UNIVERSITY OF SOUTH ASIA

Department of Management Sciences

CUSTOMERS PRICE SATISFACTION IN BANKING

SECTOR OF PAKISTAN
Master of Business Administration (Marketing) (3.5 Years),
Session (2011-2015)

Submitted by: Ihtsham Ali (40027)

Submitted to: Khurram Aziz Fani
Project Advisor: Mr. Akram Rahat Butt Principal (Head of
Department)

_____________________________________________
47-Tufail Road, Lahore Cantt.
Tel: (042) 36672942 - 5
E-mail: info@usa.edu.pk, U.R.L: www.usa.edu.pk
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DECLARATION

I declare that this study submitted for the degree of Master of Business Administration has not
already been accepted in substance of any degree, and is not being concurrently submitted in
candidature for any degree.

I also declare that this study submitted for the degree of Masters of business administration is the
result of my own work and investigations. Wherever possible I have acknowledged the authors
of references used and of views expressed which are then my own.

Contents
Abstract ......................................................................................................................................................... 5
1.0: Introduction, Research Aim and Objectives .......................................................................................... 6
1.1: Introduction: ...................................................................................................................................... 6
1.2: Customers Satisfaction In Banking Industry And Its Importance: .................................................... 6
1.3: Importance Of Pricing: ....................................................................................................................... 7
1.4: Antecedents Of Price And Its Satisfaction: ........................................................................................ 8
1.5: The Context Of Price Satisfaction In Banking Sector: ........................................................................ 8
1.6: Research Aim: .................................................................................................................................... 9
1.7: Research Questions: .......................................................................................................................... 9
1.8: Research Objectives: .......................................................................................................................... 9
1.9: Significance of the Study: ................................................................................................................. 10
2.0: Review of Literature............................................................................................................................. 11
2.1: Introduction: .................................................................................................................................... 11
2.2: Satisfaction of the Customers: ......................................................................................................... 11
2.3: Loyalty of Customer: ........................................................................................................................ 11
2.4: Analysis of Consumer Behavior-Significance: .................................................................................. 12
2.5: Pricing Strategy: ............................................................................................................................... 12
2.6: Pricing and Customers Satisfaction: ............................................................................................... 12
2.7: Price Satisfaction:............................................................................................................................. 13
2.8: Dimensions of Price Satisfaction: ..................................................................................................... 13
2.8.1: Price Transparency:................................................................................................................... 14
2.8.2: Relative Price: ........................................................................................................................... 14
2.8.3: Price-Quality Ratio: ................................................................................................................... 14
2.8.4: Price Confidence: ...................................................................................................................... 14
2.8.5: Price Fairness: ........................................................................................................................... 15
2.8.6: Price Reliability:......................................................................................................................... 15
3.0: Methodology and Data Collection ....................................................................................................... 17
3.1: Introduction: .................................................................................................................................... 17
3.2: Need for Research: .......................................................................................................................... 17
3.3: Type of Data to be Collected: .......................................................................................................... 17

3.4: Research Ethics: ............................................................................................................................... 18

3.5: Population and Sample Selection: ................................................................................................... 18
4.0: Limitation of Proposed Study .............................................................................................................. 19
5.0: Time Frame Of The Proposed Research............................................................................................... 19
5.1: Timeline: .......................................................................................................................................... 19
BIBLIOGRAPHY ............................................................................................................................................ 20

Abstract
Introduction: The said research is purely based on the customers price satisfaction on overall
customers satisfaction and to analyze customers satisfaction on pricing at retail banking sector
of Pakistan. These are important determinents of customers of satisfaction.
Aims and Objectives: The aim of this research is to analyze customers price satisfaction on
overall customers satisfaction and to analyze customers satisfaction on pricing at retail banking
sector of Pakistan. It is an important part to discuss as well as others to focus on customers price
satisfaction.

Methodology: Research will be based on positivism philosophy. Population of this research is

all those persons who have their account in Pakistani bank. Researcher will conduct a structured
survey to collect the data. SPSS will be used to analyze the collected data.
Significance of Research: Banking sector will found the reasons on which their customers are
not satisfied and the suggestions to increase the customers price satisfaction to make them loyal.
This will help to make the policies regarding price satisfaction of customers.
Timeframe of the Research: This research will be carried out in 12 weeks approximately.
Submission of the proposal will be in 1st week and will be approved in 2nd week. Researcher will
complete review of literature till 8th week. Questionnaires will be structured and finalized after
approval of proposal in 4th 5th and 6th week. Data will be collected in 6th 7th and 8th week. Data
will be analyzed in 8th and 9th weeks. The first draft will be finalized and submitted in 10th week.
Final draft will be reviewed in 11th week. The submission of this research will be in 12th week to
University.
Limitations of the Study: This research will focus on price dimensions only. Moreover,
convenient based sampling technique will be used in this research.
Key Words: Pakistan, Customer, Price Satisfaction, Banking Sector.

1.0: Introduction, Research Aim and Objectives

1.1: Introduction:

In this section, introduction and background of price satisfaction of customers in banking

industry of Pakistan will be presented. Moreover, aim, objectives and research questions
regarding the topic will also be presented in this section.

1.2: Customers Satisfaction In Banking Industry And Its Importance:

Customer satisfaction has long been researched by the academics and practitioners of business
(Amin and Isa, 2008, Anderson et al., 1994, Anderson, 1998, Arasli et al., 2005, Bell et al., 2005,
Biyalogorsky et al., 2001, Brown, 2001, Churchill and Suprenant, 1982, Dick and Basu, 1994,
Gonzalez et al., 2004, Huber et al., 2001, Lee and Lin, 2005, Ranaweera and Neely, 2003, Rust
et al., 2004, Sadiq Sohail and Shanmugham, 2003, Wilding and Juriado,2004). Different
businesses, manufacturing to retailing, now focus on customers retention and satisfaction. This
includes both services and products. Kotler and Armstrong (2010) suggested that to satisfy the
customers needs and wants, organizations should give more attention on their products and
services. This would give competitive advantage to an organization over its counterparts.
Organizations who pay much attention to needs and wants of the customer satisfaction ensure
that they are following the philosophy of customer orientation. Moreover, Fornell et al. (1994)
indicated that businesses should have to pay more attention on customers satisfaction as this is
becoming the major problem of the businesses.

They further highlighted that customers

satisfaction may also lead to repeat purchase among customers as well as positive word of mouth
for organization. Customers satisfaction has positive impact on sales and profitability of an
organization. This leads to increase in market share. Banks performance is also based on
customers satisfaction. Banking customers are said to be satisfied when the banks meet their
expectation level of the quality service and on the other side, dissatisfaction occurs if the
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expectations are not fulfilled. It is important to identity the factors on which customers
satisfaction is based in the banking sectors. The modern banking is moving towards mobile or
electronic banking and presently there are not too many banks that are providing the mobile
banking service facility. Customers satisfaction is not more than an act of providing enough
services acceptable by the customer. Customers satisfaction directly effects the profitability of
any organization. Customer satisfaction effects the reliability, reputation and success in the
banking sector. (Zaman, Rustam, Umar 2013)
The organizations who monitor its customers needs and wants, they retain their customers.
Products and the services offered by an organization should be changed with the change in needs
and wants of the customer. Therefore, needs and wants should therefore be researched (Pine et
al,. 2010).

1.3: Importance Of Pricing:

Athanassopoulos (2000) suggested that customers satisfaction is based upon such attributes as
innovation, price and convenience. Zhang and Raju (2010) indicated that customers adjust their
needs according to the pricing plans. Boone et al. (2009) explains that price of a product or
service has an impact on consumer behavior. They identified that comparatively women instead
of men have tendency to pay money, and white people pay less as compared to black people.
Price affects not only the purchase but also post-purchase behavior.

Colgate and Varki (2001) identify that price and the level of general satisfaction have positive
relationship with each other. The prices charge to the people directly relates with customer
satisfaction. If a bank decides to charge high price for its services, this may result in
dissatisfaction of customer and lost the customer, as customer would switch to other banks,
which comparatively charge low prices. Price satisfaction is an important area and is still reap for
research.

1.4: Antecedents Of Price And Its Satisfaction:

There are various factors that have an influence on customers satisfaction. Some of these are
honest pricing, fixed pricing, customers advocacy and money back guarantee. Renirtaz et al.
(2005) indicated that the customer retention strategy should be adopted carefully because
retaining a customer is a costly as well as important job. Shanka (2012) says that the
responsiveness, empathy, tangibility, assurance and reliability are the five dimensions of the
SERUPERF model to measure the customers satisfaction of a bank. Matzler et al. (2006) said
that to understand the price satisfaction is a difficult thing and they mentioned various factors of
price satisfaction. These factors include relative price, price reliability, price transparency, price
fairness and price-quality. Over the period customer changes their preferences.

1.5: The Context Of Price Satisfaction In Banking Sector:

This dissertation is related to banking industry of Pakistan and purpose of research is to find out
the impact of various dimensions of price satisfaction on customers satisfaction. Hopkinson and
Aman (2009) indicated that distribution channels in Pakistan are changing and has implications
not only for business community but for retail customers also. They highlighted that not only
large banks in market hold large market share but there is also a part of small banks in industry.
Small banks facing threats due to entry of large banks in market. Hopkinson and Aman (2009)
highlighted that retail business is going to be increased during coming years. The dissertation
identified price satisfaction in banking sector of Pakistan for this dissertation research. There
were only 487 bank branches in Pakistan but after independence, many of the branches were
closed and only 195 branches were left in Pakistan. State Bank of Pakistan was launched in May
12, 1948. Various banks are now expanding their operations in various cities. Now, banks are
offering lots of products and services. Price satisfaction in services and products offered by
banks has been identified in this dissertation research.

1.6: Research Aim:

The aim of this research is to analyze customers price satisfaction on overall customer
satisfaction and to analyze customers satisfaction on pricing at retail banking sector of Pakistan.
It is an important part to discuss to focus on customers price satisfaction. Moreover, this is an
area in which further research should be explored.

1.7: Research Questions:

Followings are the questions of this dissertation research:

1- What are the importamnt dimensions of price satisfaction of banking industry in Pakistan?
2- To what extetnt customers of banking industry in Pakistan are satisfied with reference to
important dimensions of price satisfaction?
3- What is the influence of different dimensions of price satisfatcion on overall price
satisfaction?
4- How can customers price sastifaction can be increased so as to increase overall customers
satisfatcion?

1.8: Research Objectives:

Following objectives based on aboved mentioned research aims and research questions.
1- To analayze the importamnt dimensions of price satisfaction in banking industry of Pakistan.
2- To analyze the extetnt of customers satisisfaction from dimmensions of price satisfaction in
banking industry of Pakistan.
3- To analyze the influence of different dimensions of price satisfatcion on overall customer
satisfaction.

4- To recomend members of banking industry so that they can increase price satiscfaction of
banking customer.

1.9: Significance of the Study:

Following are some of the advantages of this research

1- It would be an extension to literature of customers price satisfaction in banking sector.

2- It is an opportunity for customers to share their experiences.
3- The findings of this research would help the banking sector to satisfy their customer regarding
prices in Pakistan.

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2.0: Review of Literature

2.1: Introduction:

In this section, review of literature will be presented including satisfaction of the customer,
customer loyalty, pricing strategies literature, review of global banking sector of Pakistan and
dimensions of price satisfaction. The motif of this section is to explain the conceptual framework
of customer satisfaction on pricing in banking sector.

2.2: Satisfaction of the Customers:

Customer satisfaction is now an important issue of organizations. OSullivan and McCalling

(2012) suggested that customer satisfaction have a positive impact on the output of organization.
Long-term organizational success requires customer satisfaction. Organizations should develop
and understanding of ways through which customers can be satisfied. Employees should
maintain personal relationships with the customers by providing those best services and quality
product. Organization needs to provide high level of quality services to survive long term in
market (Wen, Wang and Han, 2003). Corporate strategy of an organization is strongly linked
with customers satisfaction (Homburg et al., 2005). Customer satisfaction contentions now
obtrusive among organizations. Therefore, to improve the relations with customers,
organizations originate particular programs. Athanasupouls (2001) elaborated that the service is
invisible and not tangible. Due to the judgment of the customers, satisfaction is quite difficult as
compared to tangible products of organizations available in market.

2.3: Loyalty of Customer:

Bowen (2001) suggested that we need to explore the tactics and strategies of customers
satisfaction in the retail banking. The base of retail banking are relationships. Long-term
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relationships cause the increase in profitability of the bank. Weaven and Herington (2007)
suggested that IT services are not only enough to maintain strong relationships of banking
customers. Customers loyalty can be achieved by attending the personal need of customer by
providing them well-organized web sites. It is also type of a customer relationship development
while the customer use the services online and become delighted.

2.4: Analysis of Consumer Behavior-Significance:

Weaven and Herington (2007) elaborated that to generate insight organization must have to
study the consumer behavior. Herrmann et al. (2007) highlighted if organization understand the
consumer behavior it would be helpful to increase its customer satisfaction and loyalty to stay
long in the market. To increase the profits and market share organizations will have to recognize
the importance of customer satisfaction (Cacippo, 2000).

2.5: Pricing Strategy:

The pricing strategy has received significant attention during the last few years. Herrmann et al.
(2007) suggested if a customer perceives that the pricing policy of the organization is fairer than
the customers become satisfied. However, on the contrary, if the pricing is thought to be the
other way round, the customers may switch to other organizations.

2.6: Pricing and Customers Satisfaction:

Prices are the monitory units that are paid or received against buying and selling of products or
services. For suppliers, it is the way to earn profits. Customers react to changes in prices which
has an influence on their buying behavior. Price setting is a marketing issue, which has an
influence on customers behavior. It is, therefore, very critical decision to set prices. This

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research is about price and pricing strategy. This will explain about the basis of the selected
topic. Many researchers have worked on the customer satisfaction. This research includes
various price dimensions, which deals with the price satisfaction in banking sector. Zhang and
Raju (2010) identified that the customer have to adjust prices according to the marketing mix
variables. For example in telecommunication sector services like pay-as-you-go way to charge
the prices.

2.7: Price Satisfaction:

Bitner and Zeithaml (2000) highlighted that customer satisfaction attached with values given to
customer, which influence their loyalty. They also indicate that value of customers associated
with customers paying and getting. Bitner and Zeithaml (2000) highlighted that customer

satisfaction attached with values given to customer, which influence their loyalty. They
also indicate that value of customers associated with customers paying and getting. O.H
(2003) indicate that customer compare the prices charges at the time of buying any new
product or service with price which they had already in mind. High prices will lead the
dissatisfaction of customer (O.H, 2003).

2.8: Dimensions of Price Satisfaction:

Matzler et al. (2004, 2006) indicated the various price dimensions including price transparency,
relative price, price fairness, price quality ratio and price reliability. They recommended that
customer preferences change with the time. It is important to stare on level of customers price
satisfaction. The price dimensions will be explored further.

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2.8.1: Price Transparency:

Urban (2003) highlighted that if information is easy to access, easy to access alternatives, easy to
make transactions, easy to communicate with other customers are the five factors who increase
customers power. Existence of price transparency is possible when customer get complete, clear,
recent and effortless information about product prices quoted by company.

2.8.2: Relative Price:

Colgate and Varki (2001) suggested that there is relationship between prices and customer
retention. They peruse to evaluate the pricing impact on customer of overall satisfaction and the
value customer receive and customer behavior. Colgate and Varki use the banking sector of New
Zealand and America and advise that pricing perception of customer influence in overall value
that customer perceive from organization.

2.8.3: Price-Quality Ratio:

Cronin et al. (2000) proved that quality and pricing affect the customers satisfaction by overall
and price affect the customers purchase consideration.

2.8.4: Price Confidence:

Matzler et al. (2006) highlighted that customers satisfaction is related with the price, quality and
price transparency offered by organization. This discussion will end with the favourable prices
offered by organization that are perceived by the customer. To satisfy the customers, confidence
is more important in organizations perspective.

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2.8.5: Price Fairness:

Chiao (2001) indicated that when organization change the prices, customers perception also
changes. Chiao analyzed two separate areas. In his first research, he studied the relationship
between customers satisfaction and increase in prices of an organizations products and
services. Customers believe that price changing is not fair, this is an unfair practice by
organization. The results of his second research were that the goodwill of an organization will be
decreased if customers will face the unfair price practices by organization.

2.8.6: Price Reliability:

Nalebuff and Ayres (2003) highlighted that in many situations organizations do not inform
customers regarding prices. They indicate the rental car and cell phone organizations who charge
hidden prices. Price reliability is an important dimension of price, which is the part of price
satisfaction.
Therefore, this situation can arise when customers feel the change in prices unexpectedly. If
organizations communicate the price changes on time then they will not be disturbed regarding
price changing issues. This would help the organization to build long-term relationships.

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Figure 2.1: Conceptual Framework

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3.0: Methodology and Data Collection

3.1: Introduction:

In this section, researcher will present the research philosophy, research approach, research
strategy, time period and data collection methods used in this research project (Saunders et
al. 2007). After this, population and sampling procedures used in this section will also be

discussed here. This will be followed by details about research ethics, validity and reliability of
research findings.

3.2: Need for Research:

According to Krishnaswamy et al. (2009), when we need to take decisions in our daily life, we
use common sense, which we have experienced over the time. This type of decision-making is
not the most appropriate choice. If anyone faces an important issue and has to take decision so,
he should identify the problem systematically, analyze the collected data and then decide what to
do.

3.3: Type of Data to be Collected:

In this research, primary and secondary data will be required. Primary data will be collected from
the customers and will be related to customers perception about prices of services and products
of banks. This data will be collected through structured questionnaire. The secondary data will
used in literature review. Collection of primary data is to somehow time consuming but its
reliability and authenticity is more as compared to secondary data. Furthermore, the secondary
data has less reliability and authenticity. Despite all, the secondary data is available quickly, less
expensive and did not require lots of effort of researcher.

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3.4: Research Ethics:

Researches are associated with human beings. There are a large number of topics to be
researched. Sensitive topics need more ethics, protocol and are linked with high risk. Research is
increasing across national and international boundaries, if the research ethics are not accounted
for. The researcher has selected such topic which will not create any violence at all. The
customers will take part in this research voluntarily. The researcher will not offer any benefits or
pressurize the customers to take part in this research. Anonymity of respondents will be ensured
in this research and no one can trace back the respondents. The researcher will not demand any
account number or bank name in questionnaire to maintain confidentiality. To secure the data
file it will be locked with password. Secondary data will also be acknowledged by researcher.
University has defined referencing style and researcher will follow that properly.

3.5: Population and Sample Selection:

While conducting a research project the researcher should identify the population and sampling
technique to be used in research (Kumar, 2010). In this research, all the customers of banking
sector will be the population, and the targeted population will be customers who are living in
Lahore, Gujranwala, Gujrat and Sialkot. Because of shortage of time, this will be difficult to
collect data from all the customers, so the researcher decided to collect data from a sample.
Sample can be selected based on either probability or non-probability based sampling. For
probability sampling all elements of population should be known. This was not the case with this
research. Therefore, researcher decided to use non-probability technique to choose sample. To
collect the data, researcher will select 150 respondents based on convenience based sampling
technique. Cost and time of data collection are kept in mind by the researcher while selecting the
basis of sample selection.

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4.0: Limitation of Proposed Study

This section will provide limitations of this project.

1- This research will include only those people who have their bank accounts. People who
have neither bank account nor any relation with banks will be excluded from this
research.
2- People who had worked in banks and those who are willing to work with bank in future
are excluded.
3- There are various determinants of customers satisfaction in banking sector. However, the
price dimensions will be selected.

5.0: Time Frame Of The Proposed Research

5.1: Timeline:
Following table shows the complete duration of the proposed research in the farm of Gantt chart.

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International Journal of Islamic and Middle Eastern Finance and Management, 1, 191-209.
Arasli, H., Mehtap-Smadi, S. & Katircioglu, S. T. (2005) Customer service quality in the Greek
Cypriot banking industry. Managing Service Quality, 15, 41-56.
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Bowen, J. T. and S.-L. Chen (2001). "The relationship between customer loyalty and customer
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Biyalogorsky, E., Gerstner, E. & Libai, B. (2001) Customer referral management: Optimal
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Cronin, J. J., M. K. Brady, et al. (2000). "Assessing the effects of quality, value, and customer
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