The term image is currently used in a variety of contexts, i.e.
corporate image, brand image, public image, self-image, restaurant
image, store image, and so on. As a whole, an image can be defined as,
"the sum of belief, ideas and impressions that a person has of an
object" (Kotler & Clark, 1987). Consumers in particular,
develop knowledge systems to interpret their perceptions of companies.
As such, corporate image is believed to have the same characteristics as
a self-schema influencing the buyers' purchasing decision.
Corporate image has become an issue of attitudes and beliefs with
regards to awareness and recognition (Aaker, 1991). Similarly, good
corporate image may stimulate the customers' mood and purchasing
behavior toward a company by simplifying their decisions. Fornell (1992)
in his study found that corporate image has some influence on customer
satisfaction and consumer behaviour. In addition, Gronroos (1990)
stressed that customers' perceptions of service are also affected
by the corporate image. For a service company, the perception of image
could be derived from the technical and functional components of
service, fueled by any marketing promotion that takes place (Gronroos,
1990). If the perception of the company's image is favorable, minor
mistakes would be tolerated, but if the mistakes occur often, then the
image of the company will be tarnished.
Beyond impressions of the immediate service encounter and
evaluations of service evidence, customer perceptions to some extent can
be influenced by the reputation of the organization or the
company's image (Ziethmal & Bitner, 1996). Numerous definitions
of image can be found in the psychological and marketing literature.
Image has been described as subjective knowledge (Boulding, 1956) and as
an attitude (Hirschman, Greenberg, & Robertson, 1978). Erickson,
Johannson, and Chao, (1984) had identified image as a combination of
product characteristics that are different from a physical product but
nevertheless identifies with the product.
The most acceptable definition of image for service industries is
by Keller (1993) who defined image as perceptions of an organization
reflected in the associations held in consumers' memories. Gronroos
(1994) argues that image is of utmost importance to service firms and is
to a great extent determined by customers' assessment of the
service they received. Indeed, since services are intangible and based
on performances, a better understanding on the components of image
promises to help management improve the competitive performance of their
firm. Therefore, prerequisite to image management is therefore, the
understanding of the process by which image is formed through the
customers' beliefs and attitudes with regard to a firm's
products or services.
The association between corporate image and the product can be very
concrete. For example, in the transportation services the consumer will
associate a company's image with the number of trips per day; easy
and fast access to server for internet service providers and for
financial related services the customer will compare the hours of
operations between the service providers. It can also be less concrete
and even more emotional, such as excitement, trustworthiness, tradition,
and fun. Kennedy (1977) categorized the principles of image into two
parts, i.e. functional and emotional. According to him, the functional
component is related to tangible cues that can be measured more easily,
while the emotional component is associated to psychological states that
are manifested by feelings and attitudes.
In this context corporate image becomes an issue of attitudes and
beliefs with regard to awareness and recognition (Aaker, 1991), customer
satisfaction and consumer behavior (Fornell, 1992). Corporate image can
be an extrinsic information cue for both existing and potential buyers
and may or may not influence customer loyalty (e.g. willingness to
provide positive word-of-mouth). Corporate image is consequently assumed
to have an impact on customers' choice of company when service
attributes are difficult to evaluate. Corporate image is established and
developed in the consumers' mind through communication and
experience. Corporate image is believed to create a halo effect on
customers' satisfaction judgment. When customers are satisfied with
the services rendered, their attitude toward the company is improved.
This attitude will then affect the consumers' satisfaction with the
Based on the above discussion and arguments, in relation to
customer satisfaction, service quality and a customer's perception
of company image, the following hypotheses will be examined:
H1: There will be a positive relationship between sales executive,
A&P programs, Primatel image and operators' attitudes and
customer satisfaction for digital leased line service in the
H2: The relationship between sales executive factor and customer
satisfaction will be greater then those of A&P programs, Primatel
image and operators' attitudes and customer for digital leased line
service in the telecommunication industry.
Notwithstanding this, there is a lot of arguments about the
principles of corporate image. Gronroos (1984) argued that corporate
image is built mainly by technical and functional qualities. In his
argument, the technical quality refers to what the customer actually
receives from the actual service experience. However, most researchers
believe that the functional quality of service encounter plays a
significant role in determining the image of the service providers. For
example, Baker (1987) contended that atmospherics have considerable
influence on employee motivation and the quality of the service
encounter. Similarly, Crosby, Evan and Cowles, (1990) noted that the
performance of contact personnel is indicative of the level of quality
offered by the service firms.
Interestingly, the service encounter is seen to be the integral
part in service quality factors identified by Parasuraman et al. (1988).
He classified the 13 scale items in SERVQUAL i.e. responsiveness,
assurance and empathy which related directly to the service encounter
personnel. The assumption is that the higher level of satisfaction
derived from each service encounter will be viewed as having a positive
effect on corporate image assessment. Nguyen and LeBlanc (1998) had
investigated the relationship between quality of service and corporate
image for the financial services. They found that a very strong path
existed between the two variables. This finding suggests that customers
receiving higher levels of service quality during service delivery will
form a favorable image of the firm. Based on this analysis, the study
will confirm the following hypothesis:
H3: The relationship between functional quality and company image
will be greater than the association between technical quality and
company image for digital leased line service in the telecommunication
The population of the study was Digitaline II subscribers in
Malaysia. Digitaline II is a version of digital leased line offered by
Telekom Malaysia (TMB) since 1994. The current trend shows that there
are two main subscribers of Digitaline II i.e. CBC and MBC. CBC are
corporate and business customers who contribute over RM1 million in
revenue to TMB while MBC refers to major business customers whose
revenue contribution is between RM100,000 and RM 1 million. As of
December 1998, there are about 284 CBC customers and 416 MBC customers
using the service with the total number of 4,092 circuits. In selecting
the market research survey sample, the stratified random sample of
probability sampling was utilized. In this situation, the researcher
draws a sample of groups to be interviewed based on identified criteria.
The criteria was used to ensure more reliable results. It will make sure
that the sample is a representative sample of the Digitaline II
customers. The criteria is:
External current Digitaline II customers excluding the other
service providers. This criteria is needed to ensure that there will be
no bias-ness in the overall result.
The banking, finance, manufacturing, petroleum, government-owned,
transport, retail and distribution industries
All the above respondents must be located within the major towns in
Subscribing more than one Digitaline II from Telekom Malaysia.
Based on the criteria, the questionnaires were distributed to 245
respondents by using three data collection techniques i.e. personal
interview, telephone interview and mail survey. However, only 150
questionnaires were usable for data analysis.
Using the structured questionnaire, the study measures the basic
constructs--company image (CM), customer satisfaction (CS), functional
quality (FQ) and technical quality (TQ). To ensure the content validity
of the measures, a thorough review of the relevant literature was
undertaken. Face validity of the questionnaires was established by
interviewing five senior representatives from each department who have
direct involvement in Digitaline II i.e. sales, product and technical
department. The responses received were positive and some changes were
made based on their suggestions.
RESULT AND DISCUSSION
The result shows that the hypothesis H1 which states that there is
a positive relationship between the company image factors and the
overall customer satisfaction is acceptable. The correlation coefficient
(R) shows the values range between 0.526 and 0.577. This result is in
line with the finding of Nguyen and LeBlanc (1988) who asserted that a
higher level of customer satisfaction leads to a favorable customer
assessment of corporate image.
The result also clearly indicates that all the factors under
company image show a positive relationship with customer satisfaction
level where CM1 (sales executive) has the highest correlation with
R=0.577 while the CM3 (outlet service) has the lowest correlation of
R=0.526. This result, therefore supports hypothesis H2 which proposes
that the relationship between sales executive (CM1) and customer
satisfaction will be greater than other company image factors
understudy. This is due to the reason that majority of the respondents
are either corporate or major business customers in which Telekom
Malaysia had assigned individual sales executive to take care of them
personally. In this situation, their telecommunication-related problems
would be channeled through the respective sales executives and therefore
the interactions with the outlet services (CM3) are very limited.
The multiple regression 'stepwise method' had been
performed by using SPSS (version 9) to establish which of the four
company image factors can be considered as main predictor of customer
satisfaction. Table 1 illustrates the model summary in which two models
were identified. From the result, it can be inferred that model two is
the better model since it gives the highest R-value (R=0.593) when
compared to the first model (R=0.577). Two factors had been omitted from
the analysis i.e. CM2 (advertising and promotional programs) and CM3
(outlet services) since they do not explain the dependent variable
(customer satisfaction) very well.
The results on the analysis of variance in the regression analysis
found model 2 to be a better model. In this situation, ANOVA was
utilized to test the null hypothesis that no linear relationship exists
between the dependent variable (customer satisfaction) and the
independent company image factors (CM1 and CM4). The results indicate
that since the observed significance level is less than 0.05, the null
hypothesis which states that there is no linear relationship between
customer satisfaction and the two corporate image factors (CM1 and CM4)
cannot be accepted (Norusis, 1997). Moreover, since the
'F-value' is greater than 3.00 (for [n.sub.1]=2, [n.sub.2] =
[varies]), the null hypotheses can be rejected at 95% confidence
interval. Thus, this result became another empirical evidence that
supports the hypothesis H2 because it indicates the importance of sales
executive as one of the main predictors of customer satisfaction.
The value of [R.sup.2] of 0.351 for model number two indicates that
only 35.1% of the observed variability in customer satisfaction is
explained by the two identified factors namely CM1 (Sales Executive) and
CM4 (operators' attitudes). Similarly, with the high residual value
as compared to the regression value in ANOVA, it suggests that further
research should be undertaken to analyze other factors that might
influence company image. Thus, the result shows that with regard to the
company image, sales executive and operators' attitudes are the
main predictors that would affect the customers satisfaction level.
However, the low R2 value and high residual value as reported in the
finding indicate that there are other company image factors that could
be the main predictors which are not included in this study.
Table 2 shows the regression coefficient for model two. The
coefficients for the independent variables are listed in the column
labeled Beta (column under standardized coefficient). From this table,
the estimated regression equation can be read as:
CS = 1.261 + 0.416CM1 + 0.210CM4
In general, it can be inferred that all the independent items under
the company image have a positive coefficient which means that the
predicted value of the dependent variable (CS) increases when the value
of the independent variables increase (CM1 and CM4). The regression
equation indicates that on a five-point scale for customer satisfaction,
the level has the constant value at 1.261 (dissatisfied) if no
initiatives are taken to increase the level of the independent items
i.e. CM1 and CM4. However, effort must be concentrated on the sales
executive performance since it has higher coefficient beta of [beta] =
0.416 when compared to CM4 ([beta] = 0.210).
Tests between the instrumental performance (akin to functional
quality) and expressive performance (akin to technical quality) of
services suggest that the first type of performance is necessary, but it
is not a sufficient condition for satisfaction in this study (referring
to the testing on H3). Gronroos (1984) argued that functional quality
appears to be the most important facet of perceived service towards a
company's image. Thus, it is also important to study if any
relationship exists between the functional quality and company image.
Table 3 reveals the result of regression analysis
'enter-method' that analyses the possible relationships
between functional quality, technical quality and individual company
image factor. With regard to the association between functional quality
and company image factors, the result shows that the calculated R values
are between 0.615 and 0.792 where the CM1 factor recorded the highest R
value of 0.792. The CM2 factor had the lowest regression coefficient of
R=0.615. Since the regression coefficient value is well above the 0.5
mark for all the company image factors, it can be inferred that
functional quality will have a direct and positive impact on
In contrast, when the authors study the relationship between
technical quality and company's image factors, the result indicates
the regression value between 0.414 and 0.507 for all company's
image factors. Similar to the finding for functional quality, the result
shows that CM1 recorded the highest value when compared to other company
image factor. This result confirmed and proved that human interaction in
company image plays a very significance roles in assessing the
functional quality or technical quality.
Based on the above findings, it can be concluded that the
relationship between functional quality and company image will be
greater than the association between technical quality and company image
particularly for Digitaline II in the telecommunication industry. Thus,
hypothesis H3 is substantiated. This finding indicates that both
dimensions of service quality are related to the perception of
company's image. In this situation, the assessment on quality will
be better if the customer has positive perception on company image.
Image is another determinant that needs to be considered by the
organization to ensure customer satisfaction (Gronroos, 1990). The term
image is currently used in a variety of contexts i.e. corporate image,
brand image, public image, self- image, restaurant image and so on. In
general, an image can be defined as "the sum of beliefs, ideas, and
impressions that a person has of an object" (Kotler & Clarke,
1987). In order to compete successfully in a competitive market, the
company must define how quality is perceived by consumers and determined
in what way service can be influenced by their perceptions. Consumers
may not only be concerned with the actual product that they receive but
also the process accompanying the delivery of the product. As such, the
image of sales office or sales outlets will be of greatest importance
for most service firms.
Overall the result clearly indicates that the respondents agreed
that operators' attitudes, modern outlet services, advertising and
promotional programs and sales (account) executive performance will
create a positive image of the company. The study also proved that the
relationship between overall corporate image and customer satisfaction
does exist. This result is in line with Gronroos (1990) who stressed
that customers' perception of service is also affected by the
corporate image. He argued that image is of utmost importance to service
firms and is to a great extent determined by customers' assessment
of the service they received. Better understanding of the component of
image promises to help management to improve the competitive performance
of the firm since service is intangible and to some extent the level of
satisfaction will depend on performances (Gronroos, 1984).
In addition, the result also indicates that customer satisfaction
level will depend greatly on company's image factors particularly
for CM1 and CM4. The finding indicates that when measuring a
company's image with the objective to increase customer
satisfaction, human interaction factors (sales executives'
performance and operators' attitudes) play major roles in
determining the level of customer satisfaction. However, further
analysis using multiple regression between customer satisfaction and all
the independent factors in the study, found two items i.e. CM1 (sales
executive) and CM4 (operators' attitudes), to be the important
predictors for customer satisfaction level. In the analysis, CM4 had
recorded the highest coefficient value of [beta] = 0.388 when compared
to other identified factors in the model. The result indicates that the
betterment towards the operators' attitude will to a great extent
improve the customer satisfaction level.
This study was completed with a moderate sample size. This is due
to the fact that, there were only 700 subscribers of Digitaline II as of
December 1998. The result in this study could not be generalized because
it was limited to digital leased line service (Digitaline II) offered by
TM. However, since TM controlled 98% of the market share for digital
leased line service, the result could be generalized for that particular
market. Thus, it is useful as a guideline for any telecommunication
service provider which has the intention to offer similar service to
their customers in the future. The result in this study could also be
adopted as a benchmark especially for companies that had already
launched their digital leased line to customers.
Future research must try to investigate other company's image
factors that might influence customer satisfaction. This is very
important since the R2 value that explains the variation between the
dependent and independent variable that was found in the current
investigation is very low. Thus, initial study to identify other
company's image factors should be carried out prior to empirical
Since the current study only focused on digital leased line
service, future research to analyze the relationship between
company's image, customer satisfaction and service quality within
the telecommunications industry in Malaysia is required to confirm the
result of the current investigation. In relation to this, future
researchers are encouraged to take into consideration all the services
offered in the telecommunications market and expand their scope to
include all major telecommunication service providers in Malaysia.
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Table 1:Multiple Regression for Customer Satisfaction--Model
Model/ R- Regre- F- Sig.
Predictors value ssion Residual value value
1 CM1 (a) 0.577 47.981 95.913 74.038 0.000
2 CM1 (a), 0.593 50.575 93.319 39.834 0.000
(a) CM1 = Sales Executive
(b) CM4 = Operators' Attitudes
Table 2:Regression Coefficient for Model # 2
UC * SC **
Variables B Error Beta
Constant 1.261 0.282
Sales Executive (CM1) 0.419 0.105 0.416
Operators' Attutudes (CM4) 0.205 0.106 0.210
Variables value Sig.
Constant 4.472 0.000
Sales Executive (CM1) 4.005 0.000
Operators' Attutudes (CM4) 2.005 0.045
* UC = Unstandardized Coefficient
** SC = Standardized Coefficient
Table 3: Regression analysis between functional quality,
technical quality and company image factors
Company Image Factor R R Square
Sales Executive (CM1) 0.792 0.627
A&P Programs (CM2) 0.615 0.378
Outlet Services (CM3) 0.676 0.457
Operators' Attitudes (CM4) 0.768 0.589
Overall CM * 0.771 0.594
Company Image Factor R R Square
Sales Executive (CM1) 0.507 0.257
A&P Programs (CM2) 0.466 0.217
Outlet Services (CM3) 0.414 0.171
Operators' Attitudes (CM4) 0.446 0.199
Overall CM * 0.486 0.237
* Overall CM represents the average for all the company image
factors rating for each respondent.
Company The respondents were asked to evaluate four factors
image. that are related to the company image i.e. sales
executive (CM1), advertising and promotional programs
(CM2), outlet services or Primatel (CM3), and
operators' attitude (CM4). All respondents have to
indicate the extent to which they agree or disagree
with the statements concerning all the above factors.
The initial result for inter-item reliability of
[alpha] = 0.8465 indicates that all the factors in
the company image form a single, strongly cohesive
and conceptual construct. The value recorded is also
above the acceptable range of [alpha] = 0.7
Customer The respondents were asked on their overall
satisfaction. satisfaction towards Digitaline II which is measured
by using five point Likert scale from "1-strongly
dissatisfied" to "5-strongly satisfied' where the
rating 3 is for the customer who "feel neutral".
Functional The concept for service quality used in this
and technical questionnaire is the concept introduced by Gronroos
(1990). He proposed that service quality consists of
two dimensions, i.e. technical quality and functional
quality. Technical quality refers to the quality of
products or services delivered to customers. The
respondents were asked about their perception of
the overall quality of Digitaline II performance.
Functional quality refers to how the quality
service is delivered which includes the overall
perception of the service quality. The term "service
quality" is generally interpreted as how the
customers are treated by the service provider before
and after the actual products or services are
installed. The standard measure used to evaluate both
the technical and functional qualities is the five
point Likert scale of "1-Poor" to "5-Excellent".