Problem Statement And Objectives Of The Study Marketing Essay

This paper discusses exploratory study regarding Generation Y dining experience at fine dining restaurants. Few studies have found out that there are an increasing number of people dining out. Adding on, studies also reviewed that Generation Y is the new and powerful target market for marketers. It is important to put this generation into the market segment as they have huge influence in the market and big number of population. Hence, there has not been any research conducted on fine dining restaurants and Generation Y dining experience. This study aims to fill in these gaps. Twelve respondents who are in Generation Y categories and have dining experience in fine dining were interviewed using the laddering technique. Findings revealed some attributes influencing them to dine in fine dining restaurants. These findings have important implications for restaurant industry, especially fine dining, in that they reflect the customers’ feedbacks on what attracts them to dine in the restaurants. The paper concludes by giving possible suggestions to fine dining restaurants owners or managers for future research.

CHAPTER 1 : INTRODUCTION

1.1 Background

Warde and Martens (2000) defined eating out as the consumption of all foods taking place outside one’s own household. Studies show that eating out or meals purchased away from home in the United States has increased, with the restaurant industry accounting for a 47.5% share of the food dollar in 2006 (National Restaurant Association,2006). In the UK, eating out was estimated to be worth ‘30.5 billion in 2007 and expected to increase to ‘36.6 billion by 2012 (Mintel, 2007).

Eating out has become more convenient rather than prepare food at home (Lee and Tan, 2006). One of the reasons is because they want to save their time and energy after they finish working. They are exhausted; therefore they do not want to cook for themselves (Binkley, 2005; Byrne, et al. 1996; Nayga, Jr. and Capp s, Jr. 1993).

In Malaysia itself, the rising on income level have resulted higher purchasing power and disposable income to spend on various things that they might not be able to afford previously such as eating out (Stewart et al. 2004 and Ishida et al. 2003). People with higher income are likely to spend more on good and service compare to people with lower income (Ishida et al. 2003, Nik Mustapha et al. 2001 and Lee 1991).

The increasing number of people eating out is also due to the development of outside dining places. Nowadays it is common for people to dine out since there are many choices of eating venues available (Mihalopoulos and Demoussis, 2001; Nayga, Jr. and Capps, Jr., 1993). There are several choices of dining venues such as local food stalls, fast food restaurants, and fine dining restaurants.

Fine dining or gastronomy, is often referred to the art of cooking and good eating. People define fine dining restaurant as a fancy restaurant where the menu tends to be classy, with high quality ingredients and mostly prepared by a well-known chef. Food portions are smaller but with intense details. Dining here might cost more than other type of restaurants. The customers are not only paying for the food, but also the quality of service they’re receiving. Servers generally undergo more training in order to give the best and high quality service to the guests. Bowen (1990) has studied that the services require high customer contact, high customer-employee interaction, and high product customization. The food and the service can create a total different experience for customers.

However, the restaurants have certain rules of dining which must be followed by customers; for example formal attire is required. Mostly, the customers are people who already work as their affordability reach the standard price of fine dining. Those people are baby boomers and Generation X people.

Young adults, or mostly known as Generation Y has become a new market segment for marketers. They are the next generation after baby boomers and Generation X. They seek to create their own individual personality and form behaviour patterns, attitudes, values, and also their own consumption patterns (Mokhlis, 2009). Those characteristics make Generation Ys have a different shopping style compared with previous generations (Bakewell and Mitchell, 2003).

Adding on, Generation Y has greater spending powers and tends to be major spenders of family income (Morton, 2002; Taylor and Cosenza, 2002). Hence, marketers are keen to target this group because they notice them as potential loyal customers both currently and in the future (Feldman, 1999; Speer, 1998). They will dominate the market and ignoring this promising market will be very risky for the companies.

There are many restaurants that are offering a full range of food varieties and services. As the number of restaurants has increased, the business has become much more competitive. Hence, to be able to meet consumers’ expectations in today’s situation can ensure business survival. To be successful and outstanding, a restaurant has to be able to exceed consumers’ expectation by really understanding customers’ reasons for selecting a particular type of dining experience.

In Malaysia, Generation Y population is over 9 million, representing 34 percent of the population (Economic Planning Unit, 2010). Kueh and Voon (2007) found out that eating out has become an important part of the youth lifestyle in Malaysia as they generally seek convenience, time saving, and relaxation. Hence, it is advisable to target Generation Y in fine dining area due to the increasing spending power of Generation Y.

Many studies have explained about Generation Y characteristics and restaurants, but none of the researchers have focused on Generation Y towards fine dining restaurant. The gaps in previous researches leave several unexplored area. Generation Y’s new trend to dine in luxury restaurants has become motivation in this research. This study aims to fill in the gaps.

1.2 Problem Statement and Objectives of the Study

When a restaurateur wants to open a new restaurant, the knowledge of its own image carries a great value. This study focuses on fine dining restaurant upscale segment because it is differentiated by its name and presentation. The restaurants aim to create and reach customers’ expectations (Assael, 1991). The title of this research is Attributes Influence Generation Y Preference and Selection of Fine Dining Restaurants. The purpose of this research was to learn and discover more about several attributes Generation Y attach to fine dining restaurants and how these attributes influence their decision making and selection of fine dining restaurants. Those attributes can be used by restaurateurs and industry players to reposition the restaurant to improve or change to meet these young adults’ needs and preferences. The data was collected from interviews with twelve selected participants that are in Generation Y categories and have dining experience in fine dining restaurants.

In the process of conducting the research, there are several objectives which are expected to accomplish:

1. To explore and learn more about customers preference in choosing restaurant

2. To identify the key factors that has influenced Generation Y preferences specifically in fine dining restaurants

1.3 Methodology

This research is an exploratory study in exploring Generation Y preferences in selecting fine dining restaurants. This research will be conducted using a qualitative method which is means-end theory and laddering.

A total of twelve interviews will be conducted on Generation Y cohort about their preferences towards fine dining restaurants. The interviews will be using laddering technique which is further discussed on chapter 3. A conversational style interview is preferred in this study because only selected people with dining experience in fine dining restaurants are chosen in order to give more specific values.

It is also important to gather all existing literatures which are needed in order to support the findings in this study. By looking into the existing literatures, it allows gaps from previous research to be identified.

1.4 Organization of the Study

This study is organized into the following chapters:

Chapter 1: Introduction

This chapter reviews the general idea of the entire study where the background, research objectives, and methodology are discussed.

Chapter 2: Literature Review

This chapter discussed the existing literature related to the research objectives. It contains the explanation of dining out trend, in general and in Malaysia. It also explains about fine dining restaurant, and customers’ attributes in choosing restaurants.

Chapter 3: Methodology

This chapter explains the method used in this research which is laddering technique and means-end theory.

Chapter 4: Findings and Analysis

This chapter aims to criticize and analyze the information from the interviews and hypothesis based on Chapter 2.

Chapter 5: Recommendation

This chapter provides recommendations for restaurateurs and industry players. It also provides suggestions for further research.

Chapter 6: Conclusion

This chapter reviews an overview of the whole research.

CHAPTER 2 : LITERATURE REVIEW

2.1 The Dining Out Trend

Food and eating are part of consumer’s daily lives, but not only for nutritional purposes (Lethola et al. 2008). Nicod (1980) defined a meal as a structured event, a social occasion organised by rules prescribing time, place, and sequence of actions. Food and its consumption may be examined at many different levels. Depending upon one’s purpose, attention may focus on nutrients, ingredients, dishes, meals, or cuisines (Warde and Martens, 2000).

Meiselman (2000) reviewed meals can mean different things to different people and professions. One purpose is to connect people, while another goal for a meal can be to build and maintain relationships between people (Warde & Martens, 2000). The meal appears to have the effect on people which they can connect easily. These meal experiences can occur in almost everywhere in the world. Over the time, people can combine their meal experiences with eating out and eating in.

Nowadays, there is an increased focus on food and meals in many countries. There are plenty information and interest around food, cooking, and related themes. All media such as newspaper, magazine, TV channel, and other channels carry some information about meals, food, original use of spices, etc. The focus on food creates awareness around meal issues in everyday life (Hansen, 2005). As a result, customers are becoming increasingly interested in cuisine and visiting destinations for culinary experiences (Faulkner et al., 1999).

Rozin, Kurzer, and Cohen (2002) acknowledged that eating has several other functions such as for structuring daily routines, social functions, and associated with pleasure. Culture and identity are also represented by food and eating (Marshall, 2005). Back in history, dining out was a practice severely restricted by social class until at least the middle of the twentieth century. Burnett (1989) stated that it was only in the inter-war period that the lower middle classes began to eat out and it was some time after the Second World War that the practice became more or less universal. For decades, the market for eating out has developed and become an important part of national life and culture (Michael, 1994).

Lewis and Chambers (1998) reviewed that customers are seeking for opportunities and experiences that can make their lives happier, richer and more rewarding. They spend their time and money in service environments looking for such opportunities and experiences (Baker and Cameron, 1996). It enables the customers to briefly escape monotonousness from their daily routine (Finkelstein, 1989).

Food, service and physical setting of restaurant are important in consumer’s eating out experience (Pizam and Ellis, 1999). These factors are also supported by Karen, Thomas, and Klaus studies (2002) that have mentioned for most people food is always a matter of pleasure. Hence, it is essential for managers to take consumer’s experiences into account when these experiences may be recalled, for a very long time (Koster, 2006, Kowalski and Westen 2009).

However, not all dining out is done for exclusively recreational reasons. Smith (1983) has studied that many restaurant customers simply dine out as an alternative to carrying a meal to work or to travelling home during work or shopping. The eating-out population is also increasing due to the rising number of single-parent households and the number of career woman in the work force (Elmont, 1995).

Studies show that the demand for meals and snacks away from home might be influenced by the number of people living in a household. Dining out expenditures is usually higher for single-person households and households which contain multiple adults without live-at-home children (Stewart et al, 2004). It is because the more members in the household, it will be economical to prepare food at home. The increasing demand of food away from home may also be affected by the ages of household members due to the different of taste as people each (Friddle et al.,2001).

According to Frisbee and Madeira (1986), eating out was identified as a convenience activity if proportion of income spent rises. Higher income families are tend to spend more on products and services compare to lower income families that have tighter budget on their expenses (Ishida et al., 2003; Stewart et al., 2004). Adding on, the price, easy accessibility, and availability at convenient times are the key characteristics that attract consumers (Yuksel.A and Yuksel.F, 2002).

Other factors that drive people to dine out are social groups, such as friends, partners, and parents. They represent influential factors regarding the development of eating patterns (Eriksen, 1994). Social factors also represent more important sources of influences than individual factors (Bandura, 1977)

Peter Cullen (1994) stated that restaurant meals are more of convenience rather than luxury items. However, Nayga & Capps (1992) considered food away from home as a form of leisure where leisure is defined as time spent outside of both the labor force and household production.

In Malaysia, the economic development has changed the patterns of food consumption (Radam, Mansor, and Marikan 2006). Malaysians have the largest amount of family costs on food consumption (Heng & Guan 2007). In a survey conducted by Nielsen (2004), around 59% of Malaysians eat at restaurants at least once a week. The percentage of people dining out has increased from 4.6 to 10.9 during 1973 until 1999 (Department of Statistics Malaysia 2000). From 1999-2003, there has been an increasing consumption of consumer foodservice unit by 16% to a total of 20,235 consumer foodservice units. These findings indicate that Malaysians have changed their preference for food away from home.

Malaysia is a multi-ethnic country consisting of three dominant ethnic groups, namely the Malays (65%), Chinese (26%), and Indians (8%). Each ethnic group has their own food habits and the choice of the consumers may vary widely among these heterogeneous ethnic groups.

The growth in consumer’s demand for goods and services depends on the changes in lifestyle and demographic. An average Malaysians would normally have four daily meals. The largest amount of expenditure was accounted for by food and drink with a combined expenditure of M$32,971 million in 2000 (Radam et al., 2006). The increasing trend of eating out clearly explains that the Malaysian households are spending less time in preparing food at home, a reflection of busy work schedules outside the home.

Few researchers (Nayga and Capps, 1993; Byrne et al., 1996; Binkley, 2005) have mentioned that the eating out trend has increased due to the increasing of female workers in the family. The number of female workers in Malaysia had increased from 44.8% to 46.7% in 2000 until 2004 (Ministry of Finance Malaysia). Meanwhile, Ong (1993) found out that gender does not have a main role on the dining outside expenses in Malaysia since the availability of domestic helpers who can help them to prepare food at home. On the other hand, in Malaysia studies show that the value of household expenses is increasing by about RM36.00 as monthly household income increases by RM1000 (Lee and Tan 2004).

There is a rapid growth of food service facilities, such as fast food restaurants and street food stalls, available throughout the country. At the same time, a variety of food items and the service facilities are now available in the food away from home (FAFH) sector. This will have continuous impacts on the distribution, marketing, food service system, and the nutritional intake. Nik Mustapha et al. (2001) stated that most areas in Malaysia are linked by a well developed transportation and communication systems, therefore the food marketing system allows most Malaysians to gain access to the markets for food products.

To conclude this section, the reasons why people dine out are summarized in figure 1.

Figure 1: Reasons influencing people to dine out

2.2 Generation Y

Few researches have written about generations over the last century, from the ‘Veteran’ to the ‘Greatest’ to the ‘Baby Boomer’ and ‘Generation X’. Each generation had unique differences, and members of each of those generations thought and acted differently than the previous generation. Experiences, history, demographics, economics, and culture were factors that influenced their characteristics and lifestyle (Howe, 2002).

Young people born from 1977 to 1994, referred to as Generation Y, are considered as an emerging, wealthy market of potential customers (Glass, 2007; Clausing et al., 2003). Mosier (2001) identified Generation Y as the children of the Baby Boomer. Generation Y has unique characteristics that are different from previous generations (Wolburg et al., 2001). They use a different pattern of consumer behaviour than other generation segments.

These young people have grown up in strong economic times and are very well educated and self-assured (Clausing et al., 2003). This is a generation that seeks change, is comfortable with technology and strives for individuality. They were born when technology revolution was exploding. They were the first to grow up with computers hence they are able to process large amount of visual information because of the technology. Technology for Generation Y plays an important role in their environment. The younger group age has the higher percentage of using the Internet for school, work, or leisure.

Generation Y comprise about 75 million young consumers in America alone (Smith, 2008), and the size of Generation Y is three times that of Generation X (Palmer, 2008). The number of young people aged 15-24 years in Asia has grown from 648 million in 1995 to 729 million in 2006, comprising 18.4 percent of the population (US Census Bureau, 2006). In 2006, there are 4.6 million youths in Malaysia aged 15-24 years representing 19 percent of the population (US Census Bureau, 2006).

Generation Y or millennial, have major spending power and considerable influence in purchase decisions for their family as well as being savvy consumers themselves (Harris Interactive, 2003; O’Donnell, 2006; AC Nielsen, 2006; Wilson, 2007). They are therefore reasonable targets of research in services marketing (Yoon and Niehm, 2006; Rugimbana, 2007).

Generation Y has become a challenging market in the restaurant industry (Lukovitz, 2009). They are the most powerful consumer group, because they have more disposable income than that of any previous generation (Frank and Chong, 2002). According to studies in America, Generation Y usually spend $100 per week on disposable purchases, which accounts for $150 billion dollars annually, and a large portion of their expenditure is primarily spent on food and drinks in the restaurant industry (Apresley, 2010). Indeed, according to the Food Marketing Institute of the U.S., the average Generation Y eats out more than three times a week, and the frequency is twice that of the rest of the population (Sheahan, 2005).

They become a challenging market also due to their market size, lifestyle, and consumption habits. They are more likely to try new restaurants compared to older diners. They also look for environments that make them feel welcome with products and facilities that suit their needs (Gale, 2007; Hume, 2007). Therefore, in order to attract this market successfully, restaurateurs need to understand how to satisfy this population.

2.3 Fine Dining Restaurant

Many types of organization provide food in many forms. Restaurants, bistros, and cafes specialize in providing food. The beginning of modern restaurants can be traced back to France, where they replaced older types of different eating establishments. The word ‘restaurant’ has been used since the Middle Ages. The word ‘restaurant’ was originally ‘food that restores’ or ‘to restore or to refresh’ (Berulfsen and Gundersen, 1978).

Today, the word ‘restaurant’ is widely spread all over the world, and the meaning can vary according to the style of restaurant it describes. A restaurant is the simplest act of eating and transforms it into a civilized ritual involving hospitality, imagination, satisfaction, graciousness, and warmth (Gunasekeran, 1992).

This industry has an important role as a job creator and national revenues in the country’s economy. In America, the National Restaurant Association (2005) reports that the restaurant industry sales are expected to reach $476 billion in 900,000 restaurant locations in 2005. Hence, the restaurant industry acted as a job creator which will provide jobs to 12.2 million employees.

For this rapidly emerging trend, the media and various tourism and industry bodies have become more aware of the need to market, develop, and promote the restaurant industry. However, National Restaurant Association indicated that 40% of all new restaurants fail within the first three years in business, and roughly half of those fail in the first year. Thus, it is critical that restaurant owners provide high satisfaction and value to succeed in this competitive business.

Fine dining restaurants have different definitions according to some researchers. Walker and Lundberg (2001) described fine dining as an expensive restaurant with excellent food and attentive service. It is also described as dining in a traditional French style restaurant (Rush, 2006). Nowadays, fine dining restaurants can be defined as a full service restaurant where customers dine at a well-designed restaurant with excellent food and service with casual atmosphere and high price (Ko, 2008).

The restaurant image mainly recognized as an important part of customer satisfaction, hence it is a foundation of the success of the fine dining restaurants. Auty (1992) has mentioned that the style of the restaurant was also found to influence the customer’s choices of restaurants.

However, fine dining, which mostly targeted to upscale segment, has been declining in recent years. In America itself, hundreds of fine dining restaurant operations have downscaled and toned down their price due to their customers who are looking for high quality but also affordable food (Sanson, 1992)

Malaysia has various and rich food heritage that encourage restaurant industry to grow. Many travel writers and food critics have admitted Malaysia as a food paradise with diverse restaurant industry. In 2007, the full-service restaurant sector were the leading type of food service in Malaysia in both numbers of units and value terms (Euromonitor International, 2008)

Until today, Malaysia has some of the finest fine dining restaurants in the region (Tourism Malaysia, 2005). Fine dining restaurant segment has gained popularity among Malaysians, especially in the city areas. The high concentration of upper level of society, expatriates and tourists, as well as the numerous government and corporate offices in this area, provide a good market for these kinds of establishments. These restaurants are targeted for both business and leisure purposes. Adding on, promotional efforts to popularize these establishments by the relevant authorities are being carried out on an on-going basis.

2.4 Consumers’ Selection of Restaurants

Consumers review a set of attributes that represent a certain level during their selection of restaurants (Johns and Pine, 2002). Therefore, it is important to identify key attributes used by consumers to select restaurants.

2.4.1 Food Quality

It has been studied that quality of food and fresh ingredients are the most important reason for customers to return to a restaurant (Brumback, 1998; Sorino, 2002). Few researchers in their study about consumers’ restaurant selection behavior have found out that food quality is the most important attribute influencing restaurant decisions (Auty, 1992; Lewis, 1981; Soriano, 2002; Sulek and Hensley, 2004). This is because people value service more than food (Denove and Power, 2006).

Bowen and Morris (1995) indicated that sometimes the first way to evaluate quality of food for a customer is the design of the menu. The effectiveness of the menu is a selling tool for the restaurant sector. Some studies have found that customers with high satisfaction towards the restaurant’s food tend to return to a given restaurant (Oh, 2000; Qu, 1997; Pettijohn, Pettijohn, & Luke, 1997).

The tastes and ingredients also have important roles for consumers when selecting a restaurant. Food taste is known as the most important element of food attributes in several restaurant studies (Josiam and Monteiro, 2004; Tunsi, 2000). Adding on, varieties of menu also attract the potential customers. Restaurateurs regularly develop new menus and offer a selection of different menu items to attract customers’ attention (Namkung & Jang, 2007).

It also has been mentioned in Kivela, Inbakaram & Reece (2000) research that menu variety is a significant attribute of food quality in determining customer satisfaction in the restaurants. Namkung and Jang (2007) found that the presentation of the food is also the most important factor among food quality attributes in order to determine customer satisfaction in restaurants.

Therefore, we assume that:

H1: Food quality is an attribute that influence the preference and selection of fine dining restaurants.

2.4.2 Services

The service industries spend a big deal of money and time in designing the high quality service to satisfy and go above their customers’ expectation. Quality is the major factor for marketing and strategic management of any service company. Service quality determines an organizations success or failure. Thongsamak (2001) mentioned that satisfying customers is an ultimate goal for every company, as customers are the greatest resources, both short-term and long term survival of the company.

Maister and Lovelock have defined that high service quality leads to greater customer satisfaction. The quality will influence the relationship between customer satisfaction and loyalty in an organization. Service quality is influenced by expectation, process quality and output quality. The standard of service is defined by customers who have experienced that service and used their experience and feelings to form a judgment (Chen et al., 2001).

A restaurant service has a high level of contact between diners and service employees. The service in fine dining restaurant requires high customer contact, high customer-employee interaction, and the service mainly directed at people. Customers mainly demand a high level of customization and expertise. They also expect very good food, well-organized service, and efficiency. Hence, providing excellent service should be a priority of the fine dining restaurants.

Based on Njite et al. (2008) findings, they have discovered that it takes at least 1.5 hours to 3 hours for customers to enter a fine dining restaurant, place an order, have a meal, pay their bill, and leave. During this time, customers are constantly interacting with staff members. Based on this situation, the customers expect the employees of fine dining restaurant to have a pleasant manner. Consumers also expect restaurant service employees to be attentive, courteous and possess a good knowledge of the menu which allows them to create a positive impression. (Heung et al., 2000; Pratten, 2003; Sulek & Hensley, 2004). Pizam and Ellis (1999) also mentioned that the service staff needs to be friendly, efficiency, helpful, professional, and responsive to special requests as well as complaints.

Since personalized service is highly important in fine dining restaurant, the employees need to be trained to realize that they represent the organization, they help defining the product, and they promote the product directly to the customers (Shostack, 1977). Therefore, customers will generally perceive a high level of value and satisfactions when they perceive a high level of product or service quality. It will consequently promote the customer’s intention to return and recommend (Oh, 2000). The skills and performance of restaurant staff are vital to diners’ perception of restaurant experience (Kotler et al., 1998).

However, in Brink and Berndt research (2008), it was found that many customers were not too fussy about customer service. However, many restaurants are aware of the various problems experienced by customers and would rather to hear complaints. Anstey (2001) reviewed that restaurant managers agree that it is better for them to hear customers’ complaints so that they can take steps to resolve the problems. A dissatisfied customer who does not complain might avoid the restaurant in future and spreads negative word-of-mouth. Therefore, we predict that:

H2: Service is an attribute that influence the preference and selection of fine dining restaurants.

2.4.3 Price and Value for Money

As dining out becomes an important part of customers’ life styles, frequent dinner customers have raised their expectations to the restaurant quality, in terms of good service and food, while seeking a better value for their money (Klara, 2001). To gain a competitive advantage in today’s market, restaurants must offer value beside good food and good service.

Price was found to be one of the highest ranked attributes when customer selected restaurants (Okeiyi & Finley, 1994). Setting up the effective price can be critical to managers. Zeithaml et al. (2006) propose that, because price serves as an alternative for quality for customers, it must be determined very carefully.

Price represents to consumers the expense that must be incurred in the given purchase transaction. Shoemaker et al. (2006) suggest that pricing is a powerful force in attracting attention and increasing sales, and that it can also have a major influence on customer loyalty. It is also supported by Qu (1997) study that has mentioned price and value were related to the customer’s satisfaction and their intention to return.

Muller and Woods (1994) explained that restaurant consumers use price as a measure for the quality of the restaurant, assuming that an expensive restaurant serves better food and offers better quality. Similarly, Sweeny et al. (1992) stated that a low price may increase the probability of choosing a particular restaurant, while a low price may also decrease consumer perceptions of restaurant quality.