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Current Level Of Satisfaction By Customers At Oldtown Marketing Essay

4475 words (18 pages) Essay in Marketing

5/12/16 Marketing Reference this

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In today’s highly competitive food and beverage industry, Anderson, Fornell, and Lehmann (1994 cited in Lewin, 2009, p. 283) claimed that the degree of customer satisfaction from the services provided at any businesses has a certain level of impact on the organization’s current and future performance. Meanwhile, Beisel (1993 cited in Paulins, 2005, p. 345) explains service as an activity that supplements or facilitates store sales, e.g. free parking, delivery, internet access, etc.

In discussing the correlation between customer satisfaction and business success, Turnbull, Ford, and Cunningham (1996 cited in Kujala, Ahola, 2005, p. 404) argue that “organizations, which are more efficient in providing value for customers, leading to higher customer satisfaction, are more likely to survive in a competitive situation”. Correspondingly, this implies the importance of organizations to maintain and improve their customer satisfaction consistently to survive in the market. In the financial perspective, “as profit and growth are stimulated primarily by customer loyalty… customer satisfaction and repeat patronage are important indicators of restaurant performance” (Oliver, 1997 as cited in Chow et al., 2007, p. 702).

On the other hand, an article of Reuland et al. (1985) as summarized in Liu and Jang (2009, p. 340) mentioned that there are three important elements in a restaurant industry that determining the satisfaction level of customers: material product (food/product quality); the behavior and attitude of the employees (service quality); and the environment (atmospherics).

Customers do not just care about the food quality, but also the service encounters during their dining experience. Liu and Jang (2009, p. 340) emphasizes that “the service quality was more important than food quality in explaining dining satisfaction”. Likewise, the service quality which acts as an intangible aspect of meal experience tends to be a major factor that determines the place to eat. In the end, customers who are more satisfied with the services provided are more likely to return for the favours they received.

1.2 Purposes of the study

The objective of this study is to investigate customer satisfaction towards services provided at OLDTOWN located at Taman Midah, Cheras. To find out whether customers are satisfied with the current service provided, including environment, interior design, price, cleanliness of the place and other tangible and intangible services. A few research questions had been raised, which are the followings:-

To explore the satisfaction level of passenger towards OLDTOWN services.

To identify if customer service expectations are met.

To find out any other services that the company can offer to improve customer satisfaction.

To find out how the company can be better adapted to customers’ needs.

1.3 Research questions

This study attempts to answer the following research questions:

What is the level of OLDTOWN’s customer satisfaction in the five dimensions which are tangibles, reliability, responsiveness, assurance, and empathy?

What is the relationship between demographic profile (sex, age, education level, and income) and OLDTOWN’s customer satisfaction?

1.4 Significance of the study

The researcher has chosen this title because of the fact that companies nowadays is ignoring the importance of service quality in a business; they tend to focus their efforts in producing products. Therefore, the intent of this study is to identify and examine the associations between customer satisfaction and services. Most notably, this survey allows the company to understand the importance of services and having a good understanding on the customer expectation, as well as a guideline to improve their current service management and organizational strategy to stay competitive in a global market.

This study was also conducted to investigate and identify the present level of customer’s satisfaction and the associations between demographic profiles and customers’ satisfaction. The result of this study will be considerably beneficial to all businesses in restaurant industry, including OLDTOWN for improving their services. The researcher shall submit the result of this study to OLDTOWN upon request. The study on customers’ satisfaction is significant since it is the best source of information for the company to improve services. Without exploring customers’ opinions about the services they use, it will be difficult for the company to be successful. Consequently, all companies in the service industry such as airlines, hotels, and fitness centers, should survey customers’ satisfaction regularly and ensure that customers’ satisfaction is met because it is an important factor in determining the company’s success.

1.5 Scope of the study

The questionnaire was distributed to one-hundred and twenty (120) customers in OLDTOWN located at Taman Midah, Cheras (KL). The SERVQUAL instrument was used in this study to reflect company’s service in the five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.

1.6 Definition of terms

1.6.1 OLDTOWN White Coffee

The OLDTOWN’s official website (2010) has details of that they started their very first outlet in 1958, Ipoh to current 154th store as dated April, 2010, with the aim to provide quality white coffee to Malaysian households and the food services industry. It is a place where people can spend their leisure time with their family members and friends to have a break, relax, and engaging in chitchats and even work! They are not just dedicated serving coffee, but also to provide a desirable coffee shop experience. They also offer delicious foods, including a wide variety of rice, noodles, toast and many more at reasonable prices.

1.6.2 Satisfaction

Oliver (1997) as quoted in Wu and Liang (2009, p. 587) described “satisfaction as a judgment that a product or service feature, or the product or service itself, provides pleasurable consumption related fulfilment”. Other researchers described satisfaction as “a general psychological phenomenon, describing the emotional state resulting from an evaluation of the perceived discrepancy between prior expectations and the actual performance of the product” (Tse and Wilton, 1988 as quoted in Yang and Zhu, 2006, p. 668).

1.6.3 Service quality

Parasuraman, Zeithaml & Berry (1988 cited in Chang, Chen & Hsu, 2010, p. 621) define service quality “based on an overall customer judgment of service offerings…” Other researchers would explain it as “a critical measure of organizational performance and continues to compel the attention of practitioners and academics” (Lassar, Manolis & Winsor, 2000 as quoted in Karatepea, Yavas & Babakus, 2005, p. 373).

1.6.4 SERVQUAL

The SERVQUAL model, which suggested by Parasuraman, Zeithaml & Berry (1988 cited in Chang, Chen & Hsu, 2010), is one of the methods for measuring a restaurant service quality based on five dimensions: tangibles, reliability, responsiveness, assurance, and empathy.

Chapter 2 – Literature Review

The purpose of this study is to investigate customers’ satisfaction in relation to the services provided in OLDTOWN. The literature review is based on researches that have been conducted by different researchers, consisting areas of study in service quality, models used to evaluate service quality, restaurant selection criteria, atmospherics, demographic profiles, customer satisfaction and revisit intention, and customer loyalty.

2.0 Service quality

Service quality is often viewed as one of the most critical factors influencing customer satisfaction. Parasuraman, Zeithaml & Berry (1988 cited in Chang, Chen & Hsu, 2010, p. 621) define service quality “based on an overall customer judgment of service offerings…” As being one of the key determinants to success, companies must employ service quality improvement measures to exceed customers’ expectations. According to Chen, Chen, & Chen (2001 cited in Abdullah & Rozario, 2009), the level of service quality provided in any industry, i.e. restaurant, is influenced or determined by customer expectations. In other words, customers make a judgment based on their past experience on that service. As such, organizations are constantly trying to find ways to improve and provide superior quality services to satisfy their customers. In a study by Abdullah & Rozario (2009), they believe that the success of an organization depends on both internal (employees) and external (customers) factors. In the sense that organizations should not focus solely on providing good quality services (in tangible form) to customers, but also to have a certain level of concerns towards their employees’ welfare. For example, employees who are not satisfied with the company management are more likely not having a pleasant working attitude, especially in restaurant businesses, customers may be unhappy and dissatisfy with the said servers’ emotions, attitude, and behaviors.

Oliver (1981 cited in Bougoure & Tang, 2006) maintains that customers’ satisfaction has long been recognised as a process and is the difference between consumers’ perceived and expected performance of a product or service. To interpret, customer satisfaction occurs when performance is higher than expected, while dissatisfaction occurs when performance is lower than expected. Overall, to gain customer satisfaction, some argue that organisations need to exceed predictive expectations of customers, rather than just satisfy expectations” (Spreng & Mackoy, 1996 cited in Bougoure & Tang, 2006).

2.1 Models used to evaluate service quality

Accordingly, determining the level of customer satisfaction towards the services provided by OLDTOWN is the first aim of this study. The SERVQUAL model, which suggested by Parasuraman, Zeithaml & Berry (1988 cited in Chang, Chen & Hsu, 2010), is one of the methods for measuring a restaurant service quality based on five dimensions: tangibles, reliability, responsiveness, assurance, and empathy. Tangible items include “the physical appearance of the facilities, equipment, personnel and materials used to communicate with customers” (Bartlett & Han, 2007 cited in Abdullah & Rozario, 2009, p. 187). Shahin (n. d.) further elaborates that this model evaluates an organization’s (i.e. restaurant) cleanliness (i.e. hygiene), space, atmosphere and appearance of location (tangible); the ability to perform the promised service (reliability); the willingness to provide prompt resolutions and services to customers’ complaints or requests (responsiveness); the courtesy of employees, including credibility and competency to inspire trust and confidence (assurance); and lastly the individualized attention and care that an organization gives to its customers (empathy). The dimentions are defined in Table 1:

Table 1: SERVQUAL (Source: Douglas & Connor, 2003, pp. 167 – 168)

Various models have been developed for the purpose to evaluate service quality. For instance, LODGSERV, a model devised by Knutson et al. (1991, cited in Barber & Scarcelli, 2010), was designed to improve the measuring of service quality specifically for the lodging industry. DINESERV is another model that was refined from SERVQUAL and LODGSERV, a restaurant industry-specific quality measurement that is adopted by many organizations in the restaurant industry (Stevens et al. 1995, cited in Barber & Scarcelli, 2010). DINESERV utilizes the same five dimensions as SERVQUAL, but treats the tangibility dimension more richly (ten items) than SERVQUAL, with the focus on the aesthetic and functional dimensions (Raajpoot, 2002; Ryu & Jang, 2008). However, with the exception of the Lockyer (2003) study, which refined the LODGSERV model to include more specific items, such as cleanliness of the lobby, guest room, and bathroom, the concept of cleanliness has not been adequately examined. Kim, McCahon & Miller (2003) suggested that the replication studies should be undertaken in different cultures using various restaurant segments to validate the DINESERV scale. Additionally, because the DINESERV instrument has been used in a number of restaurant studies, most (if not at all) of the studies have not explored loss aversion-based restaurant service quality in the restaurant context. Therefore, the following section discusses the necessity of applying the loss aversion concept to restaurant service quality; this is a fundamental consideration for further exploration of the causal relationships derived from restaurant service quality.

2.2 Restaurant selection criteria

Lancaster (1996 cited in Sun & Morrison, 2006, p. 379) identifies that “customers do not choose goods themselves, but rather than the attributes possessed by the goods, and that they use these attributes as input factors that produce utility”. Based on a survey conducted by Lahue (2000), older customers do not just care about the food selections in a restaurant, but the services provided were important considerations too. Many reported that inattentive servers led to dissatisfying dining experiences. Restaurant servers who were not trained properly on their own products may lead to customer dissatisfactions (Seo, Wildes & DeMicco, 2001). With that being said, it is essential for servers equipped with product knowledge as they will be the one who engaged with customers.

2.3 Atmospherics

Atmospherics is perceived as the quality of the surrounding space. According to Kotler (1973 cited in Liu & Jang, 2008, p. 340), “it is the conscious designing of space to produce specific emotional effects in buyers that enhance their purchase probability. Atmospherics is made up of a set of elements, such as music, lighting, color and scent”. Research in environmental psychology has suggested that atmospherics has a powerful impact on people’s emotions, attitudes and behavior. Mehrabian & Russell (1974 cited in Liu & Jang, 2008) first introduced a theoretical model to explain the impact of environmental stimuli on individual behavior. The model claims that the physical environment could influence people’s emotional responses (such as pleasure and arousal), which in turn elicits approach or avoidance behavior toward the environment. This model has gained consistent support from numerous empirical studies in different service settings, such as retail stores and hotels (Chebat & Michon, 2003). Ryu & Jang (2007) have explored the combined effect of multiple atmospheric variables on behavioral intentions in upscale restaurants. Their findings supported that ambience (e.g. music, aroma and temperature) and employee appearance had the most important influence on customers’ emotional responses, which in turn affected customers’ post-dining behavioral intentions.

2.4 Demographic profiles

According to Reid & Bojanic (2001), markets are often segmented based on demographic variables such as age, gender, income and expenditure patterns, family size, stage in the family life cycle, educational level achieved, and occupation. When these variables are used in defining consumers within the restaurant industry, certain trends emerge. For instance, family size increases, the number of times per week that the families dine outside the home tends to decrease. Consequently the demographic profile influences customer satisfaction. In this section the relationship between demographic profile and customer’s satisfaction is reviewed.

2.4.1 Sex profile and customer’s satisfaction

Kelly & Turley (2001) argue that sex profile influenced customers’ satisfaction because customers of different sex view services with different point of views. Therefore the perception towards the services will be not the same because of different lifestyles, behaviours, attitudes, and health conditions. They pointed out that the priority concern for females when selecting products and services was price factor, but males placed more importance on other factors (e.g. necessity and benefit). Based on a case study of customer’s satisfaction towards internet banking, the result showed that customers of a different sex perceived satisfaction towards the service at different levels. Male customers placed greater importance on ‘information’ and ‘process’ factors. On the other hand, female customer placed importance on ‘service fees’ and ‘feature of website’ factors. It can be concluded that male and female customers have different perceptions of the service quality attributes. The findings of both studies are the same in that price is likely to be the factor that highly influences the satisfaction of female customers (Esichaikul & Janecek, 2009; Laforet & Li, 2005).

2.4.2 Age profile and customer’s satisfaction

In the service industry, age profile influences customers’ perception towards services provided by a company. It is possible that senior and young customers have different point of views and lifestyles (Machauer & Morgner, 2001). Various researches have been conducted and found that the ‘place’ and ‘product’ factors were more important for older customers to dine in a restaurant. Instead, the ‘price’ and ‘promotion’ are not issues that determine the perceptions towards the service quality of older customers. To illustrate, mostly older customers do not place much considerations over the price as they have their own income as compared to younger customers who normally have difficulties to raise money. Hence, the reviews show that ‘price’ and ‘promotion’ factors seems to be more important to young customers, while ‘place’ and ‘product’ factors are more important to older customers (Ng & Kim, 2009; Slevitch & Oh, 2009; Kralj & Solnet , 2010).

2.4.3 Educational profile and customer’s satisfaction

It has been shown (Snipes et al., 2004; Bei & Shang, 2005; Juhl, Kristensen & Ostergaard, 2002) that education profile influences people points of view towards services. It may be because higher educated people’s opinions and attitudes differ from lower educated ones. In the service industry, most customers with a high education level place more importance on the quality of service, while customers with a low education level place more importance on the cost of service. This may be because they have different incomes. Higher educated members can afford expensive service fees if they get a quality service. Such factors have been studied extensively, for an example, in the airline industry (Lindenmeier & Tscheulin, 2007; Chang & Chang, 2010; Soderlund & Julander, 2008; Grigoroudis & Siskos, 2003), the researchers found that ‘seat comfort’, ‘safety’ and ‘facility’ issues were more important for passengers with an advance degree than those with a high school and college degrees. However, ‘price of ticket’ issues were more important for passengers with high school or college degree.

2.4.4 Income profile and customer’s satisfaction

Income level is often related to customers’ satisfaction because the different levels of income can influence people’s attitude on using services (Johnson et al., 2001; Liu & Jang, 2008; Netemeyer & Lichtenstein, 2010). Through their extensive investigations, the researchers found that ‘convenience’ and ‘facility’ factors (e.g. service, cabin, and location) were more important for passengers earning above average income; while passengers earning below the average often viewed ‘price’ and ‘promotion’ factors more important to them. From the above findings, it can be concluded that ‘price’ and ‘promotion’ factors determine the satisfaction of customers earning low income, while ‘convenient’ and ‘fan comfort’ factors influence the satisfaction of those with high income. The studies in sport and transportation found the common result that high income customers place ‘convenience’ and ‘facility’ factors more important, while low income customers place a premium on ‘price’ and ‘promotion’.

2.5 Customer satisfaction and revisit intention

Mittal, Ross & Baldasare (1998 cited in Choi & Chu, 2001) describe that customer satisfaction and repurchase intention are regarded as qualitatively different constructs. Satisfaction may be merely a judgment with cognitive and affective dimensions, whereas repeat intentions consist of a behavioural component. As profit and growth are stimulated primarily by customer loyalty, which is a commitment to patronize preferred products or services consistently in the future (Oliver, 1997 cited in Chow et al., 2006), customer satisfaction and revisit intention are important indicators of restaurant performance. The concept of customer satisfaction is of utmost importance because of its influence on repeat purchases and word-of-mouth publicity (Berkman & Gilson, 1986 cited in Choi & Chu, 2001). Huang & Yu (1999 cited in Chow et al., 2006) found that some consumers who stick with certain products or services with repeat purchase behaviour are acting somewhat non-consciously and are influenced by inertia or brand loyalty. Another research conducted by Slama and Tashchian (1985, cited in Chow Et al., 2006) also find that female sex, education level, income level, and family life cycle stage are associated with consumer purchase behaviour. Day (1969); Jacoby & Kyner (1973); Jarvis & Wilcox (1977) as quoted in Han, Back & Barrett (2009, p. 564) define that:

it is true that repurchase intention is a critical part of such attitudinal or behavioral constructs, it should not merely be characterized by a positive attitude toward a provider (e.g., commitment and loyalty), because customers often engage in repeat purchasing behaviors when there is no psychological bond (e.g., loyalty and commitment).

Thus, in this study, revisit intention is described as an affirmed likelihood to revisit the restaurant in both the absence and presence of a positive attitude toward the provider.

The overwhelming number of studies of customer satisfaction outcomes in the service industry indicates a positive relationship between customer satisfaction and repurchase intention (Soderlund & Ohman, 2005). A study conducted by Cronin and Taylor (1992 cited in Han, Back & Barrett, 2009) in service sectors, such as casual dining, banking, pest control, and dry cleaning, showed that customer satisfaction has a significant impact on repurchase intention. Anderson and Sullivan, 1993 E.W. Anderson and M.W. Sullivan, The antecedents and consequences of customer satisfaction for firms, Marketing Science 12 (1993), pp. 125-143.Anderson and Sullivan (1993 cited in Han, Back, Barrett, 2009) verified that a high level of customer satisfaction decreases the perceived benefits of service provider switching, thereby increasing customer repurchase intention. Soderlund and Ohman (2005) assessed the role of intentions as a link between satisfactions and revisit behavior in a restaurant setting, and found that customer satisfaction is significantly related to two specific intention constructs: intentions as expectations and intentions as wants. Kivela, Inbakaran & Reece (1999 cited in Han, Back & Barrett, 2009) indicated that most of the behavioral intentions were influenced by dining satisfaction in a restaurant. These studies are the strong evidence points that shows a positive relationship between customer satisfactions and their revisit intention in the restaurant industry. Satisfied customers are more likely to refuse competitive offers and to repurchase the product or service from the current provider (Anderson & Sullivan, 1993 cited in Han, Back & Barrett, 2009).

2.6 Customer loyalty

Loyalty is defined as “a deeply held commitment to repurchase or re-patronize a preferred product or service consistently in the future despite situational influences and marketing efforts” (Oliver, 1999 R.L. Oliver, Whence consumer loyalty?, Journal of Marketing 63 (4) (1999), pp. 33-44. Full Text via CrossRef | View Record in Scopus | Cited By in Scopus (634)Oliver, 1999 cited in Ha & Jang, 2010, p. 522). According to Sivadass and Baker-Prewitt (2000), customer loyalty is the ultimate objective of customer satisfaction measurement. Moreover, compared with loyal customers, non-loyal customers are much more influenced by negative information about the products or services (Donio, Massari, & Passiante, 2006). Fornell (1992 cited in Deng et al., 2009) stated that if a food service provider can satisfy the needs of the customer better than its competitors, it is easier to create loyalty. In other words, high customer loyalty is mainly caused by high customer satisfaction. Clarke (2001) proposed that effective satisfaction must be able to create loyalty amongst customers. In a study by Choi et al. (2008), once a customer feels dissatisfied with the service provider because of low service quality or other factors, and then he/she will be much more likely to change to another.

Researchers often view loyalty not only in terms of repeat purchasing (behaviour), but also the customer’s attitudinal state of intention towards repurchasing or re-patronizing (the likelihood of a behaviour) (Evanschitzky et al., 2006). In this respect, loyalty has two distinct components: behavioural and attitudinal. Behavioural loyalty is associated with actual customer behaviours in consumption situations, which involves the measurement of past purchases or the probability of future purchase behaviour based on past purchase behaviours (Ehrenberg, 1988 A.S.C. Ehrenberg, Repeat-buying: Facts, Theory and Applications, Charles Griffin, London (1988).Ehrenberg, 1988 cited in Ha & Jang, 2010). Attitudinal loyalty reflects the customer’s psychological disposition toward the same brand or organization, which is associated with a customer’s favourable attitude (Fournier, 1998 cited in Ha & Jang, 2010). While behavioural loyalty captures cognitive behavioural patterns based on customers’ past consumption behaviours, attitudinal loyalty incorporates emotional attachments and affective commitments generated by previous consumption experiences.

Chapter 3 – Research Methodology

3.0 Measurement

Based on a thorough literature review, the researcher developed a self-administered questionnaire. The questionnaire was comprised of four sections. The first section of the questionnaire concerned respondents’ relevant personal information, such as age, gender, household income and dining-out frequency. The second section asked respondents to rate the importance of each restaurant attribute when considering for dining using a 5-point Likert-type scale, where 1 = not important at all and 5 = extremely important. Various attributes were identified based on the relevant literature and classified into three categories: service-related attributes, atmosphere-related attributes and other attributes. Service-related attributes consisted of seven items: (1) employees are friendly and helpful; (2) employees are attentive; (3) employees have knowledge of the menu; (4) service is prompt; (5) service is dependable and consistent; (6) employees serve food exactly as ordered; and (7) employees provide an accurate guest check. These items were selected based on previous studies (Liu & Jang, 2008; Soderlund & Ohman, 2005; Donio, Massari & Passiante, 2006) and identified through an expert review. They reflected the four dimensions, excluding the tangible dimension, of the original DINESERV scales (Stevens et al. 1995, cited in Barber & Scarcelli, 2010). Atmosphere-related attributes, based on (Ryu & Jang, 2007), included internal design and décor, lighting, music, temperature, odors, cleanliness and employee appearance. Price was measured in terms of the perceived fairness of price and authenticity was measured in terms of food authenticity and environmental authenticity (George, 2001). The third section measured respondents’ perceived performance of the same 24 restaurant attributes based on their dining experience in the surveyed restaurants using a 5-point Likert-type scale, where 1 = very poor and 5 = excellent. The last section asked the respondents to reflect on their overall satisfaction with the surveyed restaurant and post-dining behavioral intentions. All of these items were measured by a 5-point Likert-type scale, where 1 = strongly disagree and 5 = strongly agree.

3.1 Data collection

For the formal survey, the agreement of manager of the organization was obtained prior to the distribution of questionnaires to restaurant guests dining at the restaurant. Two procedures were used in conducting this research project: collection of primary and secondary data. The data for this study was collected from OLDTOWN customers. The questionnaires were randomly distributed by the researcher to customers who were waiting for their food to be served. Customers were asked to fill out a survey questionnaire on a voluntary basis. A total of 140 questionnaires were collected and 120 were used for analysis after excluding 20 due to the probability of incomplete responses. Among the one-hundred and twenty (120) questionnaires, twenty (20) respondents will be distributed for open-ended questionnaires, while the remaining one-hundred (100) respondents were selected for close-ended questionnaires. Thirty (30) close-ended questions will be distributed to customers for the purpose to gather qualitative data. Lastly, a qualitative interview will be conducted by the researcher with the manager-in-charge of OLDTOWN. The interview between the researcher and the manager-in-charged was conducted within 1 to 2 months after completion of the research project. Purpose of the interview was to explore three compulsory items: (1) company’s objective; (2) strategies adopted to keep the business remain competitive; (3) personal perceptions towards the customers. The interview was recorded in a video format for record purposes to be in line with University of Greenwich’s requirements. Prior to the actual interview, a semi structured format of the main topics will be discussed between the researcher and the interviewee to facilitate the recording process. The researcher was trained in qualitative interviewing techniques prior to such meeting with the manager-in-charge of OLDTOWN.

3.2 Questionnaire development

Preliminary research was conducted to identify factors that influence customer satisfaction with a meal. The study questionnaire asked respondents to identify up to three menu items ordered at that meal. A 5-point Likert-scale was used to assess satisfaction with each. Questions on overall satisfaction with each menu item, frequency of eating out, reason for eating out, special diet restrictions, gender, and age were included as well. The questionnaire was pretested in OLDTOWN during lunch and dinner periods.

3.3 Data analysis

The collected data were analyzed using Statistical Package for Social Science (SPSS) program. The mediating role of customer satisfaction was tested by investigating indirect effect of consumption emotions on revisit intention. The results are then transformed into quantitative measurement and for clear understanding; the data is represented using tables, bar charts and pie charts.

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