The Effect of Quality of Service on Customer Satisfaction in Ethiopian Pharmaceutical Supply Agency (EPSA): Case Study Bahir Dar Branch

Wohabie Tsega Gessesse^* and Awoke Seyoum Tegegne
^*Correspondence: Wohabie Tsega Gessesse, Department of Statistics, Bahir Dar University, Bahir Dar, Ethiopia, Email:

Keywords

Service quality • Service quality dimensions • Customer satisfaction • SERVQUAL • SERVPERF models

Abbreviations

EPSA: Ethiopian Pharmaceutical Supply Agency; ANOVA: Analysis of Variance

Introduction

Globally, the 2008 ISO survey reported 982,832 certifications in 176 economies, with China leading with 224,616 [1,2]. East African countries are members of ISO and certification has been on the increase in the region as a quality management measure [3]. In East and Central Africa, Kenya has the highest number of ISO 9001 certifications with 257, followed by Uganda with 244, Tanzania 12, Republic of Congo 2 and Rwanda 1 [4].

Effective delivery of services is one of the most direct ways to promote the economic growth of a country. However, public services are characterized poorly [5]. The service industry plays a great and important role in the economy of countries in the world. In the 21st century, which is characterized by high competition and business dynamism among others, providing quality service to customers is considered as essential strategy for survival and sustainable growth [6]. The public sectors have responsibility and accountability for delivering efficient and effective services to communities and societies as a customer. Though public service institutions, now days, have an ever-increasing demands to deliver best services and improve efficiency relatively compared to previous times, demands are changing in their quality requirements in government and private sector [7].

The desire to manage relationships with customers leads to the fact that organizations are starting to pay attention to the development and implementation of service standards [8]. Quality is an important source of competitive advantage in service delivery sectors [9]. Service quality is used to differentiate and add value to service offerings and to win strategic competitive advantage [10]. New managerial methods explain quality as the customer satisfaction, for that reason, all the organizations must recognize the high quality and quick service offering obstacles and solve them [11].

During the past few decades, service quality has become a major area of attention to practitioners, managers and researchers owing to its strong impact on customer satisfaction, business performance, customer loyalty, profitability and lower costs, however, providing high quality and cost-effective public services is not an easy task [12]. It involves creating organizations with the right approaches, establishing clear ways of how to deliver services and putting the right people in place to respond to the needs of citizens [13]. It also requires a combination of good policy development, successful implementation, a good understanding of citizens’ needs and expectations, appropriate resources and technology, a responsive organizational culture and well-trained staff. In Ethiopia, service companies do not have sufficient awareness about service quality management with the perspective of customers’ expectation and customers do not have lot information about the technical phases of a service [14]. Service quality may be described as customer perception of how well a service assembles or go over their expectations [15]. Service quality can be determined in terms of customer expectation, customer perception and customer satisfaction and retention [16].

Government of Ethiopia has considered quality as a development infrastructure since 1940’s when agricultural products export market began to expand [17]. However, previous researches indicate that the services delivered for customers are poorly coordinated and uneven in quality. There are different reasons for customer dis satisfaction and knowing these reasons is important strategy in reducing customer dissatisfaction. Many business sectors in the study area frequently changed their business from one type to another because of lack of customers in their productions or services. Previous researchers indicate that the potential reason for this that, service providers lack enough information about demand and need of their customers [18]. There is a lack of evidence which informs the level of customer service quality in the study area. So, this study will have a significant contribution to fill the information gaps and recommends practical solutions. Therefore, the main objective of this study was to investigate the effect of service quality on customer satisfaction on Ethiopian pharmaceutical supply agencies in Ethiopia.

Materials and Methods

Study population, design and source of data

The study was conducted in Ethiopian pharmaceutical supply agencies which is one of the business sectors in the country that many people are served. All customers receiving the services in pharmaceutical supply agencies, Bahir Dar branch were considered as the study population. The study used both primary and secondary sources of data.

Sampling techniques and sample size determination

A systematic random sampling technique was applied to select participant under the current study. The sample size determination for the current study was conducted based on the mathematical model named Yamane provides a simplified formula to calculate sample sizes [19,20].

n=N/(1+N(e)²)

where, n=sample size, N=population size, e=level of margin of error.

Based on the above formula, sample size is; n=N/(1 +N(e)²)

n=342/(1+342(0.05)²)

=184 customers are the sample size of the study.

Among the 184 customers, only 167 were responded for the structured questionnaires and included in data analysis.

Data type and sources

Researcher focused on primary data. The primary data had collected from EPSA customers those in public hospitals and health centers department of pharmacy who purchase medicines. However, besides the primary sources of data, the secondary sources were also used in collecting important information related to the variable of interest (Customer satisfaction).

Data collection procedures

The researcher used primary data to the study. In the collection of primary data, a structured questionnaire had used. Questionnaires would use as a major instrument to collect information from the data source of the study. The required data for this study would collected by distributing questionnaire to selected respondents. Thus, this study used numerical scales of Likert with 1-5 alternative answer choices to measure the attitude of respondents. Hence, the variable of interest was first measured in 5-Likert scales. Lastly, the Likert scale measures were convert in to quantitative form considering all instruments used to collect data from the field. The current study used both primary and secondary data source. The primary data were collected using structured questionnaires and the data were collected by data collectors after they got short term training. Before formal data collection, a piolet test was conducted on 25 randomly selected customers and amendment was taken on the structured questionnaires considering the feedbacks given from the piolet test.

SERVQUAL model was used to measure the quality of service given to customers. The current study used quantitative approaches. The A quantitative approach had employed using a self-administered questionnaire, based on a modified version of the SERVQUAL and HOTSPERF. The SERVQUAL measurement was based on 20 quality service attributes that were reduced into five dimensions namely: Tangibility, reliability, responsiveness, assurance and empathy (Figure 1).

Variables in the study

Response variables: The response variable for the current investigation was satisfaction of Customers served at pharmaceutical agencies.

Independent variables: The predictor variable for the current study was quality of services given to the customers. This was measured based on reliability, responsiveness, assurance, empathy and tangibility. The conceptual framework for the relationship between service provision and customer satisfaction is indicated in Figure 1. In Figure 1, tangibility of service provision was represented by availability of modern equipment, physical facility and neatness and dressing style of service providers. Hence, these factors had an indirect effect on customers’ satisfaction but direct on tangibility. Empathy was represented by the attention of service providers to customers, understanding the requirements to give service to customers and ability to deliver services convenient to customers. Similarly, politeness in delivering services, knowledge in answering customer’s request, professional of staff in delivering services and perfection of service delivery represented for assurance. Responsiveness of the service providers was expressed in an easy information made obtained from customers, willing to assist customers, full attention in responding customer’s question, delivery of customer’s personal service. Finally, reliability was expressed by the action like sincere interest of a manager to solve customer’s problem, provision of services based on their standards, application of first come, first served principle, accuracy of information given to customers.

Figure 1. Conceptual frame work showing the relationship between quality of service and customer satisfaction.

The roles and responsibilities of service providers and customers are indicated in Figure 2 and named as gaps in delivering services. Figure 2 indicates the gap (the difference between EPSA customers’ expectations and delivery of service given to customers). The SERVQUAL model incorporates the 5-gaps about expectation and delivered quality of services. Hence;

GAP1: It represents the difference between consumer expectation and management perception, which is happened while the management or service provider does not correctly perceive what the customers wants or needs.

GAP2: It is the difference between perception and service quality specification which happens while there is a gap made because of the reason that service provider might correctly perceive what the customer wants, but may not perform based on a proved standard.

GAP3: It is the difference between service quality specification and service delivery, which is arised while there is poor training, incapability or unwillingness to meet the set service standard.

GAP4: It is the different between service delivery and external communication happened while customer expectations are highly incensed by statements made by company representatives and advertisements (expectations are not fulfilled at the time of service delivery).

GAP5: It is the difference between the expectations of the customer regarding to the service delivered and the actual service experience and occurred while the service quality cannot be achieved. Hence, the final Customer perceived service quality depends on the extent of gap 5 and associated with design, marketing and service delivery based on performance of gap 5.

Figure 2. SERVPERF model to measure the quality of services given to customers’ satisfaction at Ethiopian pharmaceutical supply agency.

Method of data analysis

The study used descriptive data analysis, which uses mainly quantitative data methods of analysis and additionally the researcher uses qualitative analysis. After data collection, quantitative data organized, coded, tabulated, checked for appropriateness, and analyzed using SPSS version 26 software, for descriptive statistics, correlation, regressions and ANOVA had been used to investigate the effect of quality service on customers’ satisfaction. The descriptive statistical used to measures (percentages and frequencies) and Pearson correlation coefficient applied to investigate the relationship among variables. The study employed multiple regression analysis used to investigate the effect of service quality, service quality dimensions (Tangible, reliability, responsiveness, assurance, empathy) on customer satisfaction. The statistical significant tested at the 0.05 level. This study is generally build two sets of variables (dependent variable–customer satisfaction) and (independent variables-Tangible, reliability, responsiveness, assurance, empathy).

Therefore, the regression model under the current study is indicated as follows;

CS=β₀+β₁ (TAN)+β₂ (REL)+β₃ (RES)+β₄ (ASSU)+β₅ (EMP)+ε_i

where CS=Customer Satisfaction, which is the dependent variable of the study. TAN=Tangibility, REL=Reliability, RES=Responsibility, ASSU=Assurance, EMP=Empathy, and ε_i=Error term. β₀ is the intercept which would be equal to the mean value of the variable of interest while all predictors are zero. β₁, β₂, β₃, β₄ and β₅ are the coefficients associated with each independent variable that measures the change in the mean value of service quality per unit change in their respective independent variable.

Data quality assurance

The quality of research depends on the design of research instruments as well as application of these instruments in data collection in the field. There are several criteria or tests for judging the quality of any empirical research. These include validity and reliability of the quality of service delivered and customers’ expectation form the company.

Validity in the service delivery is the extent to which the instruments used during the studies to measure the issues they are intended to measure. Hence, in the current study, comments and suggestions from the respondents were collected using validity test. Reliability as the degree to which a survey instrument is considered reliable was used in the current study to check whether the instruments were consistent.

Results

Description of characteristics of participants in the current study

The demographic characteristics include under the current study consists of gender, age category, level of education, and work experience. The baseline characteristic indicated in Table 1 shows that among the participants about 61.68% (103) of were males and the rest were female, the majority of the respondents 62.5% were in the age category 18-25 years and about 64% of the were at diploma holders.

Table 1. Baseline characteristics of respondents.

Description of variables under study

The summary of expected quality of services rendered to customers are indicated in Table 2. As shown in Table 2, the quality of service was consisted of tangibility, reliability, responsiveness, assurance and empathy. Tangibility belongs to existence of equipment, physical facility, dressing style of employees and accuracy for their appointment. Hence, the expected value of tangibility was 3.01 with standard deviation of 0.8. Similarly, the expected reliability given for the customers was 3.2 with standard deviation 1.13, the expected assurance was 3.54 with standard deviation of 0.91 and the expected quality with respect to empathy was 3.27 with standard deviation 1.14.

Table 2. Description of quality of service for the variable of interest (n=167).

Description of customer satisfaction under study

As shown in Table 3, the majority of the customers (49%) were dissatisfied with the quality of service given to them and only 25% the participants assured that they were satisfied with the quality of service given to them (Table 4).

Table 3. Description of customer satisfaction on the service delivered by EPSA (Five-Likert scale).

Table 4. Instruments used to assess the level of customer satisfaction (n=167). Correlation ship between quality of service delivery and customer satisfaction

Correlation ship between quality of service delivery and customer satisfaction

The correlation ship between qualities of service expressed interims of tangibility, reliability, responsiveness, assurance and empathy had been indicated in Table 5.

Table 5. Correlation ship between quality of service and customer satisfaction at ES.

The results indicate that, there is positive and strong relationship between empathy and customer satisfaction (r=0.837, p<0.05), assurance and customer satisfaction (r=0.781, P<0.05), reliability and customer satisfaction (r=0.723, p<0.05), responsiveness and customer satisfaction (r=0.609, p<0.05) and tangibility and customer satisfaction (r=0.421, P<0.05). Table 5 indicates that, the expression for quality of service (empathy, assurance, reliability, responsiveness and tangibility) has a positive correlation ship with customer satisfaction. Hence, as quality of the service given to the customer increased, the corresponding customer satisfaction also increased.

Parameter estimation of customer satisfaction

In order to investigate the significance of quality of service on the customer satisfaction, five dimensions of quality of service were used these dimensions were tangibility, assurance, empathy, responsiveness and reliability. The parameter estimations of the five dimensions of quality of service is indicated in Table 6.

Table 6 indicates that tangibility, responsiveness, assurance and Empathy were significantly affected the satisfaction of customers. Hence, as empathy of the service provider increased by one unite, the expected level of satisfaction of customers were also increased by 0.68, given the other covariates constant (β=0.68, p-value<0.05). The result in this study also indicates that as responsiveness the service provider increased by one unit, the expected level of customer satisfaction was also increased by 0.79 given the other covariates constant (β=0.57, p-value<0.05).

Table 6. Parameter estimates of customer satisfaction.

Similarly, as the tangibility of the service quality increased by one unite, the expected level of satisfaction was increased by 0.85, given the other covariates constant (β=0.85, p-value=0.01) and as the assurance of service providers increased by one unit, the expected level of customer satisfaction was also increased by 0.79, given the other covariates constant (β=0.79, p-value<0.05).

Model adequacy checking

The overall adequacy of model was assessed using the F-test statistic as shown in Table 7.

Table 7. Analysis of Variance (ANOVA).

As it is indicated in Table 6, about 80% of the variation of customer satisfaction was explained by the variation of quality of services given to the customers. Hence, dimensions of the quality of service included in the current study explained 80%of the level of customer satisfaction.

Assumption of multiple linear regression model

The assumptions of multiple linear regressions such as linearity, normality, and collinearity assumptions were assessed. The linearity assumption was tested considering the standard residuals and standard residuals were randomly scattered around the horizontal line. The assumption of the regression model tested also as shown in Figure 3. Figure 3 indicates that the dependent variable customer satisfaction and independent variable quality of service had linear relation.

Figure 3. Residual vs. predicted plot.

Similarly, the normality assumptions, the multicollinearity, hetrosdascity assumptions were all assessed and meted the criterion. The normality assumption is indicated in Figure 4 and indicates that the data were normally distributed with mean zero and constant variance, σ².

Figure 4. Test of the normality assumption of data under study.

Discussion

The results in the current study indicates that out of the five service quality dimensions, four dimensions (empathy, assurance, tangibility and responsiveness) have positive and significant effects on customer satisfaction.

The findings of this study indicates that empathy has statistical significant effect on the variable of interest namely customer satisfaction. Hence, as the empathy of the service provider (service providers’ individual attention to their customers, staff understanding on requirement to get the service and convenience of working hours of service providers) increased, the expected level of the customer satisfaction also increased. The finding of this study further indicates that empathy has a positive and significant effect on customer satisfaction. This finding is supported by Huda MN, et al. However, this result is contradicted with another finding which stated that empathy has a negative effect on customer satisfaction. The potential reason for this might be study area, sample size and study time variations. Hence, this result needs further investigations to reach a conclusion.

The results in the current study also indicates that assurance has a positive and significant effect on customer satisfaction. Hence, as assurance of service providers (politeness of the service providers, knowledge of service providers about the issues raised by their customer, the professional of service providers in the company, perfection of services given to the customer) increased, the corresponding level of customer satisfaction also increased. This finding is also supported by the previous studies.

Another significant variable significantly affected the variable of study was tangibility, which is positively and significantly affects customers’ satisfaction. Hence, as the tangibility of service providers (availability of modern equipment, physical facility, neatness and dressing and accuracy of filling system) increased, their customer satisfaction also increased given the other predictors constant. This finding is supported by one of the previous studies.

Responsiveness of the service providers expressed interims of willingness of the employees, not to be busy to respond the customer’s request, provision of customer’s personal service and provision of easy/quick answer for customer’s request, had a positive and statistically significant effect on the customers’ satisfaction. This result is also supported by one of the previous studies.

Conclusion

The main purpose of this study was to examine the effect of service quality on customer satisfaction, the case of Ethiopian pharmaceutical supply agency Bahir Dar Branch by using the SERVQUAL model. The result in the current study indicates that, the four dimensions of service quality had a positive relation with overall service quality and customer satisfaction. The result also indicates that the majority of the respondents (31.3%) were dissatisfied on the quality of service given to them and only 8.2% of them were very satisfied. The expected amount of satisfaction for the participants’ quality of service was 25%. The overall result also indicate that there is a statistical significant (p-value<0.05) positive relationship between service quality and satisfaction of customers. Among measures of quality of services like empathy, assurance, tangibility and responsiveness significantly affected the level of customer satisfaction. Hence, as the level of empathy, assurance, tangibility and responsiveness of the service providers’ increased, the costumers’ satisfaction also increased.

In general, the results revealed that all independent variables accounted for 80.6% of the variation of customer satisfaction (R2=0.806). Thus, 80.6% of the variation in customer satisfaction was explained by the service quality dimensions. Based on this study finding, out of the five service quality dimensions four dimensions (empathy, assurance, tangibility and responsiveness) have positive and significant effects on customer satisfaction.

Recommendation

Customer satisfaction of any service provider company can be strengthened by treating customers as an asset to increase intimacy with customers. Customer satisfaction can be also achieved by offering personalized, flexible and adjustable services to suit the needs of customers. Bilateral communication is another essential element to satisfy customer and retains loyalty. Although customer service has been evaluated for years, EPSA’s must continue to keep up with changing customer behaviors and the nature of the competitive environment itself. Based on the findings of the current study, it is recommended EPSA should conduct ongoing research on service quality and customer satisfaction to understand the changing customer’s satisfaction levels against offerings on what should be done and what strategies to be implemented in order to achieve customer satisfaction goals. Comparison of customer standards against internal processes is also recommended to identify opportunities for the improvement of customer satisfaction. Understanding the change of needs of customer and their aspiration or expectation is also recommended by creating effective and continuous feed backing system. Strong customer relation is recommended to understand the customers’ needs and should give service explanation while interacting with them. Personalized attention to its customers and provision of an immediate response to all customer complaints is also recommended to achieve customer satisfaction. Finally, similar study is recommended with large study area and additional variables.

Limitations

This study was not without limitations, one of the limitations was the study area where samples have been taken was in Bahir Dar Branch. Including more areas about EPSA may give additional information about customer satisfaction.

Ethical Approval and Consent of Participate

The informed consent for this cross-sectional study was waived by Bahir Dar University ethics committee, Ethiopia.

Consent for Publication

This manuscript has not been published elsewhere and is not under consideration by any other journal. Authors agreed this manuscript to be submitted in this journal for publication.

Competing Interests

Authors declared that, there is no conflict of financial interest between the author and institutions.

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-from-profit sectors.

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