Western US college students: Banking preferences and marketplace performance

Received (in revised form): 1st January, 2005

Michael W. Pass
earned his PhD at the W.P. Carey School of Business, Arizona State University in 2001. As an associate professor of marketing at California State University, San Marcos, he has published in The Journal of Personal Selling and Sales Management, The Journal of Marketing Theory and Practice and the Journal of Academy of Business and Economics. His research interests include issues related to services marketing and sales management.

Abstract Retail banks generate new checking accounts by routinely promoting products and services to college students. Prospecting for new student customers is an ongoing and challenging task. Therefore, it is useful to know why students would switch from a bank currently serving them to a competing bank. With this knowledge, bank marketers can focus on relevant features and benets when interacting with potential student customers. Retaining students as customers poses another challenge, so it is also important to know how well banks in the marketplace perform on certain attributes. This information enables a bank marketer to place attention on salient characteristics and ones that can differentiate a bank from competitors. This study yielded insights into the collegestudent market by evaluating reasons for students switching banks and selecting new banks. Students perceptions of bank performance in relation to product quality, price and service quality dimensions were also obtained. Aggregating students opinions of different banks indicated the marketplace performance on these dimensions, thus suggesting areas for differentiation to achieve a competitive advantage. Journal of Financial Services Marketing (2006) 11, 4963. doi:10.1057/palgrave.fsm.4760016 Keywords Satisfaction, college students, switching behaviour, differentiation, service quality

INTRODUCTION Successful bank marketing programmes meet the diverse needs of customers by offering products, pricing and services suiting preferences of specic target markets. This market segmentation approach is well represented by banks targeting the college student market. Local banks and branches of national banks located near colleges and universities routinely promote to college students with the goal of achieving a competitive advantage.
Correspondence: California State University, San Marcos, College of Business, San Marcos, CA 92096 0001, USA Tel: + 1 760 750 4240; Fax: + 1 760 750 4250 e-mail: [email protected]

New checking accounts are generated from various activities targeted at the collegestudent market and a portion of these accounts are established with students deciding to switch from another bank. Once students become checking account customers with a particular bank, bank marketers wish to retain them, especially after graduation, to benet from other nancial arrangements, such as mortgages and new car loans. Therefore, bank marketers must strive to keep students satised with the banks products and services. The challenge of attracting and retaining college students as bank customers leads to some key questions: (1) Why would students switch from their current bank to a

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competing bank? (2) What criteria would students use to evaluate and select a new bank? (3) What are the students perceptions of bank performance in the market? These questions were addressed using two surveys to determine reasons for college students switching from an existing bank and the criteria they would use to select a new bank. Student perceptions of bank performance in the market were also obtained in terms of three dimensions: Product Quality, Pricing and Service Quality. The analysis of students perceptions suggests factors to consider when making decisions related to checking account features, banking fees and programs to support customer service. This information, which is provided by answering the three key questions, enables a bank marketer to place attention on salient characteristics and ones that can differentiate a bank from competitors. Size of the US collegestudent market, the degree of student nancial independence and the income generated while students attend classes indicates that a substantial amount of business is available. College student enrolments within the United States are estimated at over 16 million and 50.9 per cent of the students are economically independent from their parents.1,2 A high percentage of undergraduate students (80.1 per cent) work an average of 31.6 h/week,3 thus generating income to be managed through checking accounts. BACKGROUND Although keeping customers satised may appear to be an easily achievable objective, the reality is that service rms in the United States experience switching behaviour by one-half of their customers over a 5-year period.4 It is important to know potential reasons for switching to a competing institution and reasons for bank selection because they indicate attributes that are important to customers. One attribute, pricing, is reported as a principal reason for

consumers switching from one service rm to another.5 However, other characteristics also inuence a customers decision to leave a bank. A study of switching behaviour among bank customers revealed pricing problems and customer service issues (ie, inexibility and rudeness) as reasons to switch.6 Regarding bank selection, a variety of reasons have been found. Studies of the youth market for nancial services7 and college student banking behaviour8 suggest banking fees, customer service, reputation, interest rates, location, free banking and free overdrafts as principal reasons. Review of the literature and discussions with college students led to the analysis of potential reasons for switching banks and the relative importance of these reasons when selecting a different bank. This analysis was completed to answer the rst two key questions, noted above: (1) Why would students switch from their current bank to a competing bank? (2) What criteria would students use to evaluate and select a new bank? The current study examined possible reasons for switching by asking one sample of college students to indicate if they would consider price, convenience, customer service, image, or the banks products and services when making this decision. These broad categories were also ranked, by a different sample of students, to reveal their relative importance during bank selection. Presumably, the reasons for switching and selection are based on the banking preferences of students which are formed by them to satisfy their banking needs and wants. Developing lasting relationships with students begins by identifying these preferences so that suitable products, prices and services can be offered. The relative importance of banking preferences, as perceived by students, suggests where the marketer should place time and effort to attract and retain members of this target group. Answering the rst two key questions, noted above, provides this directional

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Table 1

Retail banking dimensions Component Usage of checking account features Importance of checking account features Bank reliability Expectations for banks in general Performance of students banks Belief in benet of shopping around for low prices Extent of price consciousness (ie, price sensitivity) Extent of search behavior for low prices Convenience Attributes (listed below) Importance of attributes Performance of banks on attributes Attributes: Parking Ease of moving through bank Finding information Short wait times Customer Service Quality (attributes are listed below) Expectations for all banks in general Performance of students banks Attributes: Assurance Responsiveness Empathy Tangibles

Dimension Product Quality

Price

Service Quality

guidance. Signicant strategic options for the marketers consideration emerge when this knowledge is combined with an understanding of areas in which a bank can be differentiated in the marketplace. The current study provides this view by answering the third key question: (3) What are the students perceptions of overall bank performance in the market? Answers to this question were determined by obtaining students perceptions of bank performance within a major metropolitan area of the Western United States Findings from previous studies support obtaining students opinions with respect to three broad retail banking dimensions that encompass specic components and bank attributes. Table 1 presents the Product Quality, Pricing and Service Quality Dimensions adopted for explanatory purposes, thus conforming to an existing framework used to describe factors inuencing customer satisfaction across a variety of service rms.9 Each dimension, including components and attributes, is explained below. Students perceptions of bank image were not obtained because the required questions would have increased the length of the questionnaire, thus inuencing

completion of questions related to other areas of interest. Whereas the Product Quality Dimension focuses on features of checking accounts, student perceptions of the other dimensions are based on experiences that are not necessarily limited to the students use of checking accounts. Previous studies support examining the components and related attributes of each dimension presented in Table 1. Empirical banking studies nd that customer satisfaction is related to reliability of banks, enabling features (eg, convenient locations), characteristics of employees, tangibles (eg, employee appearance) and bank fees.10,11 Previous studies of the collegestudent market examined bank performance with respect to reliability, physical features, employee characteristics, employee interactions with customers and responsiveness to customer needs.12 Students performance evaluations of UK banks, or building societies, on these characteristics were compared to expectations for each attribute. This comparison identied gaps, or areas of dissatisfaction, thus suggesting areas that could be improved. Within the USA, college students have been surveyed to determine the reasons for selecting banks,

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banking activity patterns (eg, ATM usage), overall satisfaction and sources for bank information.8 Product Quality Dimension Components suggesting how well banks reliably full the needs and wants of college students with checking account features are included in the Product Quality Dimension (Table 1). The rst component, Usage of Checking Account Features, indicates needs previously expressed by students that are currently being fullled. Attention was placed on checking accounts because they are typically opened by college students when attending school. The second component, Importance of Checking Account Features, suggests what students want from a bank. Comparing these two components indicates how well banks are meeting students wants in the marketplace, thus suggesting business growth opportunities and areas of differentiation. For example, if students rank a checking account feature to be relatively important but the usage rate is not very high, then the potential exists to expand business by promoting that account feature. The third component, Bank Reliability, is the rms ability to perform dependably and accurately. This attribute is included with this dimension because of the close association between banking products and services and how reliably they are delivered to customers. Most products and services offered by competing banks are intangible and not substantially different so reliability is the product in the eyes of customers. It is regarded as the most important characteristic of service quality13 and empirical studies indicate a signicant and positive relationship between bank reliability and customer satisfaction.10,11 Students expectations for reliability and how well banks perform on this component were examined, as noted in Table 1. Performance was measured as the extent with which the students desires for reliability are being fullled.

Price Dimension Since many banks are similar with respect to products and services, pricing is one way to differentiate an institution in the marketplace. Pricing decisions are made using commonly held assumptions about how customers perceive and react to prices. Some decisions may not reect valid assumptions about the behaviours of individual market segments, such as the college-student market. Previous empirical evidence shows that, among college students, monthly service charges are the most important factor in bank selection.8 With respect to services, in general, pricing is reported as a principal reason for consumers switching from one service rm to another.5 The Price Dimension (Table 1) contains components providing evidence of how students perceive bank fees. Perceptions of whether or not it is benecial to shop around for low bank fees (ie, bargain hunting), the extent of price consciousness (ie, sensitivity to prices) and the extent of active searching for pricing information are included in the dimension. Responses to questions concerning these components suggest the value of promoting low prices to attract college student customers and the extent of search conducted by them to compare prices. Service Quality Dimension Studies of customer satisfaction within service industries suggest that it is inuenced directly or indirectly by the physical environment (eg, facility design), self-service technologies (eg, ATM, on-line banking) and interaction with employees.11,14,15 The Service Quality Dimension (Table 1) includes two components related to these factors inuencing satisfaction: Convenience Attributes and Customer Service Quality. Both components have also been noted as reasons for switching banks and selecting a new bank.6,8 Convenience Attributes experienced by students when interacting

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with banks was evaluated with attention to bank parking, the ability to move easily through the bank, the ease of nding information at the bank and short wait times. The relative importance of these attributes and how well banks in the marketplace perform on each was determined. The Customer Service Quality component includes four attributes considered by customers when forming overall service quality evaluations: assurance, responsiveness, empathy and tangibles.16,17 Assurance is the level of trust and condence held by the customer for the rm and its employees. Responsiveness is dened as how timely the rm addresses needs of the customer and empathy is how well the rm realises customers needs and gives them personal attention. Finally, tangibles are aspects of the service that can be seen or touched, such as the physical facilities and employee dress. These attributes were investigated by asking students to review statements associated with each and indicate the level of expectation they hold for banks, in general. Students also indicated bank performance by reecting on their reported expectation level for each statement and indicating the extent with which their own bank meets what they desire. Literature pertaining to service quality includes reliability with these attributes when discussing determinants of service quality evaluations.16,17 As noted, reliability is included with the Product Quality Dimension because of the close association between banking products and services and how reliably they are delivered to customers. METHODOLOGY College students attending schools located in a large metropolitan area of the Western United States were surveyed for this study. To obtain a variety of student perspectives, surveys were completed at four different institutions having a total student population of 43,055. Of the four campuses, two are two-year community colleges and two are

four-year universities. Data collection occurred during weekdays over a six-week period by approaching students at common areas of each campus and requesting completion of questionnaires. Questionnaires completed by students 1825 years old were retained for analysis because the majority of students (62 per cent) enrolled in US colleges and universities are within this age range.1,2 Development and testing of the study questionnaire led to adoption of a two-phase sampling approach to reduce potential inaccuracies from students answering numerous questions during short breaks between classes. Two convenience samples, referred to as S1 (Survey 1) and S2 (Survey 2), were taken on the four campuses with two questionnaires focusing on different aspects of the study but featuring identical demographic questions. S1 students were asked about the usage and importance of checking account features, views of bank fees and convenience. S2 students responded to questions about usage of checking account features and their perceptions of banks with respect to the ve attributes of service quality (ie, reliability, assurance, responsiveness, empathy and tangibles). Both S1 and S2 respondents were asked questions about their reasons for selecting and switching banks. The data collection process yielded a total of 191 (S1) and 182 (S2) usable questionnaires. Measures Reasons for bank selection and the reasons why students might switch to a different bank were evaluated by S1 and S2 respondents, respectively. Both groups considered price, convenience, customer service, image, and the banks products and services. S1 respondents ranked the ve reasons to force discrimination as to the importance of each reason when selecting a bank. They were also asked to write down any other criteria used for bank selection. S2 respondents indicated the chief reasons for switching banks by selecting any of the

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ve reasons as ones they would potentially consider if they were to hypothetically leave their current bank. Therefore, multiple selections were allowed and reported based on consideration of a hypothetical situation (ie, leaving their current bank). S2 students were also given the opportunity to write down other reasons for switching from their current bank. The Product Quality Dimension also includes checking account features determined through discussions with college students about their banking habits. S1 and S2 respondents were asked to indicate if they used: (1) a checking account, (2) ATM/check cards, (3) on-line banking, (4) telephone banking and (5) direct deposit. Completed questionnaires of respondents holding checking accounts were retained for analysis, so the usage level (ie, 100 per cent) is not included in the ndings. Perceived importance mean scores were obtained for: (1) ATM access, (2) ATM/check card, (3) on-line banking, (4) telephone banking, (5) direct deposit, (6) overdraft protection, (7) waived fees during summer months and (8) no minimum balance requirements. Respondents (S1) indicated importance of these features using a seven-point Likert-type scale with Unimportant (1) to Very Important (7) anchors. This number of scale points conforms to other scales used in this study and generates greater variability, as compared to using ve or three points, thus yielding a desirable scale characteristic.18 The Product Quality Dimension also includes respondents perceptions of bank reliability. The previously published SERVQUAL scale, derived from service quality research, was used to obtain responses to scale items describing this attribute.16,17 This instrument, described below, was also used to measure perceptions related to assurance, responsiveness, empathy and tangibles, which are included in the Service Quality Dimension. The Price Dimension was measured with four-scale items previously developed to

indicate price consciousness and search behaviour.19 S1 respondents reported their price sensitivity (ie, price consciousness) with responses to two-scale items. Opinions about whether it is benecial to shop around for low bank fees (ie, bargain hunting) and the extent of search behaviour undertaken to nd low prices were measured with the other two items. Each scale item was presented with 1 = Strongly Disagree and 7 = Strongly Agree anchors. The two components of the Service Quality Dimension (ie, Convenience Attributes and Customer Service Quality) were measured using previously published scales.17,20 Convenience Attributes were measured by asking respondents to respond to a scale measuring the importance of ease of parking at the bank, ease of moving through the bank and existence of short wait times.20 Importance mean scores were obtained using 1 = Unimportant to 7 =Very Important anchors. Respondents also reported their own banks performance on these characteristics. Performance was measured with a scale having 1 = Poor and 7 = Excellent anchors. An ease of nding information scale item was developed and included in the study after discussions with students suggested the importance of this attribute. Attributes included in the Customer Service Quality component of the Service Quality Dimension were measured with the widely used SERVQUAL instrument. This instrument was also used to measure perceptions of reliability, which is a component of the Product Quality Dimension. The SERVQUAL instrument was adopted because of its development through studies revealing how customers perceive service quality16,17 and it is acknowledged to be an appropriate instrument when examining service quality.9 A customers perception of service quality is dened an overall attitudinal evaluation of a service based on a long-term orientation whereas perceived satisfaction is based on transaction-

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specic instances between the rm and customer.17 SERVQUAL has been used in numerous studies,21 including research efforts related to banking services and bank customer satisfaction.10,11 Scale items are noted as based on careful research and good descriptors of attributes considered by consumers when evaluating service quality.22,23 SERVQUAL measures normative expectations, which are used as standards for comparisons to perceptions of a service rms performance. Respondents report with 22-scale items what they should expect from a general class of service (eg, banks, retailers), thus indicating a desired level of service. Performance is measured by asking respondents to show the extent with which they believe the rm has the feature described by each scale item. Service quality is operationalised through SERVQUAL by computing difference scores from responses to the two measures (ie, expectations and performance) and averaging them to represent a total service quality score, or a score for each of the ve attributes.16 Modications were made to SERVQUAL because of concerns and discussions regarding scale dimensionality and the need to measure expectations.21,22,24,25 The need to measure expectations, as a comparison standard, has been questioned because direct measures of performance account for greater overall variance in general perceptions of service quality, thus suggesting little need for the use of difference scores to represent service quality.22 However, the value of obtaining expectations and using difference scores has been voiced because the additional information can be used to identify accurately service quality problems.26 The S2 questionnaire was designed and tested to have respondents complete the expectation and performance scales for a particular scale item statement before proceeding to the next one. This format facilitated measuring performance with immediate reference to the reported

expectation, which functioned as the respondents standard for comparison. Expectations for banks, in general, were collected by asking respondents to indicate the extent with which a bank should have an attribute, thus following the original SERVQUAL format, which measures the desired level of service quality. However, SERVQUAL scale items were modied by rewording them to refer to banks instead of the generic term rms. Responses were obtained using a scale with 1 = Strongly Disagree and 7 = Strongly Agree anchors. Whereas expectations were measured using the original SERVQUAL format, bank performance was assessed differently. SERVQUAL instructions for the performance items ask respondents to show the extent with which they believe the rm has the feature described by a scale item. These instructions were modied to measure performance as the degree with which the respondents desire for each item is fullled. Respondents indicated how well their bank compares with the level expected (ie, the extent with which a bank should have an attribute). Responses were obtained for items using a seven-point scale indicating the extent with which the desired level of an attribute is being met (1 = Lower than Desired, 7 = Higher than Desired). In summary, the questionnaire format coupled with revised instructions and a modied performance measure, based on desires, reduced the need to have difference score calculations to indicate service quality perceptions. The performance measure, indicating the extent with which desires are fullled, provides an attitudinal evaluation of service quality. Although difference scores were not needed to represent perceptions of service quality, they do help to reveal where managers may productively focus their efforts to achieve a competitive advantage in the marketplace. Therefore, difference scores were computed to show the extent with which performance (ie, extent with which desire is fullled) deviates from what the respondents

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ultimately desire (ie, what should be expected from a general class of service). Another concern expressed about SERVQUAL is its dimensionality because differences in the number of attributes represented by the scale items have been reported. The ve attribute (ie, factor) structure has been not been found to be universal and dimensionality may vary from one context to another.21,22,25 A factor analysis of data collected from S2 respondents resulted in a four-factor structure with 74 per cent of the total variance extracted and eigenvalues greater than one for each factor. The subsequent oblique rotation revealed distinct factors representing all the attributes, with the exception of tangibles. Mean scores for the SERVQUAL attributes and individual scale items are reported with the difference scores. Although factor analysis results did not include tangibles, the factor loadings were greater than 0.50, thus indicating practical signicance. Therefore, mean scores are reported for tangibles and related scale items. Scale reliabilities of 0.84 and greater were found for each of the ve attributes. Respondent proles Proles of the respondents completing S1 and S2 are presented in Table 2. The collegestudent market is adequately represented for the purposes of this study with respondents having various levels of academic achievement (eg, freshman, sophomore, junior) at either two-year or four-year institutions. Respondents are primarily fulltime students holding part-time jobs, thus more likely to be interested in checking accounts as compared to students not generating income. S1 respondents average 3.75 years experience with banks and 22 per cent of them have experienced switching to a different bank. S2 respondents reported an average of 3.65 years experience with banking and 24.7 per cent of these respondents have switched banks.

Table 2

Respondent proles Survey 1 (S1) % of respondents (n=191) Survey 2 (S2) % of respondents (n=182) 1.1 59.3 39.6 44.0 56.0 84.1 15.9 30.2 69.8 22.2 32.4 24.4 15.9 4.4 92.3 7.7 39.0 29.7 18.1 7.1 5.0

Age (years) Under 18 1820 2125 Gender Male Female Marital status Single Married Type of school attending Two-year community college Four-year university Year in school Freshman Sophomore Junior Senior Graduate student Enrollment status Full-time student Part-time student

0.5 61.3 38.2 41.4 57.6 84.3 15.7 31.2 62.9 24.6 32.5 20.4 18.3 4.2 93.7 6.3

Hours working each week Under 10 30.9 1020 29.8 2130 26.2 3139 7.4 40 or more 5.3

statistics computed to compare proportions of demographics associated with each sample (eg, per cent of male students, per cent of female students) conrmed that S1 and S2 respondents are not signicantly different. Homogeneity of the respondents was examined by comparing students attending each type of institution (ie, twoyear and four-year institutions) to determine if any differences in characteristics might be present that could moderate responses to study questions. Independent samples t-tests were completed to compare students in terms of (1) checking account features used, and (2) years of experience with checking accounts. The analyses by type of institution showed no signicant differences. The two

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Table 3

Reasons for bank selection and switching Importance (S1, n=191) 413 413 562 622 778 Reasons to switch banksb % selecting (S2, n=182) 49.2 46.6 40.8 21.5 9.4

Reasons for selecting banka

Price (ie, cost of checking account) Convenience (eg, waiting time) Products and Services (eg, ATM/ check card) Customer service (eg, friendliness, accuracy) Image (eg, reputation, well-known name)
a b

Price (ie, cost of checking account) Convenience (eg, waiting time) Products and Services (eg, ATM/check card) Customer Service (eg, friendliness, accuracy) Image (eg, reputation, well-known name)

Respondents ranked reasons numerically (15). Composite ranking is reported. Respondents selected all possible reasons to switch. Percentage of respondents selecting reason is reported.

Percentages do not total to 100 per cent because multiple selections were allowed.

survey groups (ie, S1 and S2) were also compared on these characteristics and no signicant differences were found. In summary, S1 and S2 are not demographically different and the respondents are homogeneous in terms of the usage of checking account features and experience with checking accounts. Therefore, ndings from both survey groups are presented to represent the college student market. FINDINGS Six banks and two credit unions provide banking services to S1 and S2 respondents. The majority of S1 respondents (88 per cent) hold accounts with one of the national, or regional, banks. The remainder (12 per cent) indicated use of credit unions for checking accounts. Similarly, the majority (84.5 per cent) of S2 respondents hold an account with a national or regional bank. Credit unions were also represented with 16.5 per cent of the respondents indicating accounts at these institutions. Data pertaining to these rms were aggregated to provide the marketplace perspective reported below. Hereafter, ndings are presented using the term banks to represent national banks, regional banks and credit unions. Reasons for Bank Selection and Switching are presented in Table 3. Findings for Product Quality, Price and Service

Quality Dimensions are presented in Tables 46. Reasons for selection and switching Table 3 presents ndings related to (1) the criteria (ie, reasons) used to evaluate and select a new bank, and (2) the reasons why students might switch from their current bank to a competing bank. Other reasons for selection and switching were reported in response to the open-ended questions but are not shown because they could be categorised with one of the broad reasons presented in Table 3. Composite rankings are reported with the reasons for selection to indicate the relative importance of ve criteria (ie, reasons) used for bank selection. The composite rankings were determined by summing scores (ie, ranking of 1, 2, 3, 4 or 5) for each reason. The lowest composite rankings are associated with Price and Convenience, thus suggesting these as relatively more important to members of the college-student market when selecting a bank. They are followed in the rankings by Products and Services, Customer Service and Image of a bank. The ve reasons for switching to another bank were evaluated by asking S2 respondents to consider, hypothetically, which ones would motivate them to change banks. Percentages reported in Table 3 with reasons

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Table 4 Product quality dimension Usage of checking account featuresa ATM/check card On-line banking Telephone banking Direct deposit % using (S1, n=191) 83.8 65.4 36.6 55.5 % using (S2, n=182) 79.1 62.1 23.6 48.9 Importance of checking account featuresb ATM access ATM/check card No minimum balance Direct deposit On-line banking Overdraft protection Waived charges (summer) Telephone banking Difference Scoree 1.05 1.17 1.14 1.01 1.05 0.91 Mean (sd) (S1, n=191) 6.47 (0.94) 6.35 (1.07) 5.91 (1.36) 5.81 (1.56) 5.20 (1.70) 5.07 (1.65) 4.28 (1.89) 4.10 (1.87) Performanced Mean (sd) 5.57 (1.10) 5.52 (1.32) 5.20 (1.46) 5.66 (1.21) 5.61 (1.26) 5.88 (1.19)

Expectationc Mean (sd) Bank Reliability (S2, n=182) When a bank promises to do something by a certain time, it should do so When customers have problems, a bank should be sympathetic and reassuring A bank should be dependable A bank should provide its services at the time it promises to do so A bank should keep its records accurately
a

6.63 (0.81) 6.69 (1.01) 6.34 (1.13) 6.67 (0.94) 6.66 (0.92) 6.79 (0.79)

Respondents reported features being used. Reported as per cent of respondents using each feature. Responses obtained with scale having 1=Unimportant and 7=Very Important anchors. Responses obtained with scale having 1=Lower Than Desired and 7=Higher Than Desired.

Percentages do not total to 100 per cent because multiple selections were allowed.
b c

Responses obtained with scale having 1=Strongly Disagree and 7=Strongly Agree anchors. All differences are signicant. p < 0.05.

d e

Table 5 Price dimension Pricea I nd myself checking prices in banks even for small services like checking accounts I usually watch advertisements for announcements of bank promotions A person can save a lot of money by shopping around for checking accounts I generally call several banks to get price quotes before deciding on a particular bank
a

Mean (sd) (S1, n=191) 4.01 (1.91) 2.92 (2.67) 3.98 (1.58) 2.52 (1.68)

Responses obtained with scale having 1=Strongly Disagree and 7=Strongly Agree anchors.

for switching indicate the number of respondents selecting a particular reason (eg, 40.8 per cent selected Products and Services). These ndings suggest the relative importance of a reason to members of the college-student market when making decisions about switching banks. Moreover, the ndings correspond to those found with S1 respondents showing the relative importance of reasons for bank selection. Of the ve reasons selected by S2 respondents, Price and Convenience were selected by 49.2 per cent and 46.6 per cent of the respondents, respectively. In summary, Price and Convenience are the two most important

attributes to consider when marketing to attract and retain students as bank customers. Product and Services, Customer Service and Image of a bank are considered but not to same extent as Price and Convenience. Product Quality Dimension The percentage of respondents using checking account features and the perceived importance of each is reported in Table 4. Usage levels reported by S1 and S2 respondents are relatively high for ATM/check cards and clearly surpass usage levels of other account features. Regarding

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Table 6

Service quality dimension Importancea Mean (sd) 5.75 (1.21) 5.35 (1.44) 5.14 (1.51) 4.70 (1.52) Expectationc Mean (sd ) 5.77 (1.44) 5.42 (1.96) 5.69 (1.70) 6.16 (1.64) 5.81 (1.70) 5.52 (1.56) 5.75 (1.93) 5.69 (1.87) 5.16 (1.90) 5.56 (1.85) 5.47 (1.93) 6.52 (0.87) 6.48 (1.27) 6.66 (0.91) 6.48 (0.98) 6.48 (0.98) 5.81 (0.97) 6.49 (1.01) 5.41 (1.42) 5.81 (1.33) 5.55 (1.33) Difference Scoree 1.27 0.85 1.29 1.47 1.45 0.96 1.11 1.10 0.62 0.99 0.99 0.71 0.60 0.80 0.66 0.78 0.46 1.03 0.22* 0.34 0.24 Performanceb Mean (sd) 5.59 (1.19) 5.02 (1.42) 5.12 (1.57) 5.64 (1.19) Performanced Mean (sd ) 4.50 (1.43) 4.57 (1.59) 4.40 (1.52) 4.69 (1.63) 4.36 (1.53) 4.56 (1.48) 4.64 (1.70) 4.59 (1.63) 4.54 (1.63) 4.57 (1.58) 4.48 (1.69) 5.81 (1.00) 5.88 (1.38) 5.86 (1.15) 5.82 (1.06) 5.70 (1.10) 5.35 (0.91) 5.46 (1.09) 5.19 (1.21) 5.47 (1.13) 5.31 (1.02)

Convenience (S1, n=191) Ease of nding information at bank Short wait time in line at bank Ease of parking at the bank Ease of moving through bank Customer Service Quality (S2, n=182) Responsiveness (reverse scored) A bank should not be expected to tell customers exactly when services will be performed It is not realistic to expect prompt service from a banks employees A banks employees do not always have to be willing to help customers It is okay if a bank is too busy to respond to customer requests promptly Empathy (reverse scored) A bank should not be expected to give customers individual attention Employees of a bank cannot be expected to give customers personal attention It is unrealistic to expect employees to know what the needs of its customers are It is unrealistic to expect a bank to have its customers best interests at heart A bank should not be expected to have operating hours convenient to all its customers Assurance Customers should be able to trust employees of a bank Customers should be able to feel safe in their transactions with bank employees A banks employees should be polite A banks employees should get adequate support to do their jobs well Tangibles A bank should have up-to-date equipment A banks physical facilities should be visually appealing A banks employees should be well dressed and appear neat Appearance of facilities should be in keeping with the type of services provided
a b c

Responses obtained with scale having 1=Unimportant and 7=Very Important anchors. Responses obtained with scale having 1=Poor and 7=Excellent anchors. Responses obtained with scale having 1=Lower Than Desired and 7=Higher Than Desired. Responses obtained with scale having 1=Strongly Disagree and 7=Strongly Agree anchors. Differences are signicant, except where noted (*). p < 0.05.

d e

the importance of features, ATM access is the most important feature (mean of 6.47), with telephone banking being the least important (mean of 4.10). Other features with mean scores indicating importance include availability of ATM/check cards (6.35), no minimum balance (5.91), direct deposit (5.81), on-line banking (5.20) and overdraft

protection (5.07). Waiving of service charges during summer months when classes are not in session (mean of 4.28) and telephone banking (mean of 4.10) were not perceived to be as important as the other features. Perceptions of bank reliability (ie, the ability to perform dependably and accurately) are reported in Table 4, with mean scores for

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expectations of reliability and evaluations of bank performance on this attribute. Expectations mean scores range from 6.34 to 6.79 for the scale items, thus exceeding those reported for other components of the Service Quality Dimension (ie, responsiveness, empathy, assurance, and tangibles) reported in Table 6. This nding coincides with the high expectation level reported in other studies12 and supports the point that reliability is the most important characteristic of service quality.9 Performance of banks in the marketplace on reliability is relatively high as indicated by mean scores ranging from 5.20 to 5.88 on the seven-point scale. The difference scores for scale items representing reliability suggest where improvements could be made to further improve bank performance on this component. The greatest gaps, or problems, are related to banks promising to do something by a certain time and not doing it and not being sympathetic and reassuring when customers have problems. Price Dimension Mean scores for scale items of the Price Dimension are presented in Table 5. Students are somewhat price conscious as indicated by the extent of price checking of small services provided by banks (mean of 4.01). Responding to the seven-point scale (1 = Strongly Disagree, 7 = Strongly Agree), they also reported some belief in bargain hunting as a viable way to save money. A mean score of 3.98 was found with the item stating that a person can save a lot of money by shopping around for checking accounts. Mean scores related to active searching for low prices by watching for advertisements and calling banks for prices were relatively low at 2.92 and 2.52, respectively. Service Quality Dimension Table 6 contains ndings related to the Service Quality Dimension. Mean scores

related to convenience attributes show that nding information at the bank (mean of 5.75) is the most important convenience item and the ease of moving through the bank (mean of 4.70) is least important. Banks in the marketplace are performing well on convenience attributes perceived by students to be important. Performance of the students banks on each of the convenience scale items is high with mean scores ranging from 5.02 to 5.64. Mean scores for students expectations and perceptions of bank performance with respect to responsiveness, empathy, assurance and tangibles are also shown in Table 6. Performance means for responsiveness (from 4.36 to 4.69) and empathy (from 4.48 to 4.64) are lower than scores for assurance (from 5.70 to 5.88) and tangibles (from 5.19 to 5.47). Based on these scores, alone, banks striving to achieve a competitive advantage would place time and effort on developing programs to improve performance on standards related to responsiveness and empathy. Difference scores conrm that students desires in the marketplace for these two components are not being fullled to the same degree as compared to those held for other components. The benet of examining difference scores is shown by considering these two components (ie, responsiveness and empathy) and bank reliability, which is reported in Table 4. If only performance measures were being considered, the review of operational standards and development of programs related to assurance and empathy would be placed as higher priorities for banks, as compared to programs related to bank reliability. Performance measures for responsiveness and empathy are much lower than ones for reliability. Whereas performance scores for reliability are higher, banks in the marketplace fall short of students expectations and the size of the gap, represented by difference scores, is much greater than gaps found with responsiveness and empathy components.

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Western US college students

Therefore, bank reliability should be treated as a higher priority. Nevertheless, difference scores for responsiveness and empathy indicate that improvements could be made to improve bank performance on service quality. the students desires for responsiveness are not being met to the same extent as those held for other components of service quality. The largest gaps are related to banks employees are not always willing to help customers and a bank being too busy to respond to customer requests promptly. Desires related to aspects of empathy are also not being met as well. Difference scores for scale items representing desires for individual and personal customer attention are greater than others, thus suggesting areas where problems exist. DISCUSSION The marketplace view provided in this paper indicates areas where existing banks, or new banks entering the marketplace, can obtain a competitive advantage. The students reasons for selecting a bank and possibly switching to a different institution were examined to determine their relative importance, thus indicating where a marketer should place attention to have the most productive impact. Strategic options emerge when combining the knowledge of which reasons matter the most to students, when selecting or switching banks, with an understanding of areas in which a bank can be differentiated in the marketplace. Therefore, college students perceptions were obtained by exploring components and attributes of the Product Quality, Price and Service Quality Dimensions. This section highlights the ndings as they relate to each reason for selection and switching banks. Price and Convenience were found to be the principal reasons for selecting a new bank and hypothetically switching banks. The nding that price is a chief reason for switching to another bank and selecting a

new one aligns with the nding of others showing monthly service charges as the most important factor in bank selection among students.27 Within the Pricing Dimension, responses to questions suggest the value of promoting low prices to attract college student customers because they are aware of prices and believe that lower prices can be found. However, the ndings suggest that students do not actively search for the best prices. Mean scores related to watching for advertisements (2.92) and calling banks to obtain price quotes before selecting a bank (2.52) are relatively low. These ndings suggest that a bank must actively inform students about lower fees instead of relying on them to conduct comparisons in the marketplace. When informing them about competitive fees, the use of mass media advertising may be less efcient than other methods such as direct mail and on-campus displays at special events. As noted, Convenience was also expressed as a chief reason for selecting and switching banks. Findings related to this component of the Service Quality Dimension suggest that banks are performing well on the convenience attributes perceived by students to be important. Whereas it is important to recognise the importance of convenience, no discernable gap, or problem, exists with members of the target group. The other reasons for bank selection and switching (ie, Products and Services, Image and Customer Service) were not ranked as highly or chosen as often by respondents, as compared to Price and Convenience. These secondary reasons should be considered carefully because of interdependencies between reasons (eg, the nature of a product inuencing price perceptions) and the possibility that all banks are perceived similarly with respect to Price and Convenience. When competitive parity exists, other reasons are likely to become more salient when students select a bank or consider switching to an alternative institution.

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Considering Products and Services as a reason for selection and switching banks, the two components of the related Product Quality Dimension suggest the extent with which banks in the market are meeting the college students needs and wants for products and services. The ndings show that on-line banking and direct deposit receive low usage among college students, but relatively high evaluations in terms of importance. Therefore, these account features represent opportunities for banks in the marketplace to obtain a competitive advantage. By marketing these features, banks will be aligning with the needs and wants of the collegestudent market. When providing services, such as these, students high expectations for bank reliability must be considered because the performance of banks in the marketplace falls short of these expectations. Therefore, attending to reliability and marketing this characteristic to students represents another strategic opportunity. Considering Customer Service, as a reason for bank selection and switching, the ndings related to the Service Quality Dimension suggest strategic opportunities related to bank responsiveness and empathy. As noted in the ndings section, large difference scores were found with scale item statements, such as these, related to actions taken by employees that stem from their attitude (eg, employees are not always willing to help customers) and the banks ability to effectively schedule manpower (eg, a bank being too busy to respond to customer requests promptly). Banks performing well on these attributes are in a better position to meet the desires of students, thus improving the chances of attracting and retaining them as long-term customers. This paper can be reviewed by bank marketers to generate discussions about their current marketing efforts which may lead to changes, if needed, to ne-tune marketing activities targeting college students. In addition to providing information for

comparative purposes, the study illustrates an approach to researching this target market. To summarise, a bank operating in the metropolitan area of the Western United States where this study was completed might benet from: (1) promoting low prices using media that is easily accessible to students, (2) continuing to perform well on convenience attributes, (3) determining why on-line banking and direct deposit usage is low and taking actions to increase usage, (4) improving bank reliability, and promoting this benet and (5) improving responsiveness and empathy, and promoting the banks performance related to these attributes. Since this study provides a marketplace view, a ner-grain analysis of the situation facing the particular bank would be needed to determine its performance on components and attributes of each dimension. This next level of analysis would indicate where improvements should be completed before marketing to gain a competitive advantage. The degree of satisfaction among current and new student customers, which develops from encounters with the bank then becomes a critically important perception to monitor because the results of multiple service encounters ultimately inuence the overall attitudinal evaluations of the bank and the potential for a long-term relationship. REFERENCES
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