Perceived Quality of Retail Services: an Exploratory Investigation of an Alternative Model

ABSTRACT - The concept of perceived service quality receives much attention. However, a need exists for clear theoretical conceptualization and operationalization of the construct involved. In this paper theory on perceived service quality is discussed. An alternative model of perceived service quality is presented and preliminary testing of several related propositions is done.


Kitty Koelemeijer (1993) ,"Perceived Quality of Retail Services: an Exploratory Investigation of an Alternative Model", in E - European Advances in Consumer Research Volume 1, eds. W. Fred Van Raaij and Gary J. Bamossy, Provo, UT : Association for Consumer Research, Pages: 322-328.

European Advances in Consumer Research Volume 1, 1993      Pages 322-328


Kitty Koelemeijer, Agricultural University, Wageningen, The Netherlands

[The author gratefully acknowledges the suggestions by professors Jim Wiley and Paul Larson on the "sorting procedure" which was used in the research, as well as on previous versions of this paper. The Dutch Flower Council and The Dutch Ministry of Agriculture are acknowledged for providing the research funding.]


The concept of perceived service quality receives much attention. However, a need exists for clear theoretical conceptualization and operationalization of the construct involved. In this paper theory on perceived service quality is discussed. An alternative model of perceived service quality is presented and preliminary testing of several related propositions is done.


The concept of perceived service quality has been described as "an overall judgment concerning the excellence or superiority of a product or service" (Zeithaml, 1988). Perceived service quality is conceptually different from consumer satisfaction/dissatisfaction (CS/D). The latter is considered a transaction-related affective reaction, which ultimately evolves into perceived qualityBa concept similar to attitudeB(Olshavsky, 1985). CS/D resulting from an individual transaction serves as a mediator for attitude change (Yi, 1989). An attitude may be affected by a previous attitude concerning the construct (e.g. Oliver, 1981). Also, affect is hypothesized to influence cognitive evaluations of consumption experience. CS/D is a psychological state, resulting from specific experience, which decays into one's attitude toward products/suppliers.

Several components or determinants of retail service quality have been suggested recently. Koelemeijer (1991) suggests (1) logistics customer service, (2) customer service encounter, and (3) physical product quality maintenance as quality dimensions of services associated with the marketing of goods. Larson and Wiley (1992) develop a "Pyramid of Retail Quality" which consists of similar components: (1) merchandising quality, (2) service quality, and (3) product quality. Retail services associated with the marketing of goods may differ from 'pure" services. First, they may be secondary to the physical product bought and may therefore not be of central importance to the consumer, at least in certain stages of the purchase process. Furthermore, consumers may switch stores easily even before a transaction occurs, which is more difficult in case of "pure" services. Finally, consumers will be less involved in the production process of the "augmented" (GrĂ·nroos, 1990) product bought in case of goods than in case of services. One consequence is that the dimensionality of consumers' judgments concerning the quality of the customer service encounter will be less refined than the one found for "pure" services by Parasuraman et al. (1985, 1986), as found by Finn and Lamb (1991) and Koelemeijer (1991).

Validity of the "gap" model

A well-known and widely used instrument for measuring consumer's perceptions of service quality is SERVQUAL (Parasuraman et al., 1986). SERVQUAL measures perceptions of service quality as the computed difference between expectations and perceptions ratings for a number of items. Following CS/D terminology these computed differences can be viewed as a measure of inferred disconfirmation of expectations. The authors justify modeling perceived service quality as the inferred disconfirmation of expectations by its fit to the Lewis and Booms (1983) definition of perceived service quality and the possibilities it offers for diagnosing service encounters. Conceptualization of the perceived service quality construct has been subject to discussion (Babakus and Mangold, 1989; Carman, 1990; Finn and Lamb, 1991; Hentschel, 1991; Koelemeijer, 1992, Vogels et al., 1989). Furthermore, the items in SERVQUAL pertain to "pure" services.

In their most recent working paper Parasuraman et al. (1991) argue that the difference between the concepts of satisfaction/dissatisfaction and perceived service quality lies in the nature of the standards of comparison involved. They state that with satisfaction/dissatisfaction the expectations are predictions about future performance whereas with perceived service quality expectations equal normative beliefs, like performance as it should be, or acceptable performance. As an alternative to this reasoning it can be argued that studies on consumer satisfaction/ dissatisfaction showed that so-called experience-based norms (Tse and Wilton, 1988) appear to be used as standards of comparison. These experience-based norms may equal Parasuraman, Zeithaml and Berry's expectations of service as how performance "should be" in the context of perceived service quality, indicating that the difference between the concepts may not lie so much in the difference between these two types of expectations. In CS/D formation it is perceived performance during one particular transaction which is determinant. For perceived service quality it is the perceived service performance over time which determines the consumer's judgment. Fluctuations in service performance may cause more extreme affective reactions, reflected in consumer satisfaction/dissatisfaction, which influence quality judgments. These quality judgments in turn set standards for consumer expectations. Perceptions of service performance over time might be captured by a subjective probability distribution. It is this distribution which determines prediction of a service performance as well as perceptions of service quality. The time period during which service performance affects perceptions of service quality may vary across consumers. Expectations may also be considered in terms of a probability function, consisting of an argument and variance.

The discussion on SERVQUAL for measuring perceived service quality in retail settings (Finn and Lamb, 1991; Koelemeijer, 1991) and the methodological disadvantages implied in measurement of perceived service quality as inferred disconfirmation (e.g. Carman, 1990; Vogels et al., 1989; Wall and Payne, 1973) suggest the relevance for considering an alternative model for perceived service quality in retailing.


An alternative model of perceived service quality in retailing is proposed, the components of which are discussed below.

Standards of comparison: expectations. A consumer's experiences with this particular and other service providers, his or her personal needs, and information obtained by, for example, communications with third persons create a standard against which services are evaluated. The standards of comparison and their antecedents have been discussed by Parasuraman et al. (1991), and are very well known in CS/D literature. Expectations as conceptualized by Parasuraman et al. (1986) indicating performance as it should be on a bundle of service attributes seem to be a useful basis of comparison.

P1a.A positive relationship will exist between the expected service level and perceptions of service quality.

Perceptions of service performance. The level of performance of the retail outlet customers perceive on relevant service attributes will be related to the overall evaluation of service quality.

P1b.A positive relationship exists between perceived service performance and perceptions of service quality

As has been reported in consumer satisfaction/dissatisfaction literature, expectations and perceived performance will be positively correlated. There may be an interaction with the degree of experience the consumer has with a certain purchase and supplier. With high experience expectations and perceptions of performance become alike because of the assimilation effect (e.g. Johnson and Fornell, 1990). Experiences with a certain service provider over time influence the standard of comparison used. Experience influences the service level perceived as most likely to be delivered, and the degree of uncertainty associated with the expectations and perceptions regarding service outcome which can be represented as subjective probability distributions. As Peterson and Wilson (1992) showed, perceived performance will almost never exceed expectations.

P2.Service expectations and perceptions of service performance will be positively correlated.

Disconfirmation of expectations. A direct measure of disconfirmation of expectations may add explanation to a model of service evaluation. The degree to which performance deviates from expectations and the direction may influence the consumer's overall judgment concerning the service. Parasuraman et al.'s (1991) zone of tolerance and discussion in CS/D on zone of indifference (Woodruff et al, 1983; Cadette et al., 1987), as well as contrast and assimilation theory (Johnson and Fornell, 1990) may be relevant in explaining the perceived disconfirmation between expectations and performance. Implicit in the foregoing is that a positive relationship will exist between perceived disconfirmation of expectations and perceived service quality.

Quality uncertainty: performance ambiguity. In their analysis of satisfaction with services, Jayanti and Jackson (1991) use a measure of perceived risk as an explaining variable, which apparently did not have a significant effect. An underlying source of perceived risk is performance ambiguity. In institutional economics (e.g. Williamson, 1975; 1979) the concept of performance ambiguity gains increasing attention. Transaction costs consist of the costs of negotiating, monitoring, and enforcing the exchanges between parties to a transaction. Several sources of transaction costs have been identified in literature, one general dimension being performance ambiguity (Jones, 1987). Performance ambiguity arises when it is difficult for either party to evaluate the performance of the other on some aspect of an exchange. Performance ambiguity stems from the inability to measure the performance of parties to an exchange, or an inability to accurately value it. For example, it arises when the object of exchange is complex. The central condition creating performance ambiguity in services exchanges is the intangibility of services, or stated differently, the high proportion of experience or credence attributes services possess. Although performance ambiguity causes perceived risk, the latter may not be a good concept to use in a model of perceptions of service quality as consumers may reduce perceived or actual risk, for example by store choice or by safeguarding against quality deterioration by careful treatment and maintenance. Although risk perceptions may be moderate to low, performance ambiguity may be high. Performance ambiguity may have implications for service evaluation processes. The uncertainty associated with the evaluation of services may lower standards of comparison. It may also have an effect on perceived disconfirmation of expectations, the so-called "gap" consumers experience, by increasing the assimilation effect and broadening the zone of tolerance.

P3a.The degree of performance ambiguity consumers experience is related to service expectations;

P3b.The degree of performance ambiguity consumers experience is related to perceived disconfirmation of expectations.

In figure 1. a model for retail services evaluation is shown in which the propositions are represented.


Sample and design. The sample consisted of 127 consumers who bought cutflowers at least once a month. They were selected by telephone interviews from a random sample of consumers.

Sorting procedure. Retail service attributes were generated from a review of the literature and results of a study in which the critical incident technique was used to identify sources of extreme satisfaction and dissatisfaction in a variety of retail settings (Koelemeijer, 1992). The 87 attributes were modified to fit the particular setting, which was flower retailing. In order to assess the determinance of the retail service attributes a "sorting procedure" was employed. Respondents were first asked to sort 87 cards on which attribute descriptions were typed according to their importance with regard to buying flowers on a 5-point scale, ranging from "Very unimportant" (1) to "Very important" (5) which was indicated on a sheet of paper. The interviewer wrote the number of the importance category on each card. Next, each respondent sorted the cards according to their perceived difference on the attribute between florists on a five-point scale, ranging from "No difference at all" (1) to "Great difference" (5) which was also indicated on a sheet of paper. The cards were then put into envelopes. Attributes which a respondent considered irrelevant to the retail setting and attributes which they did not understand were put aside in a separate envelope.

Measures. Consumers indicated their expectations for each attribute with regard to florists on a seven-point rating scale ranging from "Strongly disagree" (1) to "Strongly agree" (7). Perceptions of performance of each attribute were also indicated on a seven-point scale ranging from "Strongly disagree" (1) to "Strongly agree" (7). Sample items are "employees understand customers' needs", "employees give advice concerning treatment of flowers", "employees spend much time on you as a customer", "the store is well-organized", and "much choice in cutflowers". Perceptions of disconfirmation were indicated on a three-item, seven-point scale ranging from "Greatly falls short of my expectations" (1) to "Greatly exceeds my expectations" (7) for one overall item and a service and a product quality item respectively. Respondents rated the degree to which product quality and services varied on a two-item, seven-point scale ranging from "Varies a lot" (1) to "Does not vary at all" (7). Consumers' difficulty in evaluating retail services (performance ambiguity) was measured using a modified version of Jones (1987) scale on a six-item, seven-point scale ranging from "Strongly disagree" (1) to "Strongly agree" (7), for example "it is difficult to assess whether employees do good work at a florist's". For assessing consumers' overall judgments concerning retail services four measures were used. First, overall evaluation was scored on a five-item seven-point scale "Very bad" (1)B"Very good (7)", consisting of items like "XYZ is a good store", "XYZ offers superior service", or "at XYZ the customer is always right". Second, a five-item seven-point Likert-type scale "Strongly disagree" (1)B"Strongly agree" (7) with similar items was used. Third, a measure of affect consisting of a five-item seven-point Likert-type scale was used, for example "Overall, I am satisfied with XYZ" or "sometimes I don't think it pleasant to by at XYZ". Cognition was measured on a six-item, seven-point Likert-type scale, with items like "I don't agree with the way customers are treated at XYZ". Finally, purchase probability was assessed on a one-item scale ranging from "Very unlikely" (1) to "Very likely" (7). The interviews took approximately one hour.


Determinant attributes. Cluster analysis was done on the correlation matrices of the importance, perceived differences between outlets, and importance multiplied by difference scores respectively. Irrelevant attributes were assigned missing values. Although no clear solution resulted the icicle plots and dendograms indicated roughly three or four clusters of items. These clusters concerned first a large set of items related to employee behavior, second store specific items, and finally information or advice and suggestions by employees. Items relating to assortment grouped together, but could also be viewed as belonging to the store cluster.

Items with mean score >3.0 on differences between stores were selected from the set and factor analyzed. On the basis of principal components analysis of these 21 items the scree plot, percentage of variance explained, and eigenvalues exceeding one, 5 factors were uncovered and varimax rotated, explaining 67.4% of variance. The first factor consisted of 8 items all relating to assortment, the second factor consisted of store-specific items, like display and appearance, and the third factor related to quality maintenance. The last two factors related to store atmospherics and exclusiveness, respectively. Factor analysis of the 27 items with mean importance score >4.0 revealed five factors as well, explaining 51.1% of variance. The varimax rotated factors concerned respectively (1) employee behavior and attitude, (2) fairness and reputation, (3) employees knowledgeability and support, (4) assortment and quality maintenance, and (5) environmental issues with regard to flower growing and selling. Each of the retail service quality components mentioned earlier are represented clearly in these results. From the cluster and factor solutions determinant and representative attributes were chosen from each cluster and used to constitute measures of the expectations and perceived performance constructs.


Performance ambiguity. The six performance ambiguity items were factor analyzed and two factors were found. Varimax and oblique rotation provided similar results. The first factor explained 42% of variance and items loading high were positively formulated items concerning difficulty of evaluating florists services. The second factor consisted of negatively formulated items and explained 29.9% of variance. The three items loading high (>.80) on the first factor were subsequently used as a measure for performance ambiguity. The items generally concerned service during purchase and postpurchase stages of the buying process. Mean score on the selected items was 4.42, indicating that respondents found it somewhat difficult to evaluate florists' services.

Expectations and perceived performance. Three indicators were used for both the expectations and perceived performance constructs. The indicators were factor analyzed and items loading high on a one-factor solution were retained. The first indicator consisted of six items relating to advice and suggestions given by employees as well as quality maintenance and assortment. The second indicator concerns seven items representing employee behavior and attitude, like the willingness to help customers. And the third indicator concerns seven store items, like atmosphere, and layout. For expectations this indicator was reduced to five items. Assortment as a separate indicator did not relate strongly to the other indicators, so a selection of items was included in the "merchandise/information" indicator. Mean expectations ratings ranged from about 3.75 to 6.80, and mean performance ratings ranged from 4.60 to 6.25. In this case perceptions and expectations scores differ, as the mean difference ranges from -2.30 to 2.10. Variation in performance was measured as the summated score on the two items, which correlated significantly.

Disconfirmation of expectations. Disconfirmation of expectations was represented by two indicators, one global assessment and an indicator representing disconfirmation with services and quality offered. Mean disconfirmation was positive, about 4.80 on a seven-point scale.

Overall judgment of service quality. Three items of the overall "Very badBVery good" scale as well as four items of the overall "Strongly disagreeBStrongly agree" scale were used as indicators for overall judgment of retail service quality together with three items of the affect scale and two items of the cognition scale. Negative items were reversed prior to analysis. For each indicator all items loaded high on one factor. In figure 1. the model used for LISREL analysis is shown.

LISREL analysis of the model

Several indicators were not used in the LISREL analysis. The measure for purchase probability did not correlate stronger with all other measures of the same construct "overall evaluation" than with some measures of other constructs. In table 1. Cronbach's alpha for the indicators which have been used in the LISREL analysis are presented.

The results shown in table 2 indicate highly significant effects of perceived performance on both disconfirmation and overall judgments, supporting proposition 1b. There is a non-significant negative effect of expectations on disconfirmation (P1a), higher expectations coincide with lower positive disconfirmation. The correlation between expectations and perceived performance is highly significant and positive (P2). The correlation between performance ambiguity and expectations (P3a) is only weakly significant (t = 1.87). There is a weakly significant effect of performance ambiguity on disconfirmation (t = 1.80) (P3b). Finally, disconfirmation and overall judgment are significantly related.

The Chi-square value of the model and its associated p-value are not higly significant. On the other hand, Bentler-Bonett's indices of practical significance are about .90 and the average residuals are small. Compared with the full model the increase in Chi-square value is not significant, however, deletion of additional nonsignificant parameters caused Chi-square value to increase significantly (p<.10). In addition, squared multiple correlations for each of the structural equations are rather high: .566 and .782 respectively. Unexplained variance with respect to disconfirmation and overall evaluation are rather low: .312 and .189. LISREL analysis without the performance ambiguity construct shows similar results.


For various reasons modeling and measurement of perceived service quality as derived disconfirmation of expectations does not seem to be desirable. In addition, insight is needed into the relevance of attributes for retail settings which were previously lacking in service quality studies, notably attributes relating tot merchandise and product quality maintenance. We suggested a model with separate effects of expectations and perceptions of performance on service judgments, possibly moderated by direct disconfirmation. Disconfirmation in general being slightly positive, we found a nonsignificant negative relationship between expectations and disconfirmation. This may be due to low involvement with customer services for routine buyers. The effect may differ across retail settings and purchase situations which differ in terms of customers' involvement, perceived disconfirmation, and experience. The role of expectations may vary in different stages of the buying process. In a similar setting Koelemeijer (1992) found from an analysis of several ways of measuring service quality that with modified SERVQUAL items measures combining expectations or importance ratings did not discriminate from measures consisting of only perceived performance ratings. This is in agreement with Wilkie and Pessemier's (1973) findings.



One moderating variable in contrast effects is ambiguity of product performance. With respect to services performance ambiguity is clearly a concept which deserves attention, especially in retail settings where more uncertainty is experienced than was the case in this study. Although we did not succeed in operationalization of perceived variation in service performance, this may be an important aspect as well. Here experimental research may provide more insights.

The results from the attribute screening stage indicate the existence of a multidimensional retail service quality concept as suggested by Koelemeijer (1991) and Larson and Wiley (1992), consisting of three dimensions related to respectively merchandise, product quality, and employee interactions. This may be elaborated in further research, which may focus also on, for example, the relationship between perceived service quality and the number of retailers in the evoked set, and behavioral measures. Limitations of the study concern in the first place the limited retail setting. In addition, a large number of attributes (87) had to be rated, which might have introduced error or even a halo effect.

Future research could focus consumer service evaluation, in particular formation of expectations, in the different stages of the purchase process and their role in service quality judgments. Also, expectations and performance can be considered as probability distributions. With regard to perceptions of performance we suggest it is the cumulative effect of service experiences over time which determines the consumers' perceptions of service quality. Perceived variation in service performance will lower perceptions of service performance and may even reduce service quality judgments. Another interesting issue concerns the role of performance ambiguity across different types of services. Finally, attention could be devoted to the role of involvement and personal characteristics.






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Kitty Koelemeijer, Agricultural University, Wageningen, The Netherlands


E - European Advances in Consumer Research Volume 1 | 1993

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