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05/17/2012

Research Proposal - The Impact of Total Quality Management (TQM) on Effectiveness Customer Retention Plan in the New Zealand Professional Services


1.0  Title

The proposed title for the research study is The Impact of Total Quality Management (TQM) on Effectiveness of Customer Retention Plan in New Zealand Professional Services. This proposal will present background information and review related literatures about TQM. It will also present the different methodologies, approaches and instruments which will be used and applied in order to successfully implement the study.

2.0  Introduction

Quality is considered as an effective strategic technique in order to improve the productivity of an organization (Hasan and Kerr, 2003). Service quality is a multi-dimensional construct and it is perceived as the attributes of service delivery system, which pertains on the level of the satisfaction of the customer as well as the connections among the different entities of the service system which describe the service encounter (Chase and Bowen, 1991). Per se, efforts and strategies are aimed in improvement of quality of service, which mainly focus on front- and backend of the overall service operational (Yasin, et al., 2002).

Currently, interest in application of TQM in service industry is increasing. This is because of the fact that the service sector in all industrial countries are playing a vital role in the economy, at the same time, it covers a wide range of organizations, which include: consultancy firms, insurance, hotels, healthcare, retailers, banking, airlines, construction firms, utilities and transport and communication companies. The quality of service can help to improve the competitiveness of a company because of the increase satisfaction of the customers, thus, the company can gain competitive advantage, which will help to maintain edge from its competitors (Hasan and Kerr, 2003).).

TQM is widely accepted in the manufacturing industry and setting. However, in the past few years, there are numbers of service companies in different service industries, such as healthcare, tourism and insurance which showing interests in TQM (Hasan and Kerr, 2003). The said interest is because of the advantages and benefits TQM can offer to the strategic and operational aspect of the organizational performance (Augus, Krishnan and Kadir, 2000).

2.1  Statement of the Problem

The problem that will be addressed in the study is the impact of TQM on the customer retention plan in the professional services in New Zealand. The following will be the questions to be answered in the study:

·         What are the different factors which drive and motivate customer satisfaction and loyalty in the service sector?

·         How does TQM help professional service firms in New Zealand in terms of customer retention?

·         What is the impact of customer retention in the overall performance of companies in the professional service sector?

2.2  Objectives of the Study

            The main aim of the study is to analyze the impact of TQM on the effectiveness of customer retention plan in New Zealand professional service industry. In line with this, the following are the specific objectives of the study:

·         To examine the current professional service sector of New Zealand;

·         To assess the importance of service quality towards the customer relationship aspects of companies in service sector; and

·         To evaluate the significance of TQM towards the success of maintaining good relationship with the customers; and

2.3  Significance of the Study

The issue of quality is always an important aspect in any sector or industry. This is because of the fact that quality, particularly in the service sector is the vital factors which connect the customers to a specific company. The quality of service being offered by a specific company motivates customer satisfaction, loyalty and retention, which are vital in the marketing and management aspect. This study will be helpful in order to analyze how TQM influence the customer relationship of organizations in the service environment. Therefore, this paper will be helpful towards firms and companies in the service sector of New Zealand to focus more on their TQM processes and standards in order to come up with established and competitive customer relationship.

3.0  Literature Review

3.1  Total Quality Management

            The materialization of TQM is considered as one of the most important developments in management practice in the last 20 years. TQM was first brought up into the USA around 1980 in order to focus on the severe competitive challenge from companies from Japan. Consequently, TQM had been recognized as a source of competitive advantage in the world, particularly in the Western countries, specifically in the manufacturing sector (Dean and Bowen, 1994).Different studies, surveys and researches showed that even though TQM offer mixed results in terms of benefits and advantages, in general, TQM help to offer advantages for those organizations which implement it properly (Samson and Terziovski, 1999)

            TQM is considered as the process and art of managing the whole in order to accomplish excellence. TQM can be defined as both a philosophy and a set of guiding standards and principles which correspond to the underpinnings of an endless improving and evolving organization. Thus, it pertains on the implementation of different qualitative methods and human resources in order to develop and improve all the procedures being done inside the organization, at the same time, meet and exceed the needs of the customers in the current environment and in the future. TQM incorporates the basic management techniques, current improvements as well as the different technical tools under a disciplined strategy (Talukder and Ghosh, 2004). With these, it shows that TQM pertains on the understanding that organizations must be considered as systems which the different processes and procedures which main goal is to serve the customers. Therefore, TQM looks for in order to inflict standards, acquire efficiencies and effectiveness, describe the roles of every individual in processes as well as the organization as a whole, lessen errors and defects by implementation of different statistical process control, and to make use of teams in order to plan and carry out procedures in more efficient manner. It also enables leaders who are willing to establish a culture wherein people can describe and define their roles and responsibility pertaining on the quality outputs towards the customers (Moghaddam and Moballeghi, 2008).

            On the other hand, TQM also focus on the issues related to customer satisfaction and guidance towards the implementation and application of different marketing concepts. In 1980’s the issue related to the process of constant improvement in order to satisfy the needs of customers emerged (Churchill and Paul, 1994). The concept of total quality is considered as the general viewpoint of management which goes well beyond the marketing customer-perceived view of quality by counting all vital requirements and necessities which help not just towards the perceived quality of the customer but also towards satisfaction of the customers (Price and Chen, 1993).

3.2  Service Quality

            There are three alternative themes of service quality: attribute theory, customer satisfaction theory and interaction theory (Chase and Bowen, 1991).

            The attribute theory presumes that service quality chiefly mirrors the characteristics of the service delivery system, thus it applies the framework of product quality towards the services. In addition, it also assumes that management has a vital control over the input which defines these attributes (Hasan and Kerr, 2003).

            The customer satisfaction theory approach pertains to service quality as the difference between the quality of service expectations and the perceptions of reality (Parasuraman, Zeithamal and Berry 1988). Thus, it mainly focuses towards the points-of-view of the customers, while the attribute theory mainly focuses on the significance of the technical aspect of the production process (Hasan and Kerr, 2003).

            Lastly, the approach of interaction theory considers service quality as the “shared experience of gain” by all participants in the service encounters (Klaus, 1985). Therefore, the quality of service materializes via the experience and the need satisfaction of the customers and the employees (Hasan and Kerr, 2003).

            Quality is considered as a multi-dimensional occurrence. It is important to know the most prominent aspects of quality to guarantee quality of product or service. According to Grongroos (1978) there are three vital dimensions of service quality, which include the technical quality of the result, the functional quality of the service encounter and the image of the company. This is supported by other studies which show that service quality include three important dimensions, which include: physical quality – the physical attributes of the service; corporate quality – the image and attributes of the company; and interactive quality – the connection between the employees of the customers. On the other hand, Parasuraman, Zeithaml and Berry (1985) identified 5 determinants of service quality: tangibles, reliability, responsiveness, empathy and assurance. Thus, Parasuraman Zeithaml and Berry (1988) enabled to develop an instrument known as SERVQUAL which help to measure the service quality as perceived by the customers.

3.3  TQM and Customer

            The study of Mehra, Hoffman and Sirias (2001) showed the importance of customer focus on TQM, and stated that TQM is customer oriented. Thus, the authors focused on the significance of the elements of customer loyalty and customer satisfaction in TQM. Therefore, TQM must be used in order to improve customer focus, thus, it is important to focus on satisfaction of the customers.

            With this, it shows that TQM is customer-oriented, thus TQM is expected to focus towards customer-focus in the future. This is being supported by different studies and literatures. The study of Chien, Su and Su (2002) shows that for those organizations that are planning to implement TQM, it is vital to focus first towards achievement of customer satisfaction. The authors believed that the degree of the customer satisfaction that have achieved is closely connected to the TQM practices of a company, consequently it affect the overall performance of the company. In addition, the study of Kaynak (2003) suggested that there is a need to do further research in order to study more the relationship of TQM and the customer relations and satisfactions. For this reason, it is reasonable to believe that customer-focused organizations need TQM in order to improve customer focus and their overall performance (Mehra and Ranganathan, 2008).

            On the other hand, the study of Cronin and Taylor (1992) investigated the conceptualization and measurement of service quality and its connection with service quality, satisfaction of the customers as well as the purchase intentions and behaviors. The result showed that the a performance-based measure of service quality may be considered as an improved approaches of determining the service quality construct, thus, the consumer satisfaction has a vital impact towards the purchase intensions.

4.0  Methodology

The research will be operated within the cross-sectional design; the researcher will collect data on more than one case with the use of questionnaire and semi-structured interviews. This will help in order to focus on the breath of the research. Cross-sectional design will be applied because of the time constraints. According to Saunders et al. (2003), cross-sectional enable to study a given phenomenon at a given period of time. Furthermore, it can also help in order to describe the environment and situation of a phenomenon and even compare factors in different settings.

Descriptive method will be utilized for this study because it will help to present the facts of the problem as it exists during the time of the study. According to Creswell (1994), descriptive study helps to explain the present situations based on the impressions and reactions of the respondents involved in the research.

4.1  Data Collection

            Both primary and secondary data will be used in this study. Primary data will be gathered by survey questionnaire and interview. Surveys are considered as the most common types of research method for collecting primary data (Commonwealth of Learning, 2000). This is because it can help in order to describe and count the frequency of some important phenomenon which helps to assess the distribution of important variables related to population. It is planned to design the questionnaire with the use of 5-point Liker Scale, which will enable to collect data based on the level of agreement or disagreement of the respondents in statements given in the questionnaire. Interviews will be done through phones in order to follow the schedule of the respondents, at the same time, to save time and cost for both the researcher and the respondents.

            On the other hand, secondary data will be gathered from researches, studies and literatures of past. This will be gathered from different online libraries which include Emerald, Questia and Science Direct.

4.2  Sample Frame

            The target sample population for this research is 50 marketing staffs and managers from different professional service companies in New Zealand. It will include sectors such as tourism or hospitality, banking and consultancy services. The respondents will be selected via random sampling, in order to prevent bias from the researcher. The name of the respondents and their respective organizations will be listed in strips of paper then will be drawn. Names of respondents who will undergo interview will also be drawn, and then e-mail will be sent in order to acquire their approval. Then schedule of interview will be sent.

4.3  Data Analysis

The primary data gathered from the respondents will be checked (to know if the questionnaires were completed and if the answers are appropriate). Then the data will be encoded in SPSS, statistic software/application. In connection, the following are the statistical formulas to be used:

1.    Percentage

2.    Weighted Mean

4.4  Limitation

The main limitation of the study focus on the time spent in the study. It is important to consider that the time to spend in the study has a direct impact to the methodologies and instruments to be used and applied, thus it has an impact towards the result of the study. In addition, the number of the respondents will also be an important issues, this will affect the result of the study, particularly because it will not cater the majority of the service companies in New Zealand.

4.5  Timetable

 

5.0  Conclusion

Focusing on the quality of service had indeed become one of the primary focuses on businesses in different sectors. This particularly important in the service sector, where in the perception of the customers will be directly related towards the different factors involved in the service, which include the physical aspect and the behavior of the employees serving them, together with their total experience and interaction with the firm. With this, TQM is also being applied by many organizations in the world, in order to gain competitive advantage, at the same time, focusing on the satisfaction and loyalty of the customers.

This study will help in order to connect the TQM processes towards the effectiveness of customer retention plan. This is important because customer retention can help in order to maintain the position of a company in the market, which will mean continuous increase or maintenance of level of sales and profit.  

6.0  References 

August, A., Krishnan, S. K. and Kadir, S. L. S. A. (2002). ‘The structural impact of TQM on financial performance relative to competitors through customer satisfaction: A study of Malaysian manufacturing companies’. Total Quality Management. 808 – 820. 

Chase, R. B. and Bowen, D. E. (1991). ‘Service quality and the service delivery system – a diagnostic framework’. In S. W. Brown, E. Gummesson,, B. Edvartsson, B. and B. Gustavsson (eds.). System Quality – Multidisciplinary and Multinational Perspectives. New York, NY: Lexington Books.

Chien, T. K.. Su, C. H. and Su, C. T. (2002). ‘Implementation of a customer satisfaction program: A case study’. Industrial Management & Data Systems. 102(5), 252 – 259.

Commonwealth of Learning. (2000). Manual for Educational MediaResearchers: Knowing your Audience. Vancouver, Canada:   Commonwealth Educational Media Centre for Asia (CEMCA).

Churchill, G. A. and Paul, P. J. (1994). Marketing: Creating value for customer. New York, NY: Irwin.

Cronin, J. J. and Taylor, S. A. (1992). ‘Measuring service quality: A re-examination and extension’. Journal of Marketing. 56(July), 56 – 68. 

Dean, J. W. and Bowen, D. E. (1994). ‘Management theory and total quality: Improving research and practice through theory development’. Academy of Management Review, 19(3), 392 – 418.

Gronroos, C. (1978). ‘A service oriented approach to marketing of service’. European Journal of Marketing. 12(8), 588 – 601.

Hasan, M. and Kerr, R. M. (2003). ‘The relationship between total quality management practices and organisational performance in service organizations’. The TQM Magazine. 15(4), 286 – 291. 

Kaynak, H. (2003). ‘The relationship between total quality management practices and their effects on firm performance’. Journal of Operational Management. 21, 405 – 435. 

Klaus, P. (1985). ‘Quality epiphenmenon: The conceptual understanding of quality in face-to-face service encounters’. In J. Czepiel, M. R. Solomon and C. F. Suprenant (eds). The Service Encounter. Lexington, MA: Lexington Books.

Mehra, S., Hoffman, J. M. and Sirias, D. (2001). ‘TQM as a management strategy for the next millenia’. International Journal of Operations and Production Management. 21(5/6). 855 – 876.

Mehra, S. and Ranganathan, S. (2008). ‘Implementing total quality management with a focus on enhancing customer satisfaction’. International Journal of Quality & Reliability Management. 25(9), 913 – 927. 

Moghaddam, G. G. and Moballeghi, M. (2008). ‘Total quality management in library and information sectors’. The Electronic Library. 26(6), 912 – 922.

Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1985). ‘A conceptual model of service quality and its implication for future research’. Journal of Marketing. 49(7), 14 – 50.

Parasuraman, A., Zeithaml, V. A. and Berry, L. L. (1985). ‘SERVQUA: A multi-item scale for measuring customer perceptions of service’. Journal of Retailing. 64(1), 12 – 40.

Price, M. and Chen, E. (1993). ‘TQM in a small high-technology company’. California Management Review. 35, 96 – 117. 

Samson, D. and Terziovski, M. (1999). ‘The relationship between total quality management practices and operational performance’. Journal of Operations Management. 17(4), 393 – 409.

Saunders, M., Lewis, P. & Thornhill, A. (2003). Research methods for business students, 3rd edn. London: Prentice Hall.

Talukder, T. and Ghosh, S. (2004). ‘Total quality management and its implication on library laws’. SRELS Journal of Information Management. 41(3), 255 – 266.

Yasin, M., Zimmerer, L., Miller, P. and Zimmerer, T. (2002). ‘An empirical investigation of the effectiveness of contemporary managerial philosophies, techniques and tools in a hospital setting’, International Journal of Quality Assurance. 15(6), 268 – 276.

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