ADVANCED RESEARCH METHODOLOGY

LITERATURE REVIEW

Services are deeds, processes and performances (Zeithaml and Bitner, 2003). According to
(Quinn,Baruch and Paquette, 1987) services include all economic activities whose output is not
a physical and tangible product or construction is generally consumed at the time it is produced
and provides added value in forms (convenience, amusement, timeliness, comfort or health) that
are essentially intangible Service has been entering every part of our life from the most
essential demands (such as eating, sleeping) to other entertainment needs (such as sport,
traveling, cooking, and telecommunication). In other words, we readily define bank, hotel,
restaurants, education and beauty salon as being service-based business. Similarly said by Hung
N. Bui (2004)i service is an activity that impacts all parts of our life. Since we were born, our
lives have relied on services (such as hospital service, education service, retail service etc.).
Service differs from goods in terms of the way they are produced, consumed, and evaluated. In
service marketing context, the delineation of services, which are widely accepted by many
scholars and marketers (e.g. Zeithaml, 1981, 1985; Levitt, 1981, Zeithaml & Bitner, 1996), can
be defined through four characteristic differences between services and goods, “IHIP”, i.e.
intangibility, heterogeneity, inseparability, and perishability (Wolak, Kalafatis & Harris, 1998)
Services are normally “intangible” since they are performances and experiences which
infrequently control accurate manufacturing specifications concerning a uniform quality like any
objects. These performances often change from producer to producer, customer to customer, and
day today, “heterogeneouse”. Production and consumption of services cannot be separated,
“inseparable”, compared with goods that are separated into small units/ departments. Quality in
services often occurs during service delivery as well as in an interaction between customer and
provider. Finally services are “perishable” which are time dependent and can not be stored.
(Parasuraman et al., 1985, in Tatakasem & Lee, n.d.; Parasuraman et al., 1990) As the inherent
differences between goods and services, they therefore make unique existence as well as
management challenges for service business and for manufactures that provide services as a core
offering (Zeithaml & Bitner, 1996).

Edvardsson (1996) claimed that in the eyes of the customer, the service is one associated with
added value and quality and that quality will satisfy the needs and meets the expectations of

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customers, employees and owners. On the other hand, quality of service is also the main driving
force of service providers to build the competitive challenges as well as position themselves in
market and to remain the existing customers as well as to attract more new customers
(Kandampully, 2000 in Kvist & Klefsjo, 2006, Lewis, 1993 in Yoon, T-H & Ekinci, 2003).

SQ is defined as the effort exerted by an organization in order to meet and satisfy the
expectations and requirements desired by its customers.. Thus, SQ is approached as ‘customer-
oriented’ despite the fact that this is not the rule (Edvardsson, 1998). If an organisation succeeds
in creating a base of trustful and satisfied consumers, it will manage to raise its sales, decrease its
costs, progress well in all phases and levels of its structure and in this way it will maximize its
profit (Yavas & Shemwell, 1997; Yang, 2003). The quality of services performed can only be
assessed during or after consumption (Audhesh et al., 2005). The more complex and personal the
service,the more “detective” work customers are likely to do (Berry et al., 2006). Consequently,
Service quality has become an increasingly important factor for success and survival in the
service industry. This means that by providing high quality service, the organization will have
greater chances of achievement of the main targets relating to customer satisfaction and loyalty,
market share, gaining new customers, productivity, financial performance and profitability
(Cuiet al., 2003:191).

Cronin and Taylor (1994)ii viewed service quality as a form of attitude representing a long-run
overall evaluation. Maintaining service quality at certain level and improving service quality
must be life-time efforts to those companies who desire life-time prosperity in customers’ heart.

Neverthless service quality is not easy to evaluate for customers which differ from goods quality.
Service quality is not only entirely evaluated by customers on the outcome of that service, but its
process of delivery is also considered during customer evaluation (Parasuraman et al., 1991).
According to Parasuraman, Zeithaml and Berry (1985), service quality can be defined as the
difference between expected, service (customer expectations) and perceived service (customer
perceptions).If expectations are greater than performance, then perceived quality is less than
satisfactory and a service-quality gap appears. This does not necessarily mean that the service is

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of low quality but rather that customer dissatisfaction occurs and opportunities arise for the better
fulfillment of customer expectations.
Excellent service quality is not an optional competitive strategy which may, or may not, be
adopted to differentiate one service industry from another: today it is essential to corporate
profitability and survival.
Consumer perception of service quality is a very complex process. Therefore, multiple
dimensions of service quality have been suggested (Brady & Cronin, 2001). One of the most
popular models, SERVQUAL, used in service marketing, was developed by Parasuraman et al
(1985, 1988). SERVQUAL is based on the perception gap between the received service quality
and the expected service quality, and has been widely adopted for explaining consumer
perception of service quality. Originally 10 dimensions of service quality were proposed
(reliability, responsiveness, competence, access, courtesy, communication, credibility, security,
understanding the consumer, and tangibles). Later these were reduced to five (reliability,
responsiveness, empathy, assurances and tangibles). In its original form, servqual contains 22
pairs of Likert scale statements structured around five service quality dimensions in order to
measure service quality (Cronin and Taylor, 1992). Each statement appears twice. One measures
customer expectations of a particular service industry. The other measures the perceived level of
service provided by an individual organization in that industry. The 22 pairs of statements are
designed to fit into the five dimensions of service quality. A seven-point scale ranging from
“strongly agree” (7) to “strongly disagree” (1) accompanies each statement. The “strongly agree”
end of the scale is designed to correlate with high expectations and high perceptions. Service
quality occurs when expectations are met (or exceeded) and a service gap materializes if
expectations are not met. The gap score for each statement is calculated as the perception score
minus the expectation score. A positive gap score shows that expectations have been met or
exceeded and a negative score demonstrates that expectations are not being met.
According to Oliver (apud SALOMI and MIGUEL, 2005), SERVQUAL is the method that
assesses client satisfaction as a result of the difference between expectation and the performance
obtained.
Numerous studies and investigations on service quality have been carrying out across various
industries after the pioneering work by Parasuraman et al. (1985) such as medical services
(Brown and Swartz, 1989), car retailing (Carman, 1990), dental services (Carman, 1990), travel

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and tourism (Fick and Ritchie, 1991), hospitality (Saleh and Ryan, 1992; Johns, 1993), higher
education (Ford et al., 1993), accounting firms (Freeman and Dart, 1993), construction
professionals (Hoxley and Measuring, 2000), public services (Wisniewski, 2001; Brysland and
Curry, 2001; Agus et al., 2007), and mobile communications (Kung et al., 2009; Negi, 2009).

RESEARCH OBJECTIVE

To identify the level to which customer expectations and perceptions exist on the basis of
SERVQUAL in Pakistan and to find out similarity between expectations and perceptions of the
customers for all aspects of SERVQUAL.

RESEARCH HYPOTHESIS

Hypothesis must be formulated in order to evaluate the level of satisfaction of the service
provided by Insurance company using above quality dimensions. It is noteworthy that these
dimensions are interrelated and affect significantly on customer satisfaction.

HYPOTHESIS NO.1

HO: Customers expectations and perceptions do not depend upon their overall satisfaction.

HA: Customers expectations and perceptions depend upon their overall satisfaction.

HYPOTHESIS NO.2

HO: There is similarity between customer’s expectations and perceptions

HA: There is no similarity between customer’s expectations and perceptions

METHODOLOGY

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Instrument would contain 22 questions divided into five service quality dimensions. They are
tangibles, reliability, responsiveness, assurance, and empathy. Responses would be on a 7-point
likert scale from ‘Strongly agree” (7) to “strongly disagree” (1). The sample size used was 70
respondents and the questionnaires were distributed to the customers of different insurance
companies The Cronbach Coeffecient alpha will be used to test the construct reliability.
Regression model is used to check level of satisfaction dependency on expectations and
perceptions .The paired sample T-test is used to check differences between customer expectation
and customer perceptions.

RESEARCH METHOD
Research method used in our Study is Quantitative. We have selected five service quality
dimensions and want to measure them by the means of structured questionnaire and through a
survey.

PROPOSED SAMPLING TECHNIQUE

The basic idea of sampling is that by selecting some of the elements in a population, researcher
may draw conclusions about the entire population. Selection of the sampling method to use in a
study depends on a no. of related theoretical and practical issues. These include considering the
nature of the study, the objective of study and the time and budget available .Traditional
sampling method can be divided into two categories: Probability and non-probability sampling.
The method which is used in this study for sampling is Non-Probability sampling. Non-
probability sampling provides a range of alternative techniques based on researcher subjective
judgment. The non probability sampling method used in our research is Judgement sampling. In
Judgmenet sampling group of people who have knowledge about particular problem can be
selected as sample element.

SAMPLE CHARACTERISTICS

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The sample has following characteristics:

AGE    
  18-25 2
  26-35 38
  36-45 21
  46-55 7
  Above 55 2
   
QUALIFICATI
ON    
  Diploma 3
  Graduate 11
Post
  Graduate 42
  M.Phill/PhD 6
  Other 8
   
OCCUPATION    
Employee(Gv
  t) 3
Employee(Pv
  t) 52
Self-
  employed 4
Business
  Man 7
  Other 4
   
POLICY    
  EFU 30
  AIC 21
  NJI 19
  OTHERS 3
   
PRODUCT    
  Home Ins 2
Auto
  insurance 43
Equipment
  Ins 3
Travel
  insurance 1
  PA/Medical 3

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  other 18

RELIABILITY

Reliability is used to refer to the degree of variable error in a measurement. Reliability is defined
as the extent to which a measurement is free of variable errors. Cronbach`s Coefficient Alpha is
one of the most commonly used statistical techniques to estimate internal consistency reliability.
It solves the purpose to measure of the reliability of psychometric instrument (questionnaire). It
is important to know the reliability and validity of the proposed questionnaire. The closer the
Cronbach`s Alpha is to 1, higher the internal reliability consistency (Sekaran, 1992 p. 172, 284).
VALUE OF
NO. OF RELIABILIT
    CRONBACH'S
ITEMS Y
ALPHA
Tangibles 0.843 4 GOOD
EXPECTATIONS

Reliability 0.821 5 GOOD

Responsivenes
s 0.889 4 GOOD
Assurance 0.912 4 EXCELLENT
Empathy 0.842 5 GOOD
Tangibles 0.884 4 GOOD
PERCEPTIONS

Reliability 0.949 5 EXCELLENT

Responsivenes
s 0.956 4 EXCELLENT
Assurance 0.955 4 EXCELLENT
Empathy 0.946 5 EXCELLENT
OVERALL
RELIABILITY 0.958 44 EXCELLENT

The overall reliability is found to be 0.958 which indicates the SERVQUAL instrument appears
to be a fairly valid and reliable measure of service quality.
VALIDITY

No. of different steps were taken to ensure the validity of the study:
 Data was collected from the reliable sources
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 Respondents were chosen who had an experience with Insurance services.

 Questionnaire was developed on a well known customer satisfaction measuring model
SERVQUAL.
STATISTICAL ANALYSIS

RESULTS FOR HYPOTHESIS NO. 1

LEVEL OF SATISFACTION DEPENDENCY ON EXPECTATIONS AND

PERCEPTIONS

REGRESSION MODEL

Model Summaryb
Adjusted R Std. Error of Durbin-
Model R R Square Square the Estimate Watson
1 .881a .777 .770 .651 2.114
a. Predictors: (Constant), perceptions, expectations
b. Dependent Variable: Overall satisfaction

This table gives us the R-value which represents the correlation between the observed and
predicted values of the dependent variable.R-Square is called coefficient of determination and it
gives the adequacy of the model.Here the value of R-square is 0.777 that means the independent
variable in the model can predict 77.7% of the variance in dependent variable.Adjusted R-square
gives the more accurate information about the model fitness if one can further adjust the model
by its own.
ANOVAb
Sum of
Model Squares df Mean Square F Sig.
1 Regression 98.607 2 49.303 116.401 .000a
Residual 28.379 67 .424
Total 126.986 69
a. Predictors: (Constant), perceptions, expectations
b. Dependent Variable: Overall satisfaction

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The above table gives the test results for the analysis of one-Way ANOVA. The results are given
in three rows, the first row labeled Regression gives the variability in the model due to known
reasons. The second row labeled Residual gives the variability due to random error or unknown
reasons.F-Value in this case is 116.401 and the p-value is given 0.000 which is less than 0.05 so
we reject our null hypothesis and conclude that the customer expectation and perception depends
on Overall Satisfaction.

Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) -.289 1.427 -.202 .840
expectations -.091 .211 -.025 -.430 .669
perceptions 1.158 .076 .882 15.251 .000
a. Dependent Variable: Overall satisfaction

The above table gives the regression constant and coefficient and their significance .These
regression coefficient and constant can be used to construct an ordinary least squares (OLS)
equation which is as follow:

OVERALL SATISFACTION = -0.289 – 0.091 EXPECTATIONS + 1.158 PERCEPTIONS

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The above normal probability plot of regression standardized residual shows the regression line
which touches maximum number of points present in the model and it shows the accuracy of the
fitted model.

RESULTS FOR HYPOTHESIS NO. 2

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(DIFFERENCE IN CUSTOMERS EXPECTATIONS AND PERCEPTIONS).

PAIRED SAMPLE T TEST

Paired Samples Statistics

Std. Error
Mean N Std. Deviation Mean
Pair 1 expectations 6.6494 70 .37268 .04454
perceptions 4.7279 70 1.03333 .12351
The above table shows the descriptive statistics (Means, Number of data sets, Standard deviation
and standard error means) for both Expectations and perceptions.

Paired Samples Correlations

N Correlation Sig.
Pair 1 expectations & 70 .058 .633
perceptions

This table shows the value of correlation coefficient between two variables which is 0.58 that
shows expectation and perception are not strongly correlated.
Paired Samples Test
Paired Differences
95% Confidence Sig.
Std. Interval of the (2-
Std. Error Difference t df tailed)
Mean Deviation Mean Lower Upper
Pair expectations - 1.92143 1.07790 .12883 1.66441 2.17845 14.914 69 .000
1 perceptions

In the above table, p-value is found to be lesser than 0.05 so we reject our null hypothesis and
conclude that there is no similarity between customer`s expectations and perceptions.

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CONCLUSION
i

This study explores service quality of an Insurance company. The 70 customers of different insurance
companies were randomly selected to measure their expectations and perception by the questionnaire.
The questionnaire was followed according to SERVQUAL model developed by Parasuraman et al.
(1998), which asked 22 service features grounded on 5 dimensions; tangibles, reliability, assurance,
responsiveness, and empathy.

ii

REFERENCES

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Cronin, J.J. and Taylor, S.A. (1992) “Measuring service quality: a reexamination and extension”,
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Kandampully, J., 2000, The Impacet of Demand Fluctuation on the Quality of Service: a Tourism
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Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1994). Re- assessment of expectations as a
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Parasuraman, A.; Zeithaml, V.A.; and Berry, L.L. (1985) ‘A conceptual model of service quality and its
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