literature review on service quality and customer satisfaction

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Service Quality and Customer Satisfaction in the Post Pandemic World: A Study of Saudi Auto Care Industry

Sotirios zygiaris.

1 College of Business Administration, Prince Mohammad Bin Fahd University, Khobar, Saudi Arabia

Zahid Hameed

Mubarak ayidh alsubaie, shafiq ur rehman.

2 Department of Management Sciences, University of Baluchistan, Quetta, Pakistan

Associated Data

The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.

The aim of this research is to examine the impact of service quality on customer satisfaction in the post pandemic world in auto care industry. The car care vendor in the study made effective use of social media to provide responsive updates to the customers in the post pandemic world; such use of social media provides bases for service quality and customer satisfaction. The study examined the relationship between service quality and customer satisfaction using the SERVQUAL framework. According to the findings, empathy, reliability, assurance, responsiveness, and tangibles have a significant positive relationship with customer satisfaction. Our findings suggest that it is critical for workshops to recognize the service quality factors that contribute to customer satisfaction. Findings also suggest that empathy, assurance, reliability, responsiveness, and tangibles contribute to customer satisfaction. Auto repair industry must regularly provide personal attention, greet customers in a friendly manner, deliver cars after services, notify customers when additional repairs are required, and take the time to clarify problems to customers. Furthermore, workshops must screen and hire courteous staff who can clearly communicate the services required to customers both in-person and online and effectively communicate the risks associated with repairs. Service quality seems to be aided by prompt services.

Introduction

The previous studies on the effect of pandemic have focused on the behavior related to preventative measures to protect the health of the customers; however, less attention has been paid to the influence of pandemic on customer outcomes. To fill this gap, the SERVQUAL framework was employed to examine the changes in customers’ social media behaviors that have occurred since the pandemic was declared ( Mason et al., 2021 ). In the post pandemic world, the parameters for customer satisfaction have changed considerably ( Monmousseau et al., 2020 ; Srivastava and Kumar, 2021 ; Wu et al., 2021 ). Pandemic has made personal interaction more challenging ( Brown, 2020 ). To be less vulnerable to becoming severely ill with the virus, customers prefer touchless digital mediums of communications. For example, Mason et al. (2021) concluded that pandemic has altered customers’ needs, shopping and purchasing behaviors, and post purchase satisfaction levels. Keeping in view the public healthcare concerns, the governmental pandemic mitigation policies also promotes touchless mediums for shopping; therefore, the role of social media as a communication tool stands to increase at a time when social distancing is a common practice; social media provides avenues for buyers to interact with sellers without physical contact. Thus, the use of social media gains critical importance, especially after the pandemic ( Mason et al., 2021 ), and the businesses may find new opportunities to gain competitive advantage through their use of effective social media strategies.

The car care industry uses traditional means of customer communications. The company in this study made use of social media in improving their service quality through effective and safe communication with their customers. The use of social media to provide updates to customers played a significant role in improving service quality and satisfaction ( Ramanathan et al., 2017 ). The company in the study used Snapchat to provide updates on the work, thus minimizing the customers’ need to physically visit the car care facility. This use of social media gave a significant boost to the responsiveness aspect of the service quality.

Service quality and customer satisfaction are important aspects of business since a company’s growth is largely dependent on how well it maintains its customers through service and how well they keep their customers satisfied ( Edward and Sahadev, 2011 ). According to Chang et al. (2017) ; customer satisfaction is expected to result from good service efficiency, which will improve customer engagement and interrelationship. González et al. (2007) asserted that customer satisfaction is linked to high service quality, which makes businesses more competitive in the marketplace. This study uses the SERVQUAL framework to define service quality. This framework uses five dimensions to account for service quality, namely, tangibles, reliability, responsiveness, assurance, and empathy. Identifying issues in service and customer satisfaction can lead to high service quality. Furthermore, service quality can be characterized by analyzing the variations between planned and perceived service. Service quality and customer satisfaction have a positive relationship.

Recognizing and meeting customer expectations through high levels of service quality help distinguish the company’s services from those of its rivals ( Dominic et al., 2010 ). Social media plays a critical role in shaping these service quality-related variables. Specifically, in the context coronavirus disease 2019 (COVID-19), where customers hesitated to visit auto workshops physically, the importance of online platforms such as auto workshops’ social media pages on Instagram and Facebook has increased, where customers try to get information and book appointment. For example, responsiveness is not only physical responsiveness but also digital means of communication. The car care company in this study uses social media as mode of communication with their customers due to physical interaction restriction caused by the pandemic.

Service quality becomes a critical element of success in car care industry because customer contact is one of the most important business processes ( Lambert, 2010 ). Saudi Arabia is one of the Middle East’s largest new vehicle sales and auto part markets. Saudi Arabia’s car repair industry has grown to be a significant market for automakers from all over the world. As a result, the aim of this research was to see how service quality affects customer satisfaction in the Saudi auto repair industry.

This aim of this research was to answer the following research questions:

• (i) What is the contribution of individual dimensions of SERVQUAL on customer perceived service quality of car care industry in Saudi Arabia?
• (ii) What is the impact of perceived service quality on customer satisfaction in car care industry in Saudi Arabia?

Literature Review

The concept of service has been defined since the 1980s by Churchill and Surprenant (1982) together with Asubonteng et al. (1996) , who popularized the customer satisfaction theory through measuring the firm’s actual service delivery in conformity with the expectations of customers, as defined by the attainment of perceived quality, and that is meeting the customers’ wants and needs beyond their aspirations. With this premise, Armstrong et al. (1997) later expanded the concept of service into the five dimensions of service quality that comprised tangibles, reliability, responsiveness, assurance, and empathy.

Extant literature on service delivery focuses on the traditional emphasis on the contact between the customer and service provider ( Mechinda and Patterson, 2011 ; Han et al., 2021 ). Doucet (2004) explained that the quality in these traditional settings depends on the design of the location and the behavior of the service provider. More recently, the proliferation of the internet has led to the emergence of the online service centers. In these cases, communication both in-person and online plays a critical role in the quality of service rendered. It follows that service quality in hybrid settings depends on quality of communications on social media as well as the behavioral interactions between the customer and the service provider ( Doucet, 2004 ; Palese and Usai, 2018 ). These factors require subjective assessments by the concerned parties, which means that different persons will have varied assessments of the quality of service received.

SERVQUAL Dimensions

Service quality has been described with the help of five quality dimensions, namely, tangibles, reliability, responsiveness, assurance, and empathy. Definitions relating to these variables have been modified by different authors. The relationship between various dimensions of service quality differs based on particular services.

The tangible aspects of a service have a significant influence on perception of service quality. These comprise the external aspects of a service that influence external customer satisfaction. The key aspects of tangibility include price, ranking relative to competitors, marketing communication and actualization, and word-of-mouth effects ( Ismagilova et al., 2019 ), which enhance the perception of service quality of customers ( Santos, 2002 ). These aspects extend beyond SERVQUAL’s definition of quality within the car care industry settings. Thus, we proposed the following hypothesis:

• Hypotheses 1a: Tangibles are positively related with perceived service quality.

Reliability

Reliability is attributed to accountability and quality. There are a bunch of precursors that likewise aid basic methodology for shaping clients’ perspectives toward administration quality and reliability in the car care industry in Saudi ( Korda and Snoj, 2010 ; Omar et al., 2015 ). A portion of these predecessors is identified with car repair benefits and includes the convenient accessibility of assets, specialist’s expertise level and productive issue determination, correspondence quality, client care quality, an exhibition of information, client esteem, proficiency of staff, representatives’ capacity to tune in to client inquiries and respond emphatically to their necessities and protests, security, workers’ dependability, more limited holding up time and quickness, actual prompts, cost of administration, accessibility of issue recuperation frameworks, responsibility, guarantees, for example, mistake-free administrations, generally association’s picture and workers’ politeness, and responsiveness. Despite the innovative changes happening in the car care industry and the instructive degree of car administrations suppliers in Saudi Arabia, car care suppliers in the territory are taught about the need to continually refresh their insight into the advancements in the area of vehicle workshops and the components of administration. Thus, we argued that reliability is important to enhance the perception of service quality of customers.

• Hypotheses 1b: Reliability is positively linked with perceived service quality.

Responsiveness

Responsiveness refers to the institution’s ability to provide fast and good quality service in the period. It requires minimizing the waiting duration for all interactions between the customer and the service provider ( Nambisan et al., 2016 ). Nambisan et al. (2016) explained that responsiveness is crucial for enhancing the customers’ perception of service quality. Rather, the institution should provide a fast and professional response as to the failure and recommend alternative actions to address the customer’s needs ( Lee et al., 2000 ). In this light, Nambisan summarizes responsiveness to mean four key actions, i.e., giving individual attention to customers, providing prompt service, active willingness to help guests, and employee availability when required. These aspects help companies to enhance the customers’ perception of service quality. Therefore, we proposed the following hypothesis:

• Hypotheses 1c: Responsiveness is positively linked with perceived service quality.

Assurance refers to the skills and competencies used in delivering services to the customers. Wu et al. (2015) explains that employee skills and competencies help to inspire trust and confidence in the customer, which in turn stirs feelings of safety and comfort in the process of service delivery. Customers are more likely to make return visits if they feel confident of the employees’ ability to discharge their tasks. Elmadağ et al. (2008) lists the factors that inspire empathy as competence, politeness, positive attitude, and effective communication as the most important factors in assuring customers. Besides, other factors include operational security of the premises as well as the proven quality of the service provided to the customers. Thus, the assurance has significant contribution in the perception of service quality.

• Hypotheses 1d: Assurance is positively related with perceived service quality.

Empathy refers to the quality of individualized attention given to the customers. The service providers go an extra mile to make the customer feel special and valued during the interaction ( Bahadur et al., 2018 ). Murray et al. (2019) explains that empathy requires visualizing the needs of the customer by assuming their position. Murray et al. (2019) lists the qualities that foster empathy as including courtesy and friendliness of staff, understanding the specific needs of the client, giving the client special attention, and taking time to explain the practices and procedure to be undertaken in the service delivery process. Therefore, we proposed the following hypothesis:

• Hypotheses 1e: Empathy is positively related with perceived service quality.

Perceived Service Quality and Customer Satisfaction

Customer satisfaction refers to the level of fulfillment expressed by the customer after the service delivery process. This is a subjective assessment of the service based on the five dimensions of service quality. Customer satisfaction is important due to its direct impact on customer retention ( Hansemark and Albinsson, 2004 ; Cao et al., 2018 ; Zhou et al., 2019 ), level of spending ( Fornell et al., 2010 ), and long-term competitiveness of the organization ( Suchánek and Králová, 2019 ). Susskind et al. (2003) describes that service quality has a direct impact on customer satisfaction. For this reason, this research considers that five dimensions of service quality are the important antecedents of customer satisfaction.

Service quality refers to the ability of the service to address the needs of the customers ( Atef, 2011 ). Customers have their own perception of quality before interacting with the organization. The expectancy-confirmation paradigm holds that customers compare their perception with the actual experience to determine their level of satisfaction from the interaction ( Teas, 1993 ). These assessments are based on the five independent factors that influence quality. Consequently, this research considers service quality as an independent variable.

This study attempts to quantify perceived service quality though SERVQUAL dimensions. We proposed that customers place a high premium on service quality as a critical determinant of satisfaction. Moreover, it is argued that satisfaction prompts joy and reliability among customers in Saudi Arabia. These discoveries infer that the perception of service quality is significantly related to satisfaction, and quality insight can be applied across different cultures with negligible contrasts in the result. Car care industry in Saudi Arabia has grave quality problems. To rectify this situation, it is essential to apply quality systems as tools for development. The SERVQUAL is one of these system options. It is used to gauge the service quality using five dimensions that have been time-tested since 1982. Thus, the significance of SERVQUAL in car care industry in Saudi Arabia cannot be overemphasized. The study further suggests that the SERVRQUAL dimension increases the perceived service quality, which in turn increases customer satisfaction. Thus, we proposed the following hypothesis:

• Hypothesis 2: The perceived service quality of car care customers is positively linked with their satisfaction.

Methods and Procedures

In this study, we employed a cross-sectional research design. Using a paper-pencil survey, data were collected form auto care workshops situated in the Eastern Province of Saudi Arabia. According to the study by Newsted et al. (1998) , the survey method is valuable for assessing opinions and trends by collecting quantitative data. We adapted survey instruments from previous studies. The final survey was presented to a focus group of two Ph.D. marketing scholars who specialized in survey design marketing research. The survey was modified keeping in view the recommendations suggested by focus group members. We contacted the customers who used social media to check the updates and book the appointment for their vehicle’s service and maintenance. We abstained 130 surveys, 13 of which were excluded due to missing information. Therefore, the final sample encompassed 117 (26 female and 91 male) participants across multiple age groups: 10 aged less than 25 years, 46 aged between 26 and 30 years, 28 aged between 31 and 35 years, 21 aged between 36 and 40 years, and 12 aged older than 40 years (for details, refer to Table 1 ). Similarly, the averaged participants were graduates with more than 3 years of auto care service experience.

Demographic information.

We measured service quality dimensions using 20 indicators. Customer satisfaction of the restaurant customers was assessed using 4-item scale (for detail, refer to Table 2 ). In this research, the 5-point Likert scale from 1 = strongly disagree to 5 = strongly agree was used.

Constructs and items included in the questionnaire.

Control Variables

Following the previous research, customer’s gender and age were controlled to examine the influence of service quality dimensions on customer satisfaction.

Data Analysis and Results

For data analysis and hypotheses testing, we employed the structural equation modeling (SEM) based on the partial least squares (PLS) in Smart-PLS. Smart-PLS 3 is a powerful tool, which is used for the confirmatory factor analysis (CFA) and SEM ( Nachtigall et al., 2003 ). Research suggests that CFA is the best approach to examine the reliability and validity of the constructs. We employed SEM for hypotheses testing because it is a multivariate data analysis technique, which is commonly used in the social sciences ( González et al., 2008 ).

Common Method Bias

To ensure that common method bias (CMB) is not a serious concern for our results, we employed procedural and statistical and procedural remedies. During data collection, each survey in the research contained a covering letter explaining the purpose of the study and guaranteed the full anonymity of the participants. Moreover, it was mentioned in the cover letter that there was no right and wrong questions, and respondents’ answers would neither be related to their personalities nor disclosed to anyone. According to Podsakoff et al. (2003) , the confidentiality of the responses can assist to minimize the possibility of CMB. Furthermore, CMB was verified through the Harman’s single-factor test ( Podsakoff et al., 2003 ). All items in this research framework were categorized into six factors, among which the first factor explained 19.01% of the variance. Thus, our results showed that CMB was not an issue in our research. Moreover, using both tolerance value and the variance inflation factors (VIFs), we assessed the level of multicollinearity among the independent variables. Our results indicate that the tolerance values for all dimensions of service quality were above the recommended threshold point of 0.10 ( Cohen et al., 2003 ), and VIF scores were between 1.4 and 1.8, which suggested the absence of multicollinearity; thus, it is not a serious issue for this study.

Measurement Model

We performed CFA to analyze the reliability and validity of the constructs. The measurement model was assessed by examining the content, convergent, and discriminant validities. To assess the content validity, we reviewed the relevant literature and pilot test the survey. We used item loadings, Cronbach’s alpha, composite reliability (CR), and the average variance extracted (AVE) ( Fornell and Larcker, 1981b ) to assess the convergent validity. The findings of CFA illustrate that all item loadings are greater than 0.70. The acceptable threshold levels for all values were met, as the value of Cronbach’s alpha and CR was greater than 0.70 for all constructs ( Fornell and Larcker, 1981b ), and the AVE for all variables was above 0.50 ( Tabachnick and Fidell, 2007 ; see Table 3 ). Thus, these findings show acceptable convergent validity.

Item loadings, Cronbach’s alpha, composite reliability, and average variance extracted.

To analyze the discriminant validity, we evaluated the discriminant validity by matching the association between correlation among variables and the square root of the AVE of the variables ( Fornell and Larcker, 1981a ). The results demonstrate that the square roots of AVE are above the correlation among constructs, hence showing a satisfactory discriminant validity, therefore, indicating an acceptable discriminant validity. Moreover, descriptive statistics and correlations are provided in Table 4 .

Descriptive statistics and correlations.

n = 117, *p < 0.05, **p < 0.01.

Structural Model and Hypotheses Testing

After establishing the acceptable reliability and validity in the measurement model, we examined the relationship among variables and analyzed the hypotheses based on the examination of standardized paths. The path significance of proposed relations were calculated using the SEM through the bootstrap resampling technique ( Henseler et al., 2009 ), with 2,000 iterations of resampling. The proposed research framework contains five dimensions of service quality (i.e., tangibles of the auto care, reliability of the auto care, responsiveness of the auto care, assurance of the auto care, and empathy of the auto care) and customer satisfaction of auto care. The results show that five dimensions of service quality are significantly related to customer’s perception of service quality of auto care; thus, hypotheses 1a, 1b, 1c, 1d, and 1e were supported. Figure 1 shows that the service quality of auto care is a significant determinant of customer satisfaction of auto care industry (β = 0.85, p < 0.001), supporting hypothesis 2. The result in Figure 1 also shows that 73.8% of the variation exists in customer satisfaction of auto care.

Results of the research model tests. *** p < 0.001.

The main purpose of this research was to assess the relationship between service quality and customer satisfaction in the post pandemic world in Saudi Arabia. This study was designed to examine how satisfaction of auto care customers is influenced by service quality, especially, when pandemic was declared, and due to health concerns, the customers were reluctant to visit workshops physically ( Mason et al., 2021 ). It appears that after the pandemic, customers were increasingly using online platforms for purchasing goods and services. This study reveals how customers of auto repair in Saudi perceive service quality and see how applicable SERVQUAL model across with five dimensions, including tangibles, responsiveness, reliability, assurance, and empathy measure service quality. The findings of this research show that five dimensions of SERVQUAL are positively related to the service quality perception of auto care customers in Saudi Arabia. Moreover, service quality perceptions are positively linked with customer satisfaction. These results indicate that auto care customers view service quality as an important antecedent of their satisfaction. The findings indicate that the customers perceive the service quality as a basic service expectation and will not bear the extra cost for this criterion. In this research, the positive connection between service quality and customer satisfaction is also consistent with previous studies (e.g., González et al., 2007 ; Gallarza-Granizo et al., 2020 ; Cai et al., 2021 ). Thus, service quality plays a key role in satisfying customers. These findings suggest that service organizations, like auto repair industry in Saudi Arabia could enhance satisfaction of their customers through improving service quality. Because of pandemic, people are reluctant to visit auto care workshops, and they try to book appointment through social media; so, by improving the quality of management of their social media pages, the workshops can provide accurate information for monitoring, maintaining, and improving service quality ( Sofyani et al., 2020 ). More specifically, social media, which allows individuals to interact remotely, appears to be gaining significant importance as a tool for identifying customers’ products and service needs. Increasingly, customers are also increasingly engaging with retailers through social media to search and shop for product and services options, evaluate the alternatives, and make purchases.

Furthermore, the research on the customer service quality can be held essential since it acts as a means for the promotion of the competitiveness of an organization. Precisely, the knowledge about the customers’ view concerning service quality can be used by organizations as a tool to improve their customer services. For example, knowledge of the required customer service would help in the facilitation of training programs oriented toward the enlightenment of the overall employees on the practices to improve and offer high-quality customer services. Besides, information concerning customer services would be essential in decision-making process concerning the marketing campaigns of the firm, hence generating competitive advantage of the organization in the marketplace. Findings show that customers demand more from auto repair, so the company must work hard to increase all service quality dimensions to improve customer satisfaction. Thus, organizations ought to venture in customer services initiatives to harness high-quality services.

Managerial Implications

The findings of this research indicate a strong association between SERVQUAL dimensions and perceived service quality. Perception of higher service quality leads to higher level of customer satisfaction among Saudi car care customers. In particular, the results indicate high scores for reliability, empathy, tangibles, and responsiveness. These are clear indications that the immense budgetary allocation has enabled these institutions to develop capacity. Nevertheless, the lack of a strong human resource base remains a key challenge in the car care industry. The effective use of social media plays a critical role in the responsiveness dimension of service quality. Companies need to develop their digital and social media marketing strategies in the post pandemic world to better satisfy their customers.

Saudi Arabia requires a large and well-trained human resource base. This requires intensive investment in training and development. Most of these workers have a limited contract, which reduced their focus on long-term dedication. Consequently, the government should provide longer-term contracts for workers in this critical sector. The contracts should include training on tailored courses to serve the identified needs in effective communication with the customers using digital media. We suggested that the auto car care workshops should provide training to their workers, particularly, on service technicians to enhance their skills that will help to deliver fast and reliable service to their auto customers.

Moreover, the auto car care workshops also provide customer care- or customer handling-related training especially for the service marketing personnel who handles customer directly for them to better understand the customer needs and expectations. This can be done at least once a year. This will help auto care workshops to improve their service quality.

Limitation and Future Research Direction

This research is not without limitations. First, the findings of this study are based on data collected from a single source and at a single point of time, which might be subjected to CMB ( Podsakoff et al., 2003 ). Future research can collect data from different points of time to validate the findings of this research. Second, this research was carried out with data obtained from Saudi auto car care customers; the findings of this research might be different because the research framework was retested in a different cultural context. Therefore, more research is needed to improve the understanding of the principles of service quality and customer satisfaction, as well as how they are evaluated, since these concepts are critical for service organizations’ sustainability and development. A greater sample size should be used in a similar study so that the findings could be applied to a larger population. Research on the effect of inadequate customer service on customer satisfaction, the impact of customer retention strategies on customer satisfaction levels, and the impact of regulatory policies on customer satisfaction is also recommended. Third, because most of the participants participated in this research are men, future studies should obtain data from female participants and provide more insights into the difference between male and female customers’ satisfaction levels. Moreover, due to limitation of time, the sample was collected from the eastern province. Consequently, further research should include a larger and more representative sample of the Saudi population. Because of the non-probability sampling approach used in this research, the results obtained cannot be generalized to a wide range of similar auto repair services situations, even though the methodology used in this study could be extended to these similar situations. Since the sample size considered is not that large, expectations could vary significantly. When compared with the significance of conducting this form of analysis, the limitations mentioned above are minor. Such research should be conducted on a regular basis to track service quality and customer satisfaction levels and, as a result, make appropriate changes to correct any vulnerability that may exist.

Data Availability Statement

Ethics statement.

Ethical review and approval was not required for the study on human participants in accordance with the local legislation and institutional requirements. Written informed consent for participation was not required for this study in accordance with the national legislation and the institutional requirements. The patients/participants provided their written informed consent to participate in this study.

Author Contributions

SZ helped in designing the study. ZH helped in designing and writing the manuscript. MAA helped in data collection and analysis and writing the manuscript. SUR repositioned and fine-tuned the manuscript, wrote the introduction, and provided feedback on the manuscript.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s Note

All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.

This study was received funding from University Research Fund.

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A study of service quality, corporate image, customer satisfaction, revisit intention and word-of-mouth: evidence from the KTV industry

PSU Research Review

ISSN : 2399-1747

Article publication date: 8 December 2020

Issue publication date: 30 August 2022

This paper aims to understand the impact of service quality on corporate image and customer satisfaction. Furthermore, this study also examined the influence of corporate image and customer satisfaction on revisit intention and word of mouth. The mediation effect of corporate image and customer satisfaction on the relationships between service quality–revisit intention and service quality–word of mouth was also examined.

Design/methodology/approach

This study used the survey questionnaire method and collected data from 253 respondents comprising of customers who had karaoke singing experience in the Karaoke television (KTV). The partial least squares structural equation modeling was used in this study.

This study found that service quality has a significant positive influence on corporate image and customer satisfaction. Corporate image does not have a significant influence on revisit intention but has a significant positive influence on word of mouth. Furthermore, customer satisfaction has a significant positive influence on revisit intention and word of mouth. The mediation effect of corporate image and customer satisfaction is also found to be significant for most of the relationships.

Originality/value

This study showed the importance of service on customers’ reactions and behaviors in the KTV context, which have not been previously investigated. Businesses should always provide superior service quality to their customers because it impacts their subsequent behaviors such as revisit intention and word of mouth.

Service quality

Customer satisfaction.

• Revisit intention
• Word of mouth

Corporate image

Khoo, K.L. (2022), "A study of service quality, corporate image, customer satisfaction, revisit intention and word-of-mouth: evidence from the KTV industry", PSU Research Review , Vol. 6 No. 2, pp. 105-119. https://doi.org/10.1108/PRR-08-2019-0029

Emerald Publishing Limited

Copyright © 2020, Kim Leng Khoo.

Published in PSU Research Review . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence maybe seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

A karaoke house, also known as a Karaoke television (KTV), is a place where private rooms furnished with karaoke equipment are rented out to customers who want to sing in private ( Fung, 2009 ). It allows ordinary singers to enjoy singing in a private KTV room instead of singing on stage in front of the general public, which can avoid the pressure of being criticized ( Ruismäki et al. , 2013 ). Karaoke singing is a popular leisure activity in Asian countries such as Japan, Hong Kong, China, Taiwan and Malaysia. The KTV is a place not only for customers to express their feelings through singing but also for to talk about businesses.

China’s karaoke-booth market alone is currently worth about $600m and is expected to reach $1.2bn by the end of 2018 ( The Wall Street Journal, 2018 ). In Malaysia, there is no statistics on the total sales of the KTV industry but the increasing number of KTVs opening up in Malaysia shows the rising demand for karaoke consumption among Malaysians. Some of the popular Karaoke operators in Malaysia include RedBox, Loudspeaker, Neway and Superstar Family KTV ( Tan, 2016 ). Given the stiff competition in the KTV industry, KTV companies need to project good service quality to attract and retain customers ( Koay et al. , 2019 ). It is important to offer service elements that satisfy customers’ expectations and simultaneously, reflect positive companies’ identities. With satisfied customers and positive corporate image, positive word of mouth will be generated and customers are more likely to revisit the business ( Hussain, 2016 ).

However, the question remains that how existing service model of KTV operators, particularly in Malaysia, manage to attract and retain customers. Therefore, the study aims to examine the influence of service quality on corporate image and customer satisfaction and how corporate image and customer satisfaction influence revisit intention and word of mouth. Furthermore, this study also investigates the mediating role of corporate image and customer satisfaction on the relationships between service quality–revisit intention and service quality–word of mouth.

The findings will be very useful for managers whose aim is to improve the current practices of their KTV businesses.

Literature review

Equity theory.

Equity theory posits that people compare their sacrifices and rewards that they receive during an exchange process ( Adams, 1963 ). In line with this, several studies have adopted equity theory to understand the relationship between customers and companies ( Chen et al. , 2019 ; Lim, 2020 ; Pai et al. , 2018 ). These studies argue that when customers feel that they are equitably treated during an exchange with the company, they feel satisfied.

Equity theory suggests that when customers receive good quality of service, they are more likely to show commitment to the company in different forms, such as repeat patronage ( Kelley and Davis, 1994 ; Andreassen, 2000 ). Jiang et al. (2016) conducted a study in the e-commerce context and found that service quality significantly influenced customer loyalty based on equity theory. In another study of Chen et al. (2012) , equity theory is used to examine how service quality affects customer satisfaction in the banking industry. This theory provides a profound theoretical lens to understand how customers perceive KTV service quality. Customers are likely to revisit and create positive word of mouth if they believe KTV service quality satisfies them.

Providing superior service quality is crucial in achieving long-term success in the service industry ( Shahin and Dabestani, 2010 ). Service quality refers to consumers’ evaluation of the excellence and superiority of the service encountered ( Zeithaml and Bitner, 2003 ). Customers who experience positive feelings and attitudes toward the services during the service consumption process are more likely to perceive favorably toward the service provider, which subsequently leads to customer loyalty ( Ishaq, 2012 ). This is consistent with past studies which have shown that in the hotel industry, customers who are satisfied with the service quality are more likely to become loyal customers ( Cheng and Rashid, 2013 ; Cheng et al. , 2014 ). In the context of tourism, a research by Wu and Li (2015) on a sample of visitors to the Museums of Macau revealed that service quality is critical to customer satisfaction. In addition, a recent study by Kasiri et al. (2017) indicated that service industry can improve customer satisfaction through service quality.

Service quality has a significant positive influence on corporate image.

Service quality has a significant positive influence on customer satisfaction.

Corporate image is defined as “the immediate mental picture an individual holds of the organisation” ( Foroudi et al. , 2014 , p. 2271) which is formed based on a customer’s overall consumption experiences ( Aydin and Özer, 2005 ). In another words, corporate image refers to customers’ perception of the organization image. According to Virvilaite and Daubaraite (2011) , corporate image is a form of competitive advantage which is hard for competitors to imitate as it can only be developed over a long period of time. Therefore, maintaining a positive corporate image is critical because it significantly impacts customer repurchase decisions and willingness to provide word of mouth ( Andreassen and Lindestad, 1998 ).

In the context of service marketing and entertainment, corporate image was found to have a significant positive influence on behavioral intention in Taiwan’s quick service restaurant industry ( Wu, 2013 ), gaming industry ( Wu, 2014 ) and theme park industry ( Wu et al. , 2018 ). For example, Wu et al. (2015) discovered that corporate image greatly affects revisit intention in the context of the hot spring industry. Quintal and Polczynski (2010) described revisit intention as customers’ judgment about the likelihood of revisiting the same destination. In the long run, such behavioral intention will contribute to the business profitability ( Jani and Han, 2014 ). On the other hand, when the corporate image is favorable, customers are more likely to spread a positive word of mouth. Word of mouth refers to “informal, person-to-person communication between a perceived non-commercial communicator and a receiver regarding a brand, product, organization, or service” ( Harrison-Walker, 2001 , p. 70). In a study investigating a company’s green image, Wang et al. (2018) found out that corporate image affects consumers’ word of mouth about green hotels.

Corporate image is viewed as an intervening variable that acts as a mediator between service quality and behavioral intentions including loyalty, revisit intention and word of mouth. For example, Lai et al. (2009) found that higher quality of service significantly increases corporate image, which in turn increases behavioral intentions. Consistent with past studies, corporate image should have a significant positive influence on revisit intention and word of mouth in the context of the KTV industry. Considering all of this evidence, behavioral intention indicates a stated likelihood to return to the place, to provide favorable comments regarding the place and to recommend the place to others in the future ( Andreassen and Lindestad, 1998 ).

Corporate image has a significant positive influence on revisit intention.

Corporate image has a significant positive influence on word of mouth.

Corporate image mediates the relationship between service quality and revisit intention.

Corporate image mediates the relationship between service quality and word of mouth.

Customer satisfaction is a measure of how products and the services provided meet or surpass customer expectations ( Kotler and Armstrong, 2018 ). It refers to the final state of a process in which the customers evaluate the perceived benefits obtained from using service ( Oliver, 2010 ). If a company wants customers to perceive their products or services as valuable, customer satisfaction must be fulfilled ( Zameer et al. , 2015 ). Satisfied customers tend to stay loyal with products that can satisfy their needs and wants ( Mohd Suki, 2017 ).

A study conducted by Agnihotri et al. (2019) reported that customer satisfaction with the sales personnel has a significant positive influence on customers’ willingness to pay more. This shows that when customers’ needs are met efficiently, the satisfaction will drive them to spend more money and make more repeated purchase. On the other hand, Reynolds and Beatty (1999) found out that high level of satisfaction with the company results in spreading positive word of mouth about the company. Ardnt (1967 , p. 1) described word of mouth as informal conversation which is “probably the oldest mechanism by which opinions on products and brands are developed, expressed, and spread.” In another words, a satisfied customer would likely give the company a good reference ( Leung, 2020 ). For example, Han and Ryu (2012) empirically verified that customer satisfaction is positively related to word of mouth in a full service restaurant.

Customer satisfaction has a significant positive influence on revisit intention.

Customer satisfaction has a significant positive influence on word of mouth.

Customer satisfaction mediates the relationship between service quality and revisit intention.

Customer satisfaction mediates the relationship between service quality and word of mouth.

The full research model is shown in Figure 1 .

Research method

A survey questionnaire method was used in this study to achieve our research objectives. Before we distribute the survey questionnaires to our target respondents, we conducted a pre-test on several academic experts and several respondents. Their feedback was later used in amending the final questionnaire. Some wordings and the layout were corrected for better clarity. To avoid sampling bias, we distributed the survey questionnaires to 50 customers in 6 different branches. Each respondent was rewarded with a voucher worth RM10 from the KTV X to increase the response rate. In the end, the final usable samples consist of 253 customers who have experienced singing karaoke in the KTV X. The real identity of the company is concealed and represented as KTV X in this paper.

All scales were adapted from validated studies and measured in a five-point scale format. Service quality was measured using three items adapted from the study by Wu et al. (2015) which included “This KTV has offered superior quality” as an example item. Corporate image was measured using five items adapted from the study by Aydin and Özer (2005) . An example item includes “The KTV X is stable and firmly established.” Customer satisfaction was measured using three items adapted from Oliver’s (1980) study with “Overall, I am satisfied with my experience at the KTV X” incorporated as an example item. Revisit intention was measured using two items from the study by Lam et al. (2011) . An example item includes “I will visit this KTV in the future.” Word of mouth was measured using four items adapted from the study by Line et al. (2018) and the example item was “I would say positive things about this KTV to other people.”

Data analysis

Partial least squares structural equation modeling (PLS-SEM) was conducted using Smart PLS 3 software in this research ( Ringle et al. , 2015 ). Some of the strengths of PLS-SEM and the reasons for its use are: PLS-SEM is less rigid on data assumptions and more flexible with small sample size data and PLS-SEM has the ability to handle complex models ( Hair et al. , 2017 ).

The measurement model was first validated and then the structural model was estimated ( Anderson and Gerbing, 1988 ).

Common method variance

Common method variance (CMV) in this study was assessed using the unmeasured latent marker construct approach ( Liang et al. , 2007 ). The ratio of the average substantive variance (0.895) to the average method variance (0.0028) is small at 29:1. Furthermore, Table 2 shows that each of the inter-construct correlations is less than the threshold value of 0.9 ( Bagozzi et al. , 1991 ). Hence, we can conclude that CMV is not a serious concern in the present study.

Measurement model

This study first checked for the internal consistency of measures for each construct. As shown in Table 1 , the values of Cronbach’s alpha and composite reliability for all the constructs are greater than the recommended value of 0.7, indicating that all the constructs are reliable. Next, convergent validity was examined by looking at the factor loadings and average variance extracted (AVE). Table 1 shows that the factors loadings were all higher than 0.7 and the AVE values were also higher than 0.5, as suggested by Hair et al. (2017) . Thus, convergent validity was ascertained in this study. Discriminant validity was examined using the Fornell–Larcker criterion and heterotrait–monotrait (HTMT) criterion. Fornell–Larcker criterion requires the square root of the AVE for each construct to be greater than its correlations with other constructs and HTMT criterion requires the ratio to be lower than 0.9 ( Fornell and Larcker, 1981 ; Henseler et al. , 2015 ). As shown in Table 2 , this study did not have discriminant validity issue. The model fit was assessed using the standardized root mean square residual (SRMR). The SRMR value for the research model was 0.059, indicating that the data fits the model ( Henseler et al. , 2016a ).

Structural model

A bootstrapping procedure of 5,000 re-samples was conducted to assess the significance of path coefficients. Table 3 shows that service quality has a significant positive influence on corporate image and customer satisfaction, supporting H1 and H2 . Next, corporate image was found to have a significant positive influence on word of mouth but no significant influence on revisit intention, thus supporting H4 but not H3 . In addition, customer satisfaction was found to have a significant positive influence on revisit intention and word of mouth, supporting H7 and H8 . Apart from that, we also assessed the mediation effect of corporate image and customer satisfaction according to the guidelines by Nitzl et al. (2016) . Table 3 shows that H5 is not supported as corporate image does not mediate the relationship between service quality and revisit intention. However, corporate image mediates the relationship between service quality and word of mouth, supporting H6 . Furthermore, customer satisfaction mediates the relationship between service quality and revisit intention, and the relationship between service quality and word of mouth, thus supporting H9 and H10 .

To examine the explanatory power of the research model, we also reported the R 2 , Q 2 and Q 2 predict, as shown in Figure 2 . The value of Q 2 was generated using a blinding folding procedure and should exceed zero indicating that the model has predictive relevance ( Geisser, 1974 ; Stone, 1974 ). The value of Q 2 predict greater than zero indicates that using the PLS model gives more predictive power (smaller prediction errors) than simply using the average value of all observations ( Hair et al. , 2019 ).

Using gender as a moderator, a post-hoc multi-group analysis (MGA) was conducted in this research because some studies indicated that the influence of service quality on customer satisfaction and corporate image, and the influence on loyalty might be different between males and females ( Dimitriades, 2006 ; Karatepe, 2011 ). Prior to running the MGA analysis, a permutation test to establish measurement invariance was conducted ( Henseler et al. , 2016b ). Table 4 shows the results of the permutation test. The results indicate the establishment of full measurement invariance. The full MGA results show significant differences between male and female groups in regard to the influence of service quality on customer satisfaction (Henseler’s MGA p -value = 0.025) ( Table 5 ). The results can be useful for managerial implications.

Discussions

Karaoke singing is a popular activity in Asia and a lucrative business especially in Malaysia. However, competition is fierce as customers are presented with many choices of KTV providers. To outperform the competitors, satisfying the needs of customers is important to attract them to revisit and spread positive words about the company to their friends. Consistent with past studies ( Cheng et al. , 2014 ; Wu et al. , 2011 ), the findings of this study showed that service quality is an important factor that influences corporate image and customers’ satisfaction. KTV companies need to ensure that the service consumption process in their premises is enjoyable for the customers as it can influence the overall perception of service quality.

The study also showed evidence of the importance of having a positive corporate image and achieving high levels of customer satisfaction. Although corporate image was found to have no significant influence on revisit intention, it has a significant positive influence on customers’ intention to spread positive things about the KTV company. For instance, customers who perceive positively about the image of the company are more likely to say positive things, post positive things online and write a positive review online about the company. Customer satisfaction is also a strong predictor of revisit intention and word of mouth, which implies that satisfied customers are more likely to come back to the same company despite having alternative choices in the market, and to spread positive things about the KTV company. It is important to ensure customers spread positive things about the company to others because it is a form of effective marketing strategies that create awareness to the public.

However, the study showed unexpected results whereby corporate image had no significant effect on revisit intentions and did not mediate the relationship between service quality and revisit intentions. It is surmised that many KTV companies in Malaysia offer the similar service model and therefore providing superior excellent service quality becomes a necessity rather than a strategy that can elevate positive corporate image and revisit intention.

Although it has been shown that corporate image and customer satisfaction are important, their influence on revisit intention and word of mouth is less direct. Hence, KTV companies need to understand which factors influence corporate image and customer satisfaction in the first place. The finding suggested that service quality is the important element that can lead to a higher revisit intention and positive word of mouth but it is mediated by corporate image and customer satisfaction.

Managerial implications

It is important for leisure-service operators to understand what customers are looking for to develop their revisit intention and willingness to spread word of mouth. The key areas to consider when companies try to reduce unfavorable word of mouth include service quality, customer satisfaction and corporate image. According to the appraisal theory, perceived service quality leads to customers’ consumption-related emotions ( Bagozzi, 1992 ). If a customer’s consumption experience involves emotions, the customer is more likely to share his/her feeling about the experience with others ( Westbrook, 1987 ).

The results indicated that satisfied customers reported greater intentions to revisit and spreading word of mouth; thus, leisure-service companies should focus on providing excellent service and build good relationships with customers to encourage repeat business. As the internet has become ubiquitous in customers’ lives, digital networking platforms can be used to create positive company reputation. The company’s digital networking platforms represent the brand; therefore, it is important for the leisure-service providers to focus on sustaining the platforms by communicating and resolving customers’ complaints. In addition, good interactions with customers help to improve corporate image ( Wu et al. , 2015 ).

On the other hand, leisure-service companies should value their employees by promoting a healthy organizational culture. Satisfied employees can improve customer satisfaction via emotional contagion ( Hennig-Thurau et al. , 2006 ). Emotional contagion refers to the “tendency to automatically mimic and synchronize facial expressions, vocalizations, and movements with those of another person and, consequently, to converge emotionally” ( Hatfield et al. , 1994 , p. 5). As highly satisfied customers are more likely to revisit, the companies should try their best to create a positive milieu and offer better service to the customers.

Conclusion, limitations and future research directions

In conclusion, to the best of the author’s knowledge, this study is the first that explored the associations between service quality, corporate image, customer satisfaction, revisit intention and word of mouth in the KTV context. Most of the hypothesized relationships are supported, indicating service quality is an important element that affects corporate image and customer satisfaction which, in turn, influences revisit intention and word of mouth. The findings of this study give suggestions to KTV companies on how to gain new customers and retain old customers, which can lead to organizational growth.

This study is not without limitations. First, cross-sectional data is inadequate in drawing causal conclusions. Future studies should use longitudinal data if possible. Second, the results might not be generalizable to other contexts. Hence, the research model should be replicated in other contexts. Third, CMV may be an issue of concern because the measured latent marker variable (MLMV) approach was not applied ( Chin, 2013 ). Future studies should consider either collecting data from different time points or using MLMV approach to detect and control for CMV. Fourth, revisit intention and word of mouth were measured using a self-report method. It would be more interesting to track customers’ revisit frequency as a way to measure revisit intention and to assess customers’ feedback on the social media as a measurement of word of mouth.

Research model

Results of the structural model

Discriminant validity

Direct and indirect effects