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This chapter will highlight the company profile (vision, mission and values), the statement of the problem of the study, objectives and the hypotheses will be stated. The chapter will also be discussing about the significance, scope and limitations of the study and definition of terms.
1.2 Company profile:
Al Ghadeer water company established in 1999, is a manufacturing company providing pure portable drinking water in a five-gallon -bottle. The company is best known for its high quality product with excellence services. Since its establishment, the company has been licensed by high corporation for specialized economic zones, by AlAin municipality & the food control authority in Abu Dhabi. The company has an up-to-date laboratory which is used to help in monitoring and testing the water quality in all phases of water treatment such as filtration, sterilizing & checking mineral components. Al Ghadeer Water company's main branch is located in AlAin and they also have a branch in Abu Dhabi.
1.2.1 Vision, Mission & Values:
"To release a high quality product and to provide service at its best".
Providing a product that complies with high quality standards.
Working in partnership with others to provide a safe and healthy product for the community.
Covering the shortage in high quality and healthy drinking water.
We continually strive to grow and develop as a company in order to set a benchmark for quality and service.
We place customer satisfaction as our highest priority.
We care about ensuring that customers receive a high quality product as well as excellent service.
We are experts in our field with extensive knowledge on what we produce, the methods of production and our customer's need
We understand that water, like oxygen is a fundamental source of life.
We have a flexible delivery service to meet our customers' needs that includes "delivery on demand" and weekly delivery.
1.2.2 Code of conduct:
The company's ethical code of conduct includes creating mutual value by working professionally & striving for excellence, establishing and maintaining a fair relationship with its stakeholders. The company believes that each of the above values need to be implemented on a personal level, inter-organizational level (i.e. with employees & business units) and as well as on an outer-organizational level (i.e. with clients, suppliers, community, environment and the business associations). The ethical code of conduct of Al Ghadeer water also includes intending to uniform conduct by leveling the difference in the multi-cultural environment in various sectors they operate.
220.127.116.11 Work environment:
Al Ghadeer water provides its employees with safe and technologically advanced working environment which will help them to improve both professionally and personally. Al Ghadeer water facilitates team work between various departments and the employees. Al Ghadeer water focuses on these areas in improving its work environment:
Ensures transparency by creating an environment that promote honesty & cooperation.
Promotes career development by improving employyes knowledge and skills through training.
Encourages employees in decision making by involving employees participation in various employee forums for getting suggestions for projects.
Working with legal compliance with an aim of "Think global; act local" by working fairly with full compliance with local laws.
Encourages diversity among its staff with no discrimination in hiring.
Al Ghadeer water is a socially responsible company that operates to bring benefits to the society while pursuing its business goals. Al Ghadeer water takes all proactive steps in preserving the environment by ensuring that their product doesn't create any negative impacts on the environment. Al Ghadeer water works with great effort to be agood accepted corporate citizen, a fair employee and a honest partner to their suppliers which leads to conducting business ethically and being a socially responsible company. Al Ghadeer water strives to be a socially responsible company by preserving the environment, conducting business ethically and supporting the local communities.
1.2.3 Certificates / Awards
Al Ghadeer water has achieved various awards for its high quality , eco friendly product.
HACCP: Certified since 2005. This certification ensures that al Ghadeer water use a food safety management system free from biological, chemical and physical hazardous from time of production till final consumption.
ISO9001-2008: Certified since 2007 for industry and quality management.
EHSMS: (Environment, Health & Safety Management System) Certified since 2011. This means that the company's activities doesn't harm the environment in any way.
EPC: Environmental Performance Certificate since 2011. This verifies that Al Ghadeer water fulfill the local requirements set by ministry of environment & water.
SKEA: Sheikh Khalifa Excellence Award since 2011. Certificate of appreciation for the 10th cycle(the best current practice).
IBA: International Business Award since 2011. For appreciation of excellence in business for food & beverage in UAE.
1.1.4 Products & Services:
The products offered by Al Ghadeer water company are; Five gallon bottle of pure water, Cooler, bottle cradle with valve, bottle rack, bottle stand, cup dispenser, manual pump, coupon book ten leafs.
Al Ghadeer water company offers free delivery service and free repairs of its coolers at any time by sending high experienced technicians.
1.3 Problem Statement:
"The problem statement in quantitative research specifies the variables and population of interest" (Donald Ary et al 2009). That problem statement is better which can be easily measured through research instrument and can be easily analyzed using statistical tools to achieve the desired and meaningful results (Laurentina P, & Melchor A, 2007).
This study is undertaken to investigate the impact of complaint handling on customer loyalty of Al Ghadeer water company in Al towayya residential area, Al Ain.
1.4 Objectives of the study:
According to Ardales (1992), research objective is defined as "statement of purpose for which the investigation is to be conducted". This means that research objectives serve as a guide for the researcher to accomplish it in the study. Research objectives are usually made specific and siple so that the researcher can easily measure them by means of research instrument while gathering the data and thus achieved by using appropriate statistical tools (Laurentina P, & Melchor A, 2007).
The objectives of this study will be:
i) To examine the impact of complaint handling on customer loyalty.
A hypothesis is a prediction expressed in a form of declarative sentence, presented and analysed using statistical tools in order to reject or accept the findings of the study (Rivera et al , 2007). Hypotheses are the statements of what is to be investigated and which needs to be proven. Hypothesis conveys the characteristics and the relationship between the variables of the study. Hypothesis statements help in searching the solution for the problem as what type of data needs to be collected and what statistical procedure needs to be implemented for arriving at solution for the research problem. A good hypothesis statement needs to be such that it can be easily tested and proven using various statistical tools.
The hypotheses are basically of two types; the Null hypothesis and the Alternative hypothesis.
The Null Hypothesis is a negative statement and it states that there is no significant relationship between independent variable and the dependent variable. The Null hypothesis is presented as H0 or HN (Rivera..). The Null hypothesis of this study is
H0 : There is no significant relationship between complaint handling and customer loyalty.
The Alternative hypothesis is a positive statement which states that there is a significant relationship between the independent variable and the dependent variable. The alternative hypothesis is presented as H1 or HA (Rivera et al, 2007). The Alternative hypothesis of this study is
H1 : There is a significant relationship between complaint handling and customer loyalty.
1.6 Scope & Limitations of the study:
The scope of the study is to focus on service quality delivery and the customers complaint handling of al Ghadeer water and to get feedback from the customers of Al Ghadeer water company. For this study the researcher needs to have information from the company about previous records of customer complaint handling so the company might not give accurate of its data regarding previously customer complaints as whether they were effectively handled or not which can also be a limitation to the study. There might be some customers who have already left the company and finding those customers to know whether what made them to leave the company (whether poor quality of service or ineffective complaint handling) can also be a limitation to the study. Doing research on only one of the branch is also limitation to the study. All customers cannot be surveyed so this can also be a limitation to the study. Due to limited time, the researcher was unable to look in to each thing.
1.7 Significance of the study:
This study is important to the following
For management of Al Ghadeer water: this study will provide them a reliable data to better improve the service quality delivery and effectively handle customer complaints in order to increase customer loyalty.
For employees of Al Ghadeer water: will help them to know the areas where they need to improve and deal with the customers.
For customers of Al Ghadeer water and for the researcher.
1.8 Definition of terms:
Complaint is the conflict that takes place between the customer and the company. Complaint handling refers to the process of managing and solving the defect dissatisfaction of the customers with the company. The dissatisfaction might be either defects in the product or the way the personnel behaves with the customer.
Customer loyalty refers to the benefit (positive behavior) that a company may achieve from the way of dealing with its customers. Loyal customer make repeat purchases and bring in new customers (word-of-mouth).
Customer satisfaction refers to fulfillment or pleasure that the customer achieves when he gets more than expected.
1.9 Chapter conclusion:
This chapter has covered brief company profile, statement of problem of this study which will be measures through appropriate research instrument in chapter 3. Objectives of this study has been stated. Hypothesis statements are generated which will be tested later in chapter 4. Scope, importance and the limitations of this study is discussed as well. The following chapter 2, will be discussing about literature review in line with the statement of the problem and hypotheses statements.
2. Theoretical Literature:
2.1 Chapter Introduction:
The chapter will be highlighting on the conceptual literature related to the variables complaint handling and customer loyalty. Previous research studies similar to this study will be mentioned and the schematic diagram will be shown and synthesis is given too.
2.2 Literature review:
The best customers are said to be the loyal customers. They purchase repeatedly, suggest the company and its products to others thereby bringing in new customers. Customer loyalty is considered to be the twenty first century's market place currency (Gee et. al 2008). Most of the marketers nowadays accept that loyalty is one of the major aspect for company's performance. According to Van Looy, et al (2003), Loyalty is defined as "customer behavior described by a positive buying pattern during an extended period and driven by a positive attitude towards the company and its products/services". Sasser (1990) describes customer loyalty as, loyal customers tends to re-purchase the company's products, willing to spend more on different products of the company, recommend the company's products or services to others and provide the company with sincere feedback about their expectations and needs. Prus & Randall (1995) states that customer loyalty is replicated through mixture of both attitudes and behaviors. Customer loyalty has been broadly classified in to two dimensions namely behavioral and attitudinal dimensions (Skogland & signaw 2004, Bell et al 2005). Behavioral loyalty is expressed in terms of repeat purchase behavior and usage behavior by the customer (Kumar & Shah 2004). Supported by Rowley (2005) saying that "customer repeat purchase loyalty must be basic yardstick of success". Attitudinal loyalty is expressed in terms of commitment to the company, trust and positive word of mouth (Doherty & Nelson 2008, Zeithmal 2000). This was supported by Kumar & Shah (2004) saying that the attitudinal loyalty will create a long rewarding relationship between organization and customers. Many other researchers have recently considered loyalty as a multi dimensional by clubbing both attitudinal & behavioral (Olsen 2007, Bell et al 2005, Backs & Parks 2003).
Narus & Anderson (2004) describes that the most effective business strategy is to achieve customer loyalty rather than acquiring the new ones for replacing the defective customers. This was supported by Gee et al (2008), "it costs five or six times more to acquire new customers than to retain the existing ones". The customer loyalty factors are classified by Cahil (2007) in to three main groups. First, the customer-related factors; are the individual customer characteristics. Second, the relationship related factors; are the interaction between customer and the firm. Third, the organization related factors; includes the organization's image and customer loyalty programs. The company benefits from loyalty customers in three ways, low acquisition costs, loyal customers are not price sensitive and the supplier gets enough feedback from loyal customers (Wong et al 2009). Loyalty is formed at the times where customer believes that the advantage he gets from the company is more than the other companies (Mirhadi 2006).
In this research satisfaction will also be considered as an Intervening variable to customer loyalty and complaint handling. Various studies show that satisfaction is one of the main determinant of loyalty Ball D et all 2006, Ulaga & Eggert 2004, Ranaweear & Drubho 2003). Customer loyalty is also said to be the result of satisfaction of customers thereby contributing to the firm's profitability through repeat purchases and recommending the company to other people (Browen & Chen 2001, Fecikova 2004). According to Dean (2004) The retention rate is said to be high when customers are more satisfied. This means that when customer are satisfied they will be loyal to the company and will remain to stay. It has been proven by many researchers in European Customer Satisfaction Index model that the relationship between loyalty and satisfaction exists i.e. the customer satisfaction leads to customer loyalty (Lu et al 2010, Bodet 2008, Ball et al 2007). According to Schneider & Browen (1999), Customer satisfaction leads to positive word of mouth. As according to Coyne (1989), the relationship between the loyalty and customer satisfaction is affected as; On the increasing side, loyalty increases significantly when customer satisfaction arrives at certain level and similarly loyalty decreases significantly when customer satisfaction drops at certain level (Oliva et al 1992). This means that just having satisfied customers are not that enough but rather the firm need to extremely satisfy its customers. As a slight increase in the customer satisfaction can lead to high level customer loyalty.
There are some criticisms against the link between satisfaction and loyalty. There is no direct relationship between satisfaction and loyalty (Daffy 2001). Satisfaction and loyalty doesn't have a direct significant correlation specially when customers in a competitive environment has enough choices. So just satisfying them will not lead to make them loyal (Jones & Sasser 1995). Only satisfaction doesn't make customers loyal because there are many satisfied customers who also switch to competitors (Doherty & Nelson 2008). According to research conducted by Coyles & Gokey (2002) resulted that only satisfaction is not enough to achieve customer loyalty. Satisfaction is a passive condition and loyalty is said to be an outcome of either an active or proactive customer-supplier relationship. Thus, there is a lot of difference between satisfaction and loyalty (Fredericks 2001).
Regardless of various organizational precautions, problems can still arise in relationship between the firm and the customer which results in customer complaints. A complaint refers to rise of conflict between the company & the customer. And complaint handling refers to the process of handling , managing and responding effectively to the customer complaints (Hsu 2008). According to Hocutt (1998), a complaint refers to dissatisfaction with the company's products communicated by the customer to the organization. The dissatisfaction with the complaint handling can be found out through two methods namely "voice" and "exit". Voice refers to the complaint of the customer regarding its dissatisfaction with the product/service. Exit refers to the customers stoppage of using the company's product/service and leaves the company (Hirschman A. ,1970). Complaining customers may most probably switch from the company if the company fails to take necessary steps in providing an effective timely solution (Bolton & Brokhurst 1995). Complaint handling is said to be having a major effect on customer loyalty (Gronroos 2007). According to Dewitt, et al (2008), a complaint doesn't only gives an opportunity for retaining the customers but it also helps in gaining valuable feedback. The firms need to ensure the customers that their complaints are received and heard and that it is in progress and the firm is putting great efforts in solving their complaints (Zeithaml & Bitner 2003).
Some research studies (Estelami 2000, Grainer 2003) has shown that nearly 50% of the complaining customers are dissatisfied with the complaint handling. So Andreassen (2001) suggested that companies are supposed to develop efforts in responding to the complaint handling. Effective complaint handling plays a cruicial role in building long term customer company relationship (Morgan & Hunt 1994). As per the National Complaints Culture Survey (NCCS) which was conducted in London in 2004, shows that ninety percent of the customers confess that they are ready and willing to repurchase from the same firm if their complaints are handled effectively and on time (Christina O Neill, 2012). It has been also stated that, a successful handling of customer complaints will lead to building strong customer-firm relationship and an unsuccessful handling will lead to negative feeling which may make the customer leave the firm. Both of the above outcomes affect the customer loyalty (Tor Wallin Andreassen 1999). The relationship between the intensity of customer complaints and customer loyalty relies on the firm's capability of effectively handling customer complaints (Fornell 1992). This means that complaint handling has an impact on the customer loyalty. As stated by Day & Mooran (2010), companies in order to achieve customer loyalty need to focus on retaining existing customers more than on acquiring new customers otherwise it will be difficult for the company to achieve loyalty. As a relationship marketing strategy, the complaint handling efficacy is known by the fact that five to ten percent of dissatisfied customers never bother to complain to the company (Tax & Brown 1998). TARP (Technical Research Assistance Program) research has shown that the customer whose complaints were effectively handled and satisfied was more loyal by 30% than the non-complaining customer and more loyal by 50% than the customer who was dissatisfied with the complaint handling. Loyalty and word of mouth are the outcomes of effective complaint handling and are said to be the key factors in determining success of the business (Reinartz & Kumar 2002; Reichheld 2003). The TARP's findings have also shown that every complaint provides an opportunity for the firm to enhance loyalty. It also stated that if a customer who complaints and is dissatisfied will be 50% less loyal than the customer who dint even complain. Thus an ineffective complaint handling will be so costly for the company that they might lose the customers. (John Goodman 2003). The study of American Customer Satisfaction Index model (ACSI) resulted that the more satisfied customers with the company, the less number of complaints made. Further the study also explained that those customers whose complaints were effectively solved showed a high level of satisfaction and the others were highly dissatisfied (Fornell 1996). This means that the effective complaint handling leads to satisfaction of customers there by achieving customer loyalty. This means that the customers do a favor when they complain meaning that they have enough trust in the firm that their complaints will be easily solved. So if the complaints are solved it will create a strong relationship between the firm and the customer thereby retaining them. So Customer complaints need to be successfully handled otherwise they might switch to competitors. Thus a poor complaint handling will create huge loss for the firm. As stated by Smith et al (1999), that firms need to be very cautious about handling complaints because a single ineffective complaint handling may make the customer to leave the firm.
2.3 Related Studies:
A similar study was contucted by Tor Wallin Andreassen (1999). The Study was to find as "what drives customer loyalty with complaint resolution". The sample consisted 201 dissatisfied complaining customers. The study resulted that among other variables, satisfaction with complaint handling had a positive grater impact on customer loyalty. It was concluded by stating that satisfaction with successful complaint handling will create a positive attitude towards the company.
This study was conducted by Saeideh Forouzandeh & Parviz Ahmadi (2010), a descriptive and analytical, conducted to identify the impact of customer satisfaction, trust, commitment, cooperation and complaint handling on the customer loyalty. The sample consisted of 700 questionnaire issued from which only 383 were completed and were used for the analysis. The results from the survey showed that satisfaction had a great impact on loyalty. The findings also stated that the company's complaint handling had a positive impact on customer loyalty
A research conducted by Michael Le Boeuf (as cited by Ergon Energy 2000) resulted as:
Out of ten customers who complain, only seven will be ready to be with the same firm if their complaints are handled and solved effectively.
On average, only one out of five dissatisfied customers will tell twenty other people about the issues (i.e. Negative word of mouth).
A satisfied complaining customer will tell about five other people that their complaints were handled and solved effectively.
This means that if the complaints are handled effectively, the customers will be satisfied, willing to stay with the same firm(customer loyalty achieved) and leading positive word of mouth.
2.4 Schematic Diagram:
According to Laurentina P & Melchor A (2007, pg 14), "a variable is defined as a quantity susceptible of fluctuations or change in value or magnitude under different conditions". The different types of variables are; the independent variable, the dependent variable, moderator variable, control variable and intervening variable (Laurentina P & Melchor A, 2007).
In this study, there are only three variables, the independent variable, the dependent variable and the intervening variable.
An independent variable is a motivational variable that is selected to find out its association or link to an observable fact. A dependent variable is a reaction variable that is examined and evaluated to find out the outcome of independent variable. An intervening variable refers to the variable that interferes or intervenes between the dependent and independent variable. Intervening variable can also either make the dependent and independent variables stronger or weaker (Laurentina P & Melchor A, 2007).
Customer Loyalty Independent Variable Dependent Variable
Figure 1. Intervening Variable
Here, the complaint handling is independent of customer loyalty which means that customer loyalty will be affected by the way complaints are handled. An effective complaint handling will also lead to satisfaction (moderate variable) of the customers thereby resulting in customer loyalty.
From the above literature and the related studies, it can be summed up that effective complaint handling is crucial aspect for achieving customer loyalty. As stated by Day & Mooran (2010) the firms need to be more careful and take greater efforts in order to respond to the customer complaints. The related studies (above in point 2.2) has also shown that customers are willing to repurchase from the same firm if their complaints are handled effectively. Satisfaction was found to be one of the key determinants of customer loyalty i.e. effectively handling the complaints will lead to customer satisfaction resulting in customer loyalty. Loyal customer benefit the firm in many ways like; loyal customers generate positive word of mouth , helps in creating long firm-customer relationship, are less price sensitive and it is cheaper to serve loyal customers. It can be concluded based on the findings that effective complaint handling with satisfaction has a positive significant impact on customer loyalty. Based on these findings, this study will be conducted in order to investigate the impact of complaint handling on customer loyalty of Al Ghadeer Water company.
2.6 Chapter conclusion:
The chapter highlighted all the theoretical literature with regard to complaint handling (independent variable), customer loyalty (dependent variable) and satisfaction (intervene variable). The criticsm is also discussed and three related studies are mentioned, the schematic diagram is shown and synthesis is given. In the following chapter 3, the research methodology techniques will be discussed.
3. Research Methodology:
3.1 Chapter introduction:
This chapter will be focus on the definitions, discussions, and different research methodology techniques with regard to ontology and epistemology, research design, the respondents of the study (sampling, sample size, sample unit, survey errors), the research instrument, different data collection procedures (benefits and drawbacks) including the ethical considerations and the various statistical tools used for analysis (regression and analysis of variance).
3.2 Research methodology:
Overview of company profile: Al Ghadeer water company is a manufacturing company that provides pure portable drinking water in a five-gallon-bottle. The company is best known for its high quality product with excellence services. Since its establishment, the company has been licensed by high corporation for specialized economic zones, by AlAin municipality & the food control authority in Abu Dhabi. The company has an up-to-date laboratory which is used to help in monitoring and testing the water quality in all phases of water treatment such as filtration, sterilizing & checking mineral components. Al Ghadeer Water company's main branch is located in AlAin and they also have a branch in Abu Dhabi.
Research methodology refers to "systematic, focused and orderly collection of data for the purpose of obtaining information from them, to solve or answer a particular research problem or questions" (Ghauri & Gronhaug, 2005).
The purpose of this research study is to recognize how complaint handling can have an impact on customer loyalty at Al Ghadeer water company, Al Ain. This chapter explores the research paradigms, research design, respondents of the study, ethical considerations, research instrument, validity of research instrument, the data collection procedures and the statistical tool analysis.
The research paradigms are the ontology and epistemology theories. Ontology refers to the theory or study of reality, whereas, Epistimology refers to the knowledge of how we come to know about the reality (i.e. in what ways the reality can be known). (Eriksson & Kovalaien, 2008).
3.3 Research design
"The purpose of a research design is to ensure that the evidence obtained enables us to answer the initial question as unambiguously as possible." (David de Vaus, 2001)
Research design acts as a guide for how the data needs to be collected and analyzed in accordance with the research objectives of the study. Thus, research design gives a clear idea of how to achieve the research objective. There various types of quantitative research designs are experimental research, exploratory research and descriptive research. The experimental research is that type of research where the result of dependent variable is observed by manipulating an independent variable. In experimental design the researcher has control over certain conditions where the research takes place. The drawbacks of experimental research is that the manipulation of independent variable may lead to unambiguous results. This method is usually expensive (Rajendar Kumar 2011). The exploratory research design is that research which is conducted for discovering fresh ideas and acquiring new knowledge Exploratory research also requires focus group interviews and the research is broad as it is conducted when less is known about the research topic and little literature exists (Hair et al , 2003). Exploratory research mostly answer "what" type of research questions (Neuman 2006). The aim of exploratory research is to collect large amount of information about a specific research problem. Exploratory research rarely offers exact answers to specific research problems (Yin 1994).
A cross-sectional design refers to the research design where a specific observable fact is studied at a specific time period (Saunders et al 2009 pg 155). This study is based on cross-sectional research design as it is easier and clear outcome can be erived. A longitudinal design which includes observation of a particular fact over time will not be undertaken in this study as longitudinal design takes a lot of time, it is complex and a large amount of data is required for analyzing (Rajendar Kumar 2011).
The type of research method for this study is the descriptive method because the descriptive method is more suitable for this study. The descriptive method illustrates the study thoroughly, accurately and precisely makes use of the information and the activities (Sumadi Surayabrata, 2003). The exploratory research method is mostly used for those research studies which are less known and the research is done for the first time. (Hair et al , 2003). But in this study, the research topic is well known and proper literature review exists. Hence, the research method is descriptive method.
3.4 Respondents of the study
Sampling refers to the systematic way of selecting an appropriate number of accurate elements from the population (Pride & Ferrell, 2003). The sample also consisted of those respondents who had lodged a complaint before with the company.
Sampling consists of probability sampling method and non -probability sampling method. The probability sampling methods includes simple random sampling, systematic sampling, cluster sampling, stratified sampling and multi-stage sampling. Probability sampling method is more suitable for this study as this method offers clear representative sample than the non-probability method. In non-probability sampling the respondents are selected based on their availability at that specific time period. Probability sampling is more preferable because here the population coverage is richer than in non-probability sampling as the sample is extracted from the total population and the respondents are chosen randomly (Hague 2002).
From all the above mentioned probability sampling methods, the simple random sampling is found to be more suitable for this study. In this study, the probability sampling method; simple random sampling is used for choosing the respondents for the study ( Sekaran & Bougie, 2010). The simple random sampling will help a lot as it will make the selected sample correspond to the total population (Egan, 2007). As stated by Armstrong & Kotler (2003, p169), in order for the researcher to create proper estimates of the total population behavior, the sample needs to be representative/corresponding to total population. Simple random sampling is easiest and quick probability sampling method. The disadvantage associated with simple random sampling is that there is possibility of getting a sample that is not well spread and also possibility of selecting similar units leading to duplication (Hague P 2002).
The survey was conducted in Al Ain city, UAE, at al Towayya residential area. The information regarding the address of the customers who complained before was acquired from the complaint handling department of the company. And those respondents were surveyed through questionnaires. The sample size consisted of eighty (80) respondents.
The systematic random sampling is not used in this study because it includes certain periodic elements which will not be representative of total population. The stratified random sampling is also not used as it is very difficult to organize and there is possibility of splitting the population into small sections which can lead to un-equal allocation of important members of the sample. Cluster sampling is not used as well because the cluster sampling is not as accurate as simple random sampling and also cluster sampling doesn't spread the population evenly (Hague P 2002).
There are different types of errors that might occur while conducting surveys. They are sampling error and non-sampling errors. Sampling error is that which is incurred while generating sample estimates for the population. Non-sampling error is that error which is incurred not by generating a sample but by other factors. These factors are bias error and variable error based on selection bias, non-response bias (when respondents don't respond to the survey) and a response bias (results from inappropriate responses from the respondents) (Hauge P 2002).
3.5 Research instrument
The most popular research instrument "questionnaire" was used for this study. The questionnaire was made based on the hypothesis of the study. The questionnaire was made simple and clear language was used so the respondents doesn't find any difficulty in filling it. The questionnaire was designed for those who had complaint experience with the company. And those customers were approached by the help of the data acquired from the company's complaint handling department.
The questionnaire consisted of two main parts. The first part consisted of demographic questions such as name, age, gender, income level of the respondents. The second part of the questionnaire consisted of questions regarding three variables of the study; about the complaint handling, satisfaction and customer loyalty. And all the questions in the second part were based on 5-point Likert scale where 5 is Strongly Agree, 4 is Agree, 3 is Neutral, 2 is Disagree and 1 is Strongly Disagree. The 5-point Likert scale was originated in 1932 by a well known Rensis Likert (Egan 2007). The 5-pont Likert scale is very commonly used, easy and helps in how to rate the responses (Sauders et al 2009). The questions in the second part of the questionnaire were based on certain researches conducted before e.g. Homburg & Furst (2005), Maxham & Netemeyer (2002), Aydin et al (2005), Ahangari (2005).
For measuring the complaint handling, the questions were adopted based on studies such as Tax et al (1998), Homburg & Furst (2005), Bitner & Hubbert (1994) and Ahangari (2005). For measuring the satisfaction, the questions were adopted based on studies such as conducted by Homburg & Furst (2005) and Aydin et al (2005). For measuring the customer loyalty, the questions were included based on researches conducted by Homburg & Gurst (2005), Maxham & Netemeyer (2002). Two questions were include along with customer loyalty regarding the word-of-mouth based on the research done by Maxham & Netemeyer (2003).
The questionnaire data are very flexible and said to be easily interpretable (Kotler & Armstrong 2006). The questionnaire method is said to be the cheapest, helps in acquiring the respondent's views easily and it also helps in acquiring large number of data than the interviews will offer (Daffy 2001).
The problems associated with the questionnaire is that the respondents will be having less number of choices provided rather than answering in their own words (Kotler & Armstrong 2006). The other drawback is that sometimes respondents are not willing to fill the questionnairte being truthful and also possibility of questions being misinterpreted (Resswell 2003).
3.6 Data Collection Procedure
The two main methods for collecting data are the Induction & Deduction methods. Induction method refers to the qualitative method where the survey begins with observing and there are chances of creating new theories at the end. Whereas Deduction method is the quantitative method which starts with referring the theories and then the hypothesis are generated and tested. (Bryman & Bell 2005). There is also a third method called as abduction which is the combination of Induction & Deduction (Alvesson & Skoldberg 1994).
But in this study, the deduction procedure is used as first the theory is referred and then the hypothesis is made and tested. Quantitative approach helps in measuring the customer's knowledge, attitudes and their opinions (Cooper & Schindler 2008). Quantitative approach is applicable with the utilization of computer programs for analyzing the data.
So, the primary data is collected for this study by distributing questionnaires to the respondents. In this study, after acquiring the addresses of the complaining customers from the complaint handling department of the company, those respondents were approached and the questionnaire were given to them. Some of the respondents were not available on same time as others were; so the unavailable respondents at that specific time were approached after some days as requested based on their convenience. Thus the questionnaire survey took around one week because of the time to be adjusted by the researcher based on the convenience availability of the respondents.
The information that is previously recorded and gathered by others for other purposes are the secondary sources of data (Cooper et al 2005). The secondary data collected for this study was from research journal articles, books and magazines.
3.6.1 Ethical Considerations
According to Jobber (2004, p909), Ethical considerations is defined as "the moral principles and values that govern the actions and decisions of an individual". A request was made to the manager of Al Ghadeer water company to permit for getting the addresses of the complaining customers from the complaint handling department. The permission was granted based on mutual agreement between the researcher and the manager that those personal information of the customers will not be exposed either outside or in the study. And based on that agreement the researcher didn't include any personal information of the customers in the study. The researcher has also agreed with the company that the data acquired from the company will not be used for any commercial purposes but solely for academic research only. Thus the above ethical considerations were taken and the study was done.
3.7 Statistical Tool Analysis:
Statistical analysis helps in analyzing the data for finding out the relationship among the variables and testing of hypothesis. Microsoft Excel 2007 was used for the statistical analysis. There are different types of statistical analysis. The quantitative data analysis involves descriptive statistics and inferential statistics. In this study both the descriptive and inferential statistical analysis is done.
Descriptive statistics is done inorder to explain and review the data. Descriptive statistics in general involves the calculation of Mean, median, mode, range & standarad deviation. In this study, Mean was calculated by adding up all the scores and dividing them by total number of respondents. Mean was calculated per respondent separately and collectively for total respondents as well. Standard deviation was also calculated in this study to find out as how much a set of values differ from one another.
Regression analysis was also used in this study to study the nature of relationship among the variables. In order to explain the strength of the relationship or link between the dependent variable and independent variable, the coefficient of correlation (R) was also find out in this study (Daniel K, 2005). The coefficient of determination (R2) was also done to find out total amount of differences in the dependent variable (Y) which is caused by the difference in the independent variable (X).
The Analysis of Variance (ANOVA) was also done in this study. ANOVA is referred to be a statistical tool that helps in splitting the total variation of the data into other different elements that might be either sources or causes of the variations (T. R. Jain, 2007). Through ANOVA analysis, the regression coefficient value, the computed F value , p-value & significance level F value and residual value was calculated which also helps in testing of the hypothesis.
3.8 Chapter conclusion:
In this chapter, the researcher have clearly explained that the research design for this study is descriptive research design, survey will be conducted from total number of eighty (80) respondents, in Al Towayya residential area, Al Ain city, questionnaire will be used as a research instrument (benefits and drawbacks also discussed), the primary and secondary data collection procedure is explained as well, ethical considerations taken into account while collecting the data, regression analysis and analysis of variance (ANOVA) will be used for analyzing the data of this study
4. Data Analysis & Interpretation:
4.1 Chapter introduction:
In this chapter (4), the data analysis will be explained and the different types of analysis techniques used in this study. Hypothesis statements are also mentioned and tested. For better interpretation of the results, scattered charts are also explained in this chapter. Regression analysis is explained including the coefficient of correlation (R) and coefficient of determination (R2). Analysis of Variance (ANOVA) is also explained including all the values such as regression coefficient value, F - value, P-value & Significance level F value and residual value. The demographic factor (gender) was also explained to know whether gender has any impact on handling complaints.
Data analysis refers to the process of organizing, coding and tabulating the information required for conducting qualitative or quantitative investigation in accordance with the research design , interpretation and the testing of hypothesis (T. R. Jain et al, 2007). The three main types of data analysis based on the number of variables are; Univariate analysis, Bivariate analysis and multivariate analysis (T. R. Jain et al, 2007).
In univariate analysis, the data of one variable at a time to be studied is analysed. The statistical tools used for analyzing the univariate data are; measures of central tendency, measures of dispersion, measures of kurtosis and measures of skewness (T. R. Jain et al, 2007).
In bivariate analysis, the data for two variables at a time to be studied is analysed. The data includes the measurement values of both the variables X and Y. The statistical tools used are; simple correlation and regression, association of attributes, cross tabulation (T. R. Jain et al, 2007).
In Multivariate analysis, the data is analysed for the study that involves more than two variables at a time. The statistical tools used in this analysis are; multiple correlation and regression, multiple variance analysis, multiple analysis of discriminant, factor analysis and canonical regression and correlation (T. R. Jain et al, 2007).
This study involves two variables at a time, the dependent variable (customer Loyalty) and the independent variable (Complaint handling). This means that this study involves the bivariate data analysis.
The data of this study was analyzed through various steps. First, the data was collected from 80 respondents by distributing questionnaires. The data was then coded in numerical form and was entered into the excel 2007 program. The descriptive statistic analysis was done. The demographic data such as gender, nationality and income level was coded and mean was calculated for them. After that mean was calculated for all the statements of the variables. Mean was calculated for per respondent separately and then collectively for total respondents. After the calculation of mean, standard deviation was calculated for all the statements. Thus, the descriptive statistic analysis was done including the demographic factors too in the "sheet 1" of the excel file. A snapshot of it is included in the Appendix.
The hypotheses statements of this study:
Null hypothesis, H0: There is no significant relationship between complaint handling and customer loyalty.
Alternate hypothesis, H1: There is a significant relationship between complaint handling and customer loyalty.
4.2 Regression Analysis:
"In statistical terms, Regression is the study of the nature of relationship between the variables so that one may be able to predict the unknown value of one variable for a known variable of another variable" (T. R. Jain et al, 2007). This means that the regression analysis is a statistical way of studying and analyzing the nature of link among the dependent and independent variable and also to make forecasts.
For calculating regression, the demographic factors were separated. Statements related to the variables were separated. Average was calculated separately for the complaint handling (Independent variable). And then the average was calculated for the customer loyalty (Dependent variable) separately.
Based on the averages calculated, scattered chart was used for the interpretation of the data. A scattered chart shows the correlation linking the dependent and independent variables (McGraw Hill, 2008). In scattered chart the dependent variable is shown on Y-axis and the independent variable is shown on X-axis. The trend line in the scattered chart is sloping upward from left to right. The upward slope of the trend line means that there is a positive relation between customer loyalty (dependent variable) and complaint handling (independent variable).
The result of the trend line was depicted through equation (shown in the below chart) as:
Y = 0.962x + 0.309
R2 = 0.658
The regression formula is used to convey the linear relationship among the variables (McGraw Hill, 2008).
4.2.1 Coefficient of Correlation (R) & Coefficient of Determination (R2):
Coefficient of correlation (R) explains the strength of the relationship or link between the dependent variable and independent variable. The coefficient value is usually from -1 to +1. The -1 value denotes negative (inverse) relationship among the variables and the +1 value denotes positive (direct) relationship among the variables. The 0(zero) denotes no relationship between the variables (Daniel K, 2005).
In this study, the coefficient of correlation (R) value is 0.811 which is approximately very close to +1, this means that there is a strong positive correlation or relationship between the customer loyalty (Dependent variable) and complaint handling (Independent variable). So, in this case, the null hypothesis (H0) of this study is rejected in favor of the alternative hypothesis (H1). This denotes there is a strong positive relationship between complaint handling and customer loyalty i.e. the more effective the complaints are handled, the more customer loyalty will be built or achieved.
The coefficient of determination (R2) refers to the total amount of differences in the dependent variable (Y) which is caused by the difference in the independent variable (X). The coefficient of determination is represented as "R2" which means that it is the square of the coefficient of correlation (R). The coefficient of determination (R2) value is usually in the range between 0 to 1. If the R2 value is above 0.5, it means that there is positive relationship among the variables and if it is below 0.5, it means that the relationship among the variables is negative.
The analysis of this study resulted the coefficient of determination (R2) value as 0.66 which is the square of the coefficient of correlation R (0.81)2. So, here the R2 is 0.66 which is greater than 0.5. This means that 66% of the variance in the customer loyalty is caused by the difference in the way the complaints were handled. Hence, there is a strong positive relationship between the customer loyalty (dependent variable) and complaint handling (independent variable). Thus, the alternative hypothesis (H1 : There is a significant relationship between complaint handling and customer loyalty) is accepted and null hypothesis (H0) is rejected in this study.
Adjusted R Square
4.3 Analysis of Variance (ANOVA):
The analysis of variance was also done for this study. ANOVA is referred to be a statistical tool that helps in splitting the total variation of the data into other different elements that might be either sources or causes of the variations (T. R. Jain, 2007). The ANOVA values that will be explained for this study is the regression coefficient value, the computed F value , p-value & significance level F value and residual value.
4.3.1 Regression coefficient
In this study, the regression coefficient for the independent variable (complaint handling) is 0.96 which is almost equal to 1. This also shows a strong relationship between the complaint handling and customer loyalty. Thus, the alternate hypothesis (H1: There is a significant relationship between complaint handling and customer loyalty) is accepted in favor of the null hypothesis.
4.3.2 F - value
The computed F value in the regression analysis in this study is 150.68 which is enough to accept the alternate hypothesis H1 with high confidence level. The value is greater which means that the relationship among the complaint handling and customer loyalty is strong enough (H1: There is a significant relationship between complaint handling and customer loyalty). Thus null hypothesis H0 is rejected. The equation of computed F is: (as shown above in figure )
F = SSR / K
SSE / [n-(k = 1)]
(K is number of independent variables, n is sample size)
F = 42.66 / 1
22.08/ [80-(1 + 1)]
F = 150.68
4.3.3 P-value & Significance level F value:
P-value is the possibility of monitoring a sample value as intense as or more intense than the value observed. P-value can be compared to the significance level for testing the hypothesis (McGraw Hill, 2008). The result is said to be significant if the p-value is equal to or less than the significance F value. (p-value â‰¤ significance level F value)
In this study, the p-value is equal to the significance F value as 6.67. This shows that there is significant relationship between the complaint handling and customer loyalty. Thus the null hypothesis H0 is rejected as the result supports the alternate hypothesis H1 (H1: There is a significant relationship between complaint handling and customer loyalty) of the study.
4.3.4 Residual Value:
A residual value refers to the variation between the definite value of Y (dependent variable) and the foresee value of Y (dependent variable). Usually, residuals must be accurately distributed or scattered (McGraw Hill, 2008). The residual value (unexplained variance) of this study is 78. The researcher while calculating the sample size assumed the population and based upon that sample size was determined. But sue to limitations as mentioned (refer Chapter 1, point 1.5), the researcher went ahead with the sample size of 80 (eighty). This led to error in sample size.
4.4 Demographic analysis
An analysis was done by the researcher to examine whether gender (demographic factor) can be a factor influencing the handling of the complaints well which will lead to loyalty. All the values were separated for males and females and then the averages were calculated for males and females separately. Scattered chart are used for better interpretation of the values.
The scattered charts above shows the R2 value as 0.71 for females which is higher as compared to males R2 value is 0.62. The trend lines for both males and females are sloping positively upwards. From the values, it can be interpreted that the relationship among complaint handling and customer loyalty based on gender is high for females as compared to males. And this means that gender is also a factor which affect the way the complaints are handled. The reason the relationship among the variables for females are high might be either the females who complain are able to convey their complaints more clear as compared to males or it might be that they are very polite in conveying the complaints which might have led the personnel in responding or solving their complaints leading to customer loyalty.
4.5 Chapter conclusion:
Based on all the values of regression analysis (coefficient of correlation value and coefficient of determination value) and the values of Analysis of Variance (ANOVA) (regression coefficient value, F - value, P-value & Significance level F value and residual value), this chapter concludes there is a positive slope in the trend line as shown through scattered charts. The hypothesis were tested based on the values through scattered charts which resulted in supporting and accepting the alternate hypothesis (H1: There is a significant relationship between complaint handling and customer loyalty) and rejected the null hypothesis (H0: There is no significant relationship between complaint handling and customer loyalty). Based on demographic factor (gender) the females complaints were more effectively handled as compared to males. So, gender also has an impact on handling complaints leading to customer loyalty.
5. Summary of findings, conclusions and recommendations:
5.1 Chapter introduction:
This chapter will be focusing on summarizing the findings of the chapter 4 with regards to testing of the hypothesis also and accordingly the study will be concluded . Recommendations will be given in this chapter for Al Ghadeer water company and further future research will also be discussed for this study.
5.2 Summary of findings:
Total number of 80 respondents were surveyed and the responses were analyzed after coding them into numerical values. Regression and Analysis of Variance (ANOVA) analysis were done. Scattered chart was used for interpretation of data. The hypothesis statements were tested with the values that resulted from the analysis. Gender (demographic factor) analysis was also done. The results can be summarized as follows:
The trend line in the scattered chart shows a positively upwards slope from left to right. The coefficient of correlation (R) value depicted in this study is 0.811 which is a positive value and is very near to 1. Thus this value states that there is positive relationship between the complaint handling and customer loyalty (H1) . The coefficient of determination (R2) value in this study is 0.66 which is greater than 0.5 (0.66 > 0.5) this means that the result of R2 also depicts a positive relationship between complaint handling and customer loyalty (H1). In the ANOVA analysis, the regression coefficient value is 0.96 which is approximately 1; means the relationship between the complaint handling and customer loyalty is positive (H1). The F - value is 150.68 which is enough in proving the alternate hypothesis (H1) with high confidence level. The alternate hypothesis is accepted if the p-value is less than or equal to the significance F value is The P-value & Significance level F value in this study are both equal as 6.67, thus the alternate hypothesis is accepted (H1: There is a significant relationship between complaint handling and customer loyalty). The unexplained variance is 78 (residual value) which exists because of the sample which has been assumed by the researcher. The values are all positive and the scattered chart depicts that very clearly, Thus the hypothesis statements after testing resulted that the result and all the values have :
rejected the null hypothesis H0: There is no significant relationship between complaint handling and customer loyalty;
and the alternate hypothesis is accepted, H1: There is a significant relationship between complaint handling and customer loyalty.
The analysis which was done at last based on the demographic factor (gender), the results (R2 value is 0.71 for females and 0.61 for males) shows that the relationship between the complaint handling and customer loyalty among females is higher as compared to males. This means that gender can also effect the relationship between the variables.
Based on the above findings, it can be concluded that, the study resulted in supporting and accepting the alternate hypothesis; H1: There is a significant relationship between complaint handling and customer loyalty. The results goes in support with various theories mentioned in the literature review such as, it has been also stated that, a successful handling of customer complaints will lead to building strong customer loyalty (Tor Wallin Andreassen 1999). Complaint handling is said to be having a major effect on customer loyalty (Gronroos 2007). Effective complaint handling plays a cruicial role in building long term customer company relationship (Morgan & Hunt 1994). As per the National Complaints Culture Survey (NCCS) which was conducted in London in 2004, resulted that ninety percent of the customers confess that they are ready and willing to repurchase from the same firm if their complaints are handled effectively and on time (Christina O Neill, 2012).
This study resulted in similar way to previous research studies "Study A" (refer chapter 2, point 2.2): by Tor Wallin Andreassen (1999) It was concluded by stating that satisfaction with successful complaint handling will create a positive attitude towards the company. The study also goes in line with the "Study B" (refer chapter 2, point 2.2): which was conducted by Saeideh Forouzandeh & Parviz Ahmadi (2010), The findings also stated that the company's complaint handling had a positive impact on customer loyalty. The study also goes in support with "study C" (refer chapter 2, point 2.2): conducted by Michael Le Boeuf (as cited by Ergon Energy 2000), if the complaints are handled effectively, the customers will be satisfied, willing to stay with the same firm(customer loyalty achieved) and leading positive word of mouth.
Thus, the relationship between the complaint handling and customer loyalty is positive in Al Ghadeer water company which also means that the complaints are effectively handled in Al Ghadeer water company in support with (Fornell 1992), the relationship between the intensity of customer complaints and customer loyalty relies on the firm's capability of effectively handling customer complaints.
In this study, it has been found that the relationship between the complaint handling and customer loyalty is positive at al Ghadeer water company, this means that the management should keep up the good work and try to improve the complaint handling mechanism otherwise it will lead to less customer loyalty and will cost more for the company as stated by Narus & Anderson (2004) , that the most effective business strategy is to achieve customer loyalty rather than acquiring the new ones for replacing the defective customers. Supported by Gee et al (2008), "it costs five or six times more to acquire new customers than to retain the existing ones". As stated by Smith et al (1999), that firms need to be very cautious about handling complaints because a single ineffective complaint handling may make the customer to leave the firm.
According to Dewitt, et al (2008), a complaint doesn't only gives an opportunity for retaining the customers but it also helps in gaining valuable feedback.
Complaint handling mechanisms need to be improved and up-to-date to be successful in it. The personnel need to be trained well so they are capable of dealing with the complainants politely and give chance to complainants to tell their side of story about the complaint.
The complaint registering procedure needs to be simple and easy so the complainants doesn't find difficulties in complaining
The complaint handling department need to be equipped with up-to-date software so the complains can be easily recorded an