EFFFECTS OF SERVICE QUALITY ON CUSTOMER LOYALTY AND WORD-OF-MOUTH IN RETAIL SETTING: MEDIATING ROLES OF RELATIONAL CHARACTERISTICS

Abstract

The quality of customer service has been one of the most representative determinants of retailers’ sustainable competitiveness. Since Parasuraman et al. (1988) introduced the service quality instrument, called SERVQUAL, many studies have used SERVQUAL to measure service quality in various domains. However, since SERVQUAL was originally developed to measure general service quality, it didn’t fully consider the underlying characteristics of a specific industry such as retailing. Recently, as retail industry is becoming more competitive, there is a general agreement that the most important retailing strategy for creating competitive advantage is the delivery of high service quality. From the retail manager’s perspective, the level of service quality is highly correlated with the level of customer loyalty and the customer’s favorable word-of-mouth behavior. In this sense, most retail managers would be very interested in the question of how to increase their customer loyalty rate and, therefore, to elaborate this question in more detail, service quality study in a retail setting would be very important. Current measures of service quality, including SERVQUAL, do not adequately capture customers’ perceptions of service quality for retail stores such as department stores or general discount stores. The main objective of this study is to investigate the usefulness and applicability of the different methods, including SERVQUAL, in measuring the service quality of retail environment and their relationships to customer loyalty and word-of-mouth behavior. By exploring the suitability of each different measurement method for retail service quality, this study enhances the understanding of the major dimensions of retail service quality and the analysis of the effect of service quality on customer loyalty and word-of-mouth behavior.