Managing Service Quality

Emerald Article: Differentiating between service quality and relationship quality in cyberspace Byron Keating, Robert Rugimbana, Ali Quazi

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To cite this document: Byron Keating, Robert Rugimbana, Ali Quazi, (2003),"Differentiating between service quality and relationship quality in cyberspace", Managing Service Quality, Vol. 13 Iss: 3 pp. 217 - 232 Permanent link to this document: http://dx.doi.org/10.1108/09604520310476481 Downloaded on: 01-05-2012 References: This document contains references to 53 other documents Citations: This document has been cited by 3 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 3581 times.

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Differentiating between service quality and relationship quality in cyberspace

Byron Keating Robert Rugimbana and Ali Quazi
The authors Bryon Keating is Lecturer, School of eBusiness and Management, Robert Rugimbana is Deputy Director and Ali Quazi is Head, Marketing and International Business Group, all at Newcastle Business School, University of Newcastle, Callaghan, Australia. Keywords Service quality, Retailing, Internet, Customer satisfaction Abstract The onset of Internet marketing is revolutionising marketing practice. Although growth in sales of goods and services online has been dramatic, very little research has addressed the factors that lead to the delivery of superior service and the creation of effective marketing relationships. This paper explores and defines two related constructs service quality and relationship quality to ascertain whether consumers can meaningfully distinguish between the constructs. The research uses focus groups and an online survey to address this issue. The paper finds that, although service quality and relationship quality are distinct constructs, they overlap in the area of personal interaction and problem solving. The key drivers for the delivery of superior service and the creation of an effective relationship are reliability and trust emanating from service quality and relationship quality respectively. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/0960-4529.htm
Managing Service Quality Volume 13 . Number 3 . 2003 . pp. 217-232 # MCB UP Limited . ISSN 0960-4529 DOI 10.1108/09604520310476481

Introduction
Preamble Despite rapid growth in the size and scope of online transactions, there is a relative dearth of research examining the dynamics of online exchange and the requirements for building effective online relationships (Parasuraman, 2002; Zeithaml, 2002a). Indeed, analysts have asserted that the ``dotcom crash'' of the 1990s was largely a consequence of a preoccupation with customer acquisition while failing to recognise the importance of delivering good service and nurturing customer relationships (Mahajan, 2002; Zeithaml, 2002b). It has been argued that long-term sustainability and profitability in the online marketplace will come only when firms embrace the challenge of developing customer loyalty (Medlin et al., 1999, Wang et al., 2000). To meet this challenge, academics and practitioners have begun to consider whether traditional relationship marketing theory can be successfully applied to the online environment. Berry (1983, p. 25) has been credited with providing the first workable definition of relationship marketing as the practice of ``attracting, maintaining, and enhancing customer relationships''. In addition to defining the construct, Berry (1983) also conceptualised the conditions required to facilitate effective relationship marketing: . that the exchange required a degree of continuity; . that the customer had to have a choice; and . that the customer had be in control of this choice. Gronroos (1990, p. 8) extended this definition to include a requirement for ``mutual exchange and fulfillment of promises'', and argued that commitment from both supplier and customer was required if long and profitable exchanges were to be developed. Gronroos (1994) added that transactional and relational exchanges occupy opposite ends of a continuum, and that all relationships begin with a transactional exchange. This process of moving from transaction to profitable relationship has been examined by a number of academics (for example, Rust and Zahoric, 1993; Liljander and Strandvik, 1993, 1994, 1995), and it has been argued that service quality at a

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transactional level results in customer satisfaction which, if repeated, leads to relationship quality. The benefit of increased relationship strength is posited as being increased profitability, given that the cost of attracting new customers is higher than that of retaining existing customers (Storbacka et al., 1995). Although associated in a relational orientation, service quality and relationship quality are, in theory, distinct constructs with service quality often conceived as being antecedent to relationship quality (Wong and Sohal, 2002; Page, 2000; Storbacka et al., 1995). However, although it is widely acknowledged that more empirical research is needed into the causal relationship of service quality and relationship quality and their effects on customer loyalty, a necessary prerequisite to any such investigation is a clear conceptualisation of each of these constructs. The two constructs, and related constructs such as satisfaction and value, are frequently used interchangeably in both the academic and practitioner literature (Page, 2000; HennigThurau, 1997; Parasuraman and Grewal, 2000; Zeithaml, 2002a; Dabholkar et al., 2000; Zeithaml and Bitner, 1996). The purpose of this paper is, therefore, to investigate and discuss the application of relationship marketing theory to the online environment. In particular, the paper examines the conceptualisation and measurement of service quality and relationship quality in the online context, and explores whether these constructs vary significantly from one another, in theory and in practice, in the offline and online contexts. Conceptualising service quality Parasuraman et al. (1988) defined service quality as being the outcome measure of effective service delivery, and conceptualised it as occurring when customers receive service that is superior to their expectations. These authors asserted that service quality is influenced by a number of factors, including: . the degree of tangibility of a service; . the perishability of the service; and . the varying nature of service consumption. In this context, the most contentious issue to have arisen during the evolution of services marketing has been the question of expectation in the evaluation of service quality. Although Parasuraman et al. (1988)

asserted that perceptions of the quality of a service are a result of evaluating service delivery in relation to pre-consumption expectations (referred to as the ``disconfirmation model''), critics have argued that expectations are fluid, difficult to quantify, influenced by factors other than the service, and essentially irrelevant to the determination of the quality of service performance. Cronin and Taylor (1992) were among the first to criticise the disconfirmation model when they asserted that service quality is an attitudinal construct based on the accumulated outcomes of all the service encounters with a particular provider. They contended that expectations are implicitly part of a consumer's evaluation of service performance, and that expectations are thus not deserving of separate treatment. Dabholkar et al. (2000) supported this view in their attempt to develop a comprehensive framework for measuring service quality. They compared a performance-only measurement model with a measured disconfirmation model and a computed disconfirmation model, and found that the performance-only model exhibited significantly better ``fit'' statistics than either of the two alternative disconfirmation models. This finding therefore suggested that measuring the outcomes (performance) of a service were adequate for the evaluation of service quality. Although the performance model can be viewed as the superior measurement model, and although it is considered adequate for the purposes of the present study, both models assume that overall service quality can be measured on either an incident-specific basis or on a cumulative basis (Zeithaml and Bitner, 1996), with one important difference. Advocates of the disconfirmation models hold that service quality can exist without experiencing the service, whereas advocates for a performance-only model contend that experience of a service is an essential prerequisite for a quality evaluation. In support of the first position, Rust and Oliver (1994) contended that consumers can develop quality expectations of establishments (such as fivestar restaurants) without actually experiencing their service. However, such views of service quality are of little practical benefit to service managers who wish to improve their service or estimate future demand.

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Another interesting aspect of the measurement debate concerns the differentiation of closely related constructs such as service encounter satisfaction, overall satisfaction, and service quality. According to the literature on attitude, service encounters and satisfaction are part of an overall evaluation of service quality. That is, consumer satisfaction with a previous encounter will influence a customer's satisfaction with the current encounter and, therefore, their perceptions of overall service quality (Cronin and Taylor, 1992). In such cases, overall service quality is viewed as a higher-order attitudinal construct, based on the consumer's ``overall impression of the relative inferiority/superiority of the organisation and its services based on all previous encounters'' (Bitner and Hubbert, 1994, p. 77). Bitner and Hubbert (1994) attempted to separate the constructs of encounter satisfaction (ES), overall satisfaction (OS), and service quality (SQ) in an abductive (inductive and deductive) study of airline travellers. They asserted that encounter satisfaction was a conceptual antecedent to overall satisfaction, and that is based on a specific and discrete experience with a service provider. In contrast, they argued that overall satisfaction represents the consumer's overall satisfaction with the organisation up to a particular point in time. They contended that there is a need for a better understanding of how consumers perceive encounters relative to more global constructs such as satisfaction and service quality and whether consumers are able to distinguish among these constructs in a meaningful way. Unfortunately, the empirical evidence presented by Bitner and Hubert (1994) provided only mixed support for the distinctiveness of the constructs. Although the findings supported the three-factor solution (ES, OS, SQ) over a single-factor solution (ES + OS + SQ) or a two-factor solution (ES, OS + SQ), the findings also revealed that consumers had difficulty in differentiating among the constructs conceptually. Furthermore, the authors reported that the factors were highly correlated (0.77 < r < 0.94), with approximately 50 percent of consumers being unable to differentiate between service encounter satisfaction and the higher-order construct of overall satisfaction, and approximately 40 percent

being unable to differentiate between service encounter satisfaction and the higher-order construct of service quality. In addition, consumers seemed to have particular difficulty discriminating between encounter satisfaction on the one hand and a combined measure of service quality and overall satisfaction on the other. These two constructs were found to be highly correlated, with r = 0.8. This finding is particularly interesting in light of a review of the literature which reveals that academics and practitioners often use the constructs of satisfaction and service quality interchangeably (Zeithaml and Bitner, 1996). Although the importance of service encounters in the evaluation of the perceived quality of a service provider is not in question, subsequent work by Zeithaml and Bitner (1996) clarified the role of encounters. They developed the service-perception model, and asserted that customer perceptions of a service (satisfaction, quality, and value) occur at different levels of analysis at the level of the encounter, at the level of multiple experiences, and at the level of firm or industry. Their work suggested that a natural hierarchy exists whereby, as a relationship continues, perceptions of the service at a transactional level combine to form perceptions of the firm as a whole. This work has implications for the current study which aims to differentiate, at the level of the firm, between consumer perceptions of service quality and relationship quality. Defining relationship quality Gummesson (1987) was one of the first academics to consider the issue of relationship quality when he suggested that it can be regarded as the quality of the interaction between a firm and its customers, and claimed that it could be interpreted in terms of accumulated value. This definition was to become a central theme in the work of the so-called ``Nordic School'' in the field of relationship marketing, and has led to the fundamental hypothesis that repeated service quality at a transactional level leads to increased satisfaction and value at a relational level. Ravald and Gronroos (1996) added that the value experienced in relationships varies in nature, with customers experiencing an episodic value at the early stages of a relationship, but a relational value as the

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relationship continues. The different types of value are said to reflect how the customer's expectations change from a consideration of transactional factors (such as product qualities and a comparison of alternatives) to a greater emphasis on relational qualities (such as security, trust, and credibility). This notion of value is consistent with the serviceperception model referred to above. Crosby et al. (1990) regarded relationship quality in terms of a trade-off between value and risk, whereby a customer's perceived uncertainty is reduced as the value of his or her relationship with a firm and/or service employee improved. Furthermore, these authors suggested that relationship quality also increases as the duration of an exchange relationship increases. Their work resulted in the development and empirical testing of a model of relationship quality, which confirmed the positive association between relationship quality and purchase intentions, and the existence of at least two dimensions trust and satisfaction. Han and Wilson (1993) added that the strength of a relationship can also be influenced by the degree of structural bonding, whereby such bonds (for example, technology, alternatives, adaptability, and supplier power) prevent customers from switching to competitors. Similarly, Mohr and Spekman (1994) argued that, in addition to trust and satisfaction, relationship effectiveness is also determined by social bonds (such as commitment, coordination, communication, goal congruence, and conflict resolution). Operationalising the constructs More recent work by van Reil et al. (2001) has asserted that traditional measurement models are suitable, with adaptation, for use in the online environment. However, Zeithaml (2002a) has cautioned that the online environment is very different from the offline context, and has insisted that more work needs to be done to understand the contextual differences regarding the applicability of traditional measurement scales in cyberspace. Although the work of both Zeithaml (2002a) and van Reil et al. (2001) have thus explored service quality in the online retail context, it is of interest that neither has examined the relevance of the retail service-quality scale (Dabholkar et al., 1996).

Dabholkar et al. (1996) examined service quality in various retail contexts, and supported the use of a performance-only model. Their work resulted in the identification of a hierarchical structure composed of a global service quality (customer satisfaction) construct supported by five underlying dimensions: (1) physical aspects; (2) reliability; (3) personal interaction; (4) problem-solving; and (5) policy. The present research probes the meaning of retail service quality to online consumers, and the relevance of the dimensions of the Dabholkar model in that context. The study also assesses whether online consumers are able to distinguish between retail service quality and another closely related construct relationship quality. The information gained from this assessment is used to modify the retail service-quality scale, before including that scale in an online survey of e-retail customers. Relationship quality is also assessed using a relationship-quality scale developed by the Marketing Science Centre at the University of South Australia (Page, 2000). This instrument was based on an initial interpretative study, and represents the only known attempt to consolidate the research in the area of relationship effectiveness (Page and Sharp, 2001). Their work was refined over a six-year period, and this resulted in the identification and validation of seven dimensions: (1) trust; (2) value; (3) effort; (4) communication; (5) cooperation; (6) liking; and (7) understanding. Although the above work was conducted primarily in the business-to-business context, the present research uses focus groups to explore whether this conceptualisation of relationship quality is applicable to the online consumer retail context. The results of the focus groups guide further modifications to the relationshipquality measurement scale, before including that scale in an online survey. Both the retail service-quality measurement model and the

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relationship-quality measurement model are applied using five-point Likert scales, whereby respondents were asked to state their level of agreement or disagreement with the associated items.

framed. The first stage involves a qualitative assessment of the constructs of service quality and relationship quality using online focus groups. The second stage uses the results of the focus groups to inform a quantitative assessment of the constructs using an online survey of e-shoppers. Stage 1: online focus groups Two focus groups were conducted using different consumer samples during May and June 2001. Invitations to participate in the focus groups were sent via e-mail to two different convenience samples selected to be representative of the target population of interest Internet users from the Hunter region of New South Wales (NSW), Australia. The first sample comprised secondyear marketing students from the University of Newcastle, whereas the second sample contained Internet users who subscribed to a large regional Internet service provider (ISP). Participants were pre-screened to ensure that they met the research criteria of being more than 18 years old, and having made an online purchase during the previous twelve months. The invitations included instructions and a hyperlink to the focus group page on the research project's Web site, where the participants were required to agree to an electronic version of a research consent form before progressing. The opinions of the two groups were gathered over a one-week period, with frequent e-mail prompts issued to stimulate discussion. As with traditional focus groups, the online version was based on an unstructured, but moderated, discussion, and the questions chosen were ``open-ended''. The information gathered was of a qualitative nature. Forest (2003) has asserted that the benefits of using online focus groups (as opposed to the traditional method) relate to cost savings, efficiency, and diversity. The online method is much less expensive than its traditional counterpart, and the online version can also streamline the qualitative process by reducing the time required to develop a sample, conduct the study, and analyse the results. Van Nuys (1999) has also noted that online groups are more convenient than offline groups, and that they allow prospective participants to communicate at a time and place convenient to them, removing geographic boundaries that can act as barriers to participation.

Aims of the study

This study has three specific research objectives. First, to explore whether service quality and relationship quality are independent constructs. Second, to determine whether the dimensions of the retail service-quality instrument transfer to the online retail environment. Third, to establish whether the dimensions of the relationship-quality instrument are applicable to online retail. The research objectives and the comments in the Introduction lead to the following hypotheses being proposed: H1. That service quality and relationship quality are independent constructs and are measuring different aspects of the relationship-marketing conceptual space. H2. That service quality in the online shopping context comprises the dimensions of: (1) physical aspects; (2) reliability; (3) personal interaction; (4) problem-solving; and (5) policy. H3. That relationship quality in the online shopping context comprises the dimensions of: (1) trust; (2) effort; (3) value; (4) communication; (5) cooperation; (6) liking; and (7) understanding.

Research methodology
Malhotra et al. (1996) stated that marketing research methods vary greatly, with each method having certain advantages and disadvantages, depending on the research problem. This project applies a two-stage research design that was chosen to explore the online context within which the study is

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Limitations with online focus groups include problems associated with screening participants, differences in technical ability and resources of participants, and the physical limitations associated with not being able to see and interpret non-verbal reactions. An online focus-group method was considered appropriate in the present study because the espoused efficiency benefits were consistent with the preferences of the sample (in that participants had shown through their adoption of e-retail that they were supportive of online alternatives) (Rezabek, 2000). The limitations of screening and technical ability were not perceived as being important. Because the aim of the focus group was essentially to facilitate a sophisticated pre-test, the physical limitations were not considered significant enough to adopt an alternative method. The focus groups followed a three-step process. First, respondents were asked to define what was meant by service quality and relationship quality. Second, they were asked to distinguish between the two principal constructs, and asked to provide an indication of the factors that contribute to the development of effective service and relationships. Third, they were asked to comment on the underlying dimensions of the constructs. This included a discussion of their interpretations of these drivers, as well as their perceived relevance. Stage 2: online customer survey Burns and Bush (1998) asserted that the ultimate effectiveness of any survey depends on the quality of the questions asked, and whether these questions are appropriate to the audience and the research problem. This research used the feedback from the focus groups to refine the measurement items from the retail service-quality scale (Dabholkar et al., 1996) and the relationship-quality scale (Page, 2000) as discussed above. Respondents were also asked to provide demographic information, details of their online shopping history, and particulars of the online shopping episode that was a prerequisite for being chosen for inclusion in the sample. The population considered in this part of the study consisted of Internet shoppers within the Hunter region of NSW. Although one of the strengths of Internet-based surveys is being able to collect data from a broad geographic sample,

the population studied here was restricted to improve the generalisability of the findings to a given sample frame. To investigate the perceptions of this general population, a sample frame of e-shoppers who were currently students at the University of Newcastle (Australia) was also studied. The sample frame was chosen for convenience, and was derived from the University of Newcastle's broader student population, all of whom have free Internet access on and off campus as part of their university enrolment. Respondents were given equal opportunity to participate, as long as they met the initial criteria identified previously. The surveys were administered to the sample frame via an online research method during July 2001. The method involved sending an e-mail invitation to the student database that included a direct link to the hosted survey. Responses were captured in a database for future analysis, with nonrespondents automatically being sent a reminder e-mail two weeks after the first invitation. Responses received after 31 July 2001 were considered as ``late'' responses, and analysed for non-response bias (Armstrong and Overton, 1977). This was based on the premise that non-respondents are more similar to late respondents than they are to early respondents (Oppenheim, 1968). The comparative benefits of alternative administration methods were considered, and this revealed that the main advantages of using the online distribution method related to cost savings, speed of distribution and response, and generally higher overall response rates. Forest (2003) has also noted that Internet surveys are often considered to be more enjoyable and aesthetically pleasing than traditional methods, and has contended that the use of such methods is particularly appropriate when the sample population consists of Internet users.

Analysis and findings

Stage 1: online focus groups From the initial discussions, it was clear that most respondents had difficulty making a conceptual distinction between service quality and relationship quality, particularly with respect to the social and personal aspects of the constructs (``good service is about good communication''; ``site presentation is important to developing a strong

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relationship''). This was not totally unexpected. Page (2000) encountered similar problems during the exploratory phase of her research, and suggested that it was a common situation when dealing with closely related outcomes. However, most respondents did believe that service quality was different from relationship quality, and that service quality was a necessary prerequisite for the development of a good relationship (``good service makes you go back and you can't develop a relationship unless you return''; ``companies have to earn your trust . . . this means delivering good service every time you visit''). Service quality in online shopping Respondents were then asked to discuss the dimensions of retail service quality, including their perception of their importance. In terms of the first dimension of physical aspects, it was acknowledged that, although the appearance of a site and the ability to find required information were important, not being subjected to lengthy delays was also important (``if a Web site takes forever to download I will stop it and look elsewhere''). Similarly, for the dimension of reliability, respondents suggested that it was important for retailers to respond promptly to their requests, and to process their orders correctly and on-time (``speedy delivery'', ``quick turn around'', ``no stuff-ups''). In terms of personal interaction, it was revealed that, although respondents desired effective customer service, they also enjoyed the anonymity of not having to deal with real people. However, the exception to this situation was when there was a service failure. In such situations, respondents cited the need to have their concerns dealt with ``promptly'' and in ``a personal way''. Similarly, this desire to have problems resolved quickly and efficiently by a real person has inferences for the fourth dimension of problem-solving. With regard to this dimension, respondents indicated that, although transacting over the Internet was often ``cheaper and more convenient'' than shopping with traditional retailers, the experience could be easily ``ruined by the difficulty of returning products''. However, the opportunity to turn bad experiences into good also has inferences for the fifth dimension of policy. With respect to this dimension, respondents stated that good retailers provide ``detailed information'' on all

aspects of the ``buying process'', making it easier to ``fix stuff-ups''. In addition, the operational policies of online retailers can assist retailers to overcome the lack of tangibility in the online environment with effective merchandising policy (``well-known products at competitive prices''). Furthermore, respondents expected retailers to offer a competitive pricing policy, and effectively challenged online retailers by noting that it was ``easier to compare prices online and switch if suppliers weren't competitive''. Finally, even though online retailers are not bound by physical limitations (such as parking and operating hours), they do need to be considerate of their global customers who operate in different time zones and do not have access to some facilities (``it is really hard to get a response from some of the overseas retailers'', ``what is the point of a `free-call' number if it's available only in the US?''). Relationship quality in online shopping The first dimension of trust was universally supported, with respondents suggesting that unless trust was achieved there was very little chance of developing a strong relationship (``if everything goes OK . . . the trust factor becomes a big ingredient in your next purchase''). Furthermore, it was acknowledged that trust is required to reduce the risk of providing personal and financial information, with respondents suggesting that they trusted online retailers to behave ethically (``anyone you are giving your credit card details to must behave ethically . . . it is a bit frightening the first time''). The dimensions of effort and value were also supported, with respondents suggesting that the amount of effort a retailer makes is a good reflection of how the retailer values the customer (``if some measure of value is not shown, the retailer is showing you that they don't want your custom''). In addition, the degree of effort and value was also perceived as a good indicator of the product and service quality (``if they don't give a rats, it's a fair bet the goods are wrong''). With regard to the dimensions of understanding and communication, only partial support was found. Although respondents generally felt that retailers should understand their needs (``if they know what their customers want they can tailor the site to suit''), respondents were also concerned with the nature of interest shown by some retailers

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(``some online retailers are a real nightmare''; ``they don't need to know what I want''). Similarly, respondents were also concerned about the nature of communication and abuse of their perceived rights (``e-mail advertisements are a real pain''; ``only as far as customer service''; ``only if I have asked for it''). Ultimately, the tone of the rhetoric suggested an underlying motive to maintain control of the online relationship (``once they know what you want they should understand your needs''; ``I don't care what they want out of it as long as I get what I want''). From these comments, the present study proposes an additional dimension that measures perceptions of customer power. However, the dimensions of liking and cooperation were omitted due to a perceived lack of relevance. In the case of cooperation, the dimension was omitted because of the participants' emphasis on customer power, and a perception among participants that cooperation was more relevant to service delivery than relationship building (``only needed to conclude transaction''). Similarly, the dimension of liking was also omitted because respondents believed that it was not possible to form social bonds with an interface (``it's a sterile and clinical type of experience''). Stage 2: online customer survey Responses were received from 259 students, resulting in an estimated response rate of 24 percent. The response rate is estimated on the basis of the percentage of Internet users who had shopped online during the preceding 12 months. Time series data published by the Australian Bureau of Statistics (2001) suggest that only approximately 6 percent of the sample population of Internet users are online shoppers. Of these 259 responses, 19 arrived after 31 July 2001 and were subsequently analysed for nonresponse bias by performing a two-sample independent t-test for the early and late groups on a range of indicators. No significant difference was found between the two groups. Reliability analysis Reliability is the extent to which a measure is free from variable errors (Nunnally, 1978). For the purposes of this study, the internal consistency method is used. The internal consistency method assesses the Cronbach alpha statistic, which indicates strong reliability if the alpha coefficient exceeds 0.7

and moderate reliability if the alpha coefficient exceeds 0.6 (Nunnally, 1967). This method of reliability analysis is common within the marketing literature, and is accepted as sufficient for examining previously validated scales (Tabachnick and Fidell, 1996). Table I shows the initial alpha coefficients for each of the combined scales and their associated subscales. From the table it can be seen that both of the combined scales and all but two of the subscales exceeded Nunnally's requirement for strong internal consistency. Of the two noncomplying subscales, one (policy) met the criteria for moderate reliability, whereas the other (customer power) was found to have an unsatisfactorily low alpha coefficient. However, Briggs and Cheek (1986) have asserted that low alpha coefficients can also be a product of too few items (fewer than three), and have suggested that an alternative test is an inspection of the item-total statistics. An examination of the item-total statistics for the subscale found that both ``customer power'' items had corrected item-total correlations of less than 0.4 (Briggs and Cheek, 1986). Further support for discarding the ``customer power'' dimension from further analysis within the relationship quality construct was provided in an examination of the scale statistics. This revealed that an elimination of both items was found to increase the alpha coefficient for the combined scale significantly (increased from 0.8999 to 0.9280).
Table I Reliability statistics for scales Scale Service quality (22) Physical aspects (4) Reliability (5) Personal interaction (6) Problem-solving (3) Policy (4) Relationship quality (12) Trust (2) Effort (2) Value (2) Understanding (2) Communication (2) Customer power (2) Cronbach alpha 0.9218 0.8515 0.8315 0.8517 0.8523 0.6818 0.8999 0.8900 0.8469 0.8062 0.7708 0.8486 0.1419

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Confirmatory factor analysis Following the reliability analysis, the scales were subjected to factor analysis in the form of principal components axis factoring (PCA), using the mean scores for the two item measures for the global constructs, and their associated subscales. The aim of the analysis was to investigate the underlying structure of the scales. However, before conducting this analysis, it was necessary to ensure that certain assumptions were met. Pallant (2001) has asserted that assumptions concerning the sample size and inter-item relationships need to be fulfilled to ensure that the data set is suitable for such an analysis. It has been said that a sample size exceeding a 5 to 1 ratio of respondents to items, and inter-item correlation coefficients greater than 0.3 are required to satisfy these requirements (Tabachnick and Fidell, 1996). These conditions were met. The respondentitem ratio was 6.82, and the inter-item correlations were in the range 0.39 to 0.67 except for ``customer power'', which had an inter-item correlation of only 0.21. These results confirm the decision to omit the ``customer power'' dimension from further analysis. Following the assumption testing, PCA was undertaken to investigate the discriminant nature of the retail servicequality construct and the relationship-quality construct. The analysis examined the underlying structure of both scales and utilised Equamax rotation over Varimax, because this method reduces both the number of factors and the degree of cross-loading (Pallant, 2001). Table II shows the rotated component matrix for the analysis. From Table II, it can be seen that the scales loaded only on the two hypothesised factors of retail service quality and relationship quality, each with a eigenvalue greater than 1.0 (Kaiser, 1970). Closer examination of the factors reveals that each dimension loaded strongly on its hypothesised construct with factor loadings and commonalities greater than 0.5 (Pallant, 2001; Tabachnick and Fidell, 1996). However, the preliminary analysis also indicates that although ``personal interaction'' and ``problem-solving'' loaded better on their intended construct, there was also evidence of strong cross-loading on the relationship quality construct. Pallant (2001) has suggested that cross-loading is problematic, particularly if it persists after rotation (as in the case of this analysis), and

Table II Principal components analysis Service quality Percent variance Global SQ Physical aspects Reliability Personal interaction Problem-solving Policy Global RQ Trust Effort Value Understanding Communication 37.289 0.710 0.770 0.719 0.698 0.557 0.666 Relationship quality 24.027

0.501 0.525 0.765 0.722 0.840 0.844 0.798 0.684

Notes: Rotation method: Equamax with Kaiser normalisation; rotation converged in three iterations

has suggested that consideration should be given to removing the offending items. However, the question of whether to eliminate or retain the dimensions should not be taken lightly, because the underlying factor structure needs to be consistent with theory to be considered parsimonious. Therefore, further analysis of the discriminant nature of the service quality and relationship constructs was conducted using CFA in AMOS4 (a structural equation modelling program). The CFA included the dimensions of retail service quality and relationship quality, and examined three competing models: (1) ``personal interaction'' (PI) and ``problem-solving'' (PS) permitted to load only on the service quality construct; (2) PI and PS allowed to load on service quality and relationship quality; and (3) PI and PS omitted. Table III shows the results of the analysis. It can be seen from Table III that, although all of the confirmatory factor models had satisfactory fit statistics, the first model (CFA1) improved significantly when the dimensions of ``personal interaction'' and
Table III Confirmatory factor models Model fit  df GFI/AGFI CFI/PNFI RMSEA CN0.1
2

CFA 1 80.473 34 0.940/0.903 0.969/0.716 0.073 180

CFA 2 74.669 32 0.944/0.904 0.972/0.677 0.072 185

CFA 3 41.082 19 0.962/0.928 0.979/0.653 0.067 228

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``problem-solving'' were allowed to load on retail service quality and relationship quality. However, the best model fit was found when the dimensions were removed altogether (CFA3, GFI/AGFI = 0.962/0.928, p < 0.001). Therefore, a decision was made to omit the dimensions of ``personal interaction'' and ``problem-solving'' from all future analyses of the retail service-quality construct. Exploring the relationship between retail service quality and its dimensions The relationship between service quality (SQ) and its dimensions was initially examined using correlation analysis which Tabachnick and Fidell (1996) have asserted to be an effective preliminary analysis to investigate the strength and direction of hypothesised relationships. Wong and Sohal (2002) have noted that regression analysis is then often used to assess the overall model fit and to find out which independent variables are the best predictors of the dependent variable. The relationship between service quality and the dimensions of ``physical aspects'' and ``reliability'' was investigated using Pearson correlations, whereas the non-parametric equivalent (Spearman correlation) was used to assess the relationship with ``policy'' (see Table IV). Preliminary analyses revealed that there were no violations of the assumptions of linearity and homoscedasticity, and all associations were found to be significant at the 99 percent level, with the strongest association being between service quality and reliability (r = 0.672, p < 0.01). To examine the fit of the regression model and discover the best predictor of global retail service quality, simple linear regression was used with the dimensions of SQ as the predictors. Preliminary analysis revealed no violation of the assumptions regarding sample size, multicollinearity, and outliers. From Tables V and VI, it can be seen that the regression model represents a good fit with the data (F = 59.960, p < 0.001), exceeding the minimum value of 26.1 at 99 percent confidence (Neter et al., 1990). The model
Table IV Correlations global SQ and its dimensions Physical aspects Global SQ 0.413* Reliability 0.672* Policy 0.373*a

Table V Regression analysis global SQ Model 1: Global SQ R 0.696 R2 0.485 Adjust R2 Std error 0.479 0.6630

Notes: Independent variables: dimensions of RSQ. Dependent variable: global RSQ Table VI Regression analysis global SQ dimensions Model (Constant) Physical aspects Reliability Policy Unstandard coefficients 0.008 0.156 0.634 0.169 Std error 0.282 0.062 0.059 0.074 Standard coefficients t-value 0.130 0.561 0.123 0.028 2.511 10.678 2.294 Sig. 0.978 0.013 0.000 0.023

explained 49 percent of the variance in the global SQ construct, with reliability found to be the best predictor of SQ (t = 10.678, p < 0.001). However, all predictors were significant with t-values exceeding the minimum value of 1.96 at the 95 percent confidence level. From the above results, it can be concluded that the first part of H1 is supported that is, that the dimensions of retail service quality are positively associated with the global construct. It is also revealed that the dimension of ``reliability'' is the best predictor of global retail service quality in the online retail context. Exploring the relationship between relationship quality and its dimensions The associations between relationship quality (RQ) and the dimensions of ``trust'', ``value'', ``effort'', ``understanding'', and ``communication'' were investigated using Pearson correlations (see Table VII). Preliminary analyses revealed that there were no violations of the assumptions of linearity and homoscedasticity. All associations were found to be significant at the 99 percent level, with the strongest association found to exist between global RQ and ``effort'' (r = 0.631; p < 0.01). To examine the fit of the regression model and discover the best predictor of global relationship quality, simple linear regression was used with the dimensions of RQ as the
Table VII Correlations global RQ and its dimensions Trust Effort Value Understanding Communication 0.573* 0.491*

Notes: a Spearman correlation; * Correlation significant at the 0.01 level (two-tailed)

Global RQ 0.591* 0.631* 0.607*

Note: * Correlation significant at the 0.01 level (two-tailed)

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predictors. Preliminary analysis revealed no violation of the assumptions regarding sample size, multicollinearity, and outliers. From Tables VIII and IX, it can be seen that the regression model represents a good fit with the data (F = 79.960, p < 0.001), exceeding the minimum value of 26.1 at 99 percent confidence (Neter et al., 1990). The model explained 48 percent of the variance in the global RQ construct, with ``trust'' found to be the best predictor of RQ (t = 3.504; p < 0.005). From the above results, it is concluded that the dimensions of relationship quality are positively associated with the global construct. It has also been revealed that the dimension of ``trust'' is the best predictor of global relationship quality in the online retail context.

Discussion and limitations

Elaboration on research issues The first issue examined was whether service quality and relationship quality are independent constructs. Although the two constructs were found to be closely related, they were statistically distinct. However, to differentiate between the two constructs, it was necessary to remove the service-quality dimensions of ``personal interaction'' and ``problem-solving''. These dimensions were found to load on both constructs, which is interesting in the light of debate regarding the scope of relationship marketing. Although the dimensions were subsequently dropped, they
Table VIII Regression analysis global RQ Model 1: Global RQ

R
0.691

R2
0.477

Adjust. R2 0.467

Std error 0.6835

Notes: Independent variables: dimensions of RQ. Dependent variables: global RQ Table IX Regression analysis global RQ dimensions Model (Constant) Trust Effort Value Understanding Communication Unstandard Standard coefficients Std error coefficients t-value 0.374 0.207 0.232 0.117 0.140 0.079 0.183 0.059 0.079 0.084 0.079 0.053 0.230 0.241 0.118 0.130 0.088 2.040 3.504 2.920 1.393 1.770 1.480 Sig. 0.042 0.001 0.004 0.165 0.078 0.140

did provide insight into the difficulty of establishing the point at which a transaction turns into a relationship that is, when the personalised service required to facilitate a transaction is commensurate with the actions required to develop and maintain a relationship. The second research issue related to whether previous conceptualisations of service quality were applicable to the online retail context. This centred on the applicability of the retail service-quality scale (Dabholkar et al., 1996), with particular attention to its interpretation and relevance. The second hypothesis proposed that there is a positive relationship between retail service quality and its dimensions. The findings supported the use of a modified version of the scale. Although not all dimensions were supported, consumers believed that the scale was suitable for use in both the offline and online contexts. The key drivers of retail service quality in the online context were ``physical aspects'', ``reliability'', and ``policy''. Of these, ``reliability'' was found to have the greatest impact on overall service quality. This finding suggests that if online retailers want to deliver superior service, they need to pay attention to how the site functions (that is, the interactivity and navigability of their sites), as well as providing the necessary support mechanisms to ensure that the site performs reliably. In terms of reliability, the issue of greatest importance to online retailers who wish to deliver superior service is the need to do what they say they will do, when they say they will do it, and to do it right the first time. The identification of reliability as the principal driver of online service quality is consistent with the need to overcome higher levels of perceived risk in transacting online. These findings are also consistent with the earlier service-quality work of Parasuraman et al. (1988, 1991), in which ``reliability'' was reported to account for the greatest amount of variance in service quality in the retail and three other contexts. The third conceptual issue examined in the study was the suitability of the relationshipquality scale (Page, 2000) to the online retail context. The results confirmed that it is also applicable to the online retail context with minor modification. Of the modified scale, ``trust'' was found to be the key driver of overall relationship quality. This finding is

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consistent with most previous research in the area of relationship quality in which ``trust'' has been identified as a key and critical variable in the measurement of relationship effectiveness (Wilson and Jantrania, 1996; Morgan and Hunt, 1994; Mohr and Spekman, 1994; Crosby et al., 1990). Limitations of the research This research is has some shortcomings that limit the interpretation of the results. The failure of the data to support the dimensions of customer power, personal interactions, and problem solving suggests that these variables were inadequately specified. Further work could be done to clarify whether this finding was related to the context of the study, or whether the conceptualisation of the constructs requires clarification. Furthermore, it is acknowledged that if the number of items in the relationship quality scale had been expanded, this would have assisted in the scale-refinement process. In addition, it was observed that not all of the dimensions were good predictors of the relevant constructs, even though they were observed to be important in terms of the model and strongly correlated to the global measures. Again, the most plausible explanation for this finding relates to the context of the current study. Other limitations with the current study are primarily related to the scope of the research and the selected methods. For example, the study considered only customer perceptions of relationship-marketing activities in the online consumer retail domain. It is acknowledged that this ignores the perceptions of the retailers themselves especially the impact of competing strategic priorities and confounding influences such as resource limitations. Similarly, it is recognised that relationship marketing is also relevant to the business-to-business (B2B) context, and a failure to consider this aspect of relationship marketing has ignored the major segment of online commerce. A related limitation is that the effectiveness of a retailer's online relationship marketing activities might be hindered by the activities of manufacturers who are using the channel to by-pass the traditional value chain. Finally, the decision to use one research method over another requires careful consideration of the strengths and weaknesses of the chosen method. All methods carry

certain technical limitations. For instance, the use of a single cross-sectional design renders the findings less generalisable than a more comprehensive technique (such as a longitudinal design). This limitation is especially relevant when investigation is made into causal relationships. In such cases, the findings of a single snapshot could fail to hold over time. Similar considerations accompany the decision to use a student sample and the selected measurement scales. The use of student samples has been criticised for lack of generalisability. However, in this research, the characteristics of the student sample were not significantly dissimilar to the broader Internet user population (ABS, 2001). In addition, the decision to adapt previously validated scales is at the cost of developing unique measures. However, the process followed for scale selection and refinement was considered adequate to ensure that the risk of inadequate specification was minimal. Moreover, the process followed for scale selection and refinement carried inherent benefits in terms of the theory highlighted above. Despite these concerns, it is felt that the strengths of the chosen method outweigh the limitations, and that the research strategy employed for this study was both appropriate and relevant. Directions for future research First, future research could build on this research by including a consideration of the structural impact of the principal constructs of service quality and relationship quality on an outcome variable (such as loyalty or profitability). Research could explore the existence of a mediating model. That is, future research could examine whether service quality leads to relationship quality and, in turn, to customer loyalty. In keeping with the moderating model, internal factors such as psychographics and demographics could be examined as possible confounders. Similarly, external factors such as the defensive marketing tactics of competitors, and the activities of supply chain members could also be explored to assess their effect on the structural relationships among service quality, relationship quality, and customer loyalty. Second, additional research could examine the transferability of these results to different contexts and viewpoints. In particular, the context should be included in future research. This would be of benefit in testing the validity

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of the modified scales developed in this research. Finally, more research could be conducted using alternative methodologies. For instance, future research could attempt to replicate this study using a longitudinal design to assess changes over time. Alternatively, the study could be replicated using a different sample, thus examining the efficacy of using a student sample.

Conclusion and implications

This paper has presented an examination of how the constructs of service quality and relationship quality apply to the online retail context. The study initially used online focus groups to explore the difference between service quality and relationship quality, and the relevance of their underlying dimensions in capturing the constructs in the online retail context. The focus group findings revealed that, although service quality and relationship quality are closely related, they are different with service quality apparently being a conceptual antecedent of relationship quality. The focus group findings also revealed that there was general support for the application of the retail service-quality and relationshipquality constructs, and their related dimensions, to the online retail context. However, in some cases, it was necessary to reinterpret some of the dimensions. Proposed changes included altering the terminology and wording of the items to make the dimensions more consistent with the consumer retail context. In such cases, it was even necessary to modify, omit, or add items and dimensions to reflect the different contextual needs of e-retail. The revised scales have been included in Table X for reference. Following the qualitative phase, an online survey was conducted using the revised scales for service quality and relationship quality. The data gathered from the online survey were subjected to a variety of statistical processes to examine the discriminant validity of the modified scales. Although the analysis revealed that service quality and relationship quality are distinct constructs, there were problems with some of the dimensions. For instance, despite strong support in the literature and focus groups for the existence of ``customer power'', this relationship-quality dimension was not supported in the survey findings. This suggests that control might be

less important than cooperation. However, it is more likely that the measurement items that were used were not sufficient to capture the dimension. Furthermore, there was overlap between service quality and relationship quality in the area of ``personal interaction'' and `` problem-solving''. However, this also could have resulted from poor specification within the survey. Despite being framed as elements of service quality, it is not surprising that these elements loaded on the relationship-quality construct. The development of a strong relationship with customers is contingent upon being able to solve their problems, and this is made easier if a personal connection is made. In addition, the analysis revealed that respondents perceived ``reliability'' to have the greatest impact on service quality in the online retail environment. The need for e-retailers to perform consistently was viewed as being more important than the aesthetics and features, and as being more important than oft-quoted issues such as financial and product security. In terms of developing a strong relationship, online retailers who were seen as trustworthy engendered stronger relationships. This notion of trust was multi-faceted, and centred on the provision of good brands and high-quality products, as well as delivering on promises. Another important driver of relationship quality was the degree of perceived effort that the e-retailer made to attract and keep a customer.

Implications for theory and practice

These findings have implications for practitioners and academics alike. Marketing managers who have adopted e-commerce technologies as a means of augmenting their service-delivery strategies should ensure that they deliver on their promises. By supporting their online initiatives with the necessary technical and infrastructure resources, they will be able to perform reliably and will be able to deliver on their promises. This, in turn, will lead to greater perceptions of trust and effort, and stronger customer relationships. For academia, the findings of this research assist in clarifying the difference between the two closely related constructs of service quality and relationship quality. In particular, the point at which the constructs diverge has been identified. The research also makes a

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Table X Revised scales for service quality and relationship quality Item SQ1 SQ2 SQ3 SQ4 SQ5 SQ6 SQ7 SQ8 SQ9 SQ10 SQ11 SQ12 SQ13 SQ14 SQ15 SQ16 SQ17 SQ18 SQ19 SQ20 SQ21 SQ22 SQ23 SQ24 Basic wording Excellent overall service The service I receive from the retailer is better than that I receive from other retailers The retailer's Web site is visually appealing The site design makes it easy to find what I want The site design makes it easy to move around The site design makes navigation quick they will do so The retailer performs the service right the first time The retailer has the products I want, when I want them This retailer provides error-free transactions and records The retailer's site seldom has technical problems The retailer's site has all the information I need to answer my questions The retailer responds promptly to my requests The information provided by the retailer is accurate It is easy to contact the retailer The communication from the retailer is personalised The customer service is courteous and helpful The retailer willingly handles returns and exchanges When a customer has a problem, the retailer shows a sincere interest in solving it Complaints are handled quickly and effectively The retailer offers high-quality merchandise The retailer has a competitive pricing policy The retailer accepts most major credit cards The retailer offers good security for my financial and personal details RSQ scale RSQ scale New RSQ scale New Problem solving Policy Policy Policy Policy SERVQUAL SERVQUAL New SERVQUAL SERVQUAL RSQ scale SERVQUAL Personal interaction Personal interaction Personal interaction Personal interaction Personal interaction Problem solving Problem solving SERVQUAL RSQ scale SERVQUAL New SERVQUAL Reliability Reliability Reliability Reliability Personal interaction SERVQUAL RSQ scale RSQ scale New Physical aspects Physical aspects Physical aspects Physical aspects Reliability Origin SERVQUAL New Grouping Overall SQ Overall SQ

Service quality

When the retailer promises to do something by a certain time, SERVQUAL

Relationship quality
RQ1 RQ2 RQ3 RQ4 RQ5 RQ6 RQ7 RQ8 RQ9 RQ10 RQ11 RQ12 RQ13 RQ14 I have a very strong overall relationship with the retailer The relationship that I have is better than the relationship I have with other retailers I have complete confidence in the retailer to behave ethically I trust the retailer totally The retailer goes out of his or her way to do the best for me I receive personal attention from the retailer The retailer makes me feel important The retailer values my business The retailer understands what I want The retailer has a strong interest in me The retailer keeps me informed The communication I receive from the retailer is timely and relevant My needs are more important than those of the retailer I would readily switch if the retailer offends me New New Customer power Customer power RQ scale RQ scale RQ scale RQ scale RQ scale RQ scale RQ scale RQ scale RQ scale RQ scale Trust Trust Effort Effort Value Value Understanding Understanding Communication Communication RQ scale RQ scale Overall RQ Overall RQ

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valuable contribution to the marketing discipline by contributing to a relatively new stream of research, and by validating two previously developed scales.

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Further reading
Berry, L.L., Parasuraman, A. and Zeithaml, V.A. (1990), ``Guidelines for conducting service quality research'', Marketing Research, December, pp. 34-44. Parasuraman, A., Berry, L. and Zeithaml, V. (1991), ``Refinement and reassessment of the SERVQUAL scale'', Journal of Retailing, Vol. 67, Winter, pp. 420-50. Parasuraman, A., Berry, L. and Zeithaml, V. (1993), ``More on improving service quality measurement'', Journal of Retailing, Vol. 69, Spring, pp. 140-7. Parasuraman, A., Zeithaml, V. and Berry, L.L. (1994), ``Reassessment of expectations as a comparison standard for measuring service quality: implications for future research'', Journal of Marketing, Vol. 58, January, pp. 111-24.

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