||The Application of Service-Profit-Chain in Banking Industry
||Institute of International Management (IIMBA--Master)(on the job class)
Privacy-Trust-Behavioral Intention model
The banking sector is getting more and more competitive nowadays because of firm’s globalization and new technology adopted. In order to quickly match competitors’ innovations for customers to feel the differences in the quality of service, companies are trying to provide different kinds of services. Based on Pareto’s 20/80 rules, 20% of the customers could contribute 80% of company’s revenue, those people usually have higher social rank and they may also care about their privacy more. In this study, we want to find out what those customers are expecting, how can we serve them correctly to meet their expectation and then help the firm attain higher profits.
To investigate the factors derived from privacy, trust, customer’s satisfaction and loyalty towards firm’s profitability, this study developed a combined model from service-profit-chain model, privacy-trust-behavioral intention model and Oliver’s expectancy-disconfirmation model. The constructs of the model including 2 independent variable of expectation and privacy, the mediating factors of perception, disconfirmation, satisfaction, trust, loyalty and the dependent variable of profitability. The proposed model is tested with VIP and Non-VIP customers by structural equation modeling (SEM) to find out the overall fitness of the research model and analyze the relationships among constructs.
Most of the hypotheses in the model were supported by VIP and Non-VIP customers, except the relationships between expectation to satisfaction, perception to disconfirmation and disconfirmation to satisfaction. The results imply that firm’s profitability is influenced by customer’s satisfaction and loyalty, consumers’ privacy security concerns would decide their trust toward the firm and disconfirmation as a mediator of perception and expectation to satisfaction does not affect customers’ satisfaction. Other findings, managerial implications and suggestion for further research are also provided.
TABLE OF CONTENTS
TABLE OF CONTENTS...V
LIST OF TABLES...VIII
LIST OF FIGURES...X
CHAPTER ONE INTRODUCTION...1
1.1 Research Background and Motivation. 1
1.2 Research Objective...1
1.3 Research Process...2
CHAPTER TWO LITERATURE REVIEW...4
2.1 Analysis by Contribution (ABC)...4
2.2 Expectation-Disconfirmation Theory (EDT)...6
2.3 Service-Profit Chain...11
2.4 Privacy-Trust-Behavioral Intention Model...18
2.5 Interrelationship among Constructs...23
CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY...27
3.1 Conceptual Model...27
3.2 Hypothesis to be Tested...28
3.3 Questionnaire Design...29
3.4 Sampling Plan...34
3.5 Data Analysis Method...35
3.5.1 Descriptive Statistic Analysis...35
3.5.2 Factor Analysis and Reliability of the Measurement Variables...36
3.5.3 Confirmatory Factor Analysis (CFA) and Structure Equation Modeling (SEM)...36
CHAPTER FOUR RESEARCH RESULTS...38
4.1 Descriptive Analysis...38
4.1.1 Sample and Data Collection...38
4.1.2 Characteristics of Respondents...38
4.1.3 Measurement Results for Relevant Research Variables...42
4.2 CFA and Reliability Test of VIP and Non-VIP Customers...50
4.3 Structure Equation Modeling (SEM)...53
4.3.1 The Model Analysis in VIP Customers...53
4.3.2 The Model Analysis in Non-VIP Customers...56
4.4 Hypotheses Result Summary...59
4.4.1 Hypothesis Result Summary of VIP Customers...59
4.4.2 Hypothesis Result Summary of Non-VIP Customers...60
CHAPTER FIVE CONCLUSION AND SUGGESTIONS...61
5.1 Research Conclusion and Discussion...61
5.2 Research Contributions and Implication...65
5.2.1 Managerial Implication...65
5.2.2 Academic Contribution...65
5.3 Research Limitation and Future Research Directions...66
LIST OF TABLES
Table 2-1 Types of Hotel Guests and Respective Contribution in Hilton Hotel...6
Table 3-1 Measurement of Expectation and Perception...29
Table 3-2 Measurement of Disconfirmation...30
Table 3-3 Measurement of Privacy...31
Table 3-4 Measurement of Trust...31
Table 3-5 Measurement of Satisfaction...32
Table 3-6 Measurement of Loyalty...33
Table 3-7 Measurement of Profitability...33
Table 4-1 Characteristics of the VIP and Non-VIP Respondents...39
Table 4-2 Characteristics of Financial Advisors and Internal Employees who Answered Profitability Evaluation Based on VIP and Non-VIP Customers Contribution...42
Table 4-3 Descriptive Analysis of Expectation Construct...43
Table 4-4 Descriptive Analysis of Perception Construct...44
Table 4-5 Descriptive Analysis of Disconfirmation Construct...44
Table 4-6 Descriptive Analysis of Privacy Construct...45
Table 4-7 Descriptive Analysis of Trust Construct...46
Table 4-8 Descriptive Analysis of Satisfaction Construct...46
Table 4-9 Descriptive Analysis of Loyalty Construct...47
Table 4-10 Descriptive Analysis of Profitability Construct...48
Table 4-11 Descriptive Analysis: Financial Advisors and Internal Employees’ Evaluation for Firm’s Profitability based on VIP and Non-VIP Customers Contribution...49
Table 4-12 Interconstruct Correlations for VIP Customers...49
Table 4-13 Interconstruct Correlations for Non-VIP Customers...50
Table 4-14 CFA of VIP Customers: Loading, VE and CR...50
Table 4-15 CFA of Non-VIP Customers: Loading, VE and CR...51
Table 4-16 CFA of VIP and Non-VIP Customers: Model Fit...52
Table 4-17 SEM Result of VIP Customers...55
Table 4-18 SEM Result of Non-VIP Customers...58
Table 4-19 Hypothesis Result Summary of VIP Customers...59
Table 4-20 Hypothesis Result Summary of Non-VIP Customers...60
LIST OF FIGURES
Figure 1-1. Research process...3
Figure 2-1. Analysis by contribution...5
Figure 2-2. Expectation-disconfirmation theory...7
Figure 2-3. The links in the service-profit chain...13
Figure 2-4. Privacy-trust-behavioral intention model...19
Figure 3-1. The research model...28
Figure 4-1. SEM diagram of VIP customers...53
Figure 4-2. SEM diagram of Non-VIP customers...56
Anderson, E. W., Fornell, C., & Lehmann, D. R. (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing, 58(3), 53-66.
Anderson, E. W., & Mittal, V. (2000). Strengthening the satisfaction-profit chain. Journal of Service Research, 3(2), 107-120.
Andreassen, T. W., & Lindestad, B. (1998). Customer loyalty and complex services. International Journal of Service Industry Management, 9(1), 7-23.
Balakrishnan, P. V. S., Oliver, R. L., & Barry, B. (1994). Outcome satisfaction in negotiation: A test of expectancy disconfirmation. Organizational Behavior and Human Decision Processes, 60(2), 252-275.
Bell, D., Deighton, J., Reinartz, W. J., Rust, R., & Swartz, G. (2002). Seven barriers to customer equity management. Journal of Service Research, 5(1), 77-86.
Bender, P. S. (1981). Mathematical modeling of the 20/80 rule: Theory and practice. Journal of Business Logistics, 2(2), 139-157.
Bennett, P. D., & Harrell, G. D. (1975). The role of confidence in understanding and predicting buyers' attitudes and purchase intentions. Journal of Consumer Research, 2(2), 110-117.
Berry, L. L. (1995). Relationship marketing of services growing interest, emerging perspectives. Journal of the Academy of Marketing Science, 23(4), 236-245.
Berry, L. L., & Parasuraman, A. (1991). Marketing service- competing through quality. New Yrok: Free Press.
Bhattacherjee, A. (2002). Individual trust in online firms: Scale development and initial test. Journal of Management Informalion Systems, 19(1), 211-241.
Bohl, D. L., Slocum, J. W., Luthans, F., & Hodgetts, R. M. (1996). Ideas that will shape the future of management practice. Organizational Dynamics, 25(1), 6-13.
Buttle, F. (1996). Servqual: Review, critique, research agenda. European Journal of Marketing, 30(1), 8-32.
Campbell, A. J. (1997). Relationship marketing in consumer markets: A comparison of managerial and consumer attitudes about information privacy. Journal of Direct Marketing, 11(3), 44-57.
Cardozo, R. N. (1965). An experimental study of customer effort, expectation, and satisfaction. Journal of Marketing Research, 2(3), 244-249.
Chan, K. W., Yim, C. K., & Lam, S. S. K. (2010). Is customer participation in value creation a double-edged sword? Evidence from professional financial services across cultures. Journal of Marketing, 74(3), p48-64.
Chiou, J. S., Droge, C., & Hanvanich, S. (2002). Does customer knowledge affect how loyalty is formed? Journal of Service Research, 5(2), 113-124.
Cronin, J. J., Brady, M.K., & Hult, G.T.M. (2000). Assessing the effects of quality, value, and customer satisfaction on consumer behavioral intentions in service environments. Journal of Retailing, 76(2), 193-218.
Dawes, J., & Swailes, S. (1999). Retention sans frontiers: Issues for financial service retailers. International Journal of Bank Marketing, 17(1), 36-43.
Dichter, E. (1966). How word-of-mouth advertising works. Harvard Business Review, 44(6), 147-166.
Dodds, W. B., Monroe, K. B., & Grewal, D. (1991). Effects of price, brand, and store information on buyers' product evaluations. Journal of Marketing Research, 28(3), 307-319.
Donaldson, T., & Dunfee, T. W. (1994). Toward a unified conception of business ethics: Intergrative social contracts theory. Academy of Management Review, 19(2), 252-284.
Doney, P. M., & Cannon, J. P. (1997). An examination of the nature of trust in buyer-seller relationships. Journal of Marketing, 61(2), 35.
Erevelles, S., & Leavitt, C. (1992). A comparison of current models of consumer satisfaction/dissatisfaction. Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior, 5, 104-114.
Finch, D., O'Reilly, N., Varella, P., & Wolf, D. (2009). Return on trust: An empirical study of the role of sponsorship in stimulating consumer trust and loyalty. Journal of Sponsorship, 3(1), 61-72.
Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention, and behavior: An introduction to theory and research. Reading: Addison-Wesley.
Garbarino, E., & Johnson, M. S. (1999). The different roles of satisfaction, trust, and comrnitment in customer relationships. Journal of Marketing, 63(2), 70-87.
Gee, R., Coates, G., & Nicholson, M. (2008). Understanding and profitably managing customer loyalty. Marketing Intelligence & Planning, 26(4), 359-374.
Gefen, D., & Straub, D. (2003). Managing user trust in B2C e-services. e-Service Journal, 2(2), 7-18.
Gummesson, E. (1981). Marketing cost concept in service firms. Industrial Marketing Management, 10, 175-182.
Gummesson, E. (1987). The new marketing -- developing long term interactive relationships. Long Range Planning, 20(4), 10-20.
Ha, H. Y. (2006). An integrative model of consumer satisfaction in the context of e-services. International Journal of Consumer Studies, 30(2), 137-149.
Hackman, J. R., & Oldham, G. R. (1980). Work redesign. Reading: Addison-Wesley.
Hallowell, R. (1996). The relationships of customer satisfaction, customer loyalty, and profitability: An empirical study. International Journal of Service Industry Management, 7(4), 27-42.
Hallowell, R., Schlesinger, L. A., & Zornitsky, J. (1996). Internal service quality, customer and job satisfaction: Linkages and implications for management. Human Resource Planning, 19(2), 20-30.
Heskett, J. L., Jones, T. O., Loveman, G. W., Sasser Jr, W. E., & Schlesinger, L. A. (1994). Putting the service-profit chain to work. Harvard Business Review, 72(2), 164-174.
Heskett, J. L., Sasser, W. E. J., & Schlesinger, L. A. (1997). The service profit chain, how leading companies link profit and growth to loyalty, satisfaction and value. New York: The Free Press.
Heskett, J. L., Sasser, W. E. J., & Schlesinger, L. A. (2003). The value profit chain: Treat employees like customers and customers like employee. New York: The Free Press.
Hill, D. J. (1986). Satisfaction and consumer services. Advances in Consumer Research, 13, 311-315.
Homburg, C., Wieseke, J., & Hoyer, W. D. (2009). Social identity and the service–profit chain. Journal of Marketing, 73(2), 38-54.
Johnson, R. H., & Winchell, W. O. (1988). Educating for quality. Quality Progress, 2(9), 48-50.
Keller, K. L. (1993). Conceptualizing, measuring, and managing customer-based brand equity. Journal of Marketing, 57(1), 1-22.
Kolter, P. H. (1991). Marketing management: Analysis, planning and control. Englewood Cliffs: Prentice-Hall, Inc.
Kopalle, P. K., & Lehmann, D. R. (2001). Strategic management of expectations: The role of disconfirmation sensitivity and perfectionism. Journal of Marketing Research 38(3), 386-394.
Kopalle, P. K., Lehmann, D. R., & Farley, J. U. (2010). Consumer expectations and culture: The effect of belief in karma in India. Journal of Consumer Research, 37(2), 251-263.
Kumar, P. (2002). The impact of performance, cost and competitive considerations on the relationship between satisfaction and repurchase intent in business markets. Journal of Service Research, 5(1), 55-68.
Kumar, V., Petersen, J. A., & Leone, R. P. (2010). Driving profitability by encouraging customer referrals:Who, when, and how. Journal of Marketing, 74(5), 1-17.
Lee, H. G. (1998). Do electronic marketplaces lower the price of goods? Communications of the ACM, 41(1), 73-80.
Lemon, K. N., Rust, R. T., & Zeithaml, V. A. (2001). What drives customer equity. Marketing Management, 10(1), 20-25.
Levesque, T., & McDougall, G. (1996). Determinants of customer satisfaction in retail banking. International Journal of Bank Marketing, 14(7), 12-20.
Lewis, B. R., & Mitchell, V. W. (1990). Defining and measuring the quality of customer service. Marketing Intelligence and Planning, 8(6), 11-17.
Li, M. L., & Green, R. D. (2011). A mediating influence on customer loyalty: The role of perceived value. Journal of Management & Marketing Research, 7, 1-12.
Lim, P. L., & Tang, N. K. H. (2000). A study of patients' expectations and satisfaction in Singapore hospitals International Journal of Health Care Quality Assurance, 13(7), 290-299.
Liu, C., & Arnett, K. P. (2002). Raising a red flag on global WWW privacy policies. Journal of Computer Information Systems, 43(1), 117-127.
Liu, C., Marchewka, J. T., Lu, J., & Yu, C. S. (2005). Beyond concern a privacy-trust-behavioral intention model of electronic commerce. Information & Management, 42(2), 289-304.
Malhotra, N. K., Kim, S. S., & Agarwal, J. (2004). Internet users' information privacy concerns (IUIPC): The construct, the scale, and a causal model. Information Systems Research, 15(4), 336–355.
Mano, H., & Oliver, R. L. (1993). Assessing the dimensionality and structure of the consumption experience: Evaluation, feeling, and satisfaction. Journal of Consumer Research, 20(3), 451-466.
Maritz, A., & Nieman, G. (2008). Implementation of service profit chain initiatives in a franchise system. Journal of Services Marketing, 22(1), 13-23.
Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An intergrative model of organizational trust. Academy of Management Review, 20(3), 709-734.
McKnight, D. H., Choudhury, V., & Kacmar, C. (2002). Developing and validating trust measures for e-commerce: An integrative typology. Information Systems Research, 13(3), 334-359.
Milne, G. R., & Boze, M. (1999). Trust and concern in consumers' perceptions of marketing information management practices. Journal of Interactive Marketing, 13(1), 5-24.
Monroe, K. B. (1990). Pricing: Making profitable decisions (2nd ed.). New York: McGraw-Hill.
Moorman, C., Zaltman, C., & Deshpande, R. (1992). Relationships between providers and users of market research: The dynamics of trust within and between organizations. Journal of Marketing Research, 29(3), 314-328.
Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing relationship. Journal of Marketing, 58(3), 20-38.
Okazaki, S., Li, H., & Hirose, M. (2009). Consumer privacy concerns and preference for degree of regulatory control. Journal of Advertising, 38(4), 63–77.
Oliver, R. L. (1977). Effect of expectation and disconfirmation on postexposure product evaluations: An alternative interpretation. Journal of Applied Psychology, 62(4), 480-486.
Oliver, R. L. (1980). A cognitive model for the antecedents and consequences of satisfaction. Journal of Marketing Research, 17(4), 460-469.
Oliver, R. L. (1993). Cognitive, affective, and attribute bases of the satisfaction response. Journal of Consumer Research, 20(3), 418-430.
Oliver, R. L., & Bearden, W. O. (1983). The role of involvement in satisfaction processes. Advances in Consumer Research, 10(1), 250-255.
Olson, J. C., & Dover, P. A. (1979). Disconfirmation of consumer expectation through product trial. Journal of Applied Psychology, 64(2), 179-189.
Ouyang, Y. (2010). A relationship between the financial consultants' service quality and customer trust after financial tsunami. International Research Journal of Finance and Economics(36), 75-86.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service quality and its implications for future research. Journal of Marketing, 49(4), 41-50.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988). SERVQUAL: A multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12-40.
Pfeifer, P. E. (2005). The optimal ratio of acquisition and retention costs. Journal of Targeting, Measurement and Analysis for Marketing, 13(2), 179-188.
Reichheld, F. F. (1993). Loyalty-based management. Harvard Business Review, 71(2), 64-73.
Reichheld, F. F., & Sasser, W. E. (1990). Zero defections: Quality comes to service. Harvard Business Review, 68(5), 105-111.
Richins, M. L. (1983). Negative word-of-mouth by dissatisfied consumers: A pilot study. Journal of Marketing, 47(1), p68-78.
Rossiter, J. R., & Percy, L. (1987). Advertising and promotion management. New York: McGraw-Hill Book Company.
Rousseau, D., Sitkin, S. B., Burt, R., & Camerer, C. (1998). Not so different after all: A cross-discipline view of trust. Academy of Management Review, 23(3), 393-404.
Russell, J. A. (1979). Affective space is bipolar. Journal of Personality and Social Psychology, 37(3), 345-356.
Sarker, S., & Valacich, J. S. (2003). Virtual team trust: Instrument development and validation in an IS educational environment. Information Resources Management Journal, 16(2), 35-55.
Sharif, K. (2009). Relationship between intra- and interorganizational service quality perceptions: An empirical testing of modified service profit chain model within kuwaiti telecommunications industry. Services Marketing Quarterly, 30(3), 249–269.
Siddiqi, K. M. (2011). Interrelations between service quality attributes, customer satisfaction and customer loyalty in the retail banking sector in Bangladesh. Intemational Joumal of Business and Management, 6(3), 12-36.
Singh, J., & Sirdeshmukh, D. (2000). Agency and trust mechanisms in consumer satisfaction and loyalty judgements. Journal of the Academy of Marketing Science, 28(1), 150-167.
Spreng, R. A., & Page, T. J. (2001). The impact of confidence in expectations on consumer satisfaction. Psychology & Marketing, 18(11), 1187-1204.
Stank, T. P., Goldsby, T. J., & Vickery, S. K. (1999). Effect of service supplier performance on satisfaction and loyalty of store managers in the fast food industry. Journal of Operations Management, 17(4), 429-447.
Van Ryzin, G. G. (2006). Testing the expectancy disconfirmation model of citizen satisfaction with local government. Journal of Public Administration Research & Theory, 16(4), 599-611.
Vaughan, C. J. (1987). Differentiate with the 5th P: People Industrial Marketing Management, 16(4), 241-247
Villanueva, J., Yoo, S., & Hanssens, D. M. (2008). The impact of marketing-induced versus word-of-mouth customer acquisition on customer equity growth. Journal of Marketing Research, 45(1), 48–59.
Walsh, G., Groth, M., & Wiedmann, K. P. (2005). An examination of consumers' motives to switch energy suppliers. Joumal of Marketing Management, 21(3/4), 421-440.
Warren, S. D., & Brandeis, L. D. (1890). The right to privacy. Harvard Law Review, 4(5), 193–220.
Webster Jr., F. E., & Keller, K. L. (2004). A roadmap for branding in industrial markets. Journal of Brand Management, 11(5), 388-402.
Westbrook, R. A. (1987). Product/consumption-based affective responses and postpurchase processes. Journal of Marketing Research, 24(3), 258-270.
Westbrook, R. A., & Oliver, R. L. (1991). The dimensionality of consumption emotion pattems and consumer satisfaction. Journal of Consumer Research, 18(1), 84-91.
Westin, A. F. (1967). Privacy and freedom. New York: Atheneum.
Wirtz, J., & Bateson, J. E. G. (1999). Consumer satisfaction with services: Integrating the environment perspective in services marketing into the traditional disconfirmation paradigm Journal of Business Research, 44(1), 55-66
Xu, Y., & Heijden, B. V. D. (2005). The employee factor in the service-profit chain framework: A study among service employees working within a leading Chinese securities firm. Journal of International Consumer Marketing, 18(1/2), 137-155.
Zeithaml, V. A. (1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing, 52(3), 2-22.
Zeithaml, V. A., Berry, L. L., & Parasuraman, A. (1996). The behavioral consequences of service quality. Journal of Marketing, 60(2), 31-46.