Business Research

Presented to:
Dr. Samar Rahi
Presented by:
Samiullah Tahir
Mi17MBA024
Title
Impact of services quality on customer satisfaction, loyalty and retention in insurance sector.
Abstract
The aims of this study are investigating the effect of service quality (SQ) dimensions on
satisfaction, identifying the effect of satisfaction on word of mouth (WOM) communication and
repurchase intention (RI) and searching a significant relationship between WOM and RI.
Improving CS and delivering SQ help service providers to differentiate the offering. Thus our
motive is to find out that the statement is true for insurance industry. This study has adopted
the work of Parasuraman et al.’s SERVQUAL variables. However, customer satisfaction has a
significant effect on WOM and RI which are found highly related
Problem Statement
Today’s business is characterized by stiff competition; consequently, delivering quality service
becomes absolutely pivotal for attracting and retaining customers. Service quality is the
consumer’s judgement about an entity’s overall excellence or superiority. Today’s relationships
with customers have undergone a paradigm shift, and private players are competing with each
other to provide quality service to customers, as customer satisfaction and customer loyalty have
become keys to success in this industry (Vanniarajan & Shfmkari, 2008). Ahmad and Sungip
(2008), in a study of service quality in the Malaysian insurance industry, found reliability and
responsiveness to be the main driving forces of service quality problems, since their study
showed that the gap between customers’ expectations and perception was widest for reliability,
followed by responsiveness. Hartono and Raharjo (2015) conducted research related to customer.
In Yi-Liang, Lin, and Sue-Ting (2015), the study results indicate that (1) product involvement
and tie strength have positive influences on word-of-mouth intention and behavior and (2) the
interaction effect of product involvement and perceived risk has a positive influence on positive
word-of-mouth (PWOM) intention and behavior. Relationship Retention of existing customers is
critical in making profits in catering industry (Chen and Chen 2014).
 Literature Review

Research Model

Services qualities dimensions (I.V) Dependent Variables

 Tangible  Customer Satisfaction
 Empathy  Customer Loyalty
 Reliability and  Customer Retention
securities
 Assurance
 Online Banking
 Image
 Price
 Perceived Value

INDEPENDENT VARIABLES:

Tangible (TAN):
The indicators of the variable, which is related to the physical facilities, appearance
of personnel and the equipment of the hospital, stated “Neat appearance of employees” (TAN1), “Visual
appealing facilities” (TAN2), “Neat appearance of polyclinic service” (TAN3), “Professional appearance”
(TAN4), and “Modern equipment’s” (TAN5).

Empathy (EMP):
The indicators of the variable, which is related to the caring, individualized attention
the firm provides its customers, stated “Given individual attention” (EMP1), “Convenient consultation
hours” (EMP2), and “Understand the specific needs of patient” (EMP3).

Reliability and securities:

The indicators of the variable, which are related to the ability to perform
the promised service dependably and accurately, stated “a sincere interest in solving problem” (REL1),
“Maintains error-free records” (REL2), and “Providing services as promised” (REL3).
Assurance:
The indicators of the variable, which is related to the knowledge and courtesy of
employees and their ability to inspire trust and confidence, stated “Constantly courteous” (AS1), “Able
to instill confidence in patient” (AS2), “Having the knowledge to answer patients’ questions” (AS3), and
“ability to handle patients’ problems” (AS4).

Perceived Value:
Perceived Value is the second determinant of overall customer, or the perceived
level of product quality relative to the price paid. Perceived value is a measure of quality relative to price
paid. Although price is often very important to the customer's first purchase, it usually has a somewhat
smaller impact on satisfaction for repeat purchases.

Prices:
A customer have perception that the prices should be low as compared to its
alternative products which he required currently. If prices are low than customer will satisfied otherwise
he will remain un-satisfied.

Dependent Variables:

Customer Satisfaction:
Customer Satisfaction has been a central concept in marketing literature
and is an important goal of all Business activities. Today, companies face their toughest competition,
because they move from a Product and sales philosophy to a marketing philosophy, which gives a
company a better chance of Outperforming competition (Kotler, 2000). Overall customer satisfaction
translates to more profits for Companies and market share increase. The importance of customers has
been highlighted by many Researchers and academicians. The principal concern of marketing is to
connect with customers by Building a strong customer relationship in order to meet their expectations.
Therefore, managers who See customers as the only way of profit, they consider the traditional chart in
Figure 2 a pyramid with The president at the top, management in the middle, and front-line people and
customers at the Bottom.

Customer Loyalty:
 Customer loyalty is a crucial factor in companies’ growth and their performance.
Loyalty is linked with the repeat business. Thus, a customer is loyal when he is frequently repurchasing a
product or service from a particular provider. Oliver defines loyalty as “A deeply held commitment to re-
buy or repatronize a preferred product or service in the future despite situational influences and
marketing efforts having the potential to cause switching behaviour” (cited by Kotler, 2000). The
perceived value from the product and the service affects customer judgement about his/her satisfaction
or loyalty with the product or the service. The significance of customer loyalty is that it is closely related
to the company’s continued survival and to strong future growth (Fornell, 1992). Customers that are
very satisfied with a company are very likely to remain with that company that leads to future revenue
for the [Link] is now a widely accepted business theory that customer retention optimizes
profitability; the cost of acquiring new customers is higher than the cost of retaining existing customers.
Therefore, the aim of a service company is to satisfy their customers in order to stimulate them to retain
and to repeat their service purchase.

The following hypotheses, based on a review of the literature, provide the scope and depth of the study.

H1: All the five service related factors have significantly positive influence on insured satisfaction.

H1a: Responsiveness has a significantly positive influence on insured satisfaction.

H1b: Empathy has a significantly positive influence on insured satisfaction.

H1c: Assurance has a significantly positive influence on insured satisfaction.

H1d: Reliability has a significantly positive influence on insured satisfaction.

H1e: Tangible has a significantly positive influence on insured satisfaction.

H2: insured satisfaction has a significantly positive influence on word-of-mouth.

H3: insured satisfaction has a significantly positive influence on repurchase.

H4: There is a significant linkage between word-of-mouth and repurchase intentions.

The survey questionnaires consisted of two sections.

The first section of the questionnaire was measuring the dimensions of service quality. These questions
were based on the literature of service quality.

The second section includes questions to determine the demographic profiles (age, education level,
income, occupation and gender) of the respondents.
Questionnaire :

Methodology :
1- Measurement :
The major goal of this study is to investigate customer-perceived service quality
dimensions, satisfaction, and behavioural intentions in the insurance industry. A survey of current
insurance policy holders in Pakistan was conducted. Respondents were selected from a list of
customers that was available from private insurance companies and authorised sales agents of
insurance service providers. Respondents were selected based on the criterion that they had
purchased at least one life insurance product (endowment policy, term policy, or unit-linked
insurance policy). A structured questionnaire was used for data collection. The variables selected
for the study were based on the literature review.
2- Data analysis
Data analysis was conducted by using the techniques of inferential statistics, and
especially exploratory factor analysis and confirmatory factory analysis. In this section, variables
relevant to service quality dimensions are first factorized using factor analysis. The relation
between the variables is identified using exploratory factor analysis and the necessary factorization
conducted.
 3- Measurement model :
The mean scores and standard deviation of the respondents. The
result shows that generated overall customer satisfaction (µ = 3.51), repurchase (µ = 3.51) and
word-of-mouth (µ = 3.51) is not high but they are above median value of 3. And also, all the
mean scores for statements related to service quality dimensions are above median value.

The means of the resulting composite variables ranged from 3.05 to 4.00 and the standard deviations
ranged from 0.84 to 1.323 (Table I). The result also shows that “Neat appearance of polyclinic service” (µ
= 4.00), “Professional appearance” (µ = 3.95) and “Able to instil confidence in patient” (µ = 3.91) are the
factors that scored the highest.

5- Conclusion :

cccccsThe purpose of this paper was to empirically test the relationship

between service quality, customer satisfaction, and behavioural intentions in life insurance
industry. This was done using a survey methodology on a sample of life insurance customers. This
study did not explore the perspective of service providers. This is a limitation inasmuch as it only
considers the customer view, which might be different from the service-provider view. The
dimensionality of service quality proposed by Parasuraman et al. (1988) was not confirmed in this
particular study. Customers clearly separate tangible from non-tangible quality attributes, but they
consider all non-tangible attributes as forming a single dimension. The five-dimensional structure
of service quality was based on research mostly performed in the United States. Customers in other
cultures may perceive service quality differently. The findings of Cronin and Taylor (1992) and
other researchers (Parasuraman et al., 1988; Fornell, 1992; Anderson & Sullivan, 1993; Hartono &
Raharjo, 2015) about the causal relations between service quality, satisfaction, and behavioural
intention are confirmed in this study.

References of Articles
 The Impact of Service Quality Dimensions on Patient Satisfaction, Repurchase Intentions
and Word-of-Mouth Communication in the Public Healthcare Industry .Olgun
kitaci,Ibrahim tayalan dobtyol….social and behaviour science ,2014 Elsevier.
 Service quality and its impact on customers’ behavioural intentions and satisfaction: an
empirical study of the Indian life insurance sector. R. Ramamoorthy, Angappa
Gunasekaran, Matthew Roy, Bharatendra K. Rai & S.A. Senthilkumar….Total Quality
Management & Business Excellence ,2018 Taylor and Francis.
 Effects of Service Recovery on Customer Satisfaction and Relationship Retention in
Catering Industry.. Ting-Yu Chueh1 and Jeng-Hwan Wang2 and Hsin-Hsing Liao3, 2014.