CHAPTER 1

BACKGROUND OF THE STUDY

Introduction

Most students and employees in Mindanao State University-Marawi City

came from the different places, and are away from their family and loved ones.

Students seek and need support from their families, especially the financial

needs. The employee also extends their financial support to somebody away

from them.

These past few years, there have been lots of money transfer services built

in Marawi City. Though they may be similar in operation, they differ in their

service quality that also reflects to their customer’s satisfaction.

Douglas Adams stated, “To give real service you must add something

which cannot be bought or measured with money, and that is sincerity and

integrity”.

Money remittances, aside from their responsibility of transferring their

client’s money, in order to have an effective service, they should be careful in

handling their customers during transaction process. They must understand the

need of the customers and accommodate them professionally. Not just for the
customer’s satisfaction but also for the company itself to become more prominent

and reliable to the customers and for an effective serve.

Palawan Express is now considered to be one of the most reliable, fastest-

growing and leading pawnshops in the Philippines. It is owned and operated by

spouses Mr. Bobby and Mrs. Angelita Castro and was formally opened in Puerto

Prinsesa City on August 17, 1985. It was originally established as a business

offering only pawn brokering and expanded its services to include money

remittance known as Palawan Express Pera Padala. Today, after more than 30

years in the industry, they offer their loyal customers other products and services

such as international money remittance, foreign exchange currency, e-loading,

bills payment and accident insurance in all branches in cities, municipalities, and

remotes towns nationwide.

One of the Palawan Express branches is in Mindanao State University-

Marawi City and it was started on April 21, 2016.

In this study, the researchers would like to find out the Service Quality of

Palawan Express in Mindanao State University Branch, in terms of its tangibility,

reliability, responsiveness, assurance, and empathy of the firm’s transaction and

personnel.

Theoretical Background
 Customer service is considered as an integral part of any facet of industry

and it defines the future of any organization. The rapid advances in technology

based systems related to internet are leading to fundamental ways in how

different organizations interact. This applies same for relation of an organization

with its customer. In different services industries the relationship between

customer satisfaction and service attributes have been difficult to identify

because services nature is intangible (Hong, 2004; Nguyen and Leblanc, 2002).

Due to intangible nature of services it is difficult for the firms to analyze

how the customers perceive and evaluate the desired outcome of the service

quality (Zeithaml, 1981). As customer evaluates their level of satisfaction to the

service quality, satisfaction with services is related to conformation or

disconfirmation of expectations (Smith and Houston, 1982). The issue of highest

priority today involves understanding the impact of service quality on profit and

other financial outcomes of the organization (Zeithaml, 1996).

As Organizations are increasingly becoming customer focused and is

driven by customer demands. It is becoming equally challenging to satisfy and

retain customer loyalty. Research by Oliver (2009) suggests that both service

quality and customer satisfaction are two distinct but related constructs. It is

particularly true for the services firms where increased level of customer

satisfaction results in profit maximization.

 To better understand the concept of quality and satisfaction, we should

look into the definitions of the two main concepts of this research customer

satisfaction and service quality, which are discussed in detail below.

Service Quality

Service quality is a complex construct, which has been the focus of a

number of studies in the services marketing literature. Two schools of thought

dominate this literature: the Nordic school of thought and the North American

school of thought. Specifically, the Nordic school of thought is based upon

Grönroos' (2005) two-dimensional model while the North American school of

thought is based upon (Parasuraman, 1985) five-dimensional SERVQUAL

model.

Service Quality Determinants

The 10 determinants were found to characterize customers’ perception of

the service. By Berry and his colleagues Parasuraman and Seithaml when they

began to study service quality determinants and how customer evaluates the

quality of services based on the Perceived Service Quality concept (Grönroos,

2005).

As a result of later study 10 determinants of service quality were

decreased to the following five:

 Tangibility. This determinant is related to the appeal of facilities,

equipment and material used by a service firm as well as to the

appearance of service employees.

Reliability. This means that the service firm provides its customers

with accurate service the first time without making any mistakes and

delivers what it has promised to do by the time that has been agreed

upon.

Responsiveness. This means that the employees of a service firm

are willing to help customers and respond to their requests a well as to

inform customers when service will be provided, and then give prompt

service.

Assurance. This means that employees’ behavior will give

customers confidence in the firm and that the firm makes customers feel

safe. It also means that the employees are always courteous and have the

necessary knowledge to respond to customers’ questions.

Empathy. This means that the firm understands customers’ problems

and performs in their best interests as well as giving customers individual

personal attention and having convenient operating hour.

Conceptual Framework

Dependent Variable
Independent Variable
SERVICE QUALITY
Determinants of service quality
Tangibility
Reliability
Responsiveness
Assurance
Empathy

Figure 1. Schematic Diagram of Conceptual Framework of the Study

As reflected in Figure 1, the determinants of the service quality are the

independent variables. On the other hand, the respondents’ perception to the

Service Quality of Palawan Express Mindanao State University Branch is the

dependent variable.
Statement of the Problem

This paper will seek to know the Service Quality of Palawan Express

Mindanao State University Branch as perceived by its selected clients. The

following questions will be asked to the clients:

1. What is the profile of respondents in terms of:

1.1 Age

1.2 Gender

2. How often do you go to Palawan Express Branch in MSU?

3. What kind of service do you commonly avail in Palawan Express?

4. What is the perception of the respondents to the Service Quality of

Palawan Express MSU Branch in terms of the following:

4.1 Tangibility

4.2 Reliability

4.3 Responsiveness

4.4 Assurance

4.5 Empathy

Scope and Limitations of the Study

This study aims to explore the Service Quality of Palawan Express MSU
Branch by setting the perception of their selected clients based on the

determinants of service quality which are the Tangibility, Reliability,

Responsiveness, Assurance and Empathy of a business. The researchers will be

selecting only the college student’s clients of Palawan Express as its

respondents. The study will be conducted in the MSU branch of Palawan

Express.

Significance of the Study

This paper will determine the level of the quality of service of Palawan

Express-Mindanao State University Branch. The significance of this study is to

give knowledge to Palawan Express’ clients in MSU-Marawi City about their

services being offered and help the people of MSU to choose the right remittance

center wisely through looking on how tangible, reliable, responsive and

empathetic the firm is, as well as its personnel.

This study will essentially assume for the benefit of the following:

Customers of Palawan Express. This study would give the customers

knowledge about the service quality of Palawan Express in Mindanao State

University. For them to articulate their perceptions regarding their experiences to

Palawan Express

The Management of Palawan Express. The findings of this study will serve

as the basis of the feedback of their clients to their services in MSU Branch. It will
provide them information about the problems of Palawan Express and their

recommendations to improve their services according to their customers

Employees of Palawan Express MSU Branch. The findings of this study

can motivate them to improve their quality of services. It will also provide them

the information of their problems regarding the facility, equipment, materials or

appearance of Palawan Express.

Future Researchers. This will provide them additional information about the

study that would eventually guide them if similar variables will be used.

Definition of Terms

The significant terms used in this study are systematically defined as follows:

Assurance. It is a promise or something on which one can rely as a

guarantee of truth or certainty.

In this paper, it is used as one of the five determinants

which employees’ behavior will give customers

confidence in the firm and that the firm makes customers

feel safe.

Determinants. It is a thing that controls or influences what happens to

certain things. It is a factor that affects the decision-

making of an individual.

In this paper, it is used as factors that will guide the

 clients to characterize their perception of the service of

Palawan Express.

Empathy. It is the capacity for participating in and understanding

the feelings or idea or another.

In this paper, it is used as one of the five determinants

where the firm understands customers’ problems and

performs in their best interests.

Palawan Express. It is a pawnshop and money remittance firm known for its

cheap, fast, and no-frizz services.

In this paper, it is used as the primary subject of the

research.

Reliability. It is the state or quality of being reliable.

. In this paper, it is used as one of the five determinants

where the service firm provides its customers with

accurate services.

Remittance. It refers to the act of sending money to someone. It also

refers to the transmittal of money (as to a distant place).

In this paper, it is mentioned as one of the services

offered by Palawan Express.

Responsiveness. It is the act of giving a response to a stimulus.

In this paper, it is used as one of the five determinants

 where the employees of a service firm are willing to help

customers and respond to their requests.

Tangible. It is an asset capable of being appraised at an actual or

approximate value.

In this paper, it is used as one of the five determinants

that is related to the appeal of facilities, equipment and

material used by a service firm.

Transaction. It is the act or process of doing business with another

person.

In this paper, this term is used in the study as the

customers’ dealing in the service firm.