Free Custom «A Study on the Effectiveness of Customer Satisfaction in the Food Retailing Business» Essay Paper

Introduction

Customer satisfaction is primarily a way of knowing whether the services or goods provided by a business are below, up to, or above customers’ expectations. It has been preferred by most marketing managers as a way of measuring company’s performance in the market. It has also been perceived as a percentage or the number of customers, who reported that their experience with a particular business, its services or products was better than they expected.

In food retailing business, customer satisfaction is dependent not only on efficiency of company’s customer service team but also on the quality of products offered. Friendly services please customers and help increase satisfaction level. However, satisfaction can be adversely affected if products offered to them do not meet customer’s expectations.

Literature Review

Factors Affecting Customer Satisfaction

Customer satisfaction is affected by a number of factors. These factors include product assortment, price, quality, and the quality of service provided. Firm’s success can be measured by its ability to influence the attitude, loyalty, and consumer-to-consumer marketing. This ability heavily depends on firm's effort aimed to ensure customer satisfaction. Generally accepted definition of customer satisfaction has not yet been established, but Porter (1998) in his multi-method study claimed that “customer satisfaction is identified by a response (cognitive or affective) that pertains to a particular focus (i.e. a purchase experience and/or the associated product) and occurs at a certain time (i.e. post-purchase, post-consumption).” Using this definition, customer’s satisfaction may be an outcome of the value provided by shopping experience. Cravens & Piercy (2003) have shown that utilitarian shopping benefits and hedonic shopping benefits have a positive impact on the level of customer satisfaction. If shopping experience provides qualities that are valued by the customer, the latter is likely to be satisfied as a result.

Shoppers are influenced by different factors. Some customers shop out of necessity, while others do it as an activity of relaxation. This means that different customers find satisfaction and value in different shopping experiences. As such, customers' expectations surrounding retail experiences vary across retail stores and products. So does customer satisfaction.

While numerous studies about grocery/food retailers have been conducted (Burkoff 2011), there exists little research that makes comparisons between gourmet/specialty and conventional stores and their ways of attaining customer satisfaction with regard to food shopping tendencies. Thus, the literature used is focused on general shopping behaviors in relation to the attained customer satisfaction. These behaviors are influenced by factors that include price, product assortment, product quality, store location, and service of associates involved.

Customer Behavior

While the reviewed literature does not specifically focus on food shopping, there are a lot of similarities in shopping behaviors in both apparel and food industries. The similarities are that customers mostly shop for products they need and expect to find (like common brand products and staple food items) in conventional stores. Specialty stores, on the other hand, and in this particular case of food retailing, offer customers something different or rather special such as organic foods, unique brands, and personalized services. They may also differentiate themselves through their product assortment or special customer relationship management (Cooper & Slagmulder 1997). Conventional food stores offer a broad product assortment and thus appeal to a wide variety of customers. Specialty stores focus more on personalized services and unique product offerings specifically for their target market. In effect, specialty shopping is a reaction against impersonal coldness of supermarket shopping and is an attempt to impart color and fun into everyday activity.

While there are no studies, which directly compare overall satisfaction between specialty and conventional stores, Holmstrom & Milgrom (1994) state that stores following “niche” or differentiated strategies are likely to be more successful in satisfying customers than stores pursuing other strategies. A differentiated approach, as employed by specialty stores, is likely to lead to higher levels of satisfaction compared to conventional stores. Based on this logic, it is expected that specialty stores will experience higher levels of customer satisfaction than conventional stores.

Attributes That Affect Shopping Habits

Store attributes that affect shopping habits and attitudes in grocery chains include quality, price, variety, and store location (Kapferer 2008). Overall price image of a store affects store choice (Narver & Stanley 1990). Narver & Stanley (1990) found low prices to be the second most important store characteristic for supermarket shoppers after store location. Price is a significant predictor of store satisfaction for Australian shoppers (McCarthy 1996). Specialty store customers, however, may be less-price sensitive. Price was ranked least important for specialty store customer groups, while it ranked much higher in importance for department store customers (McCarthy, 1996). Thus, specialty grocery store customers may be more willing to pay higher prices for their groceries than conventional shoppers. This implies that price is positively related to store satisfaction for both specialty and conventional stores, and that the relationship between price and satisfaction is stronger for conventional stores than for specialty stores.

Product variety also influences customer’s perception of a store (Parasuraman, Zeithaml & Berry 1988). In turn, perceptions concerning product variety influence both satisfaction and store choice (Rajendran & Tellis 1994). Availability of a wide variety of products is ranked higher as a store patronage attribute among department and discount store shoppers than specialty store shoppers (Treacy & Wiersema 1993). This means that expectations on product assortment vary by store type.

Many customers no longer want services that are manufactured for the masses. Market research needs to be conducted in order to determine the kind of customers that the company has and stock products that respond to the needs of these particular customers. The other thing that the company could do is it could spend more on promotions and advertisements. This will get their brand out to the public (Porter 1998). Studies have shown that brands and stores that advertise make more profits than those that the public does not know much about. While the company has invested significant amount of money in advertising, a lot more needs to be done to popularize the chain of supermarkets.

Specialty stores focus on a specific class or group of related products grouping for relatively constricted target markets. Winer (1996) found that when a store had an appealing merchandise selection, it became a key reason why that store was considered desirable. Thus, the aspect of product assortment is positively related to store satisfaction for both specialty and conventional stores. Furthermore, the relationship between product assortment and satisfaction is stronger for specialty stores than for conventional stores. Product quality and product features were noted as the most important criteria for product choice in a study of Greek grocery customers (Winer 1996). Quality is a satisfaction-maintaining aspect in the supermarket segment in that improvements in quality have small positive impact on satisfaction, while reductions in quality of the same magnitude have significantly greater chance of reducing customers' satisfaction.

For specialty store customers, merchandise quality is an important differentiating factor. According to Treacy & Wiersema (1993), specialty store customers rated product quality higher than all other store formats, demonstrating the importance of product quality to these customers. A similar study also found product quality to rank considerably higher for specialty customers as compared to customers of conventional stores (Henry 2008). This, therefore, means that product quality is positively related to store satisfaction for both specialty and conventional stores, and that the relationship between product quality and satisfaction is stronger for specialty stores than for conventional stores.

Specialty store shoppers view service as the most important influencing factor over their store patronage habits. Sales associates play a pivotal role in customer service situation with the most important attributes being the attitude of a store clerk and treatment of customers (Henry 2008). At the same time, for department and discount store shoppers sales associate service ranks much lower on the list of important shopping determinants (Cooper & Slagmulder 1997). Knowledgeable and helpful salesclerks are viewed as the most influential determining factor of store patronage among specialty store shoppers, considerably higher than department store and mass merchandiser shoppers (McCarthy 1996). In one study of customer service in specialty and conventional grocery stores, customer perceptions of service were found to vary greatly. Furthermore, McCarthy (1996) found that customers who shop in small grocery chains placed greater importance on service quality than patrons of large grocery store chains. Thus, store service is positively related to store satisfaction for both specialty and conventional stores, and in specialty stores the level of customer satisfaction heavily depends on the service team but not so much for conventional stores. The research is to be conducted in form of a survey in areas where specialty/gourmet stores are located in order to gather data across an adequate and representative sample.