CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Queuing has been in existence for many centuries. Queuing is very important to humans in all aspects of life since it is used to create order and serenity in the facility centers and to also provide fair service to members. Members wait for service in a wide variety of settings, including manufacturing and service businesses, profit and not-for-profit organizations, and private and public agencies.

Queue Management has received increased consideration in the last couple of decades, partly due to the fact that speed of service has been shown to provide a firm with a competitive edge in the market place (Stalk, 1988). This is largely due to the intense competition that is related to the emergence of a single global economic village and the increased relevance of Time to consumers. As the standard of living in a country increase, the value of member’s time also increases, and consequently they seek out those goods and services which will minimize the expenditure of their time (heineke, 1994)

Johnson, (2004) discuss that queue management as characterized by the way in which members (i.e. processes) join a queue in order to wait for service, and by the way in which members already in the queue are selected for servicing. Queuing theory is the study of waiting lines which is a common feature in organizations providing services where members arrive randomly to receive service at a service point. The management of queues has received increased attention recently, owing in part to the fact that speed of service has been shown to provide a firm with a competitive advantage in the marketplace. This emphasis on speed of delivery can be attributed both to the increasingly intense competition that is associated with the emergence of a single global economy and the increased criticality of time to members, especially in highly developed countries with high standard of living. As the standard of living in these countries increases, the value of members time also increases, and consequently they seek out those goods and services which will minimize the expenditure of their time Oliver (1999) defines loyalty as “a deeply held commitment to rebuild and re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behaviors. “Member’s loyalty is viewed as the strength of the relationship between an individual’s relative attitude and re-patronage. Although member loyalty is a crucial part of a business, loyalty alone cannot take a business to a top level. Member loyalty produces a positive financial result, especially in regular purchases. Today’s unforgiving market where creating and maintaining member’s loyalty is more complex than it used to be in the past years. This is because of technological breakthrough and widespread of the internet uses. Loyalty building requires the company to focus the value of its product and services and to show that it is interested to fulfill the desire or build the relationship with members (Griffin 2002.). Thomas and Tobe (2013) emphasize that “loyalty is more profitable.” The expenses to gain a new member is much more than retaining existing one’s. Loyal members will encourage others to buy from you and think more than twice before changing their mind to buy other services. Member loyalty is not gained by an accident, they are constructed through the sourcing and design decisions. Designing for member loyalty requires member-centered approaches that recognize the want and interest of service receiver. Member loyalty is built over time across multiple transactions. A relationship with a member is equally important in member loyalty and this requires that company work in a broader context that extends beyond itself, as no company can be world class at everything (McDonlad & Keen 2013). Gremler and Brown (1999) divided member loyalty into three different categories that include behavior loyalty, intentional loyalty, and emotional loyalty. Behavior loyalty is repeating purchasing behavior while intentional loyalty is the possible buying intention. Emotional loyalty, however, is achieved when a member feels that a brand corresponds with their value, ideas, and passion.

Member’s satisfaction has come to be regarded as a key business strategy of every business and a yardstick against which many banks have set their standards. Sustaining existing members for organizations is over more important than the ability to capture new ones because members are vital for any organization’s success (Anubav, 2010). According to Christopher, (Dallalyne, 1997), organizational survival depends upon their ability to move closer to their members and fully understanding their member’s needs and wants. The importance of members to the business process cannot be over emphasized. This is the reason why companies continuously seek to know more about their members and what satisfy them. It is an undisputable fact that the success of all businesses lies in the hands of the customers. This However seeks to fine out the interaction between members and micro finance institutions and how this micro finance institutions meets or exceeds expectations in its attempt to make their members loyal.

Member loyalty is another important factor in members’ satisfaction. The impact of the satisfaction in loyalty has been the most popular subject in study of the marketing theory. Therefore, several studies have proved that satisfaction and loyalty have the direct connection between one another. As satisfied members are loyal and dissatisfied members are a vendor (Heskett, 2011). Finding the loyal members is not accessible even the members seem to be satisfied with the products and the services. In fact, the behavior and attitude of the members towards the particular goods and services matters the most. If the behavior of the members is positive to the service holder, then those members are said as a loyal member (Abdullah, 2012). There are two types of member loyalty based on behavioral and emotional loyalty on the goods and services. Behavioral loyalty refers to frequent shopping in a particular retailer and emotional loyalty refers to the member’s concern towards certain retailer on the basis of past buying experience and attitude. In this both behavioral and emotional loyalty model, increased satisfaction should increase member loyalty. When members are not satisfied, members have the option to express the complaints by going to the competitor. But, the study has shown that 60-80% of the members are satisfied and very satisfied on the survey just prior to the defection.

 Therefore, there should also be other factors besides satisfaction that have a certain impact on member loyalty (Reichheld & Schefter 2000.) At the time of 1980 product durability and service quality used to be evaluated by member loyalty. But, there has been dramatic changing in the late 1980 and in 1990, when the needs and wants of the members were identified by the retailers in the market. Nowadays, in this modern era, the companies have changed this concept towards the initial target consumers by manufacturing ordinary product benefits in order to persuade members’ satisfaction and loyalty (Abdullah 2012.) Service quality, product quality, price strategy, store attributes are the four major variables that influence member’s loyalty. Service is one of the most complex factors which do not exist before they are consumed. In order, to develop the service management it is important to understand what members are really looking for and what the members evaluate. Members expect the quality of service through retailers, so, the service marketers have to assess how members perceive the quality of the “services feature” implied by the perceived service quality framework.

Service quality refers to the result of the comparison that the members makes their expectation about the service and their perception of the way the service has been performed (Grönroos, C. 2007). Originally, there was no any model for the quality measurement based on a service quality. Normally, members satisfaction studies are conducted to figure out how satisfied members are with a certain service.

Later on,Leonard Berry and his colleagues developed the SERVQUAL instrument which is important for measuring the members’ service quality. The relationship between members satisfaction, members loyalty and service quality are studied based on the complaints from the dissatisfied members. (Ziethaml & Bitner 2003)Hence, consumer complaints are overviewed through members’ expectations, perceptions on the service of goods. The perceived value of the consumers is liable on the expectations and outcomes of the evaluation process of the members. Further, service quality has a significant relationship with the members’ satisfaction which directly affects the members’ loyalty.

Therefore, the retailer should focus on these factor to increase customer relationship with satisfaction and loyalty in this competitive retail market globally. Product quality is also another core factor of the member’s satisfaction and loyalty. Product quality is a collection of features and sharp brand product characteristics which have a contribution to the ability to fulfill specified demand. Product qualities also have different dimensions such as features, performance, reliability, durability, serviceability and customer perceived quality. Out of all these dimensions, mainly five elements, product durability, product variety, product freshness, product attractiveness and product equity have been used to measure the satisfaction and loyalty of the members. Variety of products helps the retailers understand the buying behavior of the members because the perceptions of the quality product vary from one another. Because of product variety, the firms will get an opportunity to pay attention towards the member and also increase the greatest product variety. This will increase the growth and volume of the product as well as the members’ satisfaction and loyalty to a great extent. Hence, the firms had begun to develop the satisfaction and loyalty of the members by offering quality goods and services

Nowadays, the microfinance industry has been experiencing substantial changes in their operations. The sector has become more competitive due to the upsurge of other institutions and the rising need of members. These conditions require micro finance establishments to provide good quality services and it’s expected to perform well in serving the various needs of the members which are changing daily by offering to them quick, appropriate, and comfortable services. For this to be achievable, a micro finance institution relies on the inputs of the employees who are often referred to as the lifeblood of every institution. So, for the business operations to be conducted efficiently, it is imperative for the employees to perform at their very best to attain the institution’s goals.

In most of the world‟s economies, micro finance institutions are regarded as vectors for job and wealth creation (World Bank, 2014). Through their investments and consumption, they create value and produce a plethora of goods and services, thereby playing a significant role in funding public services and creating a dynamic local economy (Bitange, 2015)S. In short, they are a unique asset for development, serving as both a motor for growth and a tool for redistribution of wealth (ESF, 2009, p. 1). Microfinance has been termed as the banks of the poor. When looking at the global development of this financial systems, because for 10 years, the world’s largest aid agencies have worked together under the banner of the Consultative Group to Assist the Poor (CGAP), committing people, money, and countless hours to building more inclusive financial systems that work for the poor. Before, small heavily subsidized microcredit schemes used to be the norm, hundreds of profitable microfinance providers of all institutional shapes and forms are now offering a wide range of financial services—money transfers, deposit services, and insurance to ever-larger numbers of poor people in their communities. In a sure sign that microfinance is going mainstream, domestic and international commercial banks are now entering the fray, motivated by the excellent performance of poor clients and the promise of new information and delivery technologies to reduce cost and risk. Worldwide, “best practice” microfinance is becoming standard practice. Almost 600 microfinance institutions now report to the Microfinance Information exchange (MIX), the CGAP-created portal that has become “the Bloomberg of microfinance” to give a no-nonsense picture of transparency, sustainability, and growth in the microfinance sector (World Bank, 2020).

In Sub-Saharan Africa (SSA), the SME sector accounts for more than 90% of all firms. Between 70% and 80% of SMEs are micro-finance institutions. They are the main source of jobs, financing and income for Africans, after subsistence farming (Josee et al., 2016). If the African countries wish to speed up their economic development, they would certainly gain from supporting the emergence and growth of micro finance establishments. Some have understood this, and have set up dedicated small business agencies and ministries. In addition, growing numbers of researchers are suggesting that political decision-makers who wish to strengthen the private sector should focus on the legislation, regulations and institutional mechanisms that condition or shape economic life (World Bank, 2019).

In Africa, incomes in poor households are typically not only low, but also irregular. Poor people need to be able to smooth consumption flows or finance larger expenditures, but they generally lack access to banks and other formal facilities. Traditional financial institutions generally shy away from this market, either because they are unaware of it or because they deem it unprofitable. Yet providing a whole range of financial services to the poor including credit for small and micro-enterprises, savings facilities, insurance, pensions, and payment and transfer facilities is clearly desirable and can contribute to the achievement of the Millennium Development Goals. When properly harnessed, microfinance offers a variety of benefits to the African people. Foremost, microfinance initiatives can effectively address material poverty, the physical deprivation of goods, services, and the income to attain them. When properly guided, the material benefits of micro financing can extend beyond the household into the community. At the personal level, microfinance can effectively address issues associated with “non-material poverty, which includes social and psychological effects that prevent people from realizing their potential (World Bank, 2019).

For many years in Cameroon, the microfinance sector has evolved and has been transformed into a system of provision of short term loans, savings, credits, money transfers, etc thanks to various financial sector policies and programs undertaken by the government since independence. MFIs now are the primary sources of funds to small and medium size enterprises in Cameroon and other countries in the process of economic growth (GICAM, 2019)

1.2. Statement of the problem

In many organizations, queues are thriving in their day-to-day operations due to money and time constraints hence making most members wait for a service. In micro finances the exist problems of long queues for hours causing loss of precious time, limits productivity and makes patronage more tiresome. In view of the vital role that Micro finances play in the economy of the country a slight decline in performance may largely have an adverse effect on the country economy. Micro finance face complains from members about the time spent in queues before they are attended to causing delays and congestion.

The demand is higher than the suppliers of services in micro finances as they are established to bring services closer to their members. According to (Leoven, 2015), in the current competitive business environment, there is a realization that members do not only demand for quality but demand speed in service delivery. This research therefore seeks to fine out the problem faced and the issues of managing members’ expectations and perceptions of the queuing experience in a micro finance as this has been a call for concern in the day to day activities of many financial institutions in Bamenda. Despite this Cameroonian enterprise face this problems

Commercial banks have begun targeting traditional MFI members, new MFIs have continued to be created in the industry, and Microfinance clientele is becoming more sophisticated concerning-the quality of service they require or expect Daubert (2002). These factors may negatively affects MFIs, in fact, the Microfinance industry is losing members because of both the aggressive competition and weakness to satisfy clients. In this perspective, MFIs must focus members’ satisfaction, studying and determining member loyalty levels and adjust product features to suite member’s needs. In light of the above scenario, the prevailing-problem which this study investigated was the lack of tracking members loyalty levels to Microfinance services leading to an increase of registration of clients to more than one MFI and questionable exits.

Perceived waiting Time is the duration that the member feels he has been waiting for the service. According to (Khalaf, 2012) perceived waiting time depends on many factors such as whether the member is occupied or not, waiting stage, whether the member is anxious or not, whether the wait is certain or not, whether reason for the wait is explained or not, whether the member is alone or not and finally the value of the service. Pruyn and Smidts (1993) and Smidts and Pruyn (1994) have named this duration as subjective waiting time as against the objective waiting duration which is the actual waiting duration the member has been waiting. This is another problem

Waiting environment, the attractiveness of the waiting environment is related to its physical design in terms of comfort, space and decor. Service environment influences the affective aspects of waiting time (Baker and Cameron, 1996). A pleasant environment promotes positive feelings within consumers. Pruyn and Smidts (1998) show that perceived attractiveness positive Influences the affective response to the wait, a known component of loyalty. But must micro finances waiting environment is not the best hence a problem to most of their members

Queue discipline is another variable for waiting lines management that influences member loyalty. The queue discipline is the method by which members are selected from the queue for processing by the service mechanisms. The queue discipline is normally first-come-first-served (FCFS), where the members are processed in the order in which they arrived in the queue, such that the head of the queue is always processed (Andrew, 1999). Key determinant in loyalty with the experience of waiting is the degree of social justice, whereby if the principle of FCFS is violated members become dissatisfied and disloyal (Larson 1987). Most of these micro finances in Bamenda don’t respect the method of queue discipline (first come first serve).

However, literature on the role of queue management and member loyalty is still lacking in the Cameroonian context, there is still a limited knowledge on queue management driven members loyalty on the Cameroonian context. This study therefore seeks to assess in Cameroonian micro finance context the effects of queue management on member loyalty in micro finances establishment in Cameroon

1.3 Research Questions

The main research question to be address on this study resulting from the problem statement is as follows:

1.3.1 Main Research Question

What is the effect of queue management on member loyalty in micro finance institutions in Bamenda?

1.3.2 Specific Research Question

The following specific questions can be further derived:

• What is the effect of perceived waiting time on member loyalty in micro finance institutions in Bamenda?
• What is the effect of waiting environment on member loyalty in micro finance institutions in Bamenda?
• What is the effect of queue discipline on member loyalty in micro finance institutions in Bamenda?

1.4 Objective of the Study

1.4.1 Main Objective of the Study

The main objective of the study is to examine the extent to which queue management affects member loyalty in micro finance institutions in Bamenda.

1.4.2 Specific Objective

Specifically, this study seeks to;

• To determine the extent to which perceived waiting time affects member loyalty in micro finance institutions in Bamenda
• To analyze the extent to which waiting environment affects member loyalty in micro finance institutions in Bamenda
• To assess the extent to which queue discipline affects member loyalty in micro finance institutions in Bamenda