Asian Journal of Multidisciplinary Studies

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1 Asian Journal of Multidisciplinary Studies Volume 2, Issue 11, November 2014 ISSN: (Online) (Print) Impact Factor: A study of Service Quality, Customer Satisfaction and of Customers of Organized Retail Stores Dattajirao Y. Patil, Director, Bharati Vidyapeeth Institute of Management Studies and Research, Navi Mumbai ABSTRACT: A satisfied customer is the least expensive and most effective advertiser of a product or service. The retail stores are therefore emphasizing on this aspect of their service quality. Service Quality is the ultimate factor that affects customer satisfaction and hence makes customers loyal to a store by repeat visits and purchase. However apart from the service quality the store ambience and merchandizing too contribute in attracting the customers and has their role in customer satisfaction. The present paper focuses on the analysis of service quality provided by organized retail stores of Mumbai Metropolitan Region and customer satisfaction from the service provided by the retail stores. It also analyses whether service provided by stores are likely to make theme loyal towards the stores. The study has been undertaken to find (i) the relationship between service quality of organized retail store and customer satisfaction and (ii) the relationship between customer satisfaction and store loyalty. The study is based on a sample of 858 customers drawn from the retail stores in Mumbai Metropolitan Region. Data were collected about the measurement of various dimensions of store service quality viz.; physical aspects, reliability, personal interaction, policy and problem solving with the help of Likert type scales. The study analyses the relationship of store characteristics with customer satisfaction and then the relationship of customer satisfaction with store loyalty. It was found that store service quality has a significant correlation with customer satisfaction and customer satisfaction has a significant correlation with store loyalty. Keywords: Service quality, Customer satisfaction, Store loyalty, Organized retailing. INTRODUCTION: The emergence of organized retail stores has been quite phenomenal in last few years. The competition amongst organized retailers has increased to such an extent that to attract the customers, the organized retailers have to think of measures like special discounts, loyalty programs, free gifts and so on. In last few years the purchasing power of the families has increased. The knowledge of the customers about the existence of a variety of stores, facilities provided by the stores and quality of services provided by these stores has increased their expectations from a store. It becomes therefore necessary for the organized retailers to invent strategies to satisfy the customers and make them loyal to the store. A satisfied customer is the least expensive and most effective advertiser of a product or service. The retail stores are therefore emphasizing on this aspect of their service quality. Can customer satisfaction make them loyal to a store? Is there any relationship between service quality, customer satisfaction and store loyalty? With these questions this study was undertaken. The importance of can be judged from the general belief that it is easier to retain an existing customer than to attract a new customer. The existing loyal customers act as less expensive and more effective advertisers (Oluwole Iyiola, 2012). The loyal customers, who act as advertisers for the store are terms as Market Mavens. It is therefore imperative that the retail stores are working meticulously towards increasing customer satisfaction. Many researchers have studied this issue of what satisfies the customers in a retail store? Also whether customer satisfaction make customers loyal? Sumita Dave and Shikha Sondhi (2009) in their study Customer Loyalty Programs: Enlarging the Customer Base for Indian Retailers identified that the influencing factors for Customer Satisfaction are Quality of Merchandise, Services, Store Atmosphere, Pricing, Value proposition, Location and Convenience. The Customer Satisfaction in turn leads to Customer Loyalty, Shopping Frequency, Profitability and Referrals. Raju Rathod (2009) in his study Customer Expectations in an Evolving Organized Retailing in India based on a sample of 562 customers in Gujarat concluded that the best format for attracting customers is to deliver services that lead to maximum customer satisfaction. The author states, the retailer should design its overall retail strategy keeping in mind aspects of customers expectations i.e. shopping convenience, wide product ranges and its formation, recognition and credibility of the outlets / shops and retail ambience. Susobhan Goswami and Nimit Gupta (2013) in their study A Look at Implications of Available online at 142

2 Changing Store Layout and Design in India studied the effect of Store Ambience and Merchandizing on customers buying behaviour. An attractive ambience and proper merchandizing leads to a favourable attitude of employees towards customers and will thus increase customer satisfaction. Meera Mathur and Shubham Goswami (2014) in their study Store Atmospheric Factors Driving Customer Purchase Intention have described four broad aspects of Retail Store attracting the customers. These are Exterior Atmospherics, Interior Atmospherics, Store Layout and Visual Merchandizing. They conclude by saying, The product quality & variety influences the purchase decision the most but strongly followed by the impact of store atmosphere. Many other Indian studies such as by Vivekanand Pandey (2012), Siva Kumari (2011) and Nikhil A. Polke (2011) have worked in this regard. THE THEORETICAL MODEL: In the light of the above discussion the theory which emerges is that Store Features and Services affect Customer Satisfaction and in turn, Customer Satisfaction leads to Store Loyalty. This is presented in the diagram below. Chart-1: The Theoretical Model Physical Customer Satisfaction Store Loyalty Store Policy In view of the above model the Objectives and Hypotheses are as given below. OBJECTIVES: 1. To study the service quality, customer satisfaction and store loyalty of customers of organized retail stores. 2. To study the relationship between service quality of organized retail store and customer satisfaction. 3. To study the relationship between customer satisfaction and store loyalty of organized retail store. HYPOTHESES: 1. There is a significant positive relationship between service quality of organized retail store and customer satisfaction. 2. There is a significant positive relationship between customer satisfaction and store loyalty. 3. There is a significant positive relationship between service quality of organized retail store and store loyalty. SCOPE OF THE STUDY The present study is limited to the study of the quality of service provided by organized retailers to their customers, whether service quality leads to customers satisfaction and whether service quality is related to loyalty towards the store. The study does not attempt at finding out the demographic or other factors that may influence the customer satisfaction and store loyalty. Also the results are applicable to urban buyers and therefore can t be generalized for rural areas. METHODOLOGY: The Research Design: A cross-sectional survey of organized retail customers was conducted in the Mumbai Metropolitan Region (MR). The Mumbai Metropolitan Region is divided into eight areas namely Greater Mumbai, Navi Mumbai, Thane, Kalyan-Dombivali, Vasai-Virar, Mira Road- Bhayandar, Bhivandi-Nizampur and Ulhasnagar. The customers of select retail stores in the MMR region mentioned above were covered under the research. The retail stores covered were Big Bazaar, Hypercity, Reliance Mart and More. The Asian Journal of Multidisciplinary Studies, 2(11) November,

3 survey is conducted among all class of customers who were the regular purchasers and occasional buyers in the organized retail stores in MMR. The Sample: Since the data about number of customers visiting the organized retail stores are not available, a scientifically randomized selection of sample was not possible. The researcher has used the convenience sampling technique to collect data for this study. Customers who visited organized retail stores were contacted personally by the researcher and questionnaires were given to them. Researcher had selected four organized retailers of Mumbai Metropolitan Region viz. Reliance Fresh, More, Big Bazaar and Hypercity. The questionnaires, which consisted of close ended questions, were given to 900 customers in all from all the four organized retail stores. Finally 858 filled-in completed questionnaires were collected from the customers of these four organized retail stores. Questionnaire Design Service quality in retailing is different from that of products or other services. Service quality measurement of the retail stores, unlike the pure service setup includes both, the measure of service quality as well as product quality, because retail stores offer a mixture of services and products. In other words, service quality in retailing is a blend of selling goods and services to the customers keeping in view customers expectations of knowledgeable and helpful staff to assist them during their shopping experience. That is why the most famous and well discussed service quality dimensions identified by Parasuraman et al. (1985) failed to be fully adopted and validated in a retail setting (Dabholkar et al., 1996). The satisfaction of customers depends on the quality of services provided by the organized retailer. Further store loyalty of customers depends upon satisfaction they derive after shopping from the store. The questionnaire for this study has been designed on this principle. The questionnaire consisted of five sections, designed to review organized retail stores of Mumbai Metropolitan Region for customer s view on service quality, customer satisfaction and their loyalty towards store. All sections except the demographic information and reasons to shop from store, were measured using 5-points Likert-scale, ranging from Strongly Agree to Strongly Disagree, to measure the respondent s degree of agreement towards the designed statements. The questionnaire was divided into following five sections for the convenience. Table 1: Structure of Questionnaire Section Aspects Covered One Demographic information Gender, Age, Education, Occupation, Monthly Income etc. Two Respondent s reasons for shopping from visited retail store. Three Respondent s perception about Quality of Services provided by retail store. Four Respondent s Satisfaction towards service quality of the store. Five Respondent s Loyalty towards store in terms of word-of-mouth publicity, revisit and repeat purchase intention. of Service Quality Dimensions: As shown in Table-2 the service quality dimensions were comprised of items in terms of physical aspects, reliability, personal interest, problem solving and policy. The Cronbach s Alpha values for physical aspects and reliability dimensions are and respectively. The Cronbach s alpha value for personal interaction dimension is For problem solving and policy dimensions, the Cronbach s Alpha values are and respectively. All five dimensions namely physical aspects, reliability, personal interest, problem solving and policy have reached an acceptable level of a Cronbach s Alpha values above 0.7 which is a good internal consistency coefficient of reliability. Table 2: Reliabilities of scales used for Service Quality Dimension Physical aspects Solving Policy Cronbach s Alpha Cronbach s Alpha based on standardized items No. of Items Asian Journal of Multidisciplinary Studies, 2(11) November,

4 of Customers Satisfaction and : As shown in Table-3 the Cronbach s Alpha value for satisfaction dimensions is In other words, satisfaction dimensions have reached an acceptable level of Cronbach s Alpha value above 0.7, so it can be concluded that satisfaction dimensions have an acceptable coefficient of reliability. Table 3: Reliabilities of scales used for Customer Satisfaction and Dimension Customer Satisfaction Cronbach s Alpha Cronbach s Alpha based on standardized items No. of Items 5 4 Data Analysis: Statistical software IBM SPSS Version-20 was used for finding reliabilities of the scales of different dimensions of Service Quality, Customer Satisfaction and. s correlation coefficient of correlation was used to find the relationship between all these parameters. RESULTS The main objective of the research was to study relationship between service quality, customer satisfaction and store loyalty of customers of organized retail stores. The hypotheses formulated above are tested below. 1. There is a significant positive relationship between service quality of organized retail store and customer satisfaction. The quality of services provided by the organized store is the primary resource of stimulating sense of satisfaction in customer. There is linear relationship between service quality and customer satisfaction. To establish the relationship between the service quality and customer satisfaction, the service quality s five different dimensions viz. Physical Aspects,,, Solving and Policy were considered. The s correlation coefficient with one tailed test of statistical significance at 0.01 level was carried out to find out the strength of association and consistency of the relationships between Service quality dimensions and customer satisfaction. The correlation showing the statistical significance of the relationship between all service quality dimensions and customer satisfaction is presented in Table-4. The highest significant and positive correlation is found between personal interaction and customer satisfaction (r = , p < 0.01). Similarly lowest correlation is found between problem solving dimension and customer satisfaction (r = , p < 0.01). The importance of various dimensions of Service Quality for Customer Satisfaction is -, Store Policy, Physical Aspect of Store, Store and Solving in that order. Table-4: Service Quality dimensions with Customer Satisfaction Service Quality Statistics with Customer Satisfaction Physical Aspects.597 ** Store.588 **.670 ** Solving.407 ** Store Policy.658 ** 2. There is a significant positive relationship between customer satisfaction and their store loyalty. Satisfied customers visit the same store more frequently for purchase of different products and recommend their friends and relatives to purchase from the same store. Dissatisfied customers on the other hand will not do so. Table: 5: between customer satisfaction and store loyalty with Customer.671 ** Satisfaction Sig. ( tailed) (P) The above table shows a positive correlation between customer satisfaction with all aspects of service quality and store loyalty (r = ). Further strong customer satisfaction was found for personal interaction (r = ) of the employees of the store with customers (table-4). Similarly store loyalty of the customers was significantly found for the policy of the store (r= ) (Table-4). From these it could be concluded that if customers who are more satisfied with all the aspects of service quality they will show greater loyalty towards store. Asian Journal of Multidisciplinary Studies, 2(11) November,

5 3.There is significant positive relationship between store loyalty and service quality of organized retail store A person who is paying money from his/her pocket is entitled to get services from the seller. Keeping these views in the mind, researcher has referred various literatures from modern marketing and researches made in the area of marketing. The study has also observed that, the retail stores are trying to provide different services to attract the potential customers and to retain the existing customers. But the quality of the services provided by the retail stores may vary from store to store and place to place, in some of the cases it may vary from customer to customer. Table-6: between service quality and store loyalty Service Quality Statistics with Physical.567 ** Aspects Store Solving Store Policy.494 **.583 **.428 **.632 ** The above table reveals the customers have higher loyalty due the better policy of the store (r = 0.632) which included replacement of faulty products, convenient operating hours, accepting major credit cards etc. Whereas problem solving policy was not much important to become loyal to the store (r = 0.428). Conclusion: Therefore from above all three hypotheses it was concluded that there exist significant relationship between service quality, customer satisfaction and store loyalty in the organized retail stores. Especially personal interaction of customers plays a crucial role in satisfying the customers. Similarly policy of store influenced customers to become store loyal. Hence organized retailers must pay more attention towards these aspects of the services provided to the customers. The results found through the analysis of the different variables showed positive relationships among the service quality, customer satisfaction and store loyalty. REFERENCES: Dabholkar, P.A., Thorpe, D.I., and Rentz, J.O. (1996): A measure of service quality for retail stores: scale development and validation, Journal of the Academy of Marketing Science, 24 (1), pg Dave, Dr. Sumita & Mrs. Shikha Sondhi (2009): Consumer Loyalty Programs:Enlarging the Customer Base for Indian Retailers, BVIMSR s Journal of Management Research, Volume-1, Issue-2, October 2009, pp Goswami, Susobhan & Nimit Guta (2012): A Look at Implications of Changing Store Layout and Design in India, BVIMSR s Journal of Management Research, Volume-4, Issue-1, April 2012, pp Iyiola, Oluwole (2012: Socioeconomic and Demographic Profile of Market Maven on Thailand Shoppers, BVIMSR s Journal of Management Research, Volume-4, Issue-2, October 2012, pp Mathur, Dr. Meera & Dr. Shubham Goswami (2014): Store Atmospheric Factors Driving Customers Purchase Intention-An Exploratory Study, BVIMSR s Journal of Management Research, Volume-6, Issueue-2, October 2014, pp Pandey, Vivekanand (2012): What Influences Repeat Purchases in Malls?, BVIMSR s Journal of Management Research, Volume-4, Issue-1, April 2012, pp Parsuraman A, Zeithaml V.A. and Berry L.L. (1985): A conceptual model of service quality & its implications for future research, Journal of Marketing Vol. 49, pp Polke, Nikhil A. (2011): Retail is all About Detail, BVIMSR s Journal of Management Research, Volume-3, Issue-2, October 2011, pp Rathod, Dr. Raju (2009): Consume Expectations in an Evolving Organized Retailing in India, BVIMSR s Journal of Management Research, Volume-1, Issue-1, April 2009, pp Siva Kumari (2011): An Appraisal of The Effect of Factors on Brand Loyalty of Server, BVIMSR s Journal of Management Research, Volume-3, Issue-1, April 2011, pp Asian Journal of Multidisciplinary Studies, 2(11) November,