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3.2.2.1. The significance of service quality

Every service organisation is built around a core service, the very reason for its existence (Berry and Parasuraman, 1991). In addition, service firms typically offer peripheral services to complement the core service. In many cases, the core service often is virtually

identical across different firms in the same category and, therefore, consumers’ choice of service providers is largely influenced by the peripheral services made available to them (Kandampully and Duddy, 1999). Consumers thus evaluate service quality based on the degree to which the service package, comprised of core and peripheral elements, meet their expectations (Grönroos et al., 2000). Although service providers usually do not earn extra customer recognition and loyalty for meeting their expectations (Berry, 1995b), those failing to do so are more likely to lose out even in the absence of competitors.

Companies with poor service quality may succeed, through advertising and other enticements, in luring customers into disappointing experiences and learning to avoid such businesses in future (Berry and Parasuraman, 1991). Superior service quality is also considered to be an important contributor to enduring superior market performance to the extent that it is more difficult for the competition to emulate, compared to other components of value such as product quality and price (Parasuraman and Grewal, 2000).

Findings from prior research (for example, Cronin et al., 2000; Sureshchandar et al., 2002) indicate a significant correlation existing between service quality and customer satisfaction. Sivadas and Baker-Prewitt (2000) confirm that service quality has a direct impact on customer satisfaction with retailers. In service research, customer satisfaction with service quality is believed to have a major effect on their behavioural intentions (Caruana, 2002; Cronin et al., 2000; Zeithaml et al., 1996). Bolton et al. (2000) observe that consumers typically make repurchase decisions based on their past satisfaction with a firm’s products or services. In online retailing, customer service ratings have been shown to be highly correlated with online shoppers’ likelihood of repurchase from a Web site (Reibstein, 2002). Zeithaml et al. (2002) assert that electronic service quality is a critical determinant of repurchase behaviour in the Web-based market. Moreover, Sivadas and Baker-Prewitt (2000) found that service quality influences likelihood of recommendation

Indeed, customer satisfaction with service quality has traditionally been considered an important antecedent of customer loyalty (Storbacka et al., 1994). A study by Olsen (2002) suggests that service quality directly influences customer satisfaction and indirectly influences repurchase intentions through satisfaction. In other words, satisfaction plays a mediating role in the relationship between service quality and repurchase behaviour.

Therefore, customer satisfaction, being a pre-requisite of repurchase intention, can be used to predict repurchase loyalty while service quality can be used to predict both satisfaction and, to a lesser extent, repurchase loyalty (Olsen, 2002). Caruana (2002) concludes that service quality indirectly contributes to customer loyalty through satisfaction.

As the focus of Web-based business competition shifts from online transactions to online customer service, service quality increasingly becomes a differentiator and is essential to business success (Zeithaml et al., 2002). Reichheld and Schefter (2000) maintain that Internet-based service firms can only build customer loyalty by consistently delivering superior customer service, and not solely through the use of technology. Similarly, Walker and Francis (2002) emphasise the importance of electronic service quality and reliability to the establishment of long-term customer relationships and loyalty.

3.2.2.2. Attributes of service quality

Within a Web-based context, there has not been a universally accepted definition of service quality. It is, however, generally accepted that online service quality is multi-dimensional and includes both pre- and post- Web site service aspects (Zeithaml et al., 2002). Thus, electronic service is not simply about access to goods and order fulfilment, but also comprises of other elements such as experience, sense of control, two-way interactive communication and personalization (Rust and Lemon, 2001). While some attributes of human-based service quality have been found to remain relevant in a technology-based service context, research studies have identified a number of other attributes that are specifically related to online service quality.

For example, it has been shown that, in the traditional marketplace, service quality is judged by the levels of responsiveness, empathy, assurance and reliability of a service provider (Berry, 1995b; Berry and Parasuraman, 1991). Within an online context, however, Internet users often have different motivations when using different Web sites for different purposes (e.g., searching for news and entertainment versus shopping) (Wolfinbarger and Gilly, 2003), thus are likely to use different sets of evaluative criteria.

In online retailing, the extent to which a retailer can satisfy its customers’ shopping needs is an important aspect of service quality. In this regard, retailers that can offer consumers a one-stop shopping alternative are more likely to succeed (Seiders et al., 2000). Thus, the breadth and depth of selection that a retailer offers to its customers can potentially form a powerful competitive force in the retailing market (Berry, 1996).

Moreover, as competition escalates and more comparable products and services are introduced into the marketplace, consumers increasingly need to compare different offers on relevant attributes instead of evaluating a product or service in isolation (Cronin et al.,

is to help customers evaluate alternatives and make informed decisions, thus enhancing their satisfaction with the shopping experience and with the retailer itself.

By nature, e-retailers are service firms that provide online shoppers with information on products or services that are available and can be purchased through their Web sites. Also, online purchase is a process that involves an online exchange of information. Thus, it can be argued that a core element of Web-based retailing service is information-based. Hence, the quality and quantity of information featured on a retailing Web site can have a significant effect on the level of interest that the site can generate from online shoppers (Donthu and Garcia, 1999).

Many authors (Park and Kim, 2003; Szymanski and Hise, 2000) argue that the success of an online retailer is largely dependent on its ability to tailor information to meet the needs of individual customers (or to enable individual customers to obtain information that suit their needs), and to allow the customers to predict their satisfaction with subsequent purchases, thus being able to make informed purchase decisions. A Web site that acts purely as a self-service catalogue, offering promotions in pursuit of hard sales is unlikely to gain customer confidence and is likely to end up with fewer purchases, lower retention rates and sparse profits (Urban et al., 2000).

Within a Web-based service context, superior information service quality, which is a major component of overall service quality, has been identified as a valuable benefit that online shoppers appreciate (Donthu and Garcia, 1999; Novak et al., 2000; Zeithaml et al., 2002). In this respect, information service quality is an important factor that can potentially affect shoppers’ purchase behaviour and loyalty toward an online retailer (Park and Kim, 2003).

Another important component of service quality is responsiveness. Responsiveness has been identified as a critical element of service quality in the offline context (Berry, 1995b;

Berry and Parasuraman, 1991). In a technology-based service setting, consumer perception of an online service provider’s responsiveness to their requests and complaints can influence their perception of the firm’s reliability (Walker and Francis, 2002; Zeithaml et al., 2002), which is another important dimension of service quality (Parasuraman et al., 1991). In Web-based retailing, responsiveness has been found to be most frequently mentioned by online shoppers as an important contributor to their perception of service quality (Yang et al., 2003).

According to Parasuraman et al. (1991), responsiveness is concerned with a service provider’s willingness and readiness to provide prompt customer service and to respond to customer requests. Given that the Internet is a means of instant communication, customers who choose to communicate through the Internet are unwilling to tolerate delays and demand not only prompt but also proactive information service (Richter, 1999). Moreover, customers who choose to communicate through a particular medium are likely to expect the firm to respond in that same medium (Burress, 2000). Since online consumers usually communicate with their retailers by email, a quick and responsive email service is often considered an important indicator of quality service (Yang et al., 2003).

As mentioned earlier, service reliability is also a major dimension of service quality.

Kandampully (1998) suggests that delivering quality service is tantamount to consistently meeting customer expectations, the basic tenet of reliability. Given that reliability is a measure of customer perception of the extent to which a firm can be counted on to deliver its promises, a high level of reliability is likely to mitigate customer perception of risk in dealing with the firm (Vijayasarathy and Jones, 2000).

Within a Web-based environment, the reliability of a retailer is reflected through both the technical reliability of its Web site, and the reliability of the firm’s order fulfilment

both the accurate depiction of a product on the Web site and the delivery of the right product within the promised timeframe. However, in this study, since service quality and Web site quality are considered as two independent constructs (see section 3.2.4 for a detailed discussion), the reliability dimension of service quality (as opposed to the reliability dimension of Website quality) only refers to the non-Web attributes, among which order fulfilment is of particular importance. This is consistent with many previous studies (Seiders et al., 2000; Vijayasarathy and Jones, 2000; Zeithaml et al., 2002) which indicate that poor order fulfilment (ranging from failure to deliver goods on time to not delivering at all) not only affects customer perception of online retailers’ reliability and service quality but, also, offsets their perception of convenience – the primary selling point of Internet shopping.

Lastly, offline customer support is also a potentially important contributor to customer perception of service quality, although such support may not be required by all online shoppers. As online purchase behaviour tends to be goal-oriented, consumer evaluations of electronic service quality is likely to be more cognitive than emotional (Zeithaml et al., 2002). Consequently, the interpersonal elements of service quality (such as courtesy, reassurance and sympathy) become less important in an online environment, with the exception of service recovery or other instances where special customer assistance is needed (Walker et al., 2002; Zeithaml et al., 2002). For example, Meuter et al. (2000) found that 83% of self-service technology users complain about service failures to their firms either in person of by telephone. Hence, while the availability of human customer support service may not have a significant effect on online customer satisfaction, it is regarded as a value-adding benefit that can positively influence customer value perception as well as risk perception (Walker and Francis, 2002). In many cases, consumers may require customer service before committing to an online purchase (Wolfinbarger and

Gilly, 2003). Therefore, online shoppers’ perception of access to human customer support is likely to have an important role in their perception of overall service quality.