ANALYSIS OF SERVICE QUALITY DIMENSIONS ON CUSTOMER SATISFACTION

CASE STUDY: AIRTELKENYA

BEATRICE.W. GITAUREG/NO: MBA/112/02171

SUPERVISOR: DR. GONGERA

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A Research Proposal Submitted in Partial Fulfillment for theaward of Master’s Degree in Business Administration, Mount KenyaUniversity

DECLARATION

I declare that this research proposal is my original work and hasnot been presented for award of any degree in any university.

Signed:

NAME: BEATRICE WAMBUI GITAUDATE:

Approval

The research proposal has been submitted for the courseexamination with my approval as the University supervisor.

Signature:

NAME: DR. GONGERADATE:

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ABSTRACTThe study is about analysis of service quality dimensions oncustomer satisfaction in Airtel Kenya. The objectives of thestudy are to evaluate the quality of services offered by AirtelKenya, to find out the dimensions of service quality, and toidentify the relationship between service quality and customersatisfaction. The study design will be descriptive and datacollected will be based on the study objectives andquestionnaires will be used to collect data from a sample of 44respondents. The data collected will be both qualitative andquantitative and SPSS will be used to analyze data which will bedepicted in tables and frequencies.

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TABLE OF CONTENTS

DECLARATION.........................................................ii

ABSTRACT...........................................................iii

CHAPTER ONE: INTRODUCTION............................................1

INTRODUCTION.........................................................1

1.1 Background of study...........................................1

1.2 Case study history............................................2

1.3 Statement of the problem......................................2

1.4 Objectives of the study.......................................3

1.4.1General objective..............................................3

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1.4.2 Specific objectives...........................................3

1.5 Research questions............................................3

1.6 Significance of the study.....................................3

1.7 Scope of study................................................3

1.8 Assumptions of study..........................................4

1.9 Definition of key terms.......................................4

CHAPTER TWO: LITERATURE REVIEW.......................................5

2.0 INTRODUCTION.....................................................5

2.1 Service quality...............................................5

2.2 Service quality theory........................................5

2.2.1 Dimensions of service quality...............................5

2.3 Customer satisfaction.........................................6

2.4 Disconfirmation Theory on Customer satisfaction...............7

2.4.1 Theoretical framework.......................................7

2.4.2 Customer perceptions...................................8

2.4.3 Expectations of customers...................................8

2.5 Relationship between service quality and customer satisfaction 9

2.6 Empirical review.............................................10

2.7 Research gap.................................................11

2.8 Conceptual Framework.........................................11

2.9 Summary of variables.........................................13

CHAPTER THREE: RESEARCH METHODOLOGY................................14

3.0 Introduction....................................................14

3.1 Research Design..............................................14

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3.2 Target Population............................................14

3.3 Sampling Procedure and Technique.............................14

3.4 Sample size..................................................15

3.5 Data collection instruments..................................15

3.6 Pilot Study..................................................15

3.7 Data Collection Procedures...................................16

3.7.1 Primary Data...............................................16

3.7.2 Secondary Data.............................................16

3.8 Validity of Research Instruments.............................16

3.9 Reliability of Research Instruments..........................16

3.10 Data Analysis...............................................16

3.11 Ethical Issues..............................................17

AIRTEL KENYA CUSTOMERS QUESTIONNAIRE...............................20

APPENDIX II: BUDGET ESTIMATES......................................25

APPENDIX III: TIME PLAN............................................26

ABBREVIATIONS

LTD: Limited

WTO: World Trade Organization

VAS: Value Added Service

GSM: Global System Mobile

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CDMA: Code Division Multiple Access

SPSS: Statistical package of social sciences

SMS: Short messaging services

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CHAPTER ONE: INTRODUCTION

INTRODUCTIONThis chapter will discuss the background of the study, casestudy, problem statement, study objectives as well as theresearch questions.

1.1 Background of study

Service quality

Service quality refers to the gap between the customer’sexpectations and perceptions, that is, the quality of a servicewill be rated high when a service delivered exceeds thecustomer’s expectations and will be rated poor when it doesn’tmeet them (Kotler,1999). The main determinants of service qualityare reliability, responsiveness, assurance, empathy, andtangibles, whether or not the service or offers deliver thecustomers satisfaction and re-purchase behavior effects,(Parasuraman, Zeithmal and Berry 1985). Customer satisfaction isthe extent to which a product’s perceived performance matches abuyer’s expectations (Kotler, 1999). Customer satisfactionExperts have defined customer satisfaction in multiple ways.Oliver’s (1997) definition of customer satisfaction is “thecustomer’s fulfillment response; customer satisfaction is ajudgment about the pleasurable level of consumption relatedfulfillment which is derived either from the features of productor service, or from the product or service itself.”

Customer satisfaction is related to the services provided by anorganization to its customers and how an organization meetscustomer expectations. It is important that organizationsunderstand that it is during first contact that customers beginto develop their level of satisfaction. That first contact can be

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through a website advertisement or the recommendation of afriend. An organization can build a higher level of satisfactionamong customers by comparing customer expectation with customerservices. In regard to this, Oliver conducted the first study tomeasure customer satisfaction in 1980. Following this, Churchilland Surprenant conducted studies in 1982, and Bearden and Teel in1983. From this stream of research, new strategies wereimplemented to obtain customer satisfaction (Allen and Rao,2000).

Customer complaints and customer satisfaction are inverselyrelated. Increasing customer satisfaction will decrease thenumber of complaints. However, it is not an easy task to reducecustomers’ complaints and maintain a high level of customersatisfaction. Nonetheless, there is a need for organizations toput extra efforts towards handling these issues (Kondo, 2001).Kenya’s mobile telecommunication industry is perhaps one of thefastest growing sectors of the Kenya’s economy and there isfierce competition within the sector made up of Safaricom, Airteland Orange Telkom and a fourth operator that was kicked out, i.e.Essar group (YU) (www.business daily 2014)

1.2 Case study historyBharti Airtel Limited commonly known as Airtel, is an Indianmultinational telecommunications services company headquarteredin New Delhi India, with operations in 20 countries across SouthAsia and Africa. Airtel has GSM network in all countries in whichit operates, providing; 2G,3G and 4G servicesdepending upon the country of operation. Airtel is the worlds’fourth largest mobile telecommunications company by subscr4ibers,with over 261 million subscribers across 20 countries as ofFebruary 2014. These countries include, Chad, Kenya, Ghana,Gabon, DRC, Malawi, Niger, Nigeria, Sudan, Egypt and so manyothers.(www.financialexpress.com)

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In 2009, Airtel launched its first international mobile networkin Sri Lanka and in 2010, Airtel acquired the African operationsof the Kuwait based Zain Telecom. Airtel was launched in Kenya in2000 as Kencell and rebranded to Zain in 2008 and finally Airtelin 2010 with it’s Headquarter at Parkside tower, in Nairobi. Itis the second-largest service operator in Kenya after Safaricomwhich holds 66.5% of market share with over 20.8 millionsubscribers.

On the other hand, Airtel Kenya holds a 17.1% of the market sharewhich is equivalent to 4.7million subscribers as of December,2013. Airtel Kenya subscribers are meant to grow to 7.4subscribers should the telecom regulator approve Airtel licenseto buy Essar (YU) mobile 2.7 million subscribers(www.economictimes.com). Airtel Kenya offers a range of serviceswhich include, Internet access, Airtel Money, pre-paid andpostpaid services, messaging, mobile number portability services,bill payment services and top ups just to mention a few, throughits shops which are located in Kisumu, Nakuru, Nyeri, Mombasa andin Nairobi, offering, SIM cards, airtime top-up cards, phones andother accessories.

1.3 Statement of the problemService quality and customer satisfaction have long beenrecognized as playing a crucial role for success and survival intoday’s competitive market. This is because the two concepts havebeen linked to customer behavioral intentions like purchase andloyalty intention, willingness to spread positive word of mouth,referral and complaint intention by many researchers(Olsen,2002;Kang,Nobuyuki and Herbert,2004;Soderlund andOhman,2005).

Although Airtel Kenya has tried to give best of services to thecustomers, it is proving to be difficult to sustain the customersdue to challenges which come as stiff competition from other

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competitors and may be in form of; communication quality, servicediversity, price, and different tastes preferences of thecustomers as well as special offers.

The research therefore seeks to evaluate the dimensions ofservice quality on customer satisfaction by ensuring the qualityof service is assessed as well as the relationship betweenservice quality and customer satisfaction is shown clearly.

1.4 Objectives of the study

1.4.1General objectiveThe general objective of this study is to analyze the dimensionsof service quality on customer satisfaction.

1.4.2 Specific objectivesThe following will be the research objectives of the study

i. To evaluate the quality of services offered by Airtel Kenya.ii. To find out the dimensions of service qualityiii. To identify the relationship between service quality and

customer satisfaction

1.5 Research questions Following are some of research questions that will be used in theresearch.

i. How is the quality of services offered by Airtel Kenya?

ii. What are the dimensions of service quality?

iii. To what extent does service quality relate to customersatisfaction?

1.6 Significance of the study Management and employees

The study will help the management of Airtel Kenya, to make

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policies that will aim at providing quality services to customersfor example employee empowerment.

The study will also help Airtel Kenya employees to focus onquality and timely services to customers.

Researchers

To other researchers, the study will help in carrying out furtherresearch on service quality or even customer satisfaction.

Researcher

The study will help the researcher in partial fulfillment of therequirements for the award of master’s degree in businessadministration, Mount Kenya University.

1.7 Scope of studyThe study will mainly focus on analysis of dimensions of servicequality on customer satisfaction. The geographical area of studywill be limited to commerce house, Airtel shop and Headquarter,Parkside towers in Nairobi. This study will be carried out fromJanuary to June 2014.

1.8 Assumptions of studyThe study will assume that dimensions of service qualityinfluences customer satisfaction in Airtel Kenya. It will furtherassume that management has laid strategies to bring about qualityservices to their esteemed customers.

1.9 Definition of key termsService quality: is defined as the gap between the consumers’expectations and perceptions, that is, quality of a service willbe rated high when the service delivered exceeds the consumers’expectations and will be rated low when it falls short ofcustomers’ expectations.

Customer satisfaction: is defined as a psychological concept that5

involves the feeling of well-being and pleasure that results fromobtaining what one hopes for and expects from an appealingproduct and/or service (WTO, 1985).

Service delivery: is getting services as effectively and quicklyas possible to the intended recipient

Customer: a customer is the recipient of a good, service,product, or idea obtained from seller or provider for a monetaryor other considerable consideration.

Satisfaction: refers to different facts of the relationship witha customer

Service: Service according to Phillip Kotler is any activity orbenefit that is essentially intangible and does not result inownership of anything.

Quality: According to the American society for quality control,quality is the totality of features and characteristics of aproduct or service that bear on its ability to satisfy stated orimplied needs.

Customer expectations: Customer expectations are pre-trialbeliefs about a product or service (Olson and Dover, 1976).Expectations are formed with the aid of different sources ofinformation, which include prior exposure to service, word ofmouth, expert opinion, publicity, and communications controlledby the firm or institution( for example, advertising, personalselling and price) as well as prior exposure to competitiveservices(Zeithmal et al,1990).

Customer perceptions: In customer satisfaction and servicequality literature, perceptions are defined as the consumer’sjudgment of the service organization's performance.

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CHAPTER TWO: LITERATURE REVIEW

2.0 INTRODUCTION This chapter will discuss literature review from research workdone by other researchers, theoretical orientation andconceptualization as it relates to the study.

2.1 Service quality Service quality is defined as the gap between the consumers’expectations and perceptions, that is, the quality of a servicewill be rated high when the service delivered exceeds theconsumers’ expectations and will be rated low when it falls shortof customers’ expectations. If the performance exceedsexpectations, the customer is highly satisfied (Kotler 1999). Oneof the major ways to differentiate a service firm is toconsistently deliver higher quality service than competitors(Kotler 1999). The key target is to meet or exceed customer’squality expectations. Their expectations are formed by their pastexperience, word of mouth and service firm advertising. Customerschoose providers on this basis, after receiving the service; theycompare the perceived service with the expected service.

2.2 Service quality theoryParasuraman, Zeithamal and Berry (1988) built a 22-iteminstrument called SERVQUAL for measuring consumer perceptions ofservice quality.

Parasuraman et al. (1991b) devised SERVQUAL model andinvestigated service quality. He explored ten dimensions ofservice quality which he later redefined into five dimensions. Itwas documented that an increase in service quality andprofessional behavior resulted to a greater customer satisfaction

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and reduced customer erosion (Leeds, 1992). Following are thefive dimensions of parasuraman.

2.2.1 Dimensions of service quality Reliability: Delivering on promises. Reliability is described asthe ability to deliver on the company’s promises dependently andaccurately with matters of service provision, problem solvingstrategies and pricing. Firms that fail to deliver on their reliability promises doactually fail customers in the most direct way and according toZeithaml; customer expectations for service are likely to go upwhen service delivery is underperformed. When service failuresoccur, customers’ tolerance zones are likely to shrink and theiradequate desired service levels are likely to rise. (Zeithaml &Bitner 1996, 121) Responsiveness: Willingness to help. Responsiveness is thewillingness to assist and provide prompt customer servicewhenever required. The emphasis is mainly on the attentivenessand promptness of customer services rendered such as questions,problems and complaints that customers would need to be dealtwith. Responsiveness is determined by the length of time that customershave to wait for assistance and the flexibility of serviceproviders to customize their service in order to meet customers’needs. Responsiveness perceptions do shrink when customers aremade to wait too long to get assistance. Assurance: Inspiring trust and confidence. Assurance is theknowledge and courtesy of employees as well as the ability of afirm to inspire trust and confidence in customers. This assuranceis mostly required in services that involve risks such asinsurance, banking or brokerage services. Trust and confidence is normally embodied in the person thatconnects a firm with its customers for instance brokerage agent’slink their firm to customers. It would be important for such

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agents to inspire trust and confidence in order to build loyaltyand assurance in their customers. Tangibility: Representing the service physically. Tangibles arethe physical appearances of physical facilities, equipment,personnel and communication materials (Zeithaml, 1996). These tangibles represent images of the services that customersexpect to get. In most cases new customers use these tangibles toevaluate the service quality so it is of great importance thatfirms enhance their image to reflect quality as well as providecontinuity in their “service quality image”. (Zeithaml & Bitner1996, 119-123)

Empathy: treating customers as individuals. According to(Zeithaml & Bitner 1996), empathy is the caring andindividualized attention given to customers. Normally empathy isconveyed when customers get personalized or customized servicesand are made to feel unique and special.

Knowing customers by name and building personal relationshipswith them create empathy in firm reflecting personal knowledgepreferences of customers’ wants. Customers like to feelunderstood and special. With personal knowledge of customers’wants, firms are able to customize their services to meet theseneeds.

2.3 Customer satisfaction Customer satisfaction is the extent to which a product’sperceived performance matches a buyer’s expectations (Kotler,1999). Highly satisfied customers produce several benefits forthe company. Satisfied customers are not price sensitive, remaincustomers for a long period of time and talk favorably to othersabout the company and its products/ services.

The ultimate goal of total quality is to improve customer value;therefore an organization’s quality concept should evolve intoone of total customer satisfaction. As such a company will gain

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an edge over competitors by consistently and profitably meetingcustomer’s needs and preferences of quality (Kotler & Armstrong,1999). Improving customer satisfaction is a worthwhile goal forcompanies.

Customer satisfaction has been a central theme of managerialdecision making worldwide over the last 20 years and it isremarkably that the popular business excellence tools, such asthe Malcolm Bald ridge Award and the European Foundation ofquality management put considerable emphasis on the significanceof both assessing customer satisfaction and using soundassessment methodologies for such task. Customer satisfaction hasalso gained popularity via the National Customer SatisfactionIndices originally inspired by the works of the Andersen et al(1994), which have become part of continuous reporting anddevelopment in countries such as Sweden, USA, and Denmark.

Over that time period, the focus on customer satisfaction hasprogressed from being a simple measurement issue to a strategicimperative that affects firm competitiveness, (Schneider andBowen 1999a, 1999b).

2.4 Disconfirmation Theory on Customer satisfaction Disconfirmation theory argues that satisfaction is related to thesize and direction of the disconfirmation experience that occursas a result of comparing service performance againstexpectations. Szymanski and Henard found in the meta-analysisthat the disconfirmation paradigm is the best predictor ofcustomer satisfaction. Ekinci et al (2004) cites Oliver’supdated definition on the disconfirmation theory, which states“Satisfaction is the guest’s fulfillment response. It is ajudgment that a product or service feature, or the product orservice itself, provided (or is providing) a pleasurable level ofconsumption-related fulfillment, including levels of under- orover-fulfillment”.

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2.4.1 Theoretical framework

Fig.4.3.Disconfirmation Theory Model (source, Oliver 1980)

2.4.2 Customer perceptionsPerception is defined as the process by which an individualreceives, selects and interprets stimuli to form a meaningful andcoherent picture of the world (schiffman et al, 2001, p148). Incustomer satisfaction and service quality literature, perceptionsare defined as the consumer’s judgment of the serviceorganization's performance.

The perceived quality construct developed by parasuraman et alin 1988 with its SERVQUAL instrument, is defined as thedifference between perceptions and expectations. Boulding andKarla (1993), in their process model of service quality,conceptualize customers’ perception of each of the dimensions ofservice quality as a cumulative construct. This means that theperception is updated each time a customer is exposed to theservice. They argue, therefore, that customer perceptions are notonly influenced by expectations of the service but also by the

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decency of the service encounter. Sue (2001) in her analysis ofstudent’s perceptions of study outcomes asserts that the lengthof experience with an educational service can influence student’sperceptions.

If two customers enter the encounter with different expectations,they would have different cumulative perceptions of the service,even if both customers experience an identical service. The mainargument is that a person’s expectations can change the way he orshe perceives reality. Boulding and Karla (1993) concluded thatit is important to understand the type of expectation of thecustomer in order to manage the perception of service quality andsatisfaction.

The customer perceptions of post consumption performance areappraisals and feelings about a chosen alternative and consumersreact to it on an objective(product or service- attribute) levelas well as on subjective(emotional) level(Neelamegaham andjain,1999). Because of this, researchers acknowledge diversity ofperception as one of the most fundamental concepts onintercultural communication (Limaye, 2000)

According to Jandt (1995), perception is unique to each person,it being a three- step process of selection, organization andinterpretation. It has also been found that perception differsdue to differences in gender (Ndhlov and Senguder, 2002; Lin etal, 2001), physical environment of service settings (Wakefieldand Blodgett, 1999), and cultural background (Limaye, 2000).These findings indicate that a clear understanding of howperceptions are formed is critical to any service business as itfacilitates formulation of strategies to manage customerperceptions of service performance.

2.4.3 Expectations of customers Customer expectations are pre-trial beliefs about a product orservice (Olson and Dover, 1976). Expectations are formed with the

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aid of different sources of information, which include priorexposure to service, word of mouth, expert opinion, publicity,and communications controlled by the firm or institution( forexample, advertising, personal selling and price) as well asprior exposure to competitive services(Zeithmal et al,1990).

Though there is consensus among researcher on expectation as acomparison standard for customer satisfaction, differences withregard to the conceptual definitions of the expectationsconstruct are presented. A comparison standard refers to thereferent used by customers to evaluate product or serviceperformance and form disconfirmation and satisfaction judgment’s(Halstead, 1999). Oliver (1980) was the first to conceptualizethe notion of predictive expectations (predictions about aproduct’s overall performance or attribute levels) as a pre-purchase standard. The consumer judgments of satisfaction ordissatisfaction result from the process of confirming ordisconfirming prior expectations. The expectancy-disconfirmationparadigm was a major issue in the early research by Cardozo(1965): Olson and Dover (1976); Latour and Peat (1979); Oliver(1980); Churchill and Suprenant (1982); and Bearden and Teel(1983)

Bearden and Teel (1983) and Westbrook and Newman (1987) viewexpectations as primary perception of the likelihood (orprobability of occurrence) of some event while some others(Churchill and Suprenant; 1982; Oliver, 1980 and 1981; Tse andWilton, 1988) contend that expectations are both estimate of thelikelihood of an event and an evaluation of the “goodness” and“badness” of the event.

The evaluative element of the latter description of expectationsmay confound a person’s judgment of an event with an expectationof likelihood of its occurrence (Spreng et al 1996). This isbecause such evaluations could involve several other standards ofcomparison (e.g. desires, industry norms, equity, and best

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brand). Spreng et al, 1996) argue that one should avoidconfounding predictive expectations(what a person believes islikely to happen in the future) with these judgment’s and agreewith the definition of Olson and Dover(1976) of expectations asbeliefs about product attributes or performance at some time inthe future.

Miller (1977), identified four types of expectations; the ideal(what performance can be), the expected (what performance willbe) the minimum tolerable (what performance must be) and thedesired (what performance should be). According to miller (1977),the satisfaction process “sort out” different types ofexpectations in purchase and consumption situations, the endresults being different. Miller suggests ‘latitudes’ ofsatisfaction and dissatisfaction is based on this premise.

2.5 Relationship between service quality and customersatisfaction Haksik Lee, Yongki Lee and Dongkeum Yoo (2000)demonstrated thatservice quality is an antecedent of customer satisfaction andthat customer satisfaction exerts a strong influence on productperformance and purchase intention while not affecting customers’perception of service quality(Cronin and Taylor, 1992), becauseits more cost effective to retain customers than attract new ones(Fornell and Wernerfelt,1987).

Strong emphasis is placed on the importance of service qualityperceptions and the relationship between customer satisfactionand service quality (for example Bitner and Hubbert, 1994; Croninand Taylor, 1992; Taylor and Baker,1994; Rust andOliver,1994).Service quality has been described as a form ofattitude that results from the comparison of expectations withthe performance (Cronin and Taylor, 1992; Parasuraman et al.,1985).Gronroos (1982) argued that customers ,while evaluating thequality of a service, compare the service they expect with the

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perceptions of the services they actually receive. It has beenargued that quality of a service is not a one-dimensionalcontract rather; service quality incorporates various dimensionsthat relate to both core and augmented service offerings (Bitranand Lojo, 1993; Gronroos, 1984; Lewis, 1993).

It is generally accepted that customer satisfaction often dependson the quality of product or service offering (Anderson andSullivan, 1993; Levesque and McDougall, 1996). For this reason,research on customer satisfaction is closely associated with themeasurement of quality (East, 1997). Thus both service qualityand customer satisfaction share a close relationship, though theyare normally conceptualized as unique (or separate) constructs(Bitner and Hubbert, 1994); Cronin and Taylor, 1992; Pattersonand Johnson, 1993; Taylor and Baker, 1994).There is someempirical evidence suggesting that service quality is a casualantecedent of customer satisfaction (Cronin and Taylor, 1992;Woodside et al., 1989).

In a recent study, Levesque and McDougall, (1996) found that theperformance of the service provider on core and relationaldimensions of service was an important driver for customersatisfaction in retail banking in the UK. However, in a non-Western context, the link between core and relational dimensionsof service and customer satisfaction is yet to be establishedempirically. Moreover, the literature dealing with servicesoutlines some major characteristics of service that make themunique and different from physical products (Bitran and Lojo,1993; Leblanc and Nguyen, 1988; Parasuraman et al., 1985;Zeithaml and Bitner, 1996). Services are often characterized bytheir intangibility, inseparability, heterogeneity, andperishability.

The implications of these characteristics are that it isdifficult for customers to evaluate services at pre-consumptionstages of the consumer decision –making (Legg and Baker, 1996).

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Because of the intangible nature of services, it becomesdifficult for an organization to understand how its customersperceive and evaluate the quality of its services (Parasuraman etal., 1985; Zeithaml, 1981). Customers however make inferencesabout the service quality on the basis of intangibles (thebuildings, the physical layout etc.) that surround the serviceenvironment.

2.6 Empirical review Service quality on internet banking

Rahaman et al. 2011, explored service quality of the privatecommercial banks in Bangladesh. The findings from their studyrevealed that, one of the primary causes of service qualitydesign failure is the lack of understanding of the evolving needand preferences of targeted customers.

Service quality and its relationship with customer satisfactiontowards customer loyalty

Ilhaamie (2010) examined the level of service quality,expectation and perception of the external customers towards theMalaysian public services using the SERVQUAL instrument. Thestudy found that tangible is the most important dimension. Italso had the lowest scores of perception. On the other hand,service quality gap is neither the lowest nor the highest.Finally, these external customers have the highest expectation onthe reliability of the Malaysian public service.

Service quality impact on customer loyalty

Kheng et al, (2010) employed the SERVQUAL model developed byParasuraman et al., 1988 with five dimensions to evaluate theimpact of service quality on customer loyalty among bankcustomers in Penang, Malaysia. Customer satisfaction was used asan intermediate variable. The findings showed that improvement inservice quality can enhance customer loyalty. The service quality

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dimensions that play a significant role in the equation arereliability, empathy, and assurance. The findings indicated thatthe overall respondents evaluate the bank positively, but stillthere are rooms for improvements.

2.7 Research gap Service quality is an important factor in the determination ofthe level of customer satisfaction in organizations, since it isthrough service quality that an organization can meet customerneeds. However, though many researchers have made efforts toresearch about service quality, little has been done on thedimensions of service quality on customer satisfaction and hencethe gap the researcher is seeking to fill.

2.8 Conceptual FrameworkShown below is the researcher’s conceptual framework

Independent variable Intervening

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variable Dependent variable

Dependent

Figure 2.7 Source: (Researcher,2014)

As shown in the above figure, customer satisfaction will beaffected by price, communication quality, service diversity andspecial offers in the following ways:

Price An important factor that organizations should keep in mind whenintroducing a new service/product into the market is price. Theprice of a service can have an impact on the success of abusiness (Foust 2002). Price is the amount paid by customers forproducts or services. The price range of services can affectcustomer satisfaction, even if customers are provided with a highlevel of service quality (Balasubramanian, et al. 2003)

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SERVICE

QUALIT

Price

Communication quality

Service diversity

Special

Reliability

CUSTOMER SATISFACTION

Responsiveness

Tangibility

Empathy

Assurance

Communication quality

Network speed: if there is something that the customers are keenon is the speed they get when they are using the services. Forexample how fast is it to reach the person next line? Does ittake for ever before one can connect? Coverage: For example, a company that has the reputation of poorsignal stands a chance of losing customers as opposed to acompany that has good signals. This will not only bring aboutcustomer satisfaction but also customer retention.

Voice service quality: efficient voice quality will be leadingto good results to the service provider as this will be leadingto good results in sense of retention as well as loyalty.

Service diversity: service provider must ensure that customersget multiple services from which he/she will be choosing from. Ifthe services meet the expectations of the customers, they will beleading to customer satisfaction. Some of the services mayinclude fast internet that may be able to transfer large amountof data, money transferring, promotions and many more.

Special offers: there is nothing that works magic like serviceoffers given to customers. Special tariffs e.g. tosha tariff,free SMS, free data pack for a period of time, redeeming pointsand other incentives not only attract a wide range of customersbut also leads to their satisfaction.

2.9 Summary of variables 2.8.1 Independent Variables

Service quality is the independent variable of the study whichinvolves five dimensions of Service quality developed Parasuramanet al. (1988).

2.8.2 Intervening variables

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The intervening variables of the study will be price,communication quality, special offers and service diversity.

2.8.3 Dependent Variable

Customer satisfaction is the dependent variable of the study, andwill be measured using the five dimensions of service quality asdiscussed above.

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 IntroductionThis chapter presents research design methodology. It highlightsthe methods and procedures for the collection, measurement andanalysis of data in order to answer the research questions raisedin the first chapter. The chapter is organized in the followingstructure: Research Design, target population, Sampling procedureand technique, sample size, data collection instruments, pilotstudy, data collection procedure, validity of researchinstruments, reliability of research instruments, data analysisand ethical issues.

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3.1 Research DesignIn order to clearly examine the topic of research, descriptivemethod of research will be used. This method of research ispreferred because the researcher will be able to collect data toanswer questions concerning the current status of the subject ofstudy. Descriptive research determines and reports the way thingsare and also helps a researcher to describe a phenomenon in termsof attitude, values and characteristics (Mugenda and Mugenda,2006). According to Orodho (2003), descriptive design is a methodof collecting information by interviewing or administering aquestionnaire to a sample of individuals.

3.2 Target PopulationTarget population as defined by Frederic (2010), is a universalset of the study of all members of real or hypothetical set ofpeople, events or objects to which an investigator wishes togeneralize the result. As such, the population of this study willbe Airtel Kenya customers. The population is so large, and it isprohibitively expensive to gather data on all the elements. Thus,one thousand four hundred and sixty seven (1467) service users inNairobi will be sampled for the study.

CUSTOMER LEVEL NUMBERS

Corporate customers 137

External customers 1330

TOTAL 1467

Customer demographics at Airtel Kenya (researcher, 2014)

3.3 Sampling Procedure and TechniqueAccording to Denning (2001) sampling is the process by which arelatively small number of individual, object or event isselected and analyzed in order to find out something about theentire population from which it was selected. The sampling design

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to be used will be Stratified Random sampling which according toKombo, D.K and Tromp, D.L.A (2006) involves dividing thepopulation into homogeneous subgroups and then taking a simplerandom sample in each subgroup. The target population will bedivided in to 3 main categories that are the managers,operational staff and external customers.

3.4 Sample sizeThe sampling frame describes the list of all population unitsfrom which the sample will be selected (Cooper and Schindler,2008, Kothari, 2004). It is a physical representation of thetarget population and comprises all the units that are potentialmembers of a sample.

The researcher will use a 3% of the total target population whichis approximately 44 customers. 1 manager, 6 operational staff,and 37 external customers will be filling questionnaires ofservices quality of the organization on customer satisfaction.The researcher will carry out the study at commerce house, Airtelshop and headquarter because they are easily accessible and thewhole sample can fill the questionnaires since its small.

CUSTOMER LEVEL MALE FEMALE TOTAL MANAGER 1 1OPERATIONAL STAFF 3 3 6EXTERNALCUSTOMERS 19 18 37TOTAL 23 21 44

Total Number of customers to be sampled (source researcher, 2014)

3.5 Data collection instrumentsA self-administered questionnaire will be delivered by hand toeach respondent. The questionnaire will be having two main parts.Part one will cover demographic variables and part two will coverinformation of the quality of services and study objectives inthe organization. The researcher will use questionnaire because

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it is easier to administer and collect data. It is alsoeconomical in terms of time and money.

3.6 Pilot StudyAccording to Ebrahim (2003), a pilot test is necessary fortesting the reliability of data collection instruments. Cox(2000), explains reliability of research as determining whetherthe research will truly measure that which it was intended tomeasure or how truthful the research results will be. Pilot studywill be conducted to detect weakness in design andinstrumentation and to provide proxy data for selection of asample. The pilot test is meant to establish whether all thequestions from the questionnaire can be fully understood by thetargeted respondents and hence rectification if need be. Thepilot study will take place before the actual research.

3.7 Data Collection Procedures

The researcher will seek permission from the Mount KenyaUniversity to conduct the research.

3.7.1 Primary DataPrimary data will be collected using questionnaires which will beadministered by the researcher. The questionnaires will comprisequestions which will seek to answer questions related to theobjectives of this study. The questions will be both closed toenhance uniformity and open ended to ensure maximum data isobtained. The researcher will use the waiting bays to administerquestionnaires so as to clarify the terms in the questions andensure proper responses and good return rate.

3.7.2 Secondary DataSecondary data will be obtained from books, internet and journalsas indicated in the literature review.

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3.8 Validity of Research InstrumentsValidity is the accuracy and meaningfulness of inferences used onthe research results (Mugenda & Mugenda, 2003, Kothari, 2004).The researcher will test the research tool to check their abilityto measure what they purport to measure. Ambiguous items will bemodified or discarded, based on the pilot results.

3.9 Reliability of Research InstrumentsReliability is the degree to which a research instrument yieldsconsistent results after repeated trials (Mugenda & Mugenda,2003). The study will use the test-retest technique to assessreliability by administering the test to the same respondentsallowing a time lapse of two weeks between the twoadministrations. Results will be correlated to determine howclosely the participants’ responses on the second occasionmatched those on the first occasion i.e. pilot study. This willensure stability, internal consistency and equivalence of thefindings.

The formula for determining test-retest reliability orcorrelation coefficient (Pearson’s formula) is

Where; x = first test, y= second test and N number of

observations.

3.10 Data Analysis The research results will be analyzed using both quantitative andqualitative methods. The data collected will be keyed in andanalyzed using SPSS version 21. The quantitative data generatedwill be subjected to the descriptive statistics feature in SPSS

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to generate information which will be presented using tables,frequencies and percentages. Qualitative analysis will use theanalytic technique and specifically quick impressionist summarywhich according to Kombo, D.K and Tromp, D.L.A (2006) involvessummarizing the key findings, explaining and interpreting thefindings.

3.11 Ethical IssuesAn introductory letter will be done as a request for therespondents’ participation. The researcher will comply with someprinciples which aim at protecting the dignity and privacy ofevery respondent who, in the course of the research work will berequested to provide personal or commercially valuableinformation about oneself or others (hereinafter referred to as asubject of research).

Before one becomes a subject of research, there will benotification of the aims, methods, anticipated benefits andpotential hazards of the research; his/her right to abstain fromparticipation in the research and his/her right to terminate atany time his/her participation; and the confidential nature ofhis/her replies.

Also no individual shall become a subject of research unlesshe/she is given the notice referred to in the preceding paragraphand provides a freely given consent that he/she agrees toparticipate. No pressure or inducement of any kind shall beapplied to encourage an individual to become a subject ofresearch.

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REFERENCES

1. Aydin, S. and Özer, G. (2005) the analysis of antecedents ofcustomer loyalty in the Turkish mobile telecommunication Market,European Journal of Marketing, Vol.39, No.7/8, pp.910-925

2. Fornell, C. (1992) a national customer satisfaction barometer:The Swedish experience. Journal of Marketing, Vol. 56, No.1,pp.6-21

3. Cronin, J.J. Jr and Taylor, S.A. (1992) “Measuring servicequality: a re-examination and extension”, Journal of Marketing,56, pp. 55-68

4. Gronroos, C., (2001) The Perceived Quality Concept: a mistake?Managing Service Quality 11(3), pp. 150-152

5. Sattari S., (2007) Application of Disconfirmation Theory onCustomer Satisfaction Determination Model – Case of PrepaidMobiles in Iran, Master’s Thesis, LTU Sweden

6. Spreng R. A. & Mackoy R., (1996) an Empirical Examination of aModel of Perceived Service Quality and Satisfaction Journal ofRetailing, 72(2)

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7. Caruana, A. (2002), “Service loyalty – the effects of servicequality and the mediating role of customer satisfaction”,European Journal of Marketing, Vol. 36 Nos 7/8, pp. 811-27

8. Olorunniwo, F., Hsu, M.K. and Udo, G.J. (2006), “Service quality,customer satisfaction, and behavioral intentions in the servicefactory”, Journal of Services Marketing, Vol. 20 No. 1, pp. 59-72

9. Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), “Thebehavioral consequences of service quality”, Journal ofMarketing, Vol. 60, pp. 31-46

10. Gerpott, T. J., Rams, W., Schindler, A., (2001), "Customerretention, loyalty, and satisfaction in the German mobilecellular telecommunications market", Telecommunications Policy,25, 4, 249-69

11. Wiele, T. Vander, Boselie, P. and Hesselink, M., 2002-Empirical evidence for the relationship between customersatisfaction and business performance, Managing Service Quality,Vol. 12,No.3

12. Parasuraman, A., Zeithamal, V.A. and Berry, L.L. (1994),“Reassessment of Expectations as a Comparison Standard inMeasuring Service Quality: Implications for future Research”,Journal of Marketing, Vol.58, Jan pp.111-124. pp.184-93.

13. Zeithaml, V.A. Berry, L.LO. and Parasuraman, A. (1993). “Thenature and determinants of customer expectations of service”,Journal of the Academy of Marketing Science, Vol.21 No.1, p.4.

14. Oliver (1980) “Theoretical Bases of Consumer SatisfactionResearch: Review, critique, and future direction. In C. Lamb & P.Dunne (Eds), Theoretical Developments in Marketing (pp.206-210). Chicago:American Marketing Association.

15. Bitner, M.J., & Hubbert, A.R. “Encounter Satisfaction VersusOverall Satisfaction Versus Quality.” In R.T. Rust & R.L. Oliver(eds.), Service Quality: New Directions in Theory and Practice,72-94. Thousand Oaks, California: Sage, 1994.

16.

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17. Levesque, T.J., and McDougall, G.H.G. (1993). “Managingcustomer satisfaction: the nature of service problems andcustomer exit, voice and loyalty”. Asia Pacific Journal of QualityManagement, 2(2), 40-58.

18. Kotler, P., Ang, S.H., Leong, S.M., and Tan, C.T. (1999),Marketing Management: An Asian Perspective. New Jersey: Prentice Hall Inc.

19. Ilhaamie (2010), “Service Quality in Malaysian PublicService: Some Findings” International Journal of Trade, Economicsand Finance, Vol. 1, No. 1,

20. Gerpott, T. J., Rams, W., Schindler, A., (2001), "Customerretention, loyalty, and satisfaction in the German mobilecellular telecommunications market", Telecommunications Policy,25, 4, 249-69.

21. Caruana, A. (2002), “Service loyalty. The effects of servicequality and the mediating role of customer satisfaction” EuropeanJournal of Marketing, 36(7/8), 811-828.

22. Kano, N., Seraku, N., Takahashi, F., and Tsjui, S."Attractive Quality and Must-be Quality," Journal of JapaneseSociety for Quality Control (14:2), 1984, pp. 47-56.

23. Turel, O. and A. Serenko (2006). "Satisfaction with mobileservices in Canada: An empirical investigation." TelecommunicationsPolicy 30(5-6): 314-331.

24. Olson, J. C. and P. A. Dover (1979). "Disconfirmation ofconsumer expectations through product trial." Journal of AppliedPsychology 64(2): 179-189. [33] Tse, D. K. and P. C. Wilton (1988).

25. (Bitner, 1994)

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AIRTEL KENYA CUSTOMERS QUESTIONNAIRE

SECTION A: PERSONAL INFORMATION

Please tick appropriately

1. What is your Gender?

a) Male [ ] b) Female [ ]

2. What is your age group?

a) 18-24years [ ] b) 25-34years[ ] c) 35-44 years [ ]

d) 45-54 years [ ] e) above 40 years [ ]

3. What is your professional status?

a) Student [ ] b) Employed [ ]c) Unemployed [ ]

4. Which Airtel Kenya service do you normally use?

a) Airtel Money [ ] b) Internet [ ]c) voice (making calls) [ ]

d) Messaging and music [ ] e) bills payment [ ]

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5. How would you rate Airtel Kenya service Quality?

a) Satisfying [ ] b) Good [ ] c)Fair [ ] d) Dissatisfying [ ]

6. Would you recommend Airtel Kenya to others?

a) Likely [ ] b) Less likely [ ]c) others,

(Explain)……………………………………………………………………………………………………………………………………………………………………………………………………………..

SECTION B: SERVICE QUALITY

Please show the extent to which you agree or disagree with thestatements as indicated by the scale below. Please tick withinthe columns under your preferred position.

Stronglyagree

Agree Not sure Disagree Strongly Disagree

SA A NS D SD

RELIABILITY

NO Reliability SA A NS D SD

R1 Airtel Kenya are able to do what they promise

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R2 Airtel Kenya are accessible at the time theypromise

R3 Airtel Kenya tells customers the exactopening times

R4 Airtel Kenya are willing to solve customers’problems

RESPONSIVENESS

NO Responsiveness SA A NS D SD

RS1 Frontline employees of this operator arealways willing to help me

RS2 Airtel Kenya staff are friendly

RS3 Airtel Kenya are fast to respond even atbusy times

Suggest how the organization management should lead and supportthe workforce in order to properly ensure customers are served totheir expectations? (Explain)

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….

ASSURANCE

NO Assurance SA A NS D SD

A1 Airtel Kenya staff are polite

A2 Airtel Kenya staff are reliable and

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trustworthy

A3 Airtel Kenya staff are passionate aboutwork

A4 Airtel Kenya staff are knowledgeable

EMPATHY

NO Empathy SA A NS D SD

E1 Airtel Kenya has individualized servicesfor customers

E2 Airtel Kenya have personalized servicesfrom staff

E3 Airtel Kenya understands the needs ofcustomers

E4 Airtel Kenya Understands the interests ofcustomers

TANGIBILITY

NO Tangibles SA A NS D SD

T1 Airtel Kenya has modern facilities

T2 Airtel Kenya facilities have niceappearances

T3 Airtel Kenya staff dresses decently

T4 Airtel Kenya has convenient opening times

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SECTION C: CUSTOMER SATISFACTION

Please indicate the level to which you agree or disagree with thefollowing statements about customer satisfaction during yourencounter with Airtel Kenya employees basing on the followingscale.

(Please tick the appropriate box)

Stronglyagree

Agree Not sure Disagree Stronglydisagree

SA A NS D SD

NO SA A NS D SD

Q.1

Airtel Kenya provides value for moneyservices

Q.2

Airtel Kenya Ensures that customerexpectations are met

Q.3

The staff care for the customers

Q.4

The staff endeavors to keep old and attractnew customers

Q.5

The staff gives individualized attention tocustomers

Q.6

Airtel Kenya provides reliable network

Q.7

Information about Airtel Kenya Products andservices is available

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Q.8

I would recommend someone to join AirtelKenya

Suggest how the organization management should improve theirservice diversity so as to meet the customers’ needs. (Explain)

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Please indicate the level of agreement or disagreement with thefollowing statements basing on the following scale. Please tickthe appropriate box

Stronglyagree

Agree Not sure Disagree Strongly Disagree

SA A NS D SD

NO SA A NS D SD

Q.1

I feel satisfied when I get promptservices

Q.2

I feel satisfied when a confident staffattends to me

Q.3

I always feel special when I am givenindividualized attention

Q.4

I am satisfied with the convenience ofAirtel Kenya premises

Suggest how the organization management should improvecommunication quality so as to eliminate things like drop callswhile communicating. (Explain)

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………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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APPENDIX II: BUDGET ESTIMATESItem Cost (KShs)

Traveling expenses 8,000

Computer typing servicesprinting, photocopying, bindingof project

20,000

Data analysis 70,000

Miscellaneous 10,000

Total 108,000

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APPENDIX III: TIME PLANTimeActivity

January2014

February2014

March2014

April2014

May2014

June2014

ProposalWriting

InstrumentModification

ProposalDefense

DataCollection

Analysis, reportwritingandsubmission

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