The Relationship Between Service Quality and Service Fee of

Mallari Nail and Beauty Salon

Chapter 1

Billedo, Kyna Blanche

Biwang, Pamela

Heramiz, Althea Kaye

Namoc, Kate Margarette

Pahuyo, Trisha Jane

Suyat, Isabella M.

12 – Barcelon
Background of the Study

In this section, we will address the notion of service quality and its’ relationship to service
fee. This study will address how the notion is measured and outline different service quality
models and, in specific, introduce the SERVQUAL model. This study will also highlight why it
is of specific importance to study the relationship between quality of service and service fee of
Mallari Nail Salon and why SERVQUAL model is used in this research.

Service quality is an approach to manage a business processes in order to ensure full

satisfaction of the customers which will help to increase competitiveness and effectiveness of the
service industry. Quality in service is very important especially for the growth and development
of service sector business enterprises (Rahaman et al, 2011) On the contrary, As Morris (1987, p.
79) notes, “one of the more basic, yet critical decisions facing a business is what price to charge
customers for products and services.” This decision is particularly critical in what The Economist
(2013) calls the “age of austerity”—an era characterized by sales stagnation, no reasonable
possibility of cutting costs further, and price as the only remaining lever. In this competitive
environment, more than ever, a sound pricing strategy is required to facilitate customer value
creation, structure price decisions, and earn a profit (see Lancioni, Schau, & Smith, 2005);
Hinterhuber and Bertini (2011) caution that a deficient pricing strategy inhibits profitability.

According to the research of Chen, Gupta, and Rom (1993), the tendency to use price as a
quality indicator simply means the conviction that price can transmit demand-related quality or
supply-related data (Scitovsky, 1945). A high price can represent either a high demand for
superior quality or the strong cost of manufacturing connected with high quality.

To determine if this faith is justified, surveys have used certain "objective" criteria to examine
whether higher-priced alternatives are of better quality than lower-priced alternatives (Riesz,
1978; Sproles, 1977).

The researchers therefore analyzed that from the previous studies, it is said that despite
almost two decades of studies on quality improvements, the relationship between client
perceptions of quality and economic results is still under discussion (Babakus, Bienstock, &
Scotter,2004) Acccording to the research of Zeithaml (2000). With the given information, the
researchers would look into the relationship between a company’s service quality to its service
fee. This research will use Mallari Nail and Beauty Salon as instrument to find the solution and
answers to the problem through data gathering. Individuals who are directly involve on this study
is the customer of Mallari Nail and Beauty Salon while those who are indirectly involved are
Mallari Nail and Beauty Salon’s employees.

Mallari Nail and Beauty Salon is an establishment that offers different services to customers.
It is located at Capistrano St, and Pabayo-Hayes St. Cagayan de Oro (CDO) City. This salon is
not only exclusive for women; they also offer services for men who might want to take the need
to pamper themselves. It provides customers with the ultimate one-stop shop for their hair, nails,
body and beauty needs. The environment of Mallari Nail & Beauty Salon in CDO is design for
comfort, convenience and relaxation (“Mallari’s Nail and Beauty Salon,” n.d.). Also, they
emphasized that they do not only provide their customers with quality nail services, but also give
importance in maintaining the highest level of cleanliness and sterilization. The salon gives
emphasis on their proper hygiene in performing services to their customers using their
equipment. The staffs of Mallari Nail and Beauty Salon are always reminded to take
responsibility for their client’s safety through their clean and sanitized equipment.

The founder of Mallari Nail and Beauty Salon holds more than ten years of industry
experience in Sydney, Australia and seven years in CDO. The founder undergo training and
obtained Diploma with distinction at Institute Technology NSW, Australia.

Theoretical Framework

SERVQUAL by Berry, L., Parasuraman, A., Zeithaml, V. (1895)

From a study of Berry, L., Parasuraman, A., Zeithaml, V. (1895), service quality
(SERVQUAL) refers to a scale that determines the customer’s appreciation towards the quality
of service or product that the business offers. The scale deteriorates the idea of service quality in
to five: tangibility, reliability, responsiveness, assurance and empathy. Tangibility refers to the
business’ physical equipment, staff appearance and its facilities. Reliability is the ability of the
staff to do their work efficiently and accurately. Responsiveness signifies the staff’s aptitude to
entertain their customer’s queries and needs. Assurance pertains to their ability to show
importance to the customer’s trust and their certainty. Lastly, empathy alludes to the degree to
which staff can understand and share the feelings of the customer they handle.
Perceived Service Quality Model by Christian Gronross (1982).

According to his approach, a service's performance as perceived by the client is the outcome
of a comparison between the customer's expectations and their real-life experiences. The "total
perceived quality" is positive if the "experienced quality" exceeds the "expected quality."

Three dimensions of service quality were recognized by Gronross: technical, functional and
image, as expressed on Figure 1. Technical quality relates to what client receives as a
consequence of communication with the business and what is essential for him / her to assess
service quality. Functional quality relates to how the client achieves the technical result that
involves: communication, skills, employees, etc. By technical and functional perfection, image
builds up.
Gap Model of Service Quality by Berry, L., Parasuraman, A., Zeitham, V. (1985)

The Service Quality Gap Model (also known as the "5 Gaps Model") is a significant
framework for customer satisfaction. Berry, L., Parasuraman, A., Zeitham, V. recognized five
significant gaps facing organizations seeking to fulfill the customer experience expectations.

Gap 1, The Customer Gap. This refers to the distinction between the expectations of the client
and the views of the client.

Gap 2, The Knowledge Gap. This is the distinction between the expectations of the customer
with the service provided and the service supplied by the company.

Gap 3, The Policy Gap. This represents the inaccurate translation of the service policy by
management into employee laws and regulations.

Gap 4, The Delivery Gap. This gap directly exposes the performance weakness of the worker.
Gap 5, The Communication Gap. Promises produced by firms through publicity media and
communication increase client expectations in some instances.
Conceptual Framework

Profile of the
customer: Survey
Age Questionnaire
Sex Analysis Improved Service
Frequency Quality and
Relationship
Pearson R Service Fee
between Service Conclusion
Quality and Recommendation
Service Fee

As shown in the figure, the input consists of the relationship between the service quality
and service fee since the researchers are yet to know how these two different entities affect each
other. It is also consisted of the profile of the customer since the researchers will conduct their
survey to them directly. Under that is their sex and age. While in the process, it contained the
method by which the variables are to be collected and synthesized. The process is also composed
 of the analysis of data through its survey questionnaires, frequency and Pearson’s R in order for
the researchers to gather information from the respondents, to organize and summarize data, and
to measure of the strength of the association between the two variables. After analyzing of data,
then the researchers will be able to conclude and give their recommendations. Finally, in the
output, it would show the outcome of the process that is the improved service quality and service
fee.

Schematic Diagram

Service Quality
Service Fee

Reliability Quality of service

Level of Affordability
ServQual Dimensions
es
bl Bra
gi - Very Affordable
nd
n
Ta - Affordable

d
Val

se
- Expensive

tu
ue

uc
ness

od
e
Responsiv

Pr
Assurance
athy
Emp

Marketing Mix

Statement of the Problem

Specifically, this paper sought to answer the following questions:

1. Is there a significant relationship between Mallari’s Nail and Beauty Salon service
quality and service fee?
 2. How did the customers of Mallari’s Nail and Beauty Salon perceive the prices of the
services offered?

3. How do the customers of Mallari’s Nail and Beauty Salon view their service quality?

Research Hypothesis

The following hypotheses were formulated to guide this study:

Ho = There is no relationship between the salon’s service quality and its’ service fee.

Ha = There is a relationship between the salon’s service quality and its’ service fee.

Significance of the Study

This study will prove useful to the following entities:

Mallari Nail and Beauty Salon. After studying the Service Quality towards the Service Fee
the establishment offers, Mallari Nail and Beauty Salon shall have a basis for improving
their Service Quality particularly those that are critiqued by their customers. These revisions
may include the enhancement and giving value for their services.

Start-up Businesses. They will have this study as the basis in considering their price value
towards their products or services. Setting the price of the business, there is a lot consider
things and one of it is the cost of the production. On the other hand, considering also the
worth of their products towards the price being set must show that there is a relationship
between the two.

Customers. They will have an idea on what the business offers regarding their service and its
service fee. The study will serve as a basis on how they will foresee the business.

Future Researchers. Other researchers can use the findings of this study as a basis for their
ongoing or future studies. Furthermore, by conducting similar studies, they can have this
study as their RRL or Review of Related Studies.

Scope and Delimitation of the Study

 This investigation attempts to determine the relationship between the service quality and
service fee of Mallari Nail and Beauty Salon. The scope of the study will be limited only to its
branches located at Capistrano St., and Pabayo St. Thus, we do not include any other salon
operating within the City of Cagayan de Oro.

The respondents of the study will be taken from these branches, that will be randomly
selected to make up a sample of hundred; fifty from each branch. As an academic research, the
sample size then satisfies the minimum regulation regarding the depth of the study.

Defintion of Terms

Customer Satisfaction - indicates the fulfillment that customers derive from doing business with
a firm. In other words, it’s how happy the customers are with their transaction and overall
experience with the company.

Consumers Loyalty - indicates the extent to which customers are devoted to a company’s
products or services and how strong is their tendency to select one brand over the competition.

Service Quality - describe how services can be delivered in such a manner as to satisfy the
recipient

Pricing - the process whereby a business sets the price at which it will sell its products and
services, and may be part of the business's marketing plan.

Incentive - inducement or supplemental reward that serves as a motivational device for a desired
action or behavior

Customer Expectations - refers to the perceived value or benefits that the customers seek when
purchasing a good or availing a service.

Customer Perception - the process by which a customer selects, organizes, and interprets
information inputs to create a meaningful picture of the brand or the product.

Customer Retention - the ability of a company or product to retain its customers over some
specified period.

Profitability - ability of a company to use its resources to generate revenues in excess of its
expenses.

Perceived Value - a customer’s opinion of a product’s value. It has nothing to do with product’s
market price, and depends on the product’s ability to satisfy its requirements.

Market Share - the percentage of a market accounted for by a specific entity.

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