A Study of the Factors Affecting Customer Loyalty in Fast Food Industry (Case Study: Customers of Fast Food Restaurants in City of Tehran)

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1 A Study the Factors Affecting Customer Loyalty in Fast Food Industry (Case Study: Customers Fast Food Restaurants in City Tehran) Hediyeh Amanolah Baharvand, Shahrzad RezaeiDarjazini, Ali Feyzi Abstract The aim the present study has been to study the factors affecting customer loyalty in fast food industry in city Tehran in educational year This study is descriptive- survey and applied in terms methodology and purpose respectively. Statistical population included all the fast food customers in Tehran and study sample consisted 252 people including the customers fast food restaurants in districts 4 and 5. The sample size the study was selected through simple random sampling method using Cochran's formula. The intended data was collected by a questionnaire, the validity and reliability which was approved, and it was completed by the respondents. The Cronbach's alpha has been 0.94 for this questionnaire. In order to descriptively and inferentially analyze the data, the SPSS stware was used. Spearman's rank correlation coeffi was used to inferentially analyze the variables. The results the study indicate that there is a high correlation between and Besides, there is a high correlation and relationship between corporate image and have a weak relationship with customer loyalty; and there is also a weak relationship between customer and switching costs. Index Terms Customer Loyalty, Fast Food Industry, Customer Trust. 1 INTRODUCTION T ODAY, the competition has intensified in production and service sectors around the world. Increased competition is obvious in service sector, in industries such as hospitality, banking, insurance, etc. and this makes it increasingly harder to retain customers and increase their loyalty in this environment (Alameh&Noktehdan, 2010, p. 2). Recognizing and anticipating customers needs is essential for the business to gain a competitive advantage. The customer is considered to be the key and central factor in agility the organization and all the goals, strategies and resources are all oriented to attract and retain customers (Hamidizadeh&Ghamkhari, 2009, p. 3). Expansion fast food and people s desire to consume fast food, especially in big cities, has now become a major challenge for fast food owners and providers as well as for nutrition and health specialists, and a major issue in today industrial society. On one hand, expansion industry in its various dimensions including food industry paves the way for country s development, and on the other hand, today mechanized life has caused people to turn to fast food because lack time and rush to do thing, etc. (Mirshahi, 2008). According to the studies conducted by A. C. Nilsen in 28 Asian, European and American countries, the Asians are the biggest fan fast food within this huge market. Only the university students spent $7 billion on less essential purchases which include fast food Department Management, Boroujerd Branch Islamic Azad University, Boroujerd, Iran. Corresponding Author, Ma In Business Management-International Persian Gulf University, E- mail: Department Management, Boroujerd Branch Islamic Azad University, Boroujerd, Iran (Farahian&Malkami, 2007, p. 2). By the turn the third millennium, many concepts including loyal customers have increased in importance in leading organizations and individuals like Day (1969), Jacoby & Chestnut (1897) conducted more extensive researches on this subject-matter. Of course, the customer loyalty programs began first in USA airline industry by issuing the license for aviation organization in 1978 (Hamidizadeh&Ghamkharizadeh, 2009). Many organizations have expanded customer loyalty programs as one part relationship development activities. Customer loyalty is a complicated concept. The Oxford dictionary defined loyalty as the quality being faithful. Larson & Susanna (2004) believed that loyalty is to gain the commitment customer to make a transaction with a respective enterprise and to repeatedly buy goods and services (Taleghani&Sadraee, 2008, p. 3). During 1990s, many companies fered company introduction programs as a way to strengthen and even change their company s image in an attempt to improve their competitive advantage. Broadly introducing new logos, the number company who changed their name and flourishing design industry in that decade provide evidence for this. Corporate image is defined in Oxford dictionary as the overall picture which an individual, an organization, a product, etc. gives to the enterprise. Martinea(1960) believedthat corporate image is a result peoples recognition, feelings and impression about the company. The corporate image is a conglomerate customers feeling and behaviour. Mental picture or corporate image is a set impressions about the company, and these impressions through feelings, perceptions and views the observers are used for describing, remembering and com- 253

2 municating with the company (Akin &Demirel, 2011, p. 132). These images can be imprinted on the minds through advertisements, trying the product, peoples reaction after using those products, reading and hearing about those companies and their rivals (Anvari et al. 2007). Trust, as the most important relationship-based marketing variable determines the extent to which each side can count on other side s promises and is defined as the desire to have faith in or rely on the other one. Trust is a multidimensional concept and has different dimensions. The concept is a kind belief, feeling or expectation the buyer (seller) which is a result expertise, reliability or intentions the seller (buyer) (Habibi&Pirkouhi, 2006). Trust is based on the evaluation three complementing dimensions. Trust can be seen based on three dimensions: 1) efficiency, financial power or reliability, 2) honesty or integrity and 3) empathy, unity and charity. The first element can be interpreted as rational, and second and third elements as emotional (Halliburton &Poenaru, 2010, p. 7). When good products and services are fered to the customer at the time first purchase, motivation for repurchase is generated in the customer. The buyer who s the seller will most likely want to continue his/her interaction. The consumer accepts the product according to the awareness the past and present, and repeated good quality the product will raise the level. The problems buyer and seller should be addressed simultaneously and they cannot be approached separately. Developing among consumers is important, but maintaining and continuing it is far more important given the growth technology (Habibi, 2011, p. 2). arise when the customers change their provider. They are dependent on the satisfaction and loyalty the customers. When customers think switching to another store is costly, they are more eager to keep their relationship with the current store (Kheiri, Rezaee&Mirabi, 2010). Jackson stated that switching costs are sum all the costs the consumers incur during the process change. In addition to the monetary costs which the consumers have to bear, there are other hidden costs including psychological and physical costswhich are also involved whendealing with a new provider. Shy believed that switching costs are partly specific to the customer and it is the reason why some customers are unwilling to change the suppliers. Fornell& Klemperer suggested thatswitching cost will directly impact on the loyalty thecustomer whereby it reduces the price sensitivity customers and their satisfaction level (Ling et al. 2012). Whereas some types switching costs exist even if all products and suppliers are identical and known to the buyer, search costs can exist even when products and/or suppliers are differentiated and the buyer has incomplete information about which one is a better or worse substitute.besides, search costs can arise with homogenous products where effort has to be invested in finding the best price. (Fernandez, McSorly, Padilla, Reyes & Williams). Given the significance the subject, this study aims at studying the factors affecting customer loyalty in fast food industry in restaurants in city Tehran. There have been studies conducted related to the subject matter the present research inside and outside Iran which some them include: Hamidizadeh&Ghamkhari (2008) in a study titled Determining the Loyalty ShahrvandChain Stores Customers concluded that reliability, the impact services and the impact quality have a positive and significant effect on customer loyalty. Hoseini&Heirati (2007) conducted a study titled Increasing Pritability through Measuring the Degree Customer Loyalty in which their case study was measuring the degree customer satisfaction and loyalty in Super Star restaurants in Iran. The research results indicated a relationship between loyalty external customers (consumers) and loyalty internal costumers (staff). This study also shows that Super Star restaurants should pay more attention to recognized highly important factors including restaurant staff behavior, basic parameters (taste and flavor the food, food safety, packaging and food trays), price and primary services (a clean environment, waiting time for food delivery and how the food is served) and course comparing these factors to rivals services in order to raise customers satisfaction. Another study was conducted by Ling et al. (2012) in Malaysia titled Exploring Factors that Influence Customer Loyaltyamong Generation Y for the Fast Food Industry inmalaysia. The findings revealed that corporate image, and perceived switching cost werepositively related to the customer loyalty. In addition, the finding also concludes that is positivelyrelated to customer loyalty, mediated by perceived switching cost. The main question which we are trying to answer in this study is what factors affect customer loyalty in fast food industry? 2 RESEARCH HYPOTHESES There is a relationship between corporate image and customer loyalty. There is a relationship between and There is a relationship between perceived switching costs and There is a relationship between and switching costs. 3 RESEARCH METHODOLOGY The present research is descriptive-survey and applied in terms methodology and purpose. Because the customers and consumers fast foods are widespread and given the limitations related to fast food restaurants in towns, in such a way that there are no chain restaurants with known commercial names available to people, the statistical population this study includes fast food customers in city Tehran. The study sample was also selected from among the customers fast food restaurants in districts 4 and 5. Cochran's formula was used in order to determine the sample size the study. In this study, simple random sampling method was used. Data collection method is divided into library and field methods. Besides, a questionnaire was used to collect data. This questionnaire was extracted from Ling et al. (2012)and is in 5-point 254

3 Likert scale and has 5 items from totally agree to totally disagree. The validity the questionnaire was approved by the experts. In order to measure reliability, first 30 questionnaires were distributed as samples; then thecronbach's alpha was calculated as 0.94,and its variables are presented in table 1. The data obtained from the questionnaire was analyzed through descriptive statistics and inferential statistics including Spearman's rank correlation coeffi using SPSS stware, version 18. TABLE 1 CRONBACH'S ALPHA FOR RESEARCH VARIABLES value Number questions Alpha coeffi All questions Corporate image 4 RESEARCH FINDINGS Testing hypothesis 1) there is a relationship between corporate TABLE 2 CORRELATION TEST BETWEEN CORPORATE IMAGE AND LOYALTY Acceptance H1 Corporate image Since the level significance is below the level, the H1 hypothesis is accepted, i.e. there is a relationship between corporate image and The correlation coeffi shows that the relationship between two variables is direct, and there is a high correlation between them. Testing hypothesis 2) there is a relationship between and TABLE 3 CORRELATION TEST BETWEEN TRUST AND LOYALTY Acceptance H Since the level significance is below the level, the H2 hypothesis is accepted, i.e. there is a relationship between and The correlation coeffi shows that the relationship between two variables is direct, and there is a high correlation between them. Testing hypothesis 3) there is a relationship between corporate image and TABLE 4 CORRELATION TEST BETWEEN PERCEIVED SWITCHING COSTS AND LOYALTY Acceptance H Since the level significance is below the level, the H3 hypothesis is accepted, i.e. there is a relationship between perceived switching costs and The correlation coeffi shows that the relationship between two varia- 255

4 bles is direct, and there is a low correlation between them. image and Testing hypothesis 4) there is a relationship between corporate TABLE 5 CORRELATION TEST BETWEEN TRUST AND SWITCHING COST Acceptance H4 Since the level significance is below the level, the H4 hypothesis is accepted, i.e. there is a relationship between and switching costs. The correlation coeffi shows that the relationship between two variables is direct, and there is a low correlation between them. 5 DISCUSSION AND CONCLUSION Given the results obtained from the first hypothesis, it was revealed that the value Spearman's correlation coeffi between corporate image and customer loyalty is 0.675; this shows that there is a relationship between corporate image and customer loyalty, and these two have a high correlation. Thus, there have been no evidence for rejection this hypothesis. The research results are consistent with findings Ling et al. (2011), but are not consistent with findings Hoseini et al. (2010). Given the results obtained from the second hypothesis, it was revealed that the value Spearman's correlation coeffi between and customer loyalty is 0.703; this shows that there is a relationship between and customer loyalty, and these two have a high correlation. Thus, there have been no evidence for rejection this hypothesis. The research results are consistent with findings Ling et al. (2011), and findings Bell & Marshall (2002). Given the results obtained from the third hypothesis, it was revealed that the value Spearman's correlation coeffi between switching costs and customer loyalty is 0.242; this shows that there is a relationship between perceived switching costs and customer loyalty, and these two have a low correlation. Thus, there have been no evidence for rejection this hypothesis. The research results are consistent with findings Ling et al. (2011), and Tung et al. (2011). Given the results obtained from the fourth hypothesis, it was revealed that the value Spearman's correlation coeffi between and perceived switching costs is 0.30; this shows that there is a relationship between and perceived switching costs, and these two have a low correlation. Thus, there have been no evidence for rejection this hypothesis. The research results are consistent with findings Ling et al. (2011). Given the research results it was revealed that there is a relationship between corporate image and customer loyalty, and these two have a high correlation. Besides, there is a relationship between and customer loyalty and theses two have a high correlation. There is also a relationship between perceived switching costs and customer loyalty but these two have a low correlation. 256 Beside s, there is a relationship between and perceived switching costs and these two have a low correlation. Since corporate image, and switching costs have a major role in winning and increasing loyalty customers fast food restaurants, have a direct relationship and correlation with customer loyalty in this industry, and has a relationship and correlation with customer s switching costs, owners restaurants and fast food providers should give priority to programs related to building, creating a proper image the company in the customers minds and further improvement it, and increasing the switching and moving costs the seller. REFERENCES 0.30 [1] Akin,E.,&Demirel, Y.(2011). Are corporate image relation satisfaction and identification with corporate influential factor on effectiveness corporate communication and consumer retention? European Journal Social Science, 23(1), [2] Alameh, M., &Noktehdan, I. (2010). A study the impact the quality services on Journal Business Management, 5, [3] Anvari, A., Ghaedi, M., &Mousavi, A. (2007). Customer relationship management and marketing. Tadbir Journal, 180, [4] Farahian, L., &Malkami, A. (2007). A study the structure fast food industry in Iran and factors consumer behavior. Journal Business Surveys, 27, [5] Fernandez, D., Mcsorley, C., Padilla, A., Reyes, T.,& Williams, M. (2003).Switching Costs. Office Fair Trading Economic Research and Discussion Paper Resources. Retrieved from [6] Garcia de los salmons, M.,& Rodriguez de Bosque, I.(2011). Corporate social responsibility and loyalty in services sector. Esic Market, 138, [7] HabibiPirkouhi, A. (2006). The importance in relationship-based marketing and a scale for measuring it. Journal Administrative and Economic Sciences Isfahan University, 3, [8] Hamidizadeh, M., &Ghamkhari, M. (2008). Identifying the factors affecting customer loyalty based on fast response organization. Journal Commerce, 52, [9] Halliburton,Ch.,&Poenaru,A.(2010). The role in consumer relationships. ESCP Europe Business School. [10] Han, H. (2007). Restaurant customer emotional experience and perceived switching barriers: A full service restaurant setting(unpublished Doctoral dissertation). Kansas state university. Retrieved from proquest Dissertations and These database.(dat-a68/12. AAT ). [11] Hoseini, H., &Heirati, N. (2007). Increasing pritability through measuring the degree customer loyalty by case studying the Super Star restaurants in Iran. National Conference Customer/Citizen Relationship Management. Teacher Training University. [12] Kheiri, B., Rezaee, S., &Mirabi, V. (2010). A study the effect customer

5 relationship management systems for retailers. First Conference on Organizational Intelligence and Business Intelligence. [13] Larson S., & Susanna H., (2004). Managing customer loyalty in the automobile industry. Department Business Administration and Social Sciences. [14] Ling, K.,Mun, Y.,& Ling,H. (2012). Exploring factor that influence customer loyalty among Generation Y for the fast food industry in Malaysia. African Journal Business Management, 5(12), [15] Mirshahi, S. (2008). How to use marketing research process in fast food.journal Development Market Engineering, 6, [16] Taleghani, M., &Sadraee, S. A. (2010). Proposing a conceptual model for explaining the process quality-satisfaction-loyalty in banking industry (case study: Mellat bank Gilan Province). Iran Marketing Journal, 1, [17] Tung, G.,Kuo,Ch.,&Kuo, Y. (2011). Promotion, switching barriers, and loyalty. Australian Journal Business and Management Research, 1(2)

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