The role of customer satisfaction in the relationship of furniture store marketing efforts, service quality, and customer loyalty

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1 The role of customer satisfaction in the relationship of furniture store marketing efforts, service quality, and customer loyalty Background and Purpose of the Paper Customer satisfaction has been regarded as the determinant of customer loyalty. Several studies mentioned that it is less expensive to retain satisfied customers than to get new customers, which generates financial benefits for the firm (Ranaweera & Prabhu, 2003). Therefore, firms tend to do their best efforts to retain their customers. Firms manage their products and services and deliver them to the customers. Marketing mix program is a strategy to deliver the firm s value to the customers. By maintaining such aspects as product, price, place, and promotion, it is easier for a firm to attract customers, vice versa. Marketing program strengthens firms relationship with their customers (Kotler & Armstrong, 2010). It is important for a store to strengthen their relationship with the customers, because satisfied customers will be back to the store and will do positive Word-of-Mouth communications. In order to satisfy the customers, a store has to improve their performance by maintaining their marketing efforts, including the product, price, place, and promotion aspects. This research focuses on the mediating effect of customer satisfaction in the relationship of firm s marketing efforts, service quality, repeat purchase intention, and Word-of-Mouth communication, as well as the moderating effect of gender in the relationship between customer satisfaction and repeat purchase intention. Theoretical Background Marketing efforts and service quality Marketing efforts or marketing stimuli are the things done by a firm to attract and pursue the consumers to purchase their products. The efforts are based on the 4Ps or marketing mix: product, price, place (channels of distribution), and promotion (Schiffman & Kanuk, 2010). Marketing mix is a set of tactics that can be controlled and combined by the firms for the desired market response. As a set of marketing efforts, a firm has to do need-satisfying market offering (product), determine the charge of the offering (price), maintain the distribution channel (place), and finally inform the customers about the products. Marketing efforts positively impacts customer satisfaction (Van Waterschoot & Van den Bulte, 1992). Good and effective marketing efforts attract more customers and strengthen the relationship between the firm and their customers (Kotler & Armstrong, 2010). A firm delivers their products along with services. Therefore, service quality is important to satisfy the customers (Gounaris, 2005). According to Parasuraman, Zeithaml, and Berry (1985), there are five dimensions of service quality to be maintained: tangibles, reliability, responsiveness, assurance, and empathy. Service quality positively affects repeat purchase intention (Cronin & Morris, 1989; Molinari, Abratt, & Dion, 2008; Spreng, MacKenzie, & Olshavsky, 1996; Zeithaml, Berry, & Parasuraman, 1996). The role of customer satisfaction Customer satisfaction is a post-purchase phenomenon. It is an emotional or cognitive response in a focus (expectation, product, consumption experience, etc.), in a time (after consuming or choosing a product, experience accumulation, etc.). Satisfaction can only be measured in the experience-evaluation process (Giese & Cote, 2000). Customers will be 1

2 satisfied when the firm s performance is more than their expectation (Gotlieb, Grewal, & Brown, 1994; Molinari et al., 2008). When customers feel satisfied for the first time, they tell their relatives about the positive experiences they had (positive Word-of-Mouth communication) and attract others to have such positive experience with the firm. At the same time, those satisfied customers tend to return to the same firm to purchase the same products which make them satisfied (repeat purchase) (Anderson & Sullivan, 1993; Cronin Jr & Taylor, 1992; Molinari et al., 2008). Based on the role of customer satisfaction, the following hypothesis is posited. H1: Customer satisfaction mediates the relationship of marketing efforts (and its dimensions) and service quality (and its dimensions), and repeat purchase intentions and Word-of-Mouth communication. The role of gender Gender often appears as a moderating variable in marketing researches (Saad & Gill, 2000; Walsh, Evanschitzky, & Wunderlich, 2008). According to Harris (1997), gender affects the household items purchase decisions. Females have stronger influence in household items purchase decisions than males. In contrary, based on the Social Role Theory (Archer, 1996), males tend to be more risk-taking than females, and males are more eager to try something new (Walsh et al., 2008). Mittal and Kamakura (2001) and Homburg and Giering (2001) found that the relationship between customer satisfaction and repeat purchase behaviour is stronger for males, than for females. Males who are satisfied are more eager to do repeat purchase than females who are satisfied. Based on the previous arguments, the following hypothesis is posited: H2: Gender moderates the relationship between customer satisfaction and repeat purchase intention. Repeat purchase intention and Word-of-Mouth communication Positive Word-of-Mouth communication is a behaviour related to the intentions to recommend some products to others (Kotler & Keller, 2011; Molinari et al., 2008). Intentions to do Word-of-Mouth communication show that customers will talk about their experiences to someone who does not directly experience the same thing. Word-of-Mouth communication is important for the firms to retain its customers for a longer time (Swanson & Davis, 2003), because positive Word-of-Mouth communication positively correlates to repeat purchase intention (Bloemer, De Ruyter, & Wetzels, 1999; Molinari et al., 2008). Therefore, the following hypothesis is posited. H3: Repeat purchase intention positively correlates to Word-of-Mouth communication. Marketing Efforts Service Quality + + H1 Customer Satisfaction + + H2 Gender Repeat Purchase Intention H3 Word-of-Mouth Communication Figure 1. Research Model 2

3 Methodology A pilot test for marketing efforts items was conducted, with 32 respondents who have purchased any furniture in any store. Then, we use factor analysis to determine the relevance of the items for marketing efforts. Data for this research were collected from the customers who had shopped at least once in eight furniture stores under the same firm, in Yogyakarta and Central Java, Indonesia. Twohundred of five-points Likert-scaled questionnaires were distributed and only 194 were back, consist of 99 males and 95 females. KMO-MSA test shows that 194 responses are adequate to be analysed further (KMO-MSA = 0.881). Confirmatory factor analysis shows that all items are valid, and all variables are reliable for further analysis with Cronbach s Alpha (α) > 0.6. Mediation, moderation, and simple regression analyses were used to test the hypotheses, according to Baron and Kenny (1986) and MacKinnon (2011) equations below. Mediation Analysis Repeat Purchase Intention = c 1 Marketing Efforts + c 2 Service Quality + e 1 (1) Customer Satisfaction = a 1 Marketing Efforts + a 2 Service Quality + e 2.. (2) Repeat Purchase Intention = c 1 Marketing Efforts + c 2 Service Quality + b Customer Satisfaction + e 3. (3) WOM Communication = c 3 Marketing Efforts + c 4 Service Quality + e 4. (4) WOM Communication = c 3 Marketing Efforts + c 4 Service Quality + b Customer Satisfaction + e 5.. (5) Total effect measured as (ab + c ) or c, while mediated effect is ab, and direct effect is c. Moderation Analysis Repeat Purchase Intention = d 1 Customer Satisfaction + d 2 Gender + e 6. (6) Repeat Purchase Intention = d 3 Customer Satisfaction + d 4 Gender + d 5 (Cust.Satisfaction*Gender) + e 7 (7) Moderating effects can be measured from the R 2 difference between equation (6) and equation (7), or the significance of d 5 (interaction) coefficient. Results and Findings Mediation Analysis The regression results show that only service quality has significant effect (0.590) for equation (1). For the dimensions, only marketing efforts-place and service quality-empathy which have significant effects to repeat purchase intention by the value of and 0.543, respectively. Only service quality has a significant effect (0.674) for equation (2), and for the dimensions, only marketing effort-place, service quality-assurance, and service qualityempathy which have significant effects to customer satisfaction, with the coefficient of 0.207, 0.280, and 0.426, respectively. For equation (3), only service quality and customer satisfaction which are significant to repeat purchase intention, with the coefficients of and 0.637, respectively. For the dimensions, only empathy and customer satisfaction are significant, with the coefficients of and 0.581, respectively. For equation (4), only service quality that is significant to Word-of-Mouth communication, with the coefficient of The dimensions that are significant are marketing effort-place and service qualityempathy, with the coefficients of and 0.492, respectively. For equation (5), only 3

4 customer satisfaction is significant to Word-of-Mouth communication, with the coefficient of For the dimensions, only empathy and customer satisfaction are significant, with the coefficients of and 0.577, respectively. The total mediating effect of customer satisfaction in the relationship of marketing efforts and repeat purchase intention is 0 ((0*0.637)+0). The mediating effect is also 0, which means marketing efforts insignificantly affect repeat purchase intention and customer satisfaction. Total mediating effect of customer satisfaction in the relationship of service quality and repeat purchase intention is ((0.674*0.637)+0.161). The mediating effect is and the direct effect is 0.161, which means the relationship of service quality and repeat purchase intention is partially mediated by customer satisfaction, with the greater mediating effect than direct effect. In details, the dimension that affects repeat purchase intention is service qualityempathy. The total mediating effect of customer satisfaction in the relationship of marketing efforts and repeat purchase intention is 0 ((0*0.637)+0). The mediating effect is also 0, which means marketing efforts insignificantly affect Word-of-Mouth communication and customer satisfaction. Total mediating effect of customer satisfaction in the relationship of service quality and Word-of-Mouth communication is ((0.674*0.691)+0). The mediating effect is 0.466, and the direct effect is 0, which means the relationship between service quality and Word-of-Mouth communication is fully mediated by customer satisfaction. In details, the dimensions which affect Word-of-Mouth communication are marketing effort-place, service quality-assurance, and service quality-empathy. Place and assurance are fully mediated by customer satisfaction, while empathy is partially mediated by customer satisfaction. Moderation Analysis The R 2 value of equation (6) is 0.556, as well as the R 2 value of equation (7). The interaction coefficient (d 5 ) is insignificant, which means gender has no moderating effect to the relationship between customer satisfaction and repeat purchase intention. Customer satisfaction effect toward repeat purchase intention is equally effective between males and females. Correlation Analysis Repeat purchase intention and Word-of-Mouth communication are significantly correlated with the Pearson s correlation coefficient of and the Spearman s rho of These findings support Molinari et al. (2008) s finding for the mediation and correlation analyses, however, the role of gender as moderator does not support Harris (1997) and Walsh et al. (2008) s findings. Conclusion From the mediation analysis, we conclude that customer satisfaction partially mediates the relationship of service quality and repeat purchase intention, while customer satisfaction fully mediates the relationship of service quality and Word-of-Mouth communication. Gender does not moderate the relationship of customer satisfaction and repeat purchase intention, and repeat purchase intention positively correlates with Word-of-Mouth communication. 4

5 Research Limitations This research covers only marketing efforts, service quality, customer satisfaction, repeat purchase intention, Word-of-Mouth communication, and gender variables, and focus only in the mediating effect of customer satisfaction and the moderating effect of gender. This research was conducted in furniture stores, which have certain marketing efforts. Therefore, we suggest for future researches to assess more variables, such as store image as mediator, with different store characteristics. Practical Implications The relationship of service quality and repeat purchase intention is partially mediated by customer satisfaction. When customers are satisfied, they will have the intention to do repeat purchase. In order to increase customer satisfaction, the store has to improve their service quality, especially empathy dimension. Empathy has a great effect toward customer satisfaction, repeat purchase intention, and Word-of-Mouth communication. As a dimension of service quality, empathy has an emotional touch to the customers. With empathy, customers experience the customized and personalized service when they do furniture shopping. The positive correlation between repeat purchase intention and Word-of-Mouth communication has a positive impact for the furniture store. When their marketing programs work well, the customers will do repeat purchase at their stores and also do positive Word-of- Mouth communications. Contribution of Paper This paper contributes some knowledge in customer relationship management, specifically for the furniture stores, that empathy is important to strengthen the relationship between firms and the customers. The findings suggest that by doing excellent service quality, a store will gain advantages from its customers. Excellent service quality will satisfy customers and satisfied customers will be back to the firm and do positive Word-of-Mouth communication. Furniture store customers prefer customized and personalized assistance when they do furniture shopping. Therefore, the store staffs have to improve their empathy to satisfy their customers. 5

6 Appendices Questionnaire items Marketing effort Product The furniture sold here is long-lasting. The shape of the furniture sold here is interesting. The colour of the furniture sold here is interesting. The size of the furniture sold here is fit my needs. The furniture is unique. The furniture is made from good-quality materials. There are many choices of furniture in this store. This store sells famous brands of furniture. This store has interesting furniture sets. Marketing effort Price This store s prices are reasonable. I am interested to the price discounts in this store. This store provides interesting payment ways. Marketing effort Place It is easy to reach this store. This store s displays are interesting. It is comfortably to sight-seeing around the store. This store provides good parking area. Marketing effort Promotion This store offers interesting prizes. This store offers interesting gifts. The exhibition of this store is interesting. I am familiar with this store. This store s advertisings are interesting. Service quality Tangibles This store is modern. This store s facilities are interesting. The staffs look tidy. This store s merchandises are interesting. Service quality Reliability The staffs are professional. This store s services are always on-time, as promised. This store truly helps me when I have problems in furniture shopping. The staffs assist me well since the first time I arrived. The store serves me, as promised. This store never made any mistake when they serve me. Service quality Responsiveness This store gives me detail information about their promised service. The staffs are always ready. The staffs are always helpful. The staffs truly assist me, never rushed. Service quality Assurance The staffs behaviour makes me feel safe. I feel comfortable when I do the transaction here. The staffs are polite. The staffs give the right answer when I ask them. 6

7 Service quality Empathy This store treats me individually. This store has good working-time. The staffs serve me personally. This store truly cares of me. This store understands my specific needs. Customer satisfaction I am satisfied for this store s products and services. I am satisfied for the prices offered. I am satisfied for this store s layout. This store s promotions are exactly fit my needs. This store looks good. I am satisfied for the reliable services. I am satisfied for this store s responsiveness. I am satisfied for this store s assurance. I am satisfied for this store s empathy. I believe I do the right thing, to buy furniture in this store. I am happy with my decision to buy furniture in this store. Word-of-Mouth communication I will tell others positive things about this store. I will recommend this store to my relatives. I will ensure my relatives to buy furniture in this store. Repeat purchase intention When I need furniture, I will go to this store. I get many advantages when I buy furniture in this store, better than other stores. This store is the best place for furniture solutions. 7

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