Contents
1.0 Introduction 1
Definitions 2
2.0 Customer Perceive Value of Banking Sector 2
Perceived Benefits 3
Economic Benefits 3
Emotional Benefits 3
Social Benefits 3
Relationship Benefit 4
Sacrifices 4
Price, Time and Effort Sacrifices 4
Risk and Inconvenience 4
Evaluating Hong Leong Bank’s existing value proposition 4
1.0 Introduction
To meet the potential customer needs and keep the early adopters loyal by just meeting their needs are insufficient nowadays. Because of the external factors that may disrupt the habits of customers such as technology and competition, the customers are expecting more than their expectations. Therefore, the use of the concept of perceived value has gradually become a priority for business sustainability as well as the key of success in the high market competition (Septa et al., 2016).
The purpose of this paper is to identify the customer perceived value in the banking sector using Sanchez model to measure the value proposition of Hong Leong Bank Berhad and the leading competitor, Public Bank Berhad according to the list of top banks in Malaysia relbanks (n.d.) based on total assets. Through to end of this research, the new value of proposition will be proposed to meet the value criteria of the customers and provided with the implementation plan.
Definitions
(Source: Septa et al., 2016)
2.0 Customer Perceive Value of Banking Sector
In the recent years, the banking sector was changing remarkably due to several of external factors. Karin (2011) has identified 5 notable factors below:
1) Competitors in the same industry such as foreign and local banks.
2) Competitors in different industry such as leasing and money lender companies.
3) Change of IT technologies
4) Change of customer service channel
5) Marketing strategy development
Despite most of the banks have taken initiative in generating perceived value for the customers, the customer’s dissatisfaction level was not improved (Johnston, 1997). (Juan et al., 2006) highlighted that majority of the banks are defining the “customer value” as the value that the customer generates for them, instead of the value that the Banks can offer their customers. Due to this misperception, this paper will use Sanchez model to examine and analyze the customer perceived value for banking sector. Since in the previous study such as Juan et al. (2006) was using the Sanchez model to analyze the customer perceived value in banking sector, hence this is the suitable model. According to Sanchez et al. (2006), there are two main components in Sanchez model which are benefits and sacrifices. Table 1 below is showing the two main components in banking sector:
Perceived Benefits Perceived Sacrifices
Economic Benefits
1)Lower financial cost
2)Higher return of investment Price Sacrifice
1)Cost of travelling to branches
2)Cost of purchasing the smartphone
3)Cost of internet subscription
Emotional Benefits
1)Personalized and customised products Time Sacrifice
1)Queue time
2)Processing time
Social Benefits
1)Service quality
2)Convenience Effort Sacrifice
1)Adoption of new technology
Relationship Benefits
1)Service prior availing it
2)Post service Risk
1)Wrongly made transactions due to no training is provided.
2)Transaction is unsuccessful due to poor connection.
Inconvenience
1)Website is not user-friendly
2)Limited of ATM
Table 1
Perceived Benefits
Economic Benefits
In the previous study, Reichheld (1993) highlighted that customers are exploring the lower financial cost with more services by comparing the different banks in the market. Therefore, customers are usually looking for more variety of customized products and personalized services at lower price (Anna, 2011). Customer satisfaction is achievable when customers are rewarded through their cash flow is accelerated, increased in residual value of cash and decreased in volatility of cash flow (Wang et. al., 2009). To increase the number of satisfied customers and establish customer perceived value, the loyalty customers is important to act as a marketing agent by spreading positive word-of-mouth (Reichheld and Sasser, 1990).
Emotional Benefits
There are several service channels provided by Bank such as ATM, telephone and internet in order to satisfy customers with diverse intimacy preference. Majority of the customers are expecting Bank is responsible to improve the quality of their lifestyle (Anna, 2011). Thus, personalized service is highly demanded by the customers (Zineldin, 1995).
Social Benefits
Many studies have been conducted in the past to analyze the importance of service quality as well as to enhance the customer loyalty (i.e. Ladhari et. al., 2011 and Robinson, 1999). Lee and Sedigheh (2015) do believe that the increased of perceived value is followed by a higher service quality. Perceived service quality, perceived value and customer satisfaction are the important concepts in the retail banking industry despite these concepts are interlinked, intangible, complex and relatively vague (Aleksandra and Boris, 2010).
Perceived convenience is one of the major factors that may influence the customer’s satisfaction (Levesque & McDougall, 1996). Convenience has been defined by Lee and Sedigheh (2015) that it is an ability to approach bank services through its location, operating hours, ATM location, and the presence of a complete range of available services. Subsequently, Almossawi (2001) affirmed that customers are highly concerned on bank’s location, the presence of 24-hour ATM and parking availability in the bank premises.
Relationship Benefit
Empathetic service to customer is providing customer service with reliability and security which will result to a higher perceived value (Lee and Sedigheh, 2015). For example, service before availing it and post service. Service before availing it is demonstrating a concern about the customer’s need on financial products or services. Furthermore, the post service is a service after sales to the customers about their concerns. Stone (2009) has emphasized that customers prefer their queries are attended promptly and services are delivered timely.
Sacrifices
Price, Time and Effort Sacrifices
There are two broad types of customer perceived sacrifice: monetary costs and non-monetary costs (De Ruyter et al., 1997). In the previous study, Sirohi et al. (1998) defined value-for-money assessment as “what you get for what you pay”. Therefore, the perceived benefits are depending on price paid. To maximize the perceived benefits, customers are willing to sacrifice additional money to travel within a reasonable distance for better banking services, buying smartphone and subscribe mobile internet to use banking services whenever wanted. Moreover, queue time and processing time are common issue facing by customers in banking sector because majority of the customer values their time is more important than dollar cost (Carothers and Adam, 1991). The change of IT technology is providing the convenience to the customers to perform banking transaction via internet, hence the effort in adoption of new technology is a sacrifice.
Risk and Inconvenience
Titrade et al., (2008) have identified the transaction risk of internet banking and generally, this risk arises from fraudulent activity and processing errors which customers may potentially facing these issues. Subsequently, customers may face some challenges despite various service channels are provided and the common channels are internet banking and Automated Teller Machine (ATM). For security reason and capacity issue, the service availability of these channels may be limited.
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