After Sales Service Quality in Mobile Industry

In the past mobile phone is a very expensive product and which is not so popular. As adoption of the GSM standard grew, mobile phones go into a next generation, mobile phone users’ boom. In 2000 century, new generation mobile phones design and innovation not only focus on communication function; it also includes entertainment and personal assistance character. It is popular and widely use for a variety of purposes, for example keeping in touch with friend, family or business partner. Some of people may have more than 1 cell phone, such as one for business and the other for personal use. In the world market globalization, people do have more choice than the past. There are number of mobile phone manufactures producer and new model issues in the market every month. Mobile device designed with complex function and service feature built from several hardware and software components. Users need more help and technologic support after sales. “Understanding what buyers value within a given offering, creating value for them, and then managing it over time have long been recognized as essential elements of every market-oriented firm’s core business strategy” (Desarbo, 2011) A good customer service strategy is a way to enhance customer loyalty and retention, it also a role in gain new customer in the market.

SE is one of the top worldwide leading mobile phone manufacturer established in 2001, which joint venture between 2 different companies by telecommunications Leader Ericsson and consumer electronics powerhouse Sony Corporation in order to get favorable product mix. The company is owned equally by two companies. The first joint products announced in March 2002.

One of the SE key competitor NK, they move to the mobile industry on 1968 – 1991. In 1992, they decided to focus on its telecommunications business and launches first GSM phone to the market. NK makes the sector its core business on mobile phone market as mobile phone use booms.

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In this report, we are going to find out the customer satisfaction on their after-sales service quality. It is also important to understand how to retain customer loyalty. As stated by Piercy (2002), customer satisfaction is what people think of mobile product. It is an attitude. Customer loyalty is how long we keep a customer. It is a behavior. Consumers typically rely on experience when evaluating service quality. Hence, comparison of after-sales service between customer perception and expectation has been done to find out the possible results.

Literature Review

In the study of Christopher (2005) competitive advantage is the different between company and competitor cost and the value of the customer. A company success or failure will be determined by customer value that it delivers. There may be little different between competitive products made by 2 different manufactory, but may be better in term of customer support or service provide. Service is use on augment customer satisfaction and the source to added value on the products. Generally a successful company delivers more customer value then their competitors. “A prime objective of any customer service strategy should be to enhance customer retention. Whilst customer service obviously also plays a role in winning new customers it is perhaps the most potent weapon in the marketing armory for the keeping of customers. …The idea is that we should seek to create such a level of satisfaction with customers that they do not feel it necessary even to consider alternative offers or suppliers.” (Christopher, 2005, p55)

Generally products are tangible and services are intangible. “Three well documented characteristics of services – intangibility, heterogeneity and inseparability – must be acknowledged for a full understanding of service quality. When purchasing goods, the consumer employs many tangible cues to judge quality: style, hardness, color, label, feel, package, fit. When purchasing services fewer tangible cues exist. In most cases, tangible evidence is limited to the service provider’s physical facilities, equipment, and personnel.” (Parasuraman, 1985).

In the study of customer service practices LaLonde and Zinszer (1976) suggested that customer service could be examined under 3 elements.

Pre-transaction elements: relate to corporate policies or programs.

Transaction elements: involved in performing the physical product distribution functions

Post-transaction elements: generally supportive of the product while in use.

Parasuraman et al (1985, 1988, 1991) developed service quality model from the extensive research, carried out the research on service quality. In developed service quality model, it derived from the magnitude and direction of five “gaps” (see Figure 1):

Understanding

Service standards

Service performance

Communications

Service quality

Service quality is the different comparison of expectations with performance. “Insights obtained from the executive interviews and the focus groups form the basis of a model summarizing the nature and determinants of service quality as perceived by consumers. The foundation of this model is the set of gaps discussed curlier and show in Figure 1. Service quality as perceived by a consumer depends on the size and direction of GAP5 which, in turn, depends on the nature of the gas associated with the design, marketing and delivery of services: It is important to note that the gaps on the marketer side of the equation can be favorable or unfavorable from a service quality perspective. That is, the magnitude and direction of each gap will have an impact on service quality.” (Parasuraman, 1985)

Lehtinen and Lehtinen’s (1982) basic premise service quality is produced in the interaction between a customer and elements in three quality dimensions:

Physical quality: includes the physical aspects of service

Corporate quality: involves the company’s image or profile

Interactive quality: derives from the interaction between contact personnel and customers.

GAP 5: Customer perceptions and expectations of service quality

The service quality model GAP 5 shows the concept of the magnitude, direction and different of customer expectations and customer perceptions of service quality. (See figure 1) Measure the different between consumers’ perceptions and their expectation of service quality. The principal of research and analysis used to provide management how service performance when compared between perceptions and expectations. This study is useful for management in monitoring or developing the service quality. Thus it was important to understand the service quality is meeting or exceeding what customer expect.

One additional gap in service quality model

Apart of GAP 5 proposed by Parasuraman et al. (1985), there is one additional gap that have been identified and that was not included in the original service quality model.

Customer perceptions different of value

Porter (1985) notes that a firm’s competitive advantage come from its ability to create value for its buyers that more than the firm’s creating cost. This idea is similar to Christopher (2005) cost advantage lower the profile but value advantage gives or offering a differential over competitive, basic premise values advantage is the benefits customers got. “These benefits may be intangible, i.e. they relate not to specific product features but rather to such things as image or service.” (Christopher, 2005, p8) Measure the different between consumers’ perceptions of 2 different companies. The principal of research and analysis used to provide management how service performance when compared between 2 companies perceptions level. This study is useful for management in monitoring or developing the service quality. “Cost advantage gives a lower cost profile and the value advantage gives the product of offering a differential ‘plus’ over competitive offerings.” (Christopher, 2005, p7) Thus it was important to understand the “value advantage” on service quality.

Figure 1

Service quality model

Gap 4

Gap 2

Gap 5

Gap 3

Gap 1

MARKETERER

Word of Mouth Communications

Personal Needs

Past Experience

Expected Service

Perceived Service

Service Delivery (including pre-and Post-contacts)

External Communications to Consumers

Translation of Perceptions info Service Quality Specs.

Management Perceptions of Consumer Expectations

Methods

The relevant literature and survey instruments adopted from Ryu 2005 questionnaire items for mobile phones, Woo 1999 study and Christopher 2005 customer service elements provided the basis for developing the questionnaire for this study. Total 11 service quality attributes were developed in the questionnaire to identify and analyze service gap between the perceptions of SE user and NK user.

Physical Function Service:

Fast response time and information display

Easy to operate this product

Easy to read characters on the screen

Sufficient functions and capabilities

Sufficient battery capacity

Supportive Product Service:

Warranty period of the product

Maintenance of product

Web site (Technical support )

Customer service center (Technical support)

Customer service hotline

Sufficient information of documentation and manual

A questionnaire, refer to Appendix A, was used to survey a sample of SE and NK’s mobile users. The questionnaire was divided into four parts.

The first part is to check whether user did use both SE and NK mobile. If yes, this questionnaire can be use and we will go to the second part, it was designed to examine the respondent’s perceptions level regarding to service quality of SE user. The respondents indicated the level of importance of statements with responses that ranged from (1) extremely dissatisfied to (5) extremely satisfied. The third part of the questionnaires was designed to examine the respondents’ perceptions level regarding to service quality of NK user. The respondents indicated the level of importance of statements with responses that ranged from (1) extremely dissatisfied to (5) extremely satisfied. The fourth part of the questionnaire was designed to measure the respondent’s expectation of SE and NK user. The respondents indicated the level of importance of statements with responses that ranged from (1) very unimportant to (5) very important. The fifth part of the questionnaire consisted of demographic and classification questions.

A total 50 questionnaires were usable for further analysis. The others were not used because respondent have not ever used SE and NK mobile phone before.

Findings

The objective of this study was to assess the perceptions of after-sales service quality in SE, from the perspective of its users and its competitor – NK.

The specific objectives of this study were to:

Identify and analyze gaps between current expectations and perceptions held by users with respect to the quality of after-sales services provided by SE;

Compare the current perceptions held by users with respect to the performance of after-sales services provided by SE and NK;

The samples of SE users were retrieved from Hong Kong area. Refer to Appendix B, they contained more females (78 per cent) than males (22 per cent). More than 44 per cent of the respondents had a University (with degree) and above, followed by 26 per cent of Senior Middle School and 14% per cent Non Degree University Program. About 30 per cent of respondents were Junior White Collar, followed by 24% of Senior White Collar and 12 per cent of. The majority of respondents’ age group was 26-35 (56 per cent), followed by 20- 25 (20 per cent) and 36-45 (16 per cent).

To compare the SE users’ actual perception of after-sales service quality with their expectation, using Gap 5 – Service quality, derived from the service quality model in extensive research of Parasuraman et al. (1985, 1988, 1991), to be our focus on the study. It measured the difference between customers’ expectations and their perceptions of service quality delivery. This analysis let management know about the actual experience of their customer whether the after-sales service was met, above or below the service standard in the eyes of their customer, so as to monitor the after-sales service delivery in the mobile industry.

As noted in Appendix C & D, means of all attributes of customer perception and expectation were above 3. It reflected that those attributes were important to test after-sales service quality of mobile industry. A paired t-test, as shown in Appendix D, was used to evaluate the service quality gaps. It showed the results of a path analysis with structural equation modeling. The results indicated that 8 attributes after-sales service of SE was not meet the standard of users’ expectation. The biggest gap between perception and expectation was 5 “Customer service hotline” (-.660, Sig. .000), while perception mean 3.2 lower than expectation mean 3.86. Second gap is 6 “Fast response time and information display” (-.580, Sig. .000), while perceptions mean 3.26 lower than expectation mean 3.84. Third gap was 4 “Customer service center” (-.560, Sig. .000), while perception mean 3.14 lower than expectation mean 3.7. Fourth gap was 3 “Web site” (-.480, Sig. .000), while perceptions mean 3.0 lower than expectation mean 3.48. Fifth gap was 7 ” Easy to operate this product” (-.380, Sig. .012), while perception mean (3.64) lower than expectation mean (4.02). Sixth gap was 10 “Sufficient functions and capabilities” (-.340, Sig. .014), while perceptions mean 3.56 lower than expectation mean 3.90. Seventh gap was 8 “Easy to read characters on the screen” (-.160, Sig. .146), while perceptions mean 3.74 lower than expectation mean 3.90. Eighth gap was 9 “Sufficient information of documentation and manual” (-.140, Sig. .227), while perceptions mean 3.44 lower than expectation mean 3.58. Total 8 attributes expectation level larger than perceptions level, perceived service quality is less than satisfactory which tend to unacceptable service quality. Balance 3 attributes expectation level lowers than perceptions level, perceived service quality is more than satisfactory and will tend to ideal quality.

The attributes 3, 4, 5, 6, 7, 8, 9 and 10 t-values were negative, except 3, 4, 5, 6, 7 and 10 across different factors were greater than the critical value of 1.96 at the .05 significance level. The t-value of 3, 4, 5, 6 and 7 also exceeded the critical value of 2.58 at the .01 significance level. The t-value of 3, 4, 5 and 6 also exceeded the value of 3. The attributes 1, 2 and 11 t-values were positive, except 11 also exceeded the critical value of 1.96 at the .05 significance level. The higher the t-value, the more the significant of attribute it was. Those negative attributes in significance level had serious shortfalls and manager should pay significant attention to make efforts on improvement.

Compared with one of its competitors, NK, the biggest market share in Q3 2009 mobile industry, as noted in Appendix E, we found that means of all attributes of NK were above 3 and higher than that of SE. The highest mean of NK was 8 “Easy to read characters on the screen” (3.92) while SE got lower rating (3.74) in that of customer experience. All attributed of SE perceptions lower than NK perception. The results indicated that most of the SE’s user perceived service quality delivery as being lower than that NK’s user perceived to be. It also indicated that NK had better understanding of their users expect of after-sales service quality.

By using the paired t-test, as shown in Appendix F, the biggest gaps were on attribute 2 “Maintenance of product” (-0.460, Sig. .003), second gap 1 “Warranty period of the product” (-.340, Sig. .014), third gap 3 “Web site – technical support” (-.300, Sig. .046). The attributed 1, 2 and 3 t-values across different factors were greater than the critical value of 1.96 at the .05 significance level and indicated a statistically significant difference. SE manager should be aware of the influence about their service quality as NK great competitive advantage to the market share in strong competition, especially the 3 significant attributes found.

Conclusions & Recommendation

“From a firm’s perspective, customer value analysis is relevant for two important reasons. First, a number of strategy researchers have highlighted the need to account for changing customer perceptions and expectations in devising firm strategy.” (Desarbo, 2001) From a practical research, number of service quality issues is required for improvement in order to let consumers have good experience come through purchased product. Based on the findings from 50 set questionnaire, the large difference arising from customer perceptions to expectations and to competitor’s perceptions of service quality identified the significant improvement measure of after-sales service quality issue. Amidst fierce competition from mobile industry, SE has difficulty to attain new customer from their competitor. Besides, they have a big challenge to satisfy and retain current customer. As always finding a new customer is more difficulty than retaining an existing customer, so after-sales service quality and experience become more and more important. To sustain the user growth and business development, and to increase the market share, it is important for SE to provide value-for-money after-sales services to achieve consistently high service standard.

Warranty period of the product and maintenance of product is one of the service customer needed. Extend the warranty period will increase the cost and price of product. Provide protection plan or package to extend complimentary support, the repair coverage from one year up to three years of world-class support. Customer can base on their need to extend warranty period or not.

People may have difficulties on reading product specification and manual in detail. In order to have better support to their customer, provide online video guide tour is one of the options. Consumer can have a quick look on their purchased product; on the other hand it can be draw potential customer attention to our product. Beside of that, customer service center can provide free lesson on how to use software and product. Through the lesson, we can have better communication and understand what people want and what problem they face. Customer service hotline is one of the methods to build up relationship with customer. If services hot line is not valid for a certain period, customer satisfaction level will decrease. Extend the hotline service after office hour will be more convenience, as people may not available to use hotline service during office hour.

Fast response time and information display, sufficient functions and capabilities request and expectation are basic requirements nowadays, SE should meet or beyond the standard as high as customers expect. Quality of product and experience will affect customer’s consideration to re-buy the product. Obtaining data of users’ expectation is essential on product development, for example, Quality Function Deployment (QFD) can be implemented in the development stage, and this significant investment can get customer satisfaction effectively on technical requirements.

Limitations

There were some limitations in this study that need to be acknowledged. First, the sample size is small and number of questionnaires cannot be use. It may represent a relative sampling error. Second, we do not know the time of the user experience on SE and NK provide service. It may have a great time period gap; findings and performance may be not up to dated.