Chapter 1- Introduction

1.1 Background of the study.

A customer is a person who brings us his or her wants. It is our job to handle them profitably
to him or her and to ourselves. The following quotation from Mahatma Gandhi has been used
by prominent public sector undertaking for pledging its commitment to satisfy its customers.

“A customer is a king and the most important visitor on your premises. He is not dependent
on us, we are dependent on him. He is not an interruption on our work, he is the purpose of it.
We are not doing him a favors by serving him, he is doing us a favor by giving us an
opportunity to do so. He is not our outsider of our business, he is part of it.”

Whether the buyer is satisfied purchase depends on the offer’s performance in relation to the
buyers’ expectation.

According to Kotler (2001) satisfaction is a person’s feeling of pleasure or disappointment

resulting from comparing a products perceived performance in relation to his or her
expectations. Customer satisfaction = Performance- Expectations. The importance of
understanding customer requirements is so great that companies try innovative ways and
means to get close to the customers and hear the voice of the customer (Shani and Sopna,
2001 cited in Kotler, 2011).

Service industries are playing an increasingly important role in the overall economies of the
countries of developed and developing countries. Kotler et al. (2000) defined service as any
activity or benefit that one party offers to another which is essentially intangible and does not
result in the ownership of anything and it may or may not be tied to a physical product.
Services include all economic activities which are intangible, not physically apparent like
products, which provide value to the customer.

The starting point in developing quality in services is analysis and measurement. The
SERVQUAL is a multi-dimensional research instrument, designed to capture consumer
expectations and perceptions of a service along the five dimensions that are believed to
represent service quality. SERVQUAL is built on the expectancy disconfirmation paradigm,
which in simple terms means that service quality is understood as the extent to which
consumers' pre-consumption expectations of quality are confirmed or disconfirmed by their
actual perceptions of the service experience. When the SERVQUAL questionnaire was first
published in 1988 by a team of academic researchers, Parasurman, Valarie Zeithaml Leonard
and Berry to measure quality in the service sector, it represented a breakthrough in the
measurement methods used for service quality research. The diagnostic value of the
instrument is supported by the model of service quality which forms the conceptual
framework for the development of the scale for examples instrument or questionnaire. The
instrument has been widely applied in a variety of contexts and cultural settings and found to
be relatively robust. It has become the dominant measurement scale in the area of service
quality. In spite of the long-standing interest in SERVQUAL and its myriad of context-
specific applications, it has attracted some criticism from researchers.

The five SERVQUAL dimensions are:

 Tangibles-Appearance of physical facilities, equipment, personnel, and

communication materials
 Reliability-Ability to perform the promised service dependably and accurately
 Responsiveness-Willingness to help customers and provide prompt service
 Assurance-Knowledge and courtesy of employees and their ability to convey trust and
confidence
 Empathy-Caring, individualized attention the firm provides its customers

Customers’ assessments include expectations and perceptions across all five SERVQUAL
dimensions. Service providers need to work on all five, but emphasize them in order of
importance (Service Performance, 2018).

I.G. Group of Company was started in 1990. Mr. Sujith Ihalagamage owner and the founder
of this company. He started the company with property sales and then diversified the
company for finance and construction field. I.G Group of Companies (PVT) Ltd has sub three
companies known as

1. I.G Property Sales and Investment

2. I.G Micro Finance Company
3. I.G Housing
This study is based on I.G Micro Finance Company. This company has five types of loans
provide to customers. Those are known as
 Daily Loans
 Weekly Loans
 Monthly Loans
 Mortgages Loans
 Vehicle Loan also known as leasing

This study is mainly based on the customer satisfaction towards service quality using
SERVQUAL model. For this research the customers will be the people who takes loans from
I.G Group of Companies. SERVQUAL model will help to find the satisfaction level of loan
customer towards the service quality of I.G Group of Companies.

1.2 Problem Statement

According to previous years of sales I.G Group of Companies has a sales drop in these six
months. When observing the company found some issues. Main reason is this company is not
maintaining a customer satisfaction box or a book. After evaluating some point found some
areas that this should follow to get customer satisfaction.

I.G. Group of Companies provide loans daily basic and weekly basic loans at the interest rate
of at rate of 6% interest per month. Most of the bank won’t provide daily basic and weekly
basic loans. Most of private financial companies in Sri Lanka provide daily and weekly basic
loans at a rate of 8%-10% interest per month, but some of companies have a brand name and
they do the marketing process more than I.G Group of Companies.

I.G. Group of Companies provide mortgage loans, monthly loans and vehicle Loans (leasing)
at rate of 5% interest per months according to some banks interest rate is bit high, but loan
approval time is very less comparing to banks. Also bank has a floating interest rate but I.G.
Group of companies has a fixed interest rate of 5%.

I.G Group of companies has less documentation requirement according to banks. Also
documentation chargers are also less than banks and other financial companies. Loan
approval time is also very less period comparing to other banks and other financial
companies. Some time with one or two days if the documents are clear the loan is approved.
I.G Group of companies has given some benefits to customers. If customer take the loans
second time they won’t charge documentation charges for daily and weekly loans, if it is
same amount of money which they have taken in first time. Weekly and monthly loans the
customer should definitely have a current account.

Mortgage loans and vehicle loans if customer couldn’t pay three installment of loan with in
the period the company warns and also some time seize the vehicle, if it is a mortgage
company will take of the assets to company’s ownership.

Company had recently introduced online loan applying system but still in not operated by the
company and also most of the customers are not use to that online process.

From this study can evaluate the service quality by using SERVQUAL model to over-come
the above mention problems and increase the customer satisfaction of the company.

1.3 Research Question

 How does service quality affect customer satisfaction of I.G Group of Companies
(PVT) Ltd?

1.4 Objective of the study

Main Objective

 To explore the service quality with the customer satisfaction of I.G. Group of
Companies (PVT) Ltd.

Additional Objectives

 To identify the current service quality practices used by the company.

 To identify the most suitable service quality practices.
 To suggest a method to improve service quality.
1.5 Significance of the study

The study will identify the current service quality practices, most suitable service quality
practices used by the company. Also researcher will suggest a method to improve the service
quality. From these things company can identify there weakness and over-come with them.
This study will give an accurate information about their current service quality and customer
satisfaction level. Further this study will help to develop the service quality of the company
and also to increase the customer satisfaction level.

This research is a great help to employees and top management of I.G Group of companies
who are responsible for taking business decisions and making policies. When company make
decisions this study will help the top management to take accurate decisions. Also company
can keep a hard copy of this research for further references of customers and employees of
I.G. Group of company. They can also publish this research for incensement of their
reputations.

In other hand though it is the first research of researcher this study will help for the
development of new styles and creative work, analysts and intellectuals, generalizations of
new theories. Get experience as professionals in research methodology as a philosopher, new
ideas and insights. Also it will be an experience for researcher for further studies like masters
and PHD.

1.6 Outline of report

Chapter one is consist of background of the study, problem statement, research question,
objective of the study, significance of the study and outline of the report. This is the
introduction chapter. Chapter two will be on literature review. Mainly this chapter will
consist of findings and definitions on service quality, customer satisfaction and relationship
between service quality and customer satisfaction. Chapter three will be on research
methodology. This chapter will consist of the type of research, conceptual frame work,
hypotheses, population, sample, methods of data collection and methods of data presentation
of the study. Chapter four will be on data presentation and analysis. This will be done by
using SPSS software according questionnaire which customers had given. There will be pie
chart, bar charts, histograms and scatter dots to present data. Measure of central tendency,
measure of dispersions, correlations analysis, regression and frequency distribution tables
will also use to analysis data. Chapter five will consist of conclusions and recommendations
for the study.