Customer satisfaction assessment on Vietnambank''s card service quality = đánh giá độ thỏa mãn của khách hàng đối với dịch vụ thẻ của Vietinbank

In order to better serve customer, Vietinbank need to assess customer satisfaction and look for the opportunity to improve card service quality...  Which service quality model should be

VIETNAM NATIONAL UNIVERSITY, HA NOI

SCHOOL OF BUSINESS

DO THI THEM NGOC

CUSTOMER SATISFACTION ASSESSMENT

ON VIETINBANK’S CARD SERVICE QUALITY

Major : Business Administration

Code : 60 34 05

Master of business administration thesis

Supervisor: VU ANH DUNG, PhD

HA NGUYEN, MBA

Hà Nội 11/2011

v

TABLE OF CONTENTS

ACKOWLEDGEMENT i

LIST OF TABLES vii

LIST OF FIGURES viii

INTRODUCTION 1

CHAPTER 1 - CONCEPTUAL FRAMEWORK 5

1.1 Service quality 5

1.1.1 Service definition 5

1.1.2 Quality definition 7

1.1.3 Service quality 8

1.1.4 Bank card service quality 11

1.2 Measurement of service quality 12

1.2.1 Review of multi- attribute concept 12

1.2.2 Review of Nordic Model 13

1.2.3 Review of Servqual model 14

1.2.4 Review of Servperf model 17

1.2.5 Review of Kano model 19

1.3 Suggested model 23

1.4 Previous research 24

1.4.1 Previous research outside Vietnam 24

1.4.2 Previous research in Vietnam 29

CHAPTER 2- RESEARCH METHODOLOGY 31

AND OVERVIEW ON VIETBANK 31

2.1 Research methodology 31

2.1.1 Research design 31

vi

2.1.2 Sample design 35

2.1.3 Data collection 36

2.1.4 Data processing 37

2.2 Overview on Vietinbank’s card service 38

2.2.1 Overview on VietinBank 38

2.2.2 Overview on Vietinbank card business activities 40

CHAPTER 3: FINDINGS AND ANALYSIS 46

3.1 Characteristics of the sample 46

3.2.Customer satisfaction on Vietinbank’s card 49

3.3 Comparison between customers’ satisfaction toward each service attribute and the overall satisfaction level 54

3.4 Comparison of Vietinbank’s and other banks’ card service quality 58

CHAPTER 4- CONCLUSIONS AND RECOMMENDATIONS 64

CHAPTER 4- CONCLUSIONS AND RECOMMENDATIONS 64

4.1 Conclusions 64

4.2 Recommendations 64

4.2.1 Suggestions to improving debit card service quality 65

4.2.2 Suggestions for Vietinbank to improving credit card service quality 67

4.2.3 Suggested action plan for Vietinbank to improve card service quality in the next two years 68

REFERENCES 69

APPENDICES 72

Appendix 2: Data from survey 73

Q 2: Gender of respondents 73

vii

LIST OF TABLES

TABLE 1.1- SERVICE ATTRIBUTES 10

TABLE 1.2- SERVICE ATTRIBUTES 11

TABLE 2.1- MEASUREMENTS OF INDICATORS 33

TABLE 2.2- VIETINBANK’S CARD 41

TABLE 3.1- CUSTOMER SATISFACTION ON VIETINBANK’S CARD SERVICE QUALITY 54

TABLE 3.2- CUSTOMER PERCEPTION OF VIETINBANK’S CARD SERVICE 60

TABLE 4.1- SUGGESTED ACTION PLAN FOR 2012 AND 2013 68

viii

LIST OF FIGURES

FIGURE 1.1: THE KANO DIAGRAM 21

FIGURE 2.1- DEBIT CARD MARKET SHARE IN 2010 40

FIGURE 2.2- MARKET SHARE OF INTERNATIONAL CARD IN VIETNAM, 2010 42

FIGURE 2.3- BANKS’ POINT OF SALE IN VIETNAM, 2010 44

FIGURE 2.4- REVENUE OF INTERNATIONAL CARDS IN VIETNAM, 2010 44

FIGURE 3.1- AGE OF RESPONDENTS 46

FIGURE 3.2- GENDER OF RESPONDENTS 46

FIGURE 3.3- WORKING FIELD OF RESPONDENTS 47

FIGURE 3.4- RESPONDENTS’ USE OF BANK CARD 48

FIGURE 3.5- DECISIVE FACTORS TO CHOOSE BANK CARD SERVICE 49

FIGURE 3.6- USE OF BANK CARD SERVICE 49

FIGURE 3.7- CUSTOMER SATISFACTION ON VIETINBANK CARD SERVICE RANKING BY SATISFACTION LEVEL 51

FIGURE 3.8- CUSTOMER SATISFACTION ON VIETINBANK CARD SERVICE RANKING BY DISSATISFACTION LEVEL 52

FIGURE 3.9- TROUBLE IN TRANSACTION 53

FIGURE 3.10- CUSTOMER SATISFACTION TOWARD TROUBLE SOLVING OF VIETINBANK 53

FIGURE 3.11- CUSTOMER SATISFACTION OF VIETINBANK CARD 54

FIGURE 3.12- SPIDER CHART OF VIETINBANK’S CARD SERVICE QUALITY 56

FIGURE 3.13- HISTOGRAM DIAGRAM OF SATISFACTION LEVEL 57

FIGURE 3.18- COMPARISON OF VIETINBANK AND OTHER BANKS’ CARD SERVICE 59

FIGURE 3.15- COMPARISON OF CUSTOMERS’ EVALUATION ON VIETINBANK’S AND OTHER BANKS’ CARD SERVICE QUALITY 63

1

INTRODUCTION Problem identification

Retail banking services especially bank card services are increasingly popular in daily life (Hue, 2010) Most of banks in over the world develop retail services having remarkable contributions to their revenue and profit Nowadays, banks not only concentrate on traditional service including deposit, loan and letter of credit but also develop value added services such as card, internet and mobile banking These services have been becoming really important because they created differentiation among banks In Vietnam, bank card services have been toughly competitive (Hue, 2010) Among 47 domestic banks, 37 joint stocked commercial banks together with four 100% foreign banks including Citibank, ANZ bank, HSBC and Standard and Charter Bank can issue cards and have point of sales through which customer could pay by cards However, financial experts in Vietnam believed that banking card market in Vietnam is still in early stage as the market size is much smaller than the financial market

Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank) is one

of three biggest banks in Vietnam in terms of capital and revenue Up to now, the card service has been provided by Vietinbank for 17 years Among 41 bank card issuing organizations in Vietnam, Vietinbank holds about 20% of market share at the moment and thus, is believed to be one of two leading banks in card market In addition to that, bank card services are paid attention in Vietinbank’s business strategy in coming time However, Vietkinbank has never measured customer satisfaction on card services to make sure if the services conform to customer requirements Data collected by the Service Department of Card Centre showed that many customers complained about poor services and said they expected quality improvement

In order to better serve customer, Vietinbank need to assess customer satisfaction and look for the opportunity to improve card service quality

2

Objectives

With the above problem, the objectives of the research are as follows:

 Study on the models used to measure service quality and customer

satisfaction and choose the most suitable one to analysis

 Attempt to apply the selected model to measure customer satisfaction of

Vietinbank card services in comparison with other banks’

 Draw conclusions and make recommendations on what Vietinbank

should do to increase customer satisfaction toward its card services

Research questions

In this study, the author will find out the answers to the following questions

 Which service quality model should be used to measure customer satisfaction toward bank card service?

 What are dimensions of bank card service quality?

 How are Vietinbank’s customers satisfied with card service quality?

 What should Vietinbank do to improve its card service quality?

Method

The research is based on the quantitative and qualitative method For the

3

quantitative method, questionnaire delivery was used to collect information Quantitative data is process by SPSS (Statistical Products for Social Services) software For the remaining, in- dept interview technique was used Qualitative data

is processed by NVIVO principle These approaches will be presented in details in Chapter 3

Significance

After finishing the thesis, theory of customer satisfaction and framework of customer satisfaction measurement on bank card service quality are completed Besides, the research can get information on customer satisfaction toward Vietinbank card services through research result The thesis is also a reference material guiding for other banks in assessing customer satisfaction

Research result

The research result suggests the most suitable model to assess customer satisfaction

in bank card service quality It also recommends what Vietinbank should do to improve customer satisfaction toward its card service

Limitations

Due to time constraints, the research has some limitations as follows:

First, the survey is conducted in Hanoi only The results are supposed to have representatives If the survey is conducted in larger scope, such as in Hanoi and Ho Chi Minh City or even all over Vietnam, the representative of the sample would be better

Second, the convenient sampling method is used in this paper If the author had used better method, the research results would have been better

Structure of the research report

Regardless of the introduction, references and appendices, the thesis has four major parts as followings:

Chapter 1: Conceptual framework, that presents the literature about service quality

4

and measurement of service quality

Chapter 2: Research methodology and overview on VietinBank: This part is divided into two sections

Research methodology: This is the most important part where the framework to measure customer satisfaction toward bank card service is developed In this part, the sample and data collection procedures are designed and finally data processing procedure is identified

Overview on VietinBank: Introduction to VietinBank and the card business activities of VietinBank

Chapter 3: Findings and analysis, the most interesting part Descriptive information about the sample characteristics is presented The customer satisfaction toward Vietinbank’s card service is shown Some comparison between customer satisfaction toward Vietinbank’s and other banks’ card service quality are made Chapter 4: Conclusions and recommendations The chapter gives some conclusions about customer satisfaction toward Vietinbank’s card service quality Some suggestions for further study are also given

5

CHAPTER 1 - CONCEPTUAL FRAMEWORK

This part presents the literature about service quality and customer satisfaction and information about previous in research in Vietnam and aboard Then more specific information about Vietinbank card service and bank card market in Vietnam is also introduced

1.1 Service quality

1.1.1 Service definition

There are many definitions on service Most of them are defined from the distinction of service from goods In the simple way, service is everything except manufacturing, growing, processing Afterwards, people said that services are intangible things which are derived from an activity or some activities Some other said services are intangible things which are derived from a process or some processes Recently, International Organization for Standardization (ISO) reckons that services are set of activities between customers and providers and within provider to satisfy customer’s demand

Services are different from products because of its components They are derived from four components including customers, facilities, enclosed products and service providers For example, in order to provide training service, training organization need to have customer to take part in training program They also need buildings with rooms and equipment for customers use Some enclosed products are also necessary for classes such as pen, chalk, etc Finally, there must be trainers to conduct and deliver lecture The importance of each component is depended on the unique feature of service In addition to that, services have also some remarkable characteristics in comparison with goods They are intangible, inseparable, heterogeneous, un-stored and difficult to measure (Phan, 1999)

First, service is intangible People cannot see, feel, taste, or touch in the same manner as tangible goods The characteristic leads to some problems in marketing

6

service Service lacks of ability to store, lacks of protection by patents It is difficult

to display or communicate, and price The problems can be overcame by using physical evidence, tangible clue, personal source of information on perception of service, and creating strong organization imagine in public

Secondly, service is inseparable Both service providers and users involve in supplying process Some problems may occur from the characteristic The physical presences of service provider must be showed in delivering service process It leads

to another problem in improving productivity and mass service production as well

as risky in supply process during the contact time between providers and customers

To overcome these problems, service companies should emphasize on selecting and training contact personnel, consumer management and use of multi-site location Thirdly, service is heterogeneous Service is not consistency from time to time It is difficult to keep the consistency in service quality and service delivering process The solutions for the problem may be customizing service or standardizing the equipment, procedure, and providing intensive training for staffs

Fourthly, Service is un-stored It cannot be saved and inventoried The unused capacity cannot be reserved This characteristic leads to the difficulty in balancing demand and supply However, the problem can be overcome in some ways, such as use of creative price to help firm to reduce the demand fluctuation Another solution for this situation is that service companies can provide the complementary sevice that directly relate to core service offering By this ways, they can create new market segments Other alternatives are utilizing part-time employees, outsourcing

to cut down the cost, increase the customers

Finally, it is not easy to measure service quality Because services are intangible and unstable in term of the quality requirement, it is difficult to measure their quality Service often is provided in a specific situation for each customer while product is manufactured under a given standard This characteristic leads to a difficult for customer access service quality During the measuring process, people have to base

7

on customers’ feeling In addition to that, the result of service quality survey is based on majority of customers’ ideas Understanding the nature of service may be useful to explore further into service quality

1.1.2 Quality definition

Gurus on quality gave many quality definitions So far, there are several principal approaches on quality: the transcendent, product-based, user based, manufacturing based, value-based, competitiveness – based, and ISO’s concept

According to the transcendent view, quality is absolute, unique and perfect People having quality definition on transcendent view would say that they know when they see it but they could not define it exactly This view shows that, quality can not be defined precisely, that is only learned through experience The approach is more reasonable in case quality is difficult to measure In some extent, the approach reflects how to make things different from other and how to take competitive advantages It warns that innovation is the best way to get high quality

Product based quality is based on a product attributes It implies that the more attributes a product has, the higher quality level For example durability or reliability can be measured Quality is determined objectively Although this approach has many benefits, it has limitations as well Where quality is based on individual taste or preference, the benchmark for measurement may be misleading User based definitions are based on the idea that quality is an individual view The higher quality product and service the higher customer satisfaction This approach is more marketing oriented However, it has problem on strategy choosing for the company between a niche strategy and a market aggregation approach which tries to identify those product attributes that meet the needs of the largest number of consumers

Manufacturing based approach defines quality as requirement suitability This approach has a weakness which is not paid attention to the link between quality and product characteristics in customers’ mind

8

Value- based definition considers services in term of cost and prices Quality is defined as conformance at an acceptable price or cost Thus, the consumer’s purchase decision is based on quality (however it is defined) at the acceptable price Competitiveness- based definition considers the competitive attributes that the service has The more competitive attribute a product or service has the higher quality level

Afterwards, International Organization for Standardization (ISO) announced quality definition which has been the most popularly used It overcomes many constrains of quality definition in the past By ISO’s view, quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs This definition is general because of some reasons At first, it implies that quality is the meeting level to requirement of products and services Whereas, the old quality definitions were either unclear because they did not focus

on any object or bias because it focuses on manufacturer or customer, people do not know how to assess quality level; the ISO’s view on quality shows objects are requirements including Customer requirement, manufacturer/ service provider requirement, and community requirement It surmounts limitation of old definition

by giving requirements which are used to define quality By this way, people can image quality clearer Secondly, ISO’s quality definition also mentions current and potential demand which overcomes time limitation of previous definitions If there are customers’ demands appear today but they were not recognized in the past, so people can include these demands in the quality definition By these reasons, the ISO’s quality definition has been considered the most popular up to now

1.1.3 Service quality

It is more difficult for customer to evaluate than product quality The definition is mainly based on customer perception of the outcome of service and their evaluation about the service supplying process Service quality perception is driven from comparison of customers’ expectation prior to the service and their perception about

9

the level of service received (Hoffman & Bateson, 1997)

However, customer may evaluate service quality in different ways from how they perceive product quality In evaluating service quality the experience and credence quality is more important than search quality Search quality are attributes that customer can evaluate before purchasing Experience quality is attributes that customers only perceive during or after the consumption process Credence quality

is attributes that customer difficulty to evaluate even after consumption of service (Hoffman & Bateson, 1999) Those things make service quality become more complex and difficult to evaluate It may be helpful when people view service quality base on its ten dimensions These ten dimensions are reliability, responsiveness, competence, access, courtesy, communication, creditability, security, understanding the customer, and tangible (Table 1.1)

10

Table 1.1- Service Attributes

Reliability Ability to perform the promised service

dependability and accurately, and supply good of dependable quality

Functional technical

Responsiveness Responsiveness: willing to help customer

and provide prompt service

Functional

Competence Possess of required skill and knowledge Functional

merchandise, ease of contract with staff and personal approachable

technical

friendliness of the staff

Functional

Communication Retailer’s capability to keep customer

informed, and ability to listen to them

functional technical Creditability Perceived trustworthy, believability and

honesty of the retailer company and its staff

Functional

Understanding

the customer

Customers recognize that the retailer make

an effort to know them and their need

Functional

Tangible Appearance of the store, its merchandise,

displays, and staffs

technical

Source: Parasuraman, 1985

All of these dimensions can be classified as technical quality or functional quality Technical quality describes what customers get and when they get from service providers While, functional quality describes how customers get service Access, security, and tangible can be classified as technical quality Responsiveness, courtesy, creditability, competence, understanding customer is functional quality

11

Reliability and communication are both functional and technical quality (Clutterbuck, Clark, and Armistead, 1993) Recombination of services and the dimensions of service quality are important for strategic issues This implies that the service provider can differentiate its service offers in various ways on these attributes

Also in 1992, Zeitham and colleagues developed RATER model in which service an

be evaluated based on five dimensions including reliability, assurance, tangible, empathy and responsiveness (Table 1.2)

Table 1.2- Service attributes

Responsiveness – R Willingness to help customers, provide prompt service and

solve problems

Source: Zeitham at Al., 1992

1.1.4 Bank card service quality

Customers are the important dimension of bank card service Without customers and/ or customers’ requirements, the bank card service can not be completed Whenever a customer comes to a service, he or she has certain expectation toward service in terms of benefits, price, staff attitude, etc After experiencing service, he

or she could exactly evaluate whether the service meet their expectation The result

of this can be considered “service quality”

Bank card service quality can be considered as the difference between customers’ expectation toward service and their perception of the real service The difference can be one of three cases Firstly, it is the gap between perception and expectation

12

by customers By comparing perception and expectation, customers can decide the level of service quality If the perception is higher than expectation, customers are satisfied with service If the service is provided in the way that customer wished, service quality is acceptable If service provider does not meet customers’ expectation, customers are dissatisfied Secondly, the difference can be identified between customer and service provider’s perception In this way, customer and service staff or manager, in turn, answer same questions, the gap between their evaluation will show quality level Thirdly, it is assumed that customers expect the highest level of service attributes, the difference, thus, will be the gap between the maximum level and the perception

There are three components of bank card service quality They are presented as followings:

(i) core service: including such items as reasonable interest rate, short providing

time, simple procedure, security;

(ii) supporting service: including easy accessibility, easy transaction, short

processing time;

(iii) assurance: qualification, skills and attitude of staffs

1.2 Measurement of service quality

1.2.1 Review of multi- attribute concept

The multi- attribute concept about service states that a service (or product) can be viewed as a bundle of benefits and costs Whenever anyone would like to consider and examine a service or product, he or she can focus its attributes (Wilkie and Pessemier, 1973) Although this concept has advantage of yielding feasible improvement direction, attributes are perceptual rather than objective product Each attribute has two measures, importance weight and belief rating Both of them are presumed to add explanatory power; belief rating contribute product differences while importance weight provide differential stress on attributes The weight and belief rating makes the concept have weakness

For applying this kind of models, a service (or product) will be divided into many

13

attributes Based on customer perception about each attribute, the measurement will

be conducted By doing that way, researcher could understand deeper the construct

of quality then know how to improve the quality perception of customer by improving each attribute performance

So far, many multi-attribute models have been designed to measure service quality

up to this time such as Servqual (Parasuraman, Zeithaml, and Berry, 1985, 1988, 1991), Servperf (Cronin and Taylor, 1992), Evaluated performance (EP) model and Normed quality model (Teas, 1993), Kano (1996) Among them, Servqual and Servperf are the most well known for adapting In addition, Kano quality model is also a multi-attribute model even though it is a quality identification model rather than a quality measurement model The next sections will present Servqual, Servperf and Kano models and the suggestion of using Servperf model

1.2.2 Review of Nordic Model

In 1984, Gronroos developed the Nordic conceptualization of service quality It examined how technical quality and functional quality affect the expected and perceived service quality of a service encounter While, this investigation only provides preliminary support for the role of technical quality in the formation of overall quality evaluations, subsequent investigations empirically confirm its effects

in the formation of service quality perceptions Technical quality is operationally defined as “what the customer is left with when the production process is finished This model is shown on the following page

Service quality = perception (of the attribute performance) – customer expectation (of the attribute performance)

Perceived service

Image

Functional Quality

15

Where:

SQi = Servqual overall perceived quality of stimulus i

k = the number of attributes

Wj = a weighting factor if attributes have differentiated weights

Pij = Performance perception of stimulus i with respect to attribute j

Eij = Service quality expectation for attribute j that is the relevant norm for stimulus i

Servqual dimensions

Servqual instrument consists of 22 attributes which can be classified into 5 dimensions: tangible, reliability, responsiveness, assurance, and empathy (Parasuraman, Berry, and Zeithaml, 1988) These five dimensions are also known as RATER model with the arrangement of Reliability, Assurance, Tangibles, Empathy, and Responsiveness The explanation of each dimension is as follows:

Reliability dimension: reflects the consistency and dependability of a firm’s performance In order to assess the service performance on this dimension, some questions can be asked such as does the firm provide the same level of service time after time, or does quality dramatically vary with each encounter? Does the firm keep its promises, bill its customers accurately, keep accurate records, and perform the service correctly the first time?

Assurance dimension: addresses the competence of a firm, the courtesy it extends to its customers, and the security of the service This dimension refers to how a firm’s personnel interact with customers and customers’ possession such as courtesy reflects politeness, friendliness, and consideration for the customers’ property Tangibility dimension: because of the absence of a physical product, customers often rely on the tangible evidence that surrounds the service in forming evaluation This dimension includes variety of objects such as desks, lightning, wall color,

16

brochures, appearance of firm’s personnel, etc

Empathy dimension: is ability of the firm’s personnel to experience customers’ feeling as their own Empathic firms understand their customer needs and make their service accessible to customers

Responsiveness dimension: reflects the commitment of a firm to provide its service

in a timely manner This dimension concerns the willingness and readiness of personnel to provide a service It reflects the preparedness of the firm to provide the service

Servqual questionnaires

Servqual questionnaire includes 22 pairs of question designed to capture the perception of customer about their expectation toward 22 attributes of a service and their perceived performance of these attributes These pairs of question have the same format according to Parasuraman, Berry, and Zeithaml (1991) Customers those are surveyed are asked the same questions for their expectation and their perception of each service attribute The gap between their level of perception minus level of expectation will decide the service

Managerial implications

For each attribute, there are three outcomes from the above gap First, if the level of perception is higher than expectation, the customer is satisfied This is the most expected result for service provider The smaller gap between attribute performance and customer expectation, the higher the quality is Secondly, if the level of attribute performance is equal to expectation, the service quality is acceptable for customer Finally, if the gap between attribute performance and customer expectation is negative, the customer is not satisfied The smaller the gap between attribute performance and customer expectation of the attribute is, the lower the quality is Therefore, there is more improvement needed for this attribute rather than others As a result, the priorities for improvement are associated with the magnitude

of P-E gaps The larger the P-E gap is, the more benefits can be gained by closing

17

the gap and the higher priority to improve the attribute has

Critiques for Servqual model

Even though Servqual model is believed to be one of the popular models to assess customer satisfaction in service industry, it has three main shortcomings First, some studies revealed that there is poor fit between the theoretical and measurement model for 5-dimension structure Five-dimension structure of Servqual has a conceptual meaning rather than a framework to design a practical research Secondly, the gap between service attribute performance and expectation is not the good base for service improvement because the same gap does not mean customer satisfaction level is the same In this situation, the measurement of attribute performance is better than the P – E gap Thirdly, Servqual model can not point out the priority for improvement The managerial implication of Servqual model implies that the improvement of an attribute which has bigger P-E gap will provide more benefits than improvement of an attribute which has smaller P-E gap so the former has higher priority to improve The results of this research will prove that this implication is not always valid In case of some attributes, the improvement is not worth even though the performance gap is large

1.2.4 Review of Servperf model

Quality definition

Cronin and Taylor in 1992 after their research on Servqual scale showed that it is better to discard E component and let P component alone be used According to the authors, whenever customer rates their satisfaction/ dissatisfaction level (P), he or she implies a comparison with expectation (E) Service quality in this case is equal

to customer perception of service attributes

Service quality = perception (of the attribute performance)

Servperf questionnaires

As mentioned above, since the expectation component is discarded in Servperf model, questionnaire includes 22 questions designed to capture the perception of customer about service attributes It is a half of the number of questions in Servqual model The questions in details are presented in chapter 2

Managerial implications

The higher the level of customer perception of service attributes, the higher the service quality The Servperf model implies that service provider should maximize customer perception of service attributes

Critiques for Servperf model

As Servperf model uses RATER dimensions, it has the same shortcoming to Servqual model That is the five-dimension concept has conceptual meaning rather than a framework to design a practical research However, Servperf has been considered more advanced than Servqual as it subtract a half of criteria and thus, seem to be simpler In addition to that, regardless of the gap between P and E, SERVPERF makes it easy for people to measure the variation of the service quality Some researches such as those by Mc Alexander et al., 1994; Hahm et al., 1997;

19

Avkiran, 1999; Lee et al., 2000 and Brady et al., 2002 come to this conclusion They all proposed to use Servperf model to assess customer satisfaction of service rather than Servqual model

1.2.5 Review of Kano model

Quality definition

In JIS (Japanese Industrial Standards) Z8101, quality is defined as “the totality of quality characteristics or level of performance that determines whether a product or service satisfies the purpose of use” (Kano, 1996, p.114)

Quality concept is divided into 2 components, performance and satisfaction Having more meaning than quality definition in Servqual, this definition does not stop at performance measure (performance is not a benefits related factor) but it goes further, this performance must contribute to customer satisfaction in order to be defined as quality This definition links quality concept with customer benefits

Kano diagram

It is clear that higher service (or product) performance can result in higher customer satisfaction However, the relationship between customer satisfaction and service (or product) performance is more complicated than this For some attributes, customer satisfaction can be greatly improved only with a small improvement of performance; while, for some other attributes, customer satisfaction can only be improved a little even when the performance of the service (or product) has been greatly improved It is because of the fact that whenever a customer looks for a service (or product), his or her requirements are not equally important Some requirements seem to be the most important and a customer will not choose service (or product) if it does not satisfy him or her Some seem not to be important as customer does not focus so much on them Thus, the deep understanding of this relationship is the prerequisite to achieving customer satisfaction

To help people have deep knowledge on the relationship between service (product) performance and customer satisfaction level, Kano have developed a very useful

20

diagram to classify customer needs (figure 1.1) This diagram is a tool in the field of R&D for development new products and services, especially in the integration with Quality Function Deployment (QFD) (Shen, Tan, and Xie, 2000) It devides service (or product) features into three distinct categories, each of them affects customer satisfaction in a very different way:

Basic needs - Must-be attributes: these are the basic needs of customers toward the service (or product) The service must have attributes to satisfy those requirements from customers If customer is not satisfied by these atrtributes, they will be very dissatisfied and it often lead to the situation that they do not choose the service Increasing the service performance in these attributes will lead to diminishing return

in customer satisfaction

Performance needs - One-dimensional attributes: these attributes are those for which more is generally better, and will lead to the higher levef of customer satisfaction In converse, an weak performance of attribute reduce customer satisfaction

Excitement needs - Attractive attributes: these are unspoken or unexpected by customer but result in high levels of customer satisfaction Since they are unspoken

or unexpected, customers will not be dissatisfied if their needs are not met If they are satisfied by these attributes, they will be satisfied immediately

Kano questionnaires

In order to classify customer requirements or needs, Kano suggested using pairs of opposite questions, each with five possible responses For example, an attribute about the sms banking service in bank card service can be questioned as:

Please, rate your satisfaction if the card service provides sms banking? Or

Please, rate your satisfaction if the card service does not provide sms banking? Customer should be asked to choose one of the follows:

Managerial implications

The Kano model suggests the way service provider react to customer needs as follows:

 For must-be attributes: service provider must provide these attributes in order

to reach customer acceptance of service

 For one-dimensional attributes: the more service provider can improve them, the better the customer satisfaction

 For attractive attributes: a little improvement of these attributes might increase the customer satisfaction dramatically but the absence of them will not be recognized by customer

Critiques for Kano model

As mentioned previously, for the purpose of assessing customer satisfaction, Kano model is for requirements classification rather than customer assessment The model has some shortages such as focusing on qualitative rather than quantitative, too many indifference attributes, and more than those, giving up measurements of customer quality perception However, the ideas of measuring the relationship between product performance level and customer satisfaction and incremental affect

Firstly, the 5-dimension structure of attributes is not reliable and the dimensional property of this structure is also weak (Cronin and Taylor, 1992) Other quality measurement models such as Servperf model, Evaluated performance model, and Normed quality model also face this problem due to using the same dimensional structure Hence, it is not necessary to apply this structure into quality measurement model Using the interview or focus group to explore quality attributes of a specific product or service as in the basic of multi-attribute models (Wilkie and Pessemier, 1973) may be a flexible alternative in which the characteristics of a product or service are reflected more specifically

Secondly, using P-E gap to measure quality is worse than using performance

in validity tests (Cronin and Taylor, 1992, and Teas, 1993) It is suggested that the new model should be a performance measurement base rather than P-E gap measurement base

Thirdly, the implication of using P-E gap to determine priorities to improve

is challenged It is necessary to add one more component in the model to make sure that the improvement of performance will cause the improvement

of firm benefit

On the other hand, Kano model is not a quality measurement model but it is a qualitative model to determine the relationship of attribute performance and customer satisfaction in an incremental manner However, this idea opens a new approach to measure quality which overcomes the third weakness of Servqual

24

Due to theses reasons, Servperf model is suitable for this research SERVPERF was developed by Cronin & Taylor (1992) by overcome the limitation of SERVQUAL model It also uses 5 dimension of service quality including reliability, assurance, tangibility, empathy, responsive and 22 observed dimensions in order to measure 5 dimensions above Servperf model accesses service quality base on customer satisfaction measurement rather than customer satisfaction and expectation in Serqual model

1.4 Previous research

1.4.1 Previous research outside Vietnam

Many banks in the world conducted survey for assessing customer satisfaction Most of these banks use Servqual model For example, Winnie, Yuk-lan wong and Gopal K.Kanji had written on measuring customer satisfaction, evidence from Hong Kong retail banking industry Most of these banks use Servqual model for their research

In 1997, in working paper Efficiency, profitability and Quality of banking service,

Andreas Soteriou and Stavros A Zenios coming from The Wharton School, University of Pennsylvania, developed general framework for combining strategic benchmarking with efficiency benchmarking of services offered by bank branches

In particular, the service-profit chain is cast as a cascade of efficiency benchmarking models Three models based on Data Envelopment Analysis (DEA) are developed in order to implement the framework in the practical setting of a bank's branches: an operational efficiency mode, a quality efficiency model and a profitability efficiency model The use of the models is illustrated using data for the branches of a commercial Bank Empirical results indicate that superior insights can

be obtained by analyzing operations, service quality, and profitability simultaneously than the information obtained from benchmarking studies of these three dimensions separately Some relations between operational efficiency and profitability and between operational efficiency and service quality are investigated

25

Bahia and Nantel in 2000 anounced their research results on Bank service quality model After sampling 115 banking customers in Canada, they came out with Bank service quality model comprising of 31 items, with six dimensions namely:

(i) Effectiveness and assurance: It is important that with effectiveness

comes the assurance of an error free service This dimension requires the effectiveness of providing service and the service creation of security, joy, and good communication with customers

(ii) Accessibility: Though now a days, information technology has made

it possible to have access to the services all the time, yet the accessibility to management of the bank plays a crucial role in having

a reassuring impact on the customer This dimension refers to not only the customers’ assessibility to the physical infrastructure such as transaction offices but also intangible infrastructure such as virtual office in internet

(iii) Price: The customer must be able to see the cost effectiveness of the

services and value for money The higher the service charges, the more value customers expect

(iv) Tangibles: Though intangible benefits have a crucial role in

persuading the customer, yet the tangible benefits make the life much more simpler This dimension mentions the intangibility of the service such as building, rooms, tables and chairs, machines and equipment, receptionist, etc

(v) Services portfolio: The width and breadth of the services being

provided by the bank proves one stop solution This dimension concerns the unity of services and continuous improvement of services

26

(vi) Reliability: Reliability in terms of price, timely services, secure

services and hassle free finds a better mention amongst the customers This dimension refers to the ability to provide exact service and keep any promise This factor helps in ascertaining a long term association with the customer

Some criteria such as staff’s qualification and empathy and meeting special needs of customers, etc those are important to evaluation of bank service quality have not been mentioned in this model

In working paper Measuring service quality of bank: Scale development and

validation, which was published in Journal of Retailing and Consumer Services Vol

12 (2005), Osman M Karatepea, and colleagues including Ugur Yavasb and Emin Babakuscdeveloped to test a service quality instrument by using the retail banking services in Northern Cyprus as a case in point By employing a multi- stage, multi- phase and multi- sample approach, this paper reported on the construction of a service quality scale Customer perceptions of service quality of retail banks in Northern Cyprus serve as the study setting The parsimonious 20- item four- dimensional scale consisting of service environment (four items), iteration quality (seven items), empathy (five items) and reliability (four items) exhibits sound psychometric properties Scale development procedures and managerial applications of the derived scale are discussed

In 2006, Najjar and colleagues from University of Nebraska, Omaha; University of Nebraska, Lincoln announced their research result in the paper Service Quality: A case study of bank In this report, the authors focused on the important of improving service quality in banking industry and develop questionnaire to identify underlying dimensions

of bank quality and to assess customers' perceptions of the importance of service dimensions The questionnaires were sent to 800 customers of two large banks, with 59 percent responding The results of the service quality analysis show that reliability and responsiveness are the most critical dimensions of service quality

27

In 2007, in the Journal of Money, Credit and Banking, Vol 39, No 1 ( February, 2007) of the Ohio State University, A Dick, an economist at the Federal Reserve Bank of New York announced his research study in the paper Market size, Service quality and Competition in Banking This paper found that the nature of bank competition across marketing is strikingly similar First, markets remain similarly concentrated regardless of size Secondly, the number of dominant banks is roughly constant across markets of different size; it is the number of fringe banks that increase with market size Third, service quality increases in large markets and is higher for dominant banks The findings suggest that banks use fixed- cost quality investments to capture the additional demand when market size grows, thereby raising barriers to entry

Dr T Vanniarajan and B Anbazhagan in 2007 present their study “Servperf analysis of retails banking” In an attempt to make an assessment of the SERVPERF scale in the Indian retail banking, data for the assessment of SERVPERF scale in retail banking were collected through a survey among the borrowers of consumer loans in public, private and co-operative banks in Madurai The consumer loans were choosen due to their growing familiarity and popularity with the people in globalized era A systematic random sampling technique was adopted In total, 5 each public sector, private sector and co-operative banks in Madurai City, Tamilnadu had been selected at random From each bank, a list of 20 customer borrowed consumer loans were collected All the customers were personally interviewed with the help of pre-structured interview schedule The response rate among the customers belonging to public sector, private sector and co-operative banks were 73.0, 81.0 and 51.0 per cent to its respective total The total sample size

of the study came to 205 customers

The authors proposed to use 17 items to evaluate retail bank service quality as followings:

28

(i) Upto date equipments

(ii) Being sincere to solve problems

(iii) Telling customer exactly what they do

(iv) Employees are trustworthy

(v) Providing services at promised time

(vi) Physical facilities

(vii) Prompt services to customers

(viii) Knowledgeable employees

(ix) Promise to do something on time

(x) Neatness of employees

(xi) Employees willingness to help

(xii) Consistent courteous

(xiii) Feeling safe in bank transaction

(xiv) Keeping correct records

(xv) Communication material

(xvi) Employee oblige the requests of customers

(xvii) Performing the service right at first time

The study found that the important service quality factors in retail banking are reliability, responsiveness, assurance and tangibles There is a significant difference among the customer belonging to three group of banks regarding their SERVPERF scores on reliability and responsiveness The significantly influencing perception on service quality variables on the overall attitude towards the retail banking are reliability and assurance The perceived service quality components namely reliability and responsiveness have the most impact on customer’s satisfaction in retail banking

29

In 2009, Usha Lenka and colleagues including Damodar Suar and Pratap K.J

Mohapatra announced their research result in Journal of Entrepreneurship March

2009 vol 18 no 1 47-64 in the working paper Service Quality, Customer Satisfaction, and Customer Loyalty in Indian Commercial Banks This article

examines whether service quality of Indian commercial banks increases customer satisfaction that fosters customer loyalty Data were collected from 350 valued customers of scheduled commercial bank branches in Orissa (India) A questionnaire elicited information on socio–demographic variables along with human, technical, and tangible aspects of service quality, customer satisfaction, and loyalty Results suggest that better human, technical and tangible aspects of service quality of the bank branches increase customer satisfaction Human aspects of service quality were found to influence customer satisfaction more than the technical and tangible aspects Customer satisfaction furthers customer loyalty Increase in service quality of the banks can satisfy and retain customers In the Indian banking sector, human aspects are more important than technical and tangible aspects of service quality that influence customer satisfaction and promote and enhance customer loyalty

1.4.2 Previous research in Vietnam

In Vietnam, banks have not paid attention to survey on customer satisfaction very much In addition to that, SERVPERF model has just been mentioned in several researches so far

In 2006, Nguyen Thanh Long presented his research on Using SERVPER model to assess training program’s quality in An Giang University The result of the survey showed that students’ satisfaction is depended on lecturer, infrastructure, and student’s trust on university

In 2007, Le Phuoc Luong proposed his idea on Using SERVPERF to measure student’s satisfaction in training through a small research In this research, service components including infrastructure, lecturer, university staff, and training program

In 2009, Nguyen Thi Phuong Tram from Ho Chi Minh City University of Economics successfully defended her master thesis Improvement of e- banking service: Comparison of SERVEQUAL and GRONROOS After conducting framework to evaluate service quality of e-banking service under SERVEQUAL and GRONROOS model, the author applied models to measure e-banking service quality of e- banking The comparison of results of the two models was made Finally, the author came up with the factors affecting e-banking service quality and solutions to improvement of quality

In 2010, in a very short article on website of Bank Association of Vietnam, Nguyen Huu Bieu proposed to use 5- gap model to measure the service quality of banks in Vietnam and Deming circle (PDCA) to improve service quality However, this is a very short article without any practical research

The above information shows that so far, there has not been any research on customer satisfaction assessment on VietinBank’s card service quality This paper, hopefully, could contribute to completion of theory on customer satisfaction assessment on bank card service quality

31

CHAPTER 2- RESEARCH METHODOLOGY AND OVERVIEW ON VIETBANK 2.1 Research methodology

This is the most important part where the framework to measure the bank card service quality is developed First, the research, sample, and data collection procedures are designed Then, data processing procedure is identified

2.1.1 Research design

The aim of the research is to develop a framework to evaluate customer satisfaction toward Vietinbank Card services The findings of the research are completed by applying secondary data research, questionnaire survey and in- dept interview with customers and employees of Vietinbank

Firstly, a secondary data research was conducted to find who use Vietinbank Card services Documents from Vietinbank such as receipts and customer report were used to get result 250 receipts in 6 transaction offices of 3 branches namely Hoan Kiem, Dong Da and Thanh Xuan are recorded to identify customers of bank card services in terms of age, job, employer and telephone number The most populer jobs of customers are in the following fields:

Administration

Business

Banking, finance and inssurance

Education and training (Students and pulils)

Self- employed

Others

The report of Vietinbank showed that customers with different ages have different requirements to bank card service For example, those under 22 are often use bank card for the only one purpose of receiving money from their parents They hardly

32

use other services Those with the age from 22 to 35 use more services such as mobile money, ipay, etc Based on age, Vietinbank devided theirs customers into five catergories as follows:

Secondly, a primary data research was conducted to find which service customers have used and how they assessed on its quality The purpose of the research is finding the quality level of Vietinbank’s card service quality and comparison with other banks’ if customers experienced both services

Three set of questionnaires, one quantitative for customers, one qualitative for customers and one qualitative for Vietinbank’s employees are conducted Before these questionnaires are distributed, a pilot survey with a number of semi- structured interviews was made in order to explore whether there are ideas or aspects that the framework and the questionnaires have not captured Interviews are the customers and employees of Vietinbank Due to the time constraints, the number of interviewees is limited to 5 of which three are customers and others are employees of Vietinbank Two major issues are mentioned in each interview Firstly, the pilot tried to find the important indicators when assesing bank card service quality and how they are important Interviewees are required to answer the following questions:

33

(1) How should a bank card service with quality be? The customers are required to list the characteristics of a bank card service with quality (2) Which characteristics are important in evaluating service quality of bank card? Customers are required to list important charactersistics when assesing bank card quality and even state the most imprtant one

Secondly, the pilot survey tried to test the draft questionnaires to make sure that it is fully understandable and answerable The respondents are required to answer the following questions:

(1) Is there any question that you do not understand? Interviewees are required

to give the reasons for not understanding

(2) Is there any question that is difficult for you to answer? Interviewees are required to give the reasons

(3) Is there any important idea that has not been included in the questionnaire? (4) How long does it take you to complete the questonnaire?

The collected data is analyzed based on the theoretical framework As mentioned previously, service quality can be measured through SERVPERF model, which measures customer perception of five service attributes namely reliability, assurance, tangible, empathy, and responsiveness Each attribute, in turn, includes several indicators The indicators can be identified in the table 2.1

Table 2.1- Measurements of indicators

Reliability Cash withdraw limitation per day

Cash withdraw limitation per time Wide transaction system

Accurate transaction including amount of money, information

34

on the bill, instruction on the ATM screen Billing payment for various services telecoms, electrics, railway ticket, airlines ticket and so on

Acceptance for payment on many websites High security for internet transaction Foreigner currencies

Topup for mobile phone account SMS banking

Termed deposit at ATM Reasonable service fees Simple procedure

Tellers have good attitude Tellers are supportive

Plentiful card design Clear information on ATM billing

Responsiveness Response for customer’s requirements and complaints quickly

Source: Conducted by the author

Regarding to the above table, reliability has the largest number of indicators among five attributes of bank card service quality whereas empathy and responssiveness have one indicator for each However, the average score given by customers on attributes those have more than one indicator will be representative for the whole

35

dimension

In addition, there are some indicators those are rather important to assess the quality

of bank card service such as accessibility, communications, etc However, due to time and cost limitations, those are included in the questionnaires for interviews only (appendix)

Likert scale is chosen in questionnaire design A likert scale question is a survey question that allows the user to choose the response that best represents his or her opinion relative to a series of statements There is a minimum of one and maximum

of 10 choices for each question The most popular used likert question is five -scale

In this survey, five- scale likert question is chosen

The qualitative questionnaire for customers and employees of Vietinbank have the same contents to the quantitative questionnaire However, ways to express questions are different For example, in quantitative one, likert scale is used to captured respondents’ ideas whereas semi- structured interview is used to collect respondents’ opinions

2.1.2 Sample design

The best way to conduct a survey is choosing sample all over the country By doing

so, the representativeness of sample is assured as Vietinbank provides bank card service in all over Vietnam In addition to that, the larger the sample size, the more reliability of the survey result However, the larger the sample size requires the higher cost and the more time In this survey, the respondents in Hanoi are chosen for the survey Since Hanoi is the second largest city in revenue in Vietnam Customers in Hanoi account for about for about one third of the revenue on card service For this reason, the sample selected in Hanoi could be relevant

Regarding to the problem of sampling, ideally, the random sampling procedure is the best in this case because there are many customers to be analyzed However, such a procedure requires large sample size and long time for data collection In the research, the convenient sampling method of which, any customers willing to