CHAPTER ONE

INTRODUCTION

1.1 Introduction

This study looks into the effect of service strategy on customer satisfaction in Micro Finance Institutions in the South West Region. The study is organized into five chapters as follows Chapter one commerce with introduction which encapsulated the background of the study, statement of the problem, objective of the study, significant of the study, scope of the study and the structure of the work. Chapter two reviews all the available literature, definition and empirical evidence on the study and captures relevant theories related to service strategy and Customer satisfaction. The purpose is to further elaborate the relevance of the research issue, offer basis for defining relevant research questions and to summarize the existing theories for research issues for later revaluation of research outcome and for designing the content and the structure of the study; an overall view on service Strategy, customer retention and customer satisfaction is presented here. Chapter three focuses on the methodology of the study. Here the target population, sample size and sampling technique, research instrument and data collection procedure were outline with other research technique necessary for the study. Chapter four deals with data presentation which include (biological information of respondents, rank of respondents, academic qualification and length of  Usage ), analyzing the data, interpretation and discussion. Chapter five outlines the summary of findings; conclusion and appropriate recommendations on the basis research findings, limitations and suggestion for further studies and it will be followed closely with references and appendix.

1.2 Background of the Study

Companies which are exclusive in service industries like financial institution should constantly upgrade themselves and should modify their offerings in order to meet the change in demand from the customers. However, there are companies which are both into the offerings of the product as with the service for example companies like Dell and Apple. Both of these companies provide products which are electronics and they also provide after Sales service. In both of them, Apple stands out as the best because of efficient after sales service.

The expectancy/disconfirmation paradigm in process theory (Mohr, 1982) provides the grounding for the vast majority of satisfaction studies and encompasses four constructs: (1) expectations; (2) performance; (3) disconfirmation; and (4) satisfaction. Disconfirmation arises from discrepancies between prior expectations and actual performance. This conceptualization is reflected in the definition of satisfaction by (Tse & Wilton 1988, 2024) as The consumer’s response to the evaluation of the perceived discrepancy between prior expectations (or some norm of performance) and the actual performance of the product as perceived after its consumption. At face value this definition is very similar to that put forward for service quality. However, a number of distinctions are often made between customer satisfaction and service quality. These include that satisfaction is a post- decision customer experience while quality is not (Bolton & Drew, 1991; Boulding et al., 1993; Cronin & Taylor, 1994; Oliver, 1980, 1993; Parasuraman et al., 1988). A further point concerns expectations that are defined differently.

Service quality has been the subject of considerable interest by both practitioners and researchers in recent years, spurred on by the original work of Parasuraman et al. (1985). An important reason for the interest in service quality by practitioners’ results from the belief that this has a beneficial effect on bottom-line performance for the firm. However, practitioners often tend to use the terms service quality and customer satisfaction interchangeably. Among academics the satisfaction construct is recognized as being distinct and has developed along fairly independent lines from service quality (Oliver, 1980). The concepts of service quality, customer satisfaction and service loyalty are related to each other. Theoretically, the expectancy/disconfirmation paradigm in process theory can provide the grounding for this study, with service quality as an antecedent construct and service loyalty as an outcome variable of customer satisfaction. A better understanding of the effects of service quality and customer satisfaction on service loyalty can help academics in the development of a model of service marketing. It can also provide practitioners with indications as to where best to devote marketing attention and scarce corporate resources in the satisfaction and quality literature.

In the satisfaction literature “expectations reflect anticipated performance’’ (Churchill  & Suprenant, 1982,) made by the customer about the levels of performance during a transaction. On the other hand, in the service quality literature, expectations are conceptualised as a normative standard of future wants (Boulding et al., 1993). These normative or ideal standards represent enduring wants and needs that remain unaffected by the full range of marketing and competitive factors. Normative expectations are therefore more stable and can be thought of as representing the service the market oriented provider must constantly strive to offer (Zeithaml et al., 1993). One of the hurdles in looking at antecedents and consequences of customer satisfaction is the absence of a consensus as to what constitutes satisfaction. Without a clear and broadly accepted conceptual and operational definition the development of satisfaction measurement instruments is somewhat arbitrary, and any conclusions about interactions with other constructs are problematic. To identify the conceptual domain of the customer satisfaction construct, Giese and Cote (2000) conduct research that involves a review of the satisfaction literature together with group and personal interviews. They define the customer as the ultimate user of a product. Their research suggests three general components that constitute the customer satisfaction construct. First, customer satisfaction is a summary affective response that varies in intensity. Second, the response pertains to a particular focus, be it a product choice, purchase or consumption. Finally, the response occurs at a particular time that varies by situation, but is generally limited in duration.

Corporate strategies have gradually shifted from goods-dominant (G-D) logic to service- dominant (S-D) logic and from a supplier-oriented perspective to a customer oriented one, thus cementing the central role of service in the economy (Bell 1976; Lee et al. 2007). G-D logic focused on distribution mechanisms for service provision (Vargo and Lusch 2008), while S-D logic emphasizes a unique expression of value for economic exchange between firms and customers (Vargo & Lusch 2004). In addition, S-D logic is one of the most important the ories to explain value co-creation through interactions between firms and customers because value is transferred from firms to customers (Vargo &Lusch 2004, 2008). Recently, an individual’s quality of life is increasingly determined by the availability of services (Xie et al. 2016). A service is described as an economic activity that creates a certain value for a customer or provides benefits to the user (consumer) at a specific place and time through the acts or performance of the provider (Xie et al. 2016; Bor doloi et al. 2018). As S-D logic combines activities between firms and customers as resource integrators (Lusch & Nambisan 2015), a service is a time-perishable intangible experience performed for a customer acting in the role of a co-producer.

Theory of service encounter was first proposed by Shostack (1985) who classified service contact into three types (face-to-face encounter, indirect encounter, and remote encounter) and defined it as a pe riod of time during which a consumer directly contacts and inter acts with a service. Solomon et al. (1985) and Guiry (1992) proposed a service contact structure (customer–technology–provider), which was later generalized by Bitner (1992). Bitner (1990, 1992) defined a service encounter as a personal interaction that influences business performance. In addition, he classified the types of service encounters into two main categories: person–person and person–environment. Froehle and Roth (2004) classified service encounters into five types: technology-free, technology-assisted, technology facilitated, technology-mediated, and technology-generated. Lee (2018a) classified the technology-based forms of contact during the service encoun ter (where the service is performed by the customer alone or with the support of machines or AI) into three types.

A company’s ability to attract and retain new customers is related not only to its product or services, but also to the way it services its existing customers, the value the customers actually perceive as a result of utilizing the solutions, and the reputation it creates within and across the marketplace. Successful customer satisfaction involves more than giving the customer what they expect. Generating loyal advocates of the brand might mean exceeding customer expectations. Creating customer loyalty puts ‘customer value rather than maximizing profits and shareholder value at the center of business strategy’. The key differentiation in a competitive environment is often the delivery of a consistently high standard of customer service. Furthermore, in the emerging world of Customer Success, retention is a major objective. Hence this study seeks to understand the effects of service quality using Reliability responsiveness and empathy as subconstruct to understand customer satisfaction within the telecommunication industry in Buea. 

1.3 Problem Statement

Customer satisfaction within MFIs is critical to maintaining and expanding a loyal customer base. In an industry marked by intense competition and rapidly changing technology, service Strategy significantly influences customer perceptions and loyalty. Despite significant investments in technology and infrastructure, many MFIs struggle to meet customer expectations in key areas of service strategy, such as reliability, responsiveness, and empathy. Even with advancements in technology and customer service initiatives, telecommunication companies face persistent challenges in delivering high-quality service. The gap between customer expectations and the actual service delivered often leads to customer dissatisfaction and a higher likelihood of customers switching to competitors. This issue highlights the need to focus on the specific dimensions of service quality that have the most substantial impact on customer satisfaction.

Customers expect reliable and consistent service from their telecommunication providers. However, issues such as network outages, dropped calls, and inconsistent internet speeds undermine reliability. These disruptions can lead to significant frustration and dissatisfaction among customers, who rely on uninterrupted service for personal and professional activities. Ensuring high levels of reliability is fundamental to meeting customer expectations and enhancing satisfaction. The ability of telecommunication companies to respond promptly and effectively to customer inquiries, issues, and complaints is crucial. Long wait times, delayed responses, and inadequate resolutions can severely impact customer perceptions of service quality. Customers value quick and effective problem-solving as a measure of the company’s commitment to their needs. Improving responsiveness is essential to maintaining customer trust and loyalty. Empathy reflects the degree to which telecommunication companies understand and address the individual needs and concerns of their customers. A lack of personalized attention and a mechanical approach to customer service can make customers feel undervalued and ignored. Demonstrating empathy through attentive and caring interactions is crucial for building customer trust and satisfaction. Empathetic service can differentiate a company in a competitive market.

In other to improve customer satisfaction in the telecommunication industry by improving service strategy  through targeted efforts in reliability, responsiveness, and empathy. The goal is to reduce customer dissatisfaction and increase loyalty by addressing the specific service quality issues that matter most to customers.

1.4 Research Questions

The main research question to this study is, what is the effect of Service Strategy on customer satisfaction in the telecommunication industry in Buea. The specific research questions include;

1. What is the effect of reliability on customers satisfaction in Micro Finance Intuitions in the   SWR?
2. How does responsiveness affects customer satisfaction in Micro Finance Intuitions in the   SWR?
3. What is the effect of empathy on customer satisfaction in Micro Finance Intuitions in the SWR?

1.5 Research Objectives

The main research objective to this study is; To examine the effect of service strategy on customers satisfaction in  Micro Finance Intuitions in SWR,  Specific research objectives are; 

1. To analyze the effect of reliability on customers satisfaction in Micro Finance Intuitions in the
2. To investigate how responsiveness affects customer satisfaction \Micro Finance Intuitions in the in SWR
3. To analyze the effect of empathy on customer satisfaction in Micro Finance Intuitions in the in SWR.