IMPACT ANALYSIS OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN GROCERY STORE CHAINS-AN EMPIRICAL STUDY OF EMPLOYEES PERSPECTIVE.

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1 IMPACT ANALYSIS OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN GROCERY STORE CHAINS-AN EMPIRICAL STUDY OF EMPLOYEES PERSPECTIVE. Sudhir Kumar Singh Research Scholar, RTM Nagpur University, PhD (Pursuing), MBA. (Marketing), MBA (Human Resource) IIBR Abstract Retailing in India is growing at the rate of about per cent per annum. As part of its strategy to gradually open it up to foreign competition, the government is also in the process of increasing foreign direct investment in the retail sector. This allows Indian consumers to be more selective of their choice of grocery stores. Smaller grocery stores in India are seen as offering more personal services but with inadequate stocks and facilities; a contrast to the larger retailers which are seen as offering better merchandise choice and public amenities but with standardized and non-personalized services. As grocery retailers are seen as offering similar products in the store, improving service quality is seen as critical to ensure customer satisfaction. Despite the extensive research on the measures used by consumers to measure service quality in the service sector from consumers perspective, there is lack of empirical studies on it in this sector from employees perspective. In this backdrop, a need to look into service quality dimensions from employees perspective is called for, as each grocery store chain is believed to have its own unique set of quality dimensions. This paper identifies the service quality dimensions effectiveness critical to urban grocery shoppers with reference to Pune for small, medium, and large-sized grocery stores from employees dimensions. For this purpose, statistical analyses were performed to understand the dimensionality of service quality. Finally, the analysis of different dimensions of service attribute and their impact on customers satisfaction was used to suggest relevant improvements in the retail store service quality. Key Words: Retail grocery chain, Service quality, customer satisfaction. 1

2 Introduction Retailing in India is growing at the rate of about per cent per annum. As part of its strategy to gradually open it up to foreign competition, the government is also in the process of increasing foreign direct investment in the retail sector. This allows Indian consumers to be more selective of their choice of grocery stores. Smaller grocery stores in India are seen as offering more personal services but with inadequate stocks and facilities; a contrast to the larger retailers which are seen as offering better merchandise choice and public amenities but with standardized and non-personalized services. As grocery retailers are seen as offering similar products in the store, improving service quality is seen as critical to ensure customer satisfaction. Grocery Chains are the mediate between production of goods (mostly food) and consumers and they are not involved in the production of physical goods. Their purpose is to sell physical products in their stores which are produced by others, but they stimulate customers to purchase groceries by offering a sales atmosphere which is determined by the physical surrounding and technical equipment (the store including products, shelves, point of sale, etc.) as well as by personnel who offer intangible service, such as reliability, friendliness, courtesy, etc. In general, grocery stores have a certain amount of personnel at their disposal, providing service to customers. Literature Review In today's increasingly competitive environment, quality services and customer satisfaction are critical to corporate success. Delivering high quality services is closely linked to profits, cost savings and market share. As stated by Piercy (1995), it is striking that one of the few elements that links many of the otherwise disparate recommendations made to managers over the past several decades has been the need to focus on customer satisfaction as a route to sustained high performance. As stated by various authors (Ballantayne et al. 1996; Berry, 1986; Collier, 1994; Schneider and Bowen, 1995): It is easier - and much cheaper - to keep existing customers than to get new ones. Additionally, another benefit from achieving 2

3 satisfied customers is the fact that the willingness to repurchase is much higher for satisfied customers than for dissatisfied and indifferent ones. Despite this awareness concerning the importance of customer satisfaction, it is beyond the ability of many of grocery chains to maintain satisfied customers. Dr. Siraj (2001) reveals extreme low levels of overall customer satisfaction. He examined the overall customer satisfaction levels in various Grocery chains (31%). However, even companies which focus their efforts on achieving satisfied customers, rarely exceed a customer satisfaction ratio above 50-70% (Scheby, 1998). Based on the results above, the impression rises that the discipline of satisfying customers is not always successfully translated into activities practiced by Grocery chains. An investigation of the relationship between service provision and customer satisfaction appears therefore of interest Research Objectives 1. To analyze the mechanism used by grocery chains to measure Customer Satisfaction. 2. To describe the perception of employees towards importance of complaint management. 3. To critically analyze customer defection tracking mechanism. 4. To discuss employees perception towards customer loyalty. Analysis 1. Customer Satisfaction 3

4 Figure per cent of grocery stores managers feel that their customers are strongly satisfied with their service and 8.33 per cent of managers feel that their customers are satisfied per cent of managers are neutral on this attribute. 2. Measurements of Customer Satisfaction Having analyzed the attitude of manager concerning their customer the next point of interest is to determine how managers assess the actual level of customer satisfaction concerning their service delivery. Almost all managers of our research sample (80.55 percent) perceive their customers as being satisfied with their service performance. This indicates that fairly large number of managers seems to succeed in fulfilling their overall goal of satisfying their customers. But as these answers reflect the manager's perception it is now necessary to find out whether objective measurements are behind their statements. It turns out that percent of all respondents do not measure customer satisfaction. It is therefore necessary to read the above-mentioned number of percent with caution. It seems that the actual level of satisfaction needs to be revised at only percent of the grocery chains customers. A distinction of whether the grocery chains conduct customer satisfaction surveys themselves or make use of professional research institutes will provide further insights in the reliability of the assessed level of customer satisfaction. All in all percent of the responding groceries stores chains use professional research institutions to conduct customer satisfaction survey. 3. Complaint Management 4

5 Figure-2 Asking the service managers about their proceedings in handling complaints will provide valuable insight in the effectiveness of service recovery among those stores of our research sample. The vast majority of the service managers (88.89 per cent) points out that they take customer complaints seriously. They stress that they use complaints in two different ways. First of all a direct and prompt action to a service failure takes place, and hereby turning one specific dissatisfied customer into a satisfied one. Secondly, managers state that the complaints are seen as sources of inspiration and are used to constantly enhance future service deliveries. 4. Customer Defection Registration Figure-3 It has been shown in the theoretical part that not every dissatisfied customer chooses to complain. It is therefore of interest to analyze whether service companies have procedures for registering customers defections. Having effective procedures enable the service companies to identity potential customer dissatisfaction, and thereby possibilities for enhancing the quality of their services. The empirical indicates that per cent of all service managers claim to have procedures to register customer defection. This implies that remaining per cent of the stores do not posses the opportunity to conduct service recovery, in cases where the customer does not complain. It has been argued that a dis satisfied customer informs other people about his bad service experience, which can have a negative effect on the reputation of the service companies, and thus on potential customers. 5

6 5. Customer Loyalty Figure percent of the managers in grocery chains find loyal customers very important and give special treatment and attention. This indicates that only a small percentage of the responding managers seem to have not understood the importance of customers' repeat business for their long-term success. In has been identified that a small percentage of stores have a tendency to adopt transaction-oriented marketing and a large percentage of stores seem to prefer a more relationship marketing. Conclusion and Recommendations The empirical research finds that the service managers in general are convinced about their ability to meet customer s needs and expectations and thereby satisfying the customers. This reinforces the overall impression that managers in all grocery chains are sure about having the appropriate sources to develop high quality service. Based on these dimensions the customers are able to evaluate the service encounter. The empirical research reveals that managers have different opinions about their strengths and weaknesses concerning each service quality dimension. A prerequisite for effective service recovery is that the grocery chains get feedback from the customer about the reason behind his dissatisfaction. For the grocery chains to receive these information, it is necessary to posses complaint procedures which motivate the customers to complain. The research reveals that grocery chains 6

7 which have a low customer contact and provide a low involvement service have fewer possibilities to register customer defections. The lack of registration implies that grocery chains do not receive the reasons behind the dissatisfaction from the tacit customers. In cases where dissatisfied customers defect without complaining, they need to implement mechanisms which monitor customer defection. These mechanisms enable them to detect the reasons behind defection, and thereby provide them with the opportunity to recover potential service failures. The empirical survey shows that the vast majority of the managers treat customer complaints seriously. It is suggested that managers see complaints as sources of information and use them to enhance customers service experience. The general reason behind the grocery chains intense focus on customer satisfaction is that customer satisfaction leads to customer retention. It has been denoted that loyal customers provides the largest revenue to the service companies, as the costs of serving regular customers are lower than the ones of attracting and serving new customers.. References 1. Philip Kortler : A framework of Marketing Management. 2nd ed. Published by pearson education, Inc Christopher H Lovelock, Lauren Wright ( 2nd edition) Principles of service marketing and Management, Prentice Hall, Upper Saddle River, NJ, Ballantyne,D., M.Christopher, A. Payne (1994) Improving the quality of service marketing: service(re)design is the critical link, journal of marketing management, Vol.11,no.1,pp Solomon,Michael R : Consumer behavior in Fashion, Prentice Hall, Englewood Cliffs, N.J., Berry,L.L (1986): Big Ideas in Service marketing, Journal of Consumer Marketing, Spring, PP Berry, L.L.,A. Parasuraman(1991): Marketing Service: Completing Through Quality,The Free Press, New York. 7

8 7. Berry,L.L,V.A Zeithaml, A. Parasuraman (1990): Five imperatives for improving service quality,sloan management Review, Vol. 31, Summer, pp Bowen, D.E., E.E. Lawler (1992): Empowerment of service workers: What, Why, How and when? Sloan management review, Vol.33, Spring,PP Brown, M.D.EHitchcock, M Willard (1994): Why TQM fails and what to do about it, Irvin Professional Publishing, New york 10. Devlin, S.J., H.K.Dong (1994) Service quality from the customer perspective, Marketing Research: A Magazine of Management and Applications, Vol. 6,No. 1,pp Fisk,R.P., S.W.Brown,M.J.Bitner (1993): Tracking the evolution of the services marketing literature,journal of retailing, vol. 69, no. 1, pp Nagel,P., W. Cilliers(1990): Customer satisfaction: a Comprehensive Approach, international Journal of Physical Distribution and logistics, Vol.20, no.6,pp Piercy, N,F, ( 1995): Customer Satisfaction and the internal market, marketing our customers to our employees, journal of marketing practice, applied marketing science, Vol. 1, no, 1,pp

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