A critical review of the relationship between Market Orientation, Service Quality and Business performance

by

Abstract

The marketing literature conceptualizes service quality and customer satisfaction as different but interrelated constructs. The consensus is that service quality is a judgment about a service's overall excellence (more descriptively and factually assessed), whereas satisfaction is a summary assessment of how the service emotionally affected the customer (more evaluative). There has been debate about the causality between the two; the consensus view is that service quality is an antecedent of satisfaction.

The marketing concept combines the concepts of customer focus, profitability, and the integration and coordination of marketing with the other major functional areas of the organization, such as finance, human resources, logistics, purchasing, and operations. This approach evolved from conditions that existed immediately after World War II, when rationing of goods for the war effort left the consumer (end user) feeling deprived of products beyond the basic, from basic foodstuffs such as sugar and flour, to shoes and clothing, to automobiles and appliances. As a result, in the late 1940s and into the 1950s consumers would buy almost any product that came on the market, regardless of lack of assortment or quality. The focus in the firm was thus on production rather than the consumer, with profits being obtained through cost controls and efficiencies in the manufacturing and delivery process.

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

Table of Contents

CHAPTER # 1: INTRODUCTION6

Study background6

Research Question8

Significance of Study8

Scope of the Study9

CHAPTER # 2: METHODOLOGY11

Introduction11

Research Design11

Keywords and search stream11

Literature search strategy11

CHAPTER # 3 : LITERATURE REVIEW (FINDINGS & ANALYSIS)13

Introduction13

Market Orientation17

Service Quality20

Business profitability21

Market Orientation and Service Quality22

Customer orientation23

Competitive Orientation24

Service Quality and Business profitability24

Market orientation and service quality28

Service worth and enterprise performance32

Market orientation and enterprise performance33

A conceptual model35

Customer approval and firm profitability35

CHAPTER # 4: DISCUSSION AND FINDINGS37

Introduction37

Comparison of competing models38

The Reliability of the Measurement43

The Validity of the Measurements44

Exploratory Factor Analysis44

Structural Model Estimations and Tests of Hypotheses50

Discussion56

Discussion of Supported Relationships56

Doesn't Promotion Work?59

Is There No Gain in Cost Efficiency?60

CHAPTER # 5: CONCLUSION62

Cost Efficiency for the Service64

Better Service for Customers68

Better Working Environment for Employees70

Two Approaches to Affecting Financial Performance71

Conclusion73

Theoretical Contributions76

Managerial Implications79

Recommendations80

REFERENCES84

APPENDIX108

GLOSSARY114

Chapter # 1: Introduction

Study background

In answer to the force of globalization, progressively comparable markets, and volatile market dynamics, numerous organizations are dynamically searching modes to add worth to their services and advance their service quality. Organizations are generally enthusiastic on making operational effectiveness a priority. Operations management (OM) has emphasized the optimization of operational methods as a entails to profitably consign worth to customers and to rendezvous or even pass customer expectations. Substantial research has been dedicated to such topics as conceiving, organising, and optimizing service consignment schemes, with a outlook to lifting service quality and operational effectiveness (e.g., [Frei et al., 1999], [Soteriou and Zenios, 1999], [Hill, in press] and [Saccania et al., 2007]). Many companies have passionately directed the operation-centric set about and illustrated that it is an productive entails for advancing organizational ...