Competition in the Service Industry - Research Paper Example

Qualitative Research and Questionnaire Design Literature review Introduction The aspect of service quality remains a crucial one as businesses try to increase and maintain their competitive advantage. Service industries are mostly impacted since financial services and mostly banks compete in the market and hence the quality of services offered becomes a very critical competitive weapon as the products are undifferentiated. The structural changes that have occurred in banks have allowed a greater range of activities that enhance these banks to become more competitive in the market place than before. The aspect of technological advancement in banking systems has resulted in the rethinking of banks to change the quality of services offered to individuals and commercial customers. Banks that are very successful in providing high quality customer services may have a very distinct marketing edge as when customer services are improved, the levels of revenues increase, customers relation raise, and there is increased cross- sell ratios. This is because customers will be attracted to a bank that provides high quality customer services. Such like banks usually expand their market shares and hence more and more customers visit them. Banks should understand that customers become loyal to a certain bank if the bank produces greater value as compared to what is produced by the competitors. Therefore, the purpose of this study is to examine the university students’ perceptions, expectations, and customer behaviors about retail banking services offered in institutions of higher education. Customers’ behavior and service quality in banking institutions The quality of services provided to customers is very vital in determining the competitive advantage of a bank. This is because university students like any other customer will be more inclined in transacting in a bank that provides them with high quality customer services. As indicated by Barbara, Jayne, and Vincent-Wayne, the quality of customer services has been increasingly recognized as a very crucial aspect in the success of any business (4). The banking sector in not exceptional in this sector meaning that it is also impacted by the quality of services offered. Banks usually earn higher if they are capable of positioning themselves in a better position in as far as service quality is concerned that their competitors within a particular market. As reported by Hossain and Leo, service quality is a very imperative strategy that banks should focus on majorly (339). The behavior of students moving from bank to the other in a particular market may be a result of the services provided by these banks. This shows that customers’ behaviors are as a result of the customer services provided in a bank (East et al 98). Customers usually perceive differences in the level of services provided in banking institutions and evaluate the performances of these banks in relation to their personal contact and interaction (Mokhlis et al 258). In spite of the fact that most of the university students are not employed and therefore most of their finances are derived from educational loans, they offer excellent business opportunities for banks. This is because all their loans are provided through banks. It is therefore the role of banks to ensure that they attract university students to transact in their banks in order to make more money. It has been reported by Blythe (33); students’ market is increasingly growing and has become very lucrative making many banks to venture in that market. In developing and developed countries, education is considered as a tool for development and hence the numbers of public and private universities are increasing drastically hence increasing the number of students. This shows that the number of students top be targeted is very large and hence a bank can make handsome profits out of this market (Hoffman & Bateson 323). This has increased competition in this market and hence a bank that is to excel in this market has to focus on the provision of high quality customer services. It is the expectations of students’ customers that a bank should have modern and advanced information and communication technology in order to ease the process of transferring money (Zopounidis 4). Students would not be interested in transacting in a bank that takes very long before transferring money. The interaction that is created by the employees of a bank with the students is very vital in making sure that customers feel being recognized (Ramesh 274). From a study that was conducted the banking behaviors of British students, as reported by Mokhlis, Mat, and Salleh (273), a sample of 716 first year students was selected in 11 colleges and universities in Manchester. The findings of the study indicated that approximately 92% of the studies first year students indicated that they would continue with their banks up to fourth year. This shows that these students are satisfied with their banks as a result of the services provided in those banks. From this study, it was indicated that convenience and proximity of an ATM to college students was considered by many students as the sole reason that makes them remain in that bank for long period of time. The concepts of free banking services and the overall that were employed by the banks were reported as the selection criteria used by students in selecting which bank to patronize (Barbara et al 6 & Mokhlis et al 273). It has been reported by many researchers that the convenience is the primary reason that students give as to why they choose their banks. In this respect, a bank that has a lot of ATMs within the reach of college and university students is in a position to attract as many customers as possible. The criteria that are used by university students in selecting a bank are very essential in explaining what levels of services are offered by a particular bank (East et al 98). Service quality is clearly defined by Hossain and Leo (340) as the outcome quality and the technical quality. The technical services that are offered by a bank greatly impact the number of customers to select that bank (Ramesh 274). This is because customers who are adequately satisfied by the technical services offered by a bank usually transact in that bank for a long period of time. The current competition in banking systems has resulted in many banks ensuring that they provide their customers with high quality services (Zopounidis 4). The quality of services offered is mainly judged by customers in the process of determining which bank to transact in. It should be noted that a five per cent increase in customer retention in financial institutions is potentially worth a lot of profits. According to a study that was conducted in Taiwanese banking industry, as reported by Hossain and Leo, service quality was revealed as an antecedent of customer satisfaction and hence increases in profitability of a bank (340). According to Mokhlis, Mat, and Salleh, a study that was conducted on Singapore university students in the year 2001, factors relating to use of ATMs and the speed of the services offered in banks were among the most significant criteria that were used in selecting a bank (342). This is an indication that when the speed of services offered by a bank is very high showing that customers do not wait for long periods of time waiting to be served, more and more customers will transact with that bank (Mokhlis et al 258). A more competitive bank for university students has to focus mainly on providing high quality services to the students in order to attract as many customers as possible. University students in most institutions of higher education globally emphasizes on the pricing and product dimension of the services offered in banks (Blythe 34). It has been found that university students usually select a bank to transact in where they are very secure, where there are plenty of electronic services offered, and where high quality services are offered. In this respect, security is a very imperative aspect especially when it comes to dealing with money and should therefore be critically considered (Hossain & Leo 342). Additionally, in the modern era of advanced technology students need to transact in a bank where all transactions are electronically made and there is presence of ATMs. The aspect of service provision like provision of advices on how to use money and other services are usually of great consideration especially when selecting a bank (Zopounidis 4). Conclusion In summary, the service industry especially banks and other financial institutions have experienced very stiff competition. Additionally, university and college students have provided a very wide and good market for banking services and hence they should be adequately targeted (Barbara et al 6). The aspect of providing high quality services has been considered by many researchers as the sole criteria of selecting a bank. It should be noted that banks that have as many ATMs as possible and within the students’ reach are potential of attracting as many student customers as possible (Hossain & Leo 442). Provision of high quality customer services in banks is considered as a very imperative business strategy that is used in increasing the competitive advantage of a bank. Conducting in-depth interview An in-depth interview was conducted on ten university students that was aimed at examining the students’ perceptions and expectations of their banks. The aspect of gender was well addressed as among the ten students interviewed five of them were females. In this respect, the perceptions and expectations of students would determine their retention levels of their present banks (Mokhlis et al 262). In this interview, the respondents were asked to indicate their main banks where the term main bank represented the bank at which a student made most of his or her transactions. The main bank was used in indicating that the students were satisfied with the services that where offered there and they would continue using that bank (East et al 98). Objectives The main objectives of this study were; i) To establish the main criteria that students used when selecting a bank to transact with ii) To discover some of the factors that influenced the students in selecting a particular bank to transact with. iii) To explore how university students perceived and what were their expectations from their main banks. iv) To discover why students use their main banks and not other banks. v) To discover the length of time the students interviewed have transacted with the main bank in order to determine what has been motivating them. Research questions In order to get clear, relevant, and accurate information concerning students’ perceptions and expectations of their banks, the following research questions were asked; a) What are the main criteria which are used by university students in selecting the appropriate bank to transact with? b) What are some of the factors that influence students in selecting their main banks? c) How do students perceive their main banks? d) What are the students’ expectations from their main banks? e) How long have students used their main banks? f) What has been motivating them to use these banks? Findings From the information that was collected in the study it was found that most students in universities use commercial banks in transacting. The reason as to why a student would require a bank is to negotiate their educational loans, their parental or relative contributions, or their personal finances (Blythe 34). University students are potential markets in this respect as they have a probability of earning beyond average once they complete their studies (Mokhlis et al 262). The most important aspect here is to determine the selection criteria that students use when selecting a bank to patronize in. The findings of the interview indicated that service quality is one of the factors that influence students to transact in a particular bank (Zopounidis 6). In this respect, the way students are handled in a bank makes them feel secure and happy and hence they admire continuing transacting with that bank. According to Hoffman and Bateson, in the current market competition services industry are trying as much as possible to ensure that they increase their competitive advantage by improving the quality of services they offer (323). Banks are not exceptional and hence they attract as many customers as possible through the quality of services they offer. The proximity of ATMs was reported as the second factor that influences the decision of students to transact in a particular bank. In this respect, most of the main banks that were indicated by students had a lot of ATMs in the area and hence it was very easy for students to transact. The current world is going global and hence banks should take this opportunity and use the current advanced technology in order to expand their markets (Ramesh 276). The speed of the employees in serving customers was reported as an influencing factor to selecting a bank. This implies that a banks that served its customers as first as possible was attractive and was able to gain a lot of customers. Students remained loyal to a bank that satisfied them and they indicated that they would continue with the same bank even after completing their education from the university. This shows that they were very much satisfied with the quality of the services that were offered in their main banks (Barbara et al 5). General guidelines followed when designing questionnaire In order to come up with a precise set of questions that would be used in gathering relevant information from the respondents, the objectives of the study were well considered. This was to make sure that the questions asked were not out of the scope and brought the most reliable and relevant information. The second aspect that was considered was the research questions that were used in the study. In this case, the research questions enabled the researcher to formulate relevant questions that probed the respondents and retrieved the relevant information. This shows that the questions that were used in the questionnaire were clearly reflecting the research objectives and research questions. Since this study concentrated mostly with first year students, students’ year of study was asked in order to make sure that only the required target group was studied. The main purpose of this study was to examine the service quality of a particular bank that a particular student patronized. The criteria that were used by students in selecting a bank were well indicated in the questionnaire. The Liket Scale was used where students were required to indicate state whether their main banks provide high quality services. The scales and measurements which were used in designing these questionnaires were most appropriate and were learned during the marketing research course. Once the questionnaires were complete, they were tested with a similar population in order to establish their effectiveness. The research was supposed to be conducted on university students in their hall of residence and hence drop- off mail survey was used. Ethical considerations When conducting this study some ethical considerations were put into account for the qualitative research. In this respect, the financial status or the amount of money a student had in the bank account were not studied as this was seemed as probing personal aspects of a student. Additionally, the source of the finances was not of any importance in this study as the most important thing was the service quality of the main banks. The information that was provided by students was held very confidential and was not revealed to any unauthorized person. The questions that were asked were very accurate as the researcher tried as much as possible to avoid asking personal questions that would hurt the respondents. Conclusion From this study it can be indicated that the perceptions, expectations, and consumer behaviors of university students are very different according to the quality of service provided. In this respect, the highest customers’ perceptions were demonstrated in the factors like the speed of employees, proximity of ATMS, and the quality of services offered in a bank. Because of the wide variance in the responses that students provided, it is the responsibility of banks to consider their weak areas especially in matters relating to providing high quality services in order to adequately meet the requirements of their customers. According to Hossain and Leo, customers are more satisfied when they are provided with high quality services (341). Students’ market is becoming very potential especially for banking institutions and hence banks should increase their competitive advantage by providing their customers with high quality services. This would attract as much customers as possible as indicated in this study that most customers are attracted to a bank by the quality of services provided. Works cited Barbara, Lewis, Jayne, Orledge, and Vincent-Wayne, Mitchell. "Service Quality: Students' Assessment of Banks and Building Societies". International Journal of Bank Marketing, 12(4), 1994, 3 – 12 Blythe, Jim. Consumer Behavior. London: Open Press, 2008. Print. East, Robert, Wright, Malcolm, and Vanhuele, Marc. Consumer Behavior: applications in Marketing. New York: Prentice Hall, 2008. Print. Hoffman, Douglas, and Bateson, John. Services Marketing: Concepts, Strategies, and Cases. New Jersey: Sage, 2010. Print. 323 Hossain, Mohammed, and Leo, Shirley. “Customer Perception on Service Quality in Retail Banking in Middle East: The Case of Qatar”. International Journal of Islamic and Middle Eastern Finance and Management, 2(4), 2009, 338-350 Mokhlis, Safiek, Mat, Hazimah, and Salleh, Hayatul. “Commercial Bank Selection: The Case of Undergraduate Students in Malaysia”. International Review of Business Research Papers, 4(5), 2008, 258-270 Ramesh, Kumar. Conceptual Issues in Consumer Behavior: The Indian Context. Sudbury: Wiley, 2008. Print. Zopounidis, Constantin. New Trends in Banking Management. Victoria: Routledge, 2002. Print. Appendix Questionnaire Name ……………………………………………………………….. Location……………………………………………………………. Please tick (v) where appropriate (Data collected through this questionnaire are confidential and are only for the statistical purposes) Your information will not be given to a third party or be used in other purposes beside this research.) 1. Are you male or female? Male  Female  2. What’s your age group? 25-30  30-35  35-40  40-45  50 +  3. What’s your year of study? ...................................................................................................................... 4. What is your main bank? 5. Do you like that bank? Yes  No  Don’t Know  Not Really  If So Why? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… 6. What are the main criteria you used when selecting that bank. List four i) ………………………………………………………………….................... ii) ……………………………………………………………………………… iii) ………………………………………………………………………………. iv) ……………………………………………………………………………… 7. Do you think you main bank benefits you as a university student? Yes  No  Don’t know  Not really  If so how? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… 8. What are your perceptions concerning your main bank 9. Do you expect anything from your main bank? Yes  No  Don’t know  Not really  If so what? ………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. 10. Your main bank provides high quality service  Strongly disagree  disagree  neutral  agree  strongly agree 11. For how long have you transacted with your main bank? 12. Would you like to continue with that bank after graduating? Yes  No  13. What has been motivating you to use your main bank i) Service quality ii) ATMs proximity iii) Speed iv) Good interaction with the employees v) Parental influences Please explain your answer ................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 14. Would you recommend other students to join your main bank? Yes  No  15 How frequent do you visit your main bank? Read More