CHAPTER III THEORETICAL FRAMEWORK AND PROFILE OF RETAIL STORE

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1 CHAPTER III Introduction THEORETICAL FRAMEWORK AND PROFILE OF RETAIL STORE A common definition of service quality is that the service should correspond to the customers expectations and satisfy their needs and requirements. Service quality is a kind of personal selling, and involves direct interactions between salespeople and potential buyers. Consumers like to shop at specific stores because they like the services provided and are assured of certain service privileges. Service quality reflects the extent to which the delivered level of service matches to customer expectations. One of the critical tasks of service companies is service quality management. Quality means the degree of excellence in service performance. Consumers perceive the quality of a service by experiencing the consumption process and by comparing the experience with their expectations. Though consumers are co-producers and their participation also affects the quality, service firms cannot blame the customers. Service organizations have to be responsibility of quality performance through an effective strategic framework. Robert.E.Alen (1988) emphasis that the importance of quality trust and openness in the business problem. It is also stated that the quality management in the service place a pivotal role in all the service economy. Service quality dimensions mean the variable of services which is provided by the store brands or private brands, firms and organizations to their customers. Better quality of services provided by the store has a positive influence on satisfaction of its customers and it directly contributes to profitability of stores. Good quality of service provides numerous benefits to stores like better store image, enhancement in customer satisfaction, cross selling opportunities, decreased customer s defection, increased chances of word to mouth recommendation and facilitates the maintenance of long term and good customer relationships. 52

2 The role of service quality has become critical to the success of store brand. In fact service quality is seen as a driver of customer lifetime value. So understanding customer perceptions of service quality should be a key focus of any store desiring to differentiate its offerings in the global arena. A good understanding of the quality of services will probably encourage customers to end-up with purchase decision at the respected stores. 3.2 Store Brand - An Overview Store brands or Private labels are brands owned, controlled and sold exclusively by retailer. Private labels were first introduced over 100 years ago in a few product categories such as tea, and are now available in over 60% of all grocery products. Private branding or store branding means a large distribution channel member (usually a retailer) buys from a manufacturer in bulk and puts its own name on the product. This strategy is generally only practical when the retailer does very high volume of sales. The advantages to the retailer are: more freedom and flexibility in pricing more control over product attributes and quality higher margins (or lower selling price) eliminates much of the manufacturer's promotional costs The advantages to the manufacturer are: reduced promotional costs stability of sales volume (at least while the contract is operative) According to food marketing institute, the % of grocery shoppers buying private labels increased from 37% in 1990 to 44% in 1991(Holton 1992). According to grocery products are on the rise again with sales of about $22 billion in 1989 and growing steadying (Liesse 1991). The store-brand introduction coincides with an increase in the retailer's margins for the national brand. The preferences for the national brand are relatively unaffected by the introduction of the store-brand. 53

3 Store or private label (PL) brands have successfully evolved from being a just another low priced alternative to a widely accepted brand class of their own. Retailers continue to invest in growing store brands. According to a recent Deloitte study, 85% of retail executives are paying more attention to building their store brands and 70% of them are investing in innovation of store brand products (Deloitte 2010). There are many reasons for retailers to invest in store brands. For instance, store brands provide greater margins to retailer (e.g., Ailawadi and Harlam 2004; Meza and Sudhir 2010) and improve retailers bargaining power with respect to manufacturers to help negotiate lower wholesale prices (Scott-Morton and Zettelmeyer 2004; Meza and Sudhir 2009). Store brands can generate store differentiation and loyalty as long as their quality is high enough to satisfy a significant proportion of consumers, inducing them to purchase again. This store differentiation ability is attributed to the store exclusivity of store brands and/or consumers inherent brand choice inertia. Retailers continue to invest substantially in improving store brand quality; in a recent survey, two-thirds of retailers stated that they are increasing their offerings of premium store brands (Deloitte 2010). Store brands have a natural disadvantage in high perceived risk and hedonic categories. Our conjecture is that a household that is loyal to store brands in such high perceived risk and hedonic categories, despite natural disadvantages for store brands is likely to be more store loyal overall. Staple categories are those where consumers purchase frequently and routinely and spend a large portion of their shopping budget (Dhar, Hoch and Kumar 2001). Store brands account for an average of 14.5 percent of sales with some stores prognostic they will soon reach as high as 20 percent of all sales. Store branding is a mature industry; consequently, some store brands have been able to position themselves as premium brands. Sometimes store-branded goods imitate the shape, packaging, and labeling of national brands, or get premium display treatment from retailers. some retailer believe that, while advertising by premium national brands brings shoppers to the store, the retailer typically makes more profit by selling the shopper a store brand. 54

4 In most cases, while store brands are usually cheaper than national (or even regional) brands, they remain more expensive than generic brands sold at the store. Store brand s commitment to sustainability represents a long-term strategy that is firmly anchored in the company's corporate vision and values. That is to say, well perceived store image is able to improve quality and value perception, decrease price consciousness and reduce perceived risk. In recent years more and more retailers carry store brands and these brands have continued to increase in importance particularly in Europe with the prompting of trend toward higher store concentration, the global recession and changing consumer habits (Erdem et al., 2004). It seems that store brands will continue to grow as retailer become more sophisticated marketers continue to expand to new markets. Store brands may enable retailers to make a high value offering store image since consumer reports reveal that the range of cheaper priced SB products pro-vided by retailer is important for consumers in deciding what stores offer good value for money. SBs help retailers to compete profitably in the price-sensitive segment.therefore; SBs have been considered as a critical issue and unique source of competition for retail industry (Quelch and Harding, 1996). Since classic study of Myers (1967) there have been a growing number of SB researches in marketing and retailing literature, not surprisingly following the global emergence of SBs. Especially the indicators of the consumers SB proneness appeared to be increasingly important research area for understanding success of SB strategies. For this reason, many factors have been investigated related to SB attitudes, SB proneness, SB purchase intention or SB evaluation. In a similar vein, the main purpose of this study is to provide an increased understanding of SB purchase intention especially service quality dimensions and useful insights for retailers aiming to gain the strategic competitive ad-vantages of carrying SBs. The country has witnessed the entry of almost all leading retailers such as Wal-Mart, Tesco, Carrefour, Ikea, Staples, Home Depot, and Hamleys in association with leading Indian retailers. With the new FDI rule, they would now be capable to hold a majority share. The association has brought new practices in merchandising, store management and technology. 55

5 3.3 The Extended Gap Model of Service Quality In their model, the authors conceptualized service quality as a five dimensional construct, to develop the popularly known SERVQUAL instrument. The five SERVQUAL dimensions are: Tangibles, Empathy, Assurance, Reliable, and Responsiveness. Figure 3.1 The Extended Gap Model of Service Quality From the above perception of service quality it can be identified that there is a gap between expected service and perceived service. The expected service and perceived service are related through a moderated variable total perceived quality. The Parasuraman 1988 model also revealed that expected service is a composition of traditional marketing activities (advertising, field selling, PR, pricing) and external influence by traditions, ideology and word of mouth. But in the different context of perceived service quality image is a crucial factor which attracts the customers. After the intensified research, the author ultimately identified the image can be studied through the technical quality and functional quality of the product. 56

6 For the purpose of measuring customer satisfaction with respect to different aspects of service quality, a survey instrument was developed by Parasuraman. Zeithaml and Berry in The instrument is called SERVQUAL. The SERVQUAL scale includes five dimensions. They are tangibles, reliability, responsiveness, assurance and empathy. Apart from these dimensions the researcher discussed some more dimensions such as store loyalty, store image, confidence building and customer satisfaction and loyalty. 3.4 Reliability Reliability is defined as the ability to perform the promised service dependably and accurately. In its broadest sense, reliability means that the company delivers on its promises promises about delivery, service provision, problem resolution, and pricing. If a store keep their promises, particularly about their service outcomes and core service attributes customers are interested to purchase in the store brand products. All stores need to be aware of customer expectations of reliability. Stores that do not provide the core service that customers think they are buying fail their customers in the most direct way. Price is one of the important variables of reliability. Price reliance is a general tendency in some consumers to depend on price as a cue to quality. Consumer appears to depend on price as a quality signal in some product categories than in other variables. Munusamy and Wong 2008 emphasis Perceived price shows a positive relationship with consumers motives and this motive will drive their behavior together stimulate their responses and bring them to the store. Low price products are most attractive to consumers. This is because people are becoming more price conscious; therefore, low price product may become their target. Quality is another variable of Reliability. Perceived quality has a positive relationship with perceived value and perceived value has a relationship with willingness to pay. Value of money and quality of the product will drive consumers towards purchasing the product (Burton et al., 1998). High quality, low risk with greater value of the product can increase confidence of consumers in purchasing. The higher the perceived quality of the product, the more likely consumer has intention to purchase private label product. The higher the perceived risk of the product, the less likely consumers purchase intention towards private label product and the 57

7 greater the perceived value on provide for private label product, the more likely the consumers purchase on private label product. Once the consumers decide to purchase the product in certain store, they will be driven by their intention. However, purchase intention might be altered by the influence of price, quality perception and value perception. The service quality model is eluciatated in the following model. Service quality dimensions: an examination of Groonroos service quality model Source: Gronroos (2000cited in Gi Du & James 2004: 269). Figure 3.2 Groonroos service quality model 58

8 Gronroos (1984) model of service quality was selected in understanding service quality dimensions that may be relevant to the mobile telephony industry. The Model was appropriate for three reasons. It includes not only functional quality as portrayed by Parasuraman (1988) but also technical quality as well as image, which is more realistic of today s dynamic global marketplace than what functional-quality-only models portray. Second, the model is more suitable for mobile telecommunication context. The service quality outcome and measurement is dependent on type of service, image and customer satisfaction etc. factors. The mobile telecom market is a type of service industry in which customers place much importance not only on how they are served (functional quality), but also on outcome or nature of services they receive. For the above reasons, service quality is conceptualized to include all three dimensions namely: functional quality, technical quality and image or reputational quality. The construct of reliability measures the store s ability to deliver the service that has been promised to customers accurately, and without error (Huang, 2009 & Vàzquez et al, 2001). This implies that the store must practice a philosophy of getting it right first time, all the time. It must be able to keep its promises, meet deadlines and provide timely and accurate information to customers. Accurate information includes clear product pricing, as well as correct and precise information regarding the product. Furthermore, reliability also refers to the store being able to have merchandise available when required. Customers view reliability as a combination of keeping promises and doing it right. In the supermarket environment, limited availability of stock or long queues for the cash register refers to a lack of reliability on behalf of the retailer. It has been proved that lengthy waits for the cash register can result in consumers developing negative perceptions and decreased customer satisfaction. Zinn and Liu (2001), emphasis a stock outage can result in the consumer leaving the store and forgoing the purchase to search for the item elsewhere. Furthermore, in the long run, continuous stock outages could have a negative impact on future patronage, and result in detrimental perceptions and negative word of mouth. 3.5 Responsibility 59

9 Responsiveness is the willingness to help customers and to provide prompt service. This dimension emphasizes attentiveness and promptness in dealing with customer requests, questions, complaints and problems. Responsiveness is communicated to customers by the length of time they have to wait for assistance, answers to questions, or attention to problems. Responsiveness also captures the notion of flexibility and ability to customize the service to customer needs. To excel on the dimension of responsiveness, a store must view the process of service delivery and the handling of request from the customer s point of view rather than from the store s point of view. Standards for speed and promptness that reflect the store s view of internal process requirements may be very different from the customer s requirements for speed and promptness. To truly distinguish them on responsiveness, store s need well staffed customer service departments as well as responsive front line people in all contact positions. Responsiveness perceptions diminish when customers wait to get product, wait for billing. A store must avoid this to bring the regular customers. The following diagram shows the advantage of responsiveness dimension. Figure 3.3 Responsiveness dimension 60

10 The difference between the expected service and perceived service determined the satisfaction of the customers. The expected service arises from word of mouth, personal needs, past experience and external communication. The employees are delivered prompt responsiveness through satisfied Customer s personal needs, external communication, etc., the store compete the sustainable competitive and get long run repetitive customers. The expected service is less than the perceived service customer gets dissatisfaction. The expected service is higher than the perceived service customers are satisfied. Customers in recent years have grown to be more sophisticated in their demand and are now in pursuit of higher standards of service. To customers, service means being satisfied, delighted, urgently and properly attended to, and having a cordial relationship with the employees. 3.6 Tangibles Tangibles are defined as the appearance of physical facilities, equipments, personnel and communication materials. Tangibles provide physical representations or image of the service that customers, particularly new customers, will use to evaluate quality. Service industries that emphasize tangibles in their strategies include hospitality services in which the customer visits the establishment to receive the service, such as restaurants and hotels, retail stores and entertainment companies. Although tangibles are often used by service companies to enhance their image, provide continuity and signal quality to customers, most companies combine tangibles with another dimension to create a service quality strategy for the store. For example store s delivering speed, efficient service and comfortable, clean waiting area. In contrast, stores that do not pay attention to the tangible dimension of the service strategy can confuse and even destroy an otherwise good strategy. The following is typical example to explain the tangible dimension in Hospital services. The service quality model is explained in the following model. 61

11 Figure 3.3 Service Quality Model In this diagram explains, In hospital services the patients emotional statuses arises from the concept of physical aspects such as temperature, lighting, cleanliness, Air quality and visual attractiveness. The perceived serviceability is privacy protection, comfortable furniture, conduciveness with staff, convenient building layout. The patients are satisfied the above services which is provided by the hospitals they are willingness to recommend others and they are willingness to return again the same. Likewise, the store environment facilities influence customer satisfaction. Physical environment plays a particularly important role in the service encounter of the grocery sector and exemplary retailers insist on store cleanliness, as well as a layout that enables customer orientation and product identification. Abu (2004), emphasis a well configured store layout that is easy to navigate will reduce a shopper s search time. Furthermore, it suggest that customers often do not find the products they seek, even if these products are within the store, due to poor store layout and that this leads to poor perceptions and the consumer turning to a competitor for solutions. Perceptions of store 62

12 appearance provide tangible clues about service quality and it has been noted that the appearance of the store is widely acknowledged as an essential determinant of the shopping experience. 3.7 Assurance Assurance is defined as employee s knowledge and courtesy and the ability of the store and its employees to inspire trust and confidence. This dimension is likely to be particularly important for services that customers perceive as high risk or for services of which they feel uncertain about their ability to evaluate outcomes-for example, banking, insurance, and brokerage, medical and legal services. Trust and confidence may be embodied in the person links the customer to the store. The store seeks to build trust and loyalty to all the potential customers as well as others. Private label product is defined as the only trademark, which can only been found on the packaging and sold in a specific chain of store in low price. Retailers control private label product where they can decide the marketing activities such as advertising, packaging and wholesale price and investments of inventory. Private label product is usually low in price and hence become an alternative product choice for consumers. When the product is familiar to a person; he or she will define the product in such a good way. Therefore, in order to build up trust on private label product, retailers should let consumers feel confident with their product. Trust in private label product is influenced by perceived benefit, which means that perceived price-quality affects consumers attitude. Once purchasing is made, internal memory arise from purchase experiment along with external memory arise by the information received would play their role in the purchasing process. People with negative experience toward a product will give a negative impact for future purchase while when the quality matched the price, a positive impact is shown. Furthermore, such experience is easy to be shared with others and thus influence their decision-making. Consumers always think that purchasing a low price, simple packaging and even less-well known product are highly risky because the quality of those products are of lack of confidence and doubtful. That is the reason why consumers perceived store brand product as high-risk 63

13 products. Most of the consumers are not so familiar with store brand product and they do not understand the product very well, therefore afraid of making wrong decision (Batra and Sinha, 2000). Consumers usually maximize their utility of the product they purchase by avoiding mistake. Hence Retailers create trust among the store brand. Advertisement gives the information to consumers and thus shows the differentiation between products. In addition, there is a positive relationship between store image and private label product. Good store image can reduce perceived risk and thus add value to the product on purchasing of private label product. This means that trustable store image will decrease doubt on product and increase purchase intention. The lower the perceived price of the product is, the higher the tendency of consumers purchase intention toward private label product. In addition, there was a relationship between advertisements with consumers purchase intention. This is due to advertisement shows the information to consumers and thus shows the differentiation between products. Furthermore, the store image of the product is good; consumers purchase intention will be increase. Consumers attitude includes trust on the product, familiarity and perceived economic situation. Trust on the product is influenced by perceived benefit and later on will affect consumers attitude. Consumers who trust on the product will think the product is worth to buy and thus will recommend the product to others. Negative experience on purchasing will give a negative impact for their future purchase. In order to prevent making mistake during purchasing, consumers will choose products which are more familiar to them. The more familiar consumers to the private label product, the higher the tendency consumers purchase intention is towards private label product. Purchase economic situation influence consumers attitude which dealing with purchase decision-making. Due to the economic downturn, people tend to save more money by making private label food product as one of their selection; therefore, perceived economic situation had influence their way in evaluating product and thus affecting their attitude. 3.8 Empathy Empathy is defined as the caring, individualized attention that the store provides its customers. The essence of empathy is conveying, through personalized or customized service, that customers are unique and special and that their needs are understood. Customers want to feel 64

14 understood by and important to stores that provide service to them. Personnel at small service firms often know customers by name and build relationships that reflect their personal knowledge of customer requirements and preferences. When such a small firm competes with larger firms, the ability to be empathetic may give the small firm a clear advantage. Sales assistants play a pivotal role in a customer service situation, with the most important attributes being store clerk attitude and treatment of customers (Gounaris, 2008; Gagliano, 1994). The customer service offered by sales personnel is perhaps the most highly visible attribute of the service encounter. The importance of sales staffs knowledge regarding new products, prices, and other variations of store offerings, as well as commenting on the importance of treating the customer with respect. Employees are often viewed as facilitators of the sales process, as they play a crucial role in improving the conversion ratio. Furthermore, employees also provide customers with assistance in selecting complementary items when required. Empathy dimension covers the store s capability of handling returns and exchanges, as well as processing customers problems and complaints. It includes the store s ability to express a sincere and genuine interest in solving the customer s problem and extends to the ability of staff to handle complaints directly and immediately. Unless dealt with effectively, service failures have been shown to arouse dissatisfaction and anger, leading to disastrous consequences for the store. The following diagram is the example to explain the empathy dimension in mobile services industry. The service quality model is eluciatated in the following model. 65

15 Figure 3.4 Determinants the choice of mobile service providers From the above perception of service quality it can be identified that the mobile service users are enjoying the empathy services through customer care, communication, and price and call services which is provided by the mobile service providers. The customers are satisfied these services they are given preference to the same mobile industry and they could not change their brands to other competitors. Communication covers call quality, call drop rate and geographical coverage. Call service includes call forwarding and waiting, service quality. Price covers calling 66

16 rate, promotional offers and product range. Customer care means complaint redressal system and complaint resolution. Service provider dimensions cover customers relations, innovativeness, restoration capabilities and reliabilities and responsiveness. 3.9 Store Loyalty Store loyalty is the customer continuous purchasing behaviors of the merchandise or services of a certain stores. If a customer was satisfied with store s commodities or services they would want to offer positive word-of-mouth promoting that store. Improving customer loyalty in the service enterprises will increase economic benefits. The degree to which consumers are committed to particular store depends on a number of factors: the cost of changing brands, the availability of substitutes, social ties to the company, the perceived risk associated with the purchase and the satisfaction obtained in the past. Store loyalty is the customer continuous purchasing behaviors of the merchandise or services of a certain stores. If a customer was satisfied with store s commodities or services they would want to offer positive word-of-mouth promoting that store. Improving customer loyalty in the service enterprises will increase economic benefits. The degree to which consumers are committed to particular store depends on a number of factors: the cost of changing brands, the availability of substitutes, social ties to the company, the perceived risk associated with the purchase and the satisfaction obtained in the past. The difficulty of obtaining information about services means that consumers may unaware of alternatives or substitutes for their brands, or they may be uncertain about the ability of alternatives to increase satisfaction over present brands. Hence the retailers or store should provide proper information about their brands to their new customers and existing customers. A reason that consumers may be more stores loyal with services is the recognition of the need for repeated patronage in order to obtain optimum satisfaction from the seller. Becoming a regular customer allows the seller to gain knowledge of the customer s tastes and preferences, ensures better treatment, and encourages more in the consumer s satisfaction. Thus a consumer may exhibit store loyalty to cultivate a satisfying relationship with the seller. 67

17 Therefore, keen competition in service and improved management and marketing strategies must be aimed at retention not acquisition. The following model explains the store loyalty dimension. Figure 3.5 Loyalty dimension In this diagram explains the employees provide service recovery through the communication and conflict management. It enhances the satisfaction to the customers those who given complaint. The satisfaction leads to consumer loyalty by the way of word of mouth and re-buy intentions. Hence service recovery is one of the paths to enables consumer loyalty. Jones and Sasser (1995) sorted customer loyalty to three main categories customer repurchase intent, primary behavior, and secondary behavior. Griffin (1996) sorted customer loyalty to four main categories customer repurchase intent, word-of-mouth, participation product activity, and selection of participation product activity. Store loyalty influences consumers buying behavior since high store loyal consumers buy more store brands than low store loyal ones. Store loyalty allows retailers not only to increase directly 68

18 their revenues and also their private labels shares. This outcome improves the retailer s profit because he gets higher margins on store brand product. Store loyalty reduces consumer switch over one brand to another. Customer loyalty to store brands is only possible; the customers have a favorable image about the store Store Image Retailers try hard to position themselves in consumer s mind and to create a differentiating image. Store image as a complex combination of tangible and intangible, or functional and psychological attributes that consumer perceive. Not only that, store image is a multidimensional construct including five factors namely: 1) access, 2) in-store atmosphere, and 3) price & promotion, 4) cross-category product/service assortment, and 5) within-category. Store image has a positive effect on store brand s attitude. Store image dimensions (assortment, quality of service, goods) have a double effect on store brand attitude: A favorable attitude towards the store will allow to develop consumer loyalty and to strengthen their confidence in the store. Consequently, store image becomes a major determinant of store brand s attitude. That is to say, well perceived store image is able to improve quality and value perception, decrease price consciousness and reduce perceived risk. Store atmosphere is a major determinant of store brand attitude. The perceived quality of private label was improved in the attractive store and deteriorated in the other store. Store atmosphere can on the one hand influence the perception of economic and physical costs supported by consumer, and on the other hand, have an impact price perception, perceived quality of products and services. Store atmosphere enhances store brand attitude by improving the perceived quality and by reducing the risk. Store image is viewed as critical to retail competitiveness because of its influence on store patronage behavior and profitability. The store image dimensions were: variety of products offered by the store, quality of products offered by the store, value, service, atmosphere and 69

19 overall excellence. Consumers use the quality of the store s product assortment, namely national brands, as a cue to the quality of private labels to reduce perceived risk associated with private labels. Ailawadi & Keller (2004) suggest that consumers use the quality of national brands in the store as an important extrinsic cue to Form perceptions of private labels. Store atmosphere, store design will affect consumers perception of store image and consumers expectation of merchandise quality. The atmospheric environment in a store includes various stimuli, such as color, sound, scent, taste, layout and space, which are important clues for buyers. Store image affects attitudes to private labels differs between different retail chains and different private label types. Store image can play an important role in attitudes to store brands, which could be of particular concern where the retailer offers different types of private labels. Higher store image would result in a higher perception of store brand; reduced risk perception and improved quality perception of store brand. A positive store image is an aspect that retailers could possibly hone to increase the market share of stores. The following diagram elucidates store image dimensions and their impact. Figure 3.6 Gronroos service Quality Model 70

20 The perceived service quality determines image of the store. There is a gap between the technical quality and functional quality. Technical quality, also known as extrinsic quality which is defined as what the customer is actually receiving from the service. Functional quality is also known as intrinsic quality, and interactive quality; and describes the manner in which the service is delivered. Functional quality refers to employees' actions or the human interaction that takes place during the service encounter; it is the "how" a service is delivered or provided. Furthermore, when customers do not have the expertise, time, and/or desire to make an assessment of technical quality, they may rely primarily, and sometimes completely, on perceptions of functional quality to assess service quality. The internal factors and external factors are playing an important role in building store image. Most consumers will evaluate a store by taking into consideration its resources, history and ways of operating service activities. A store enjoys a favorable image; customers probably might forgive the occasional minor mistake of the store. However, the mistakes are repetitive; there is a danger of spoiling the market image. Customers use a store s image as a filter or a net while perceiving quality. Naylor and Frank (2000) emphasis that the employees performance will affect the consumers perception. The image of the retailer is very important to develop an excellent image for the organization and help them to be strong in the market. Another strong component of retail image is based on employee behavior towards their service to customers either positive or negative. Consumers perceived store image is important when buying store brand products because store image reflect the images of retailers where it might influence the perceived quality of products they carry and the decisions of consumers as to where to shop Confidence Building The brand awareness perceived quality, service level, store layout, price discounts, shelf display etc; affect the consumer perception of store brands. It creates confidence among the customers about the store. The marketer while formulating marketing strategies will have to take into 71

21 consideration these vital aspects. A good perception can lead to potential purchase and repurchase of store brands. Brand awareness can serve as an approximation for brand familiarity and trust created by previous consumption, exposure to advertising or word-of-mouth. Consumer reactions to national brands and private labels are influenced by a number of factors such as consumers value consciousness, the element of price-quality association, the element of trust and the issue of smart shopper self-perception. Brand loyal consumers display a stronger tendency to purchase the same brands they have always bought and, compared to those who are more likely to seek variety, are less likely to switch to new and unfamiliar brands. Research has indicated that consumers concerned with paying lower prices are less loyal toward specific brands, whereas on the other hand the tendency to purchase specific brands on a more consistent basis is positively influenced by a belief in the price-quality relationship Customer Satisfaction and Loyalty Satisfaction is generally viewed as a broader concept, whereas, service quality focuses specifically on dimensions of service. Based on this view, perceived service quality is a component of customer satisfaction. Satisfaction is influenced by perception of service quality, product quality, price as well as situational factors and personal factors. The quality of the services that a store provides is related to the satisfaction of customers and it is estimated by dissatisfying and satisfying the service provided by the store over time. The perceived service quality has positive effect on satisfaction of customers. Everyone knows what is customer satisfaction is, until asked to give a definition. Then, it seems, nobody knows. Oliver defines satisfaction in his formal definition as: Satisfaction is the customer s fulfillment response. It is a judgment that a product or service feature, or the product of service itself, provides a pleasurable level of consumption-related fulfillment. 72

22 In addition to a sense of fulfillment in the knowledge that one s needs have been met, satisfaction can also be related to other types of feelings, depending on the particular context or type or type or service. Determination of customer s satisfaction Customer satisfaction is influenced by specific product or service features perceptions of product and service quality, and price. In addition, personal factors such as the customer s mood or emotional state and situational factors such as family member opinions will also influence satisfaction. In addition to product and service features and one s own individual feelings and beliefs, consumer satisfaction is often influenced by other people. For example, satisfaction with a family vacation trip is dynamic phenomenon, influenced by the reactions and expressions of individual family members over the duration of vacation. Later, what family members express in terms of satisfaction or dissatisfaction with the trip will be influenced by stories that are retold among the family and selective memories of the event. In Tse and Wilton's (1983) definition, three antecedents of satisfaction can be identified:- 1. Customer expectations, or expected performance, 2. Actual performance or perceived performance, 3. The discrepancy or confirmation/disconfirmation is the gap between the expected performance and perceived performance. Whether a customer's positive expectations about a product or service are met, or whether a customer's negative expectations about a product or service are not met; in both cases, the result is moderate satisfaction. The former is derived from positive confirmation, and the latter is resulted from negative confirmation, or disconfirmation. The term disconfirmation in this context relates to the fulfillment of expectations, and may be positive (where product performance exceeds expectations), negative (where product performance falls below expectations) or zero (where performance equals expectations). 73

23 There is an important relationship between customer satisfaction and customer loyalty. This relationship is particularly strong when store customers are very satisfied. Thus stores that simply aim to satisfy customers may not be doing enough to engender loyalty-they must instead aim to more than satisfy or even delight their customers. Customer loyalty can fall off precipitously when customers reach a particular level of dissatisfaction or when they are dissatisfied with critically important service attributes. Attitude of employees to some extend are very much related towards maintaining satisfaction at the work place. In other words, employee s satisfaction significantly affects the performance of the retail store. Customer satisfaction is a post-purchase, global affirmative summary response occurring when customers are questioned and are undertaken relative to retail store services offered by competitors. There has been some confusion regarding the relationship of perceived service quality and customer satisfaction. However, service quality is considered as a transactional-level construct and customer satisfaction as a global-level construct. Service quality (SQ) and satisfaction are distinct constructs, and SQ is the antecedent of satisfaction. Satisfaction is considered an important determinant of customer loyalty, and has a moderating effect on the relationship of service quality with behavioral outcomes. Bloemer et al. (1999) found that both customer satisfaction and customer perceptions of service quality were important predictors of loyalty in retail banking services. They also found that quality has both direct and indirect (through satisfaction) impact on loyalty. Satisfaction plays a mediating role between the service quality and loyalty of customers. The employee delivers their quality services to their customers, they are satisfied and they will be one of the loyalty customers to the store. 74