Service quality has been one of the most important issues for researches, practitioners, managers in service literature and marketing (Parasuraman et al., 2005). Gronross (1982, p37) defined service quality as “the outcome of an evaluation process where the consumer compares his expectations with the service he perceived he has perceived”. In other words, service quality is “the delivery of excellent or superior service relative to customer expectations” (Zeithaml and Bitner,1996, p. 117).
Moreover, service quality refers to a customer’s subjective acknowledge to quality, and the most important characteristics of quality is to satisfy customer wants (Juran, 1989).
Carman (1990) suggested that service quality is difficult task causing many debates in a long time about the intangible nature of service quality and the problems coming from both production and consumption of a service. However, most of researchers have agreed that service quality should be viewed at customer’s perspective in order to improve customer satisfaction.
Rust and Oliver (1994) argued that customer satisfaction has an evaluation as well as an emotion-based response to a service.
This is mean that the customer’s belief on the probability of service leading to a positive feeling. Gronross (1982) noted two dimensions of service quality which is the technical aspect and the functional aspect, meaning what and how serviced is provided. The customers recognize what they receive as the outcome of process through the use of resources (e.g quality, technical), however, they often perceive how the process itself functions (e.g the functional, dimension).
By understanding the nature of the dimensions of service quality, organizations may improve their service quality to meet customer expectation or to satisfy their customers.
Furthermore, Lehtinen and Lehtinen (1982) developed broadly the concept of service quality which focus on physical quality, interactive quality and corporate. Physical quality concerns the tangible of service (i.e physical of product or physical support), while interactive quality means the interactive nature of services (the interaction between customer and the service organizational) and corporate quality involves the perception of customers about the image of the organization.
Oliver (1989) noted there are more than five different consumption models that encourage satisfaction. Different models are suitable with different affect description and different antecedents operate for different models. Parasuraman et al. (1985) measured 10 dimensions of service quality (SERVQUAL) (i.e reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding the customer and tangibles). In later research, Parasuraman, Zeithaml, and Berry (1988) reduced from 10 to 5 dimensions such as tangible, reliability, responsiveness, assurance and empathy.
Reliability widely concerns whether the outcome of service was as promised while other dimensions concern the process of service delivery. In their study, they suggested that customers increase expectation of performance through the service dimensions, observe performance and later form performance perceptions. SERVQUAL based on the notion of a gap between customers expect from service provider and their assessment of the actual performance of service that they received from service provider.
They summarized that the methods use to measure service quality and customer satisfaction based on comparisons of expectation and performance. Additionally, because of the nature characteristics of service quality so lead to customer always require quality guarantees in order to reduce the uncertainty of customer service ( Kotler, 1994). Bitter (1990) asserted that good service quality often leads to satisfaction, on the other hand, customer satisfaction increased the value of service quality again.
Furthermore, Teas (1993) also argued that perceived service quality was the accumulation of customer satisfaction. Cronin and Taylor (1992) examined four service industries of fast food, banking, dry-cleaning, pest control to interpret the relationship between service quality and customer satisfaction and they found that service quality was an antecedent of customer satisfaction. Oliver (1993) addressed some distinctions among the meanings of quality and satisfaction.
He suggested that satisfaction judgments may result from any dimension, quality related or not. Brady and Cronin (2001) summarized the various studies into one model called hierarchical service quality model (HSQM) which consists of three primary dimensions: interaction quality, physical environment quality and outcome quality. Each of these dimensions will split into various sub-dimensions later. As the discussion above, we can summarized that overall customer satisfaction is based on the information from all previous experiences with the service provider and is viewed as a function of all previous transaction-specific satisfactions (Teas, 1993)
Price and Customer Satisfaction In several customer satisfaction theories, price satisfaction was considered as an important price policy to satisfy customers. Fornell et al. 1996 examined the impact of price on overall satisfaction in various industries and the result shown that in each sector examined, price plays an important role. In fact, price satisfaction can be conceptualized as a multidimensional construct (Matzler et al. 2006) and that several dimensions influence overall customer satisfaction. Diller (2000) found that price satisfaction dimension consists of price-quality ratio, price fairness, price transparency, price confident, price reliability and relative price constitute. Matzler et al. (2006) found that when customers are satisfied or dissatisfied with the overall price, they may consider more specific price dimension.
Thus, customers can be satisfied with one dimension and less satisfied with another one. Urban (2003) suggested that price transparency can increases access to information, more alternatives, more simplified transaction, communication with customers. When price transparency appears, customers can have a clear, comprehensive, current and effortless overview about company’s quoted price (Diller, 1997). As a consequence, higher price transparency can lead to higher customer satisfaction. Furthermore, Lam et al. (2004) suggested that a favourable price-quality ratio (e.g. high customer value) will enhance customer satisfaction.
Price confidence addresses the question to what extent the consumer believes that an offered price is currently favorable (Diller, 1997, 2000). As the result that the more confident that customers have with an offer will lead to the higher customer satisfaction with price. Furthermore, price confident is related to price-transparency, price quality ratio and relative price, thus, customers can be more satisfied if they are able to evaluate a price offer and also if an offer is favorable. Relative price refers to the price comparison of customer about the product and service with other competitors. As Compeau and Grewal (1994) noted that relative price of an offer directly affects satisfaction with the price and, as a result, satisfaction with the offer.
Anderson, Fornell and Lehmann (1994) argued price is very important factor of customer satisfaction because whenever customers consider of buying a product or using service they always think about the price. Zeithaml and Bitner (1996) insisted that there is a relationship between price and satisfaction; they asserted that the extent of satisfaction was based on product quality, service quality, price, situation and personal factor. However, price was not fully interpreted in early studies (Spreng, Dixon, and Alshavsky 1993). According to Xia et al. (2004) price fairness refer to” a perceived fairness judgment by a buyer of a seller’s price”.
Zeithaml (1988) suggested that customer may evaluate the quality of product or service through price and perceived price. Oliver and Swan (1989) argued that customers often compare their gain to the gains of the sellers and if they think that the sellers earn exceptionally high profits for the products or services, they will perceive that as unfair and the consequence is less satisfaction. Urbany et al. (1989), for example found that customers perceive a price increase as unfair if they think it only served to increase profits. In contrast, price fairness would enhance customer satisfaction.
As in consumer’s cognitive conception, Zeithaml also noted that when customer consider of buying a product or service there must be price sacrificed or given up. Therefore, price is also known as sacrificed in another previous studied ( Chang and Wildt 1994; Athanassopoulos 2000). Zeithaml (1988) recognized that the lower perceived price will lead to lower the sacrifice so customer may get more attractive to purchase the product or service. However, it is not guaranteed that lower perceived price can make to more satisfaction; it must depend on other factor such as product or service quality.
In the concept of equity, which underlines fairness, Darke and Dahl (2003) found that generally customers should pay the same price for the same product or service. An example of the relationship between price and customer satisfaction in automobile is when customers consider to buy a car, they are typically received an initial price before they discuss about the final price and financial terms with the sellers. Therefore, price is very important with customer satisfaction.