The Management Of Winners Supermarkets Marketing Essay

In todays competitive environment, organizations have to continuously meet or exceed customers expectations in order to capture customer loyalty. Service quality has been perceived as an opportunity for businesses to survive on the market. However, the level of service quality is assessed by the customer after identifying and evaluating the gap between expectation and perception which will also reveal the level of customer satisfaction. Thus, the concepts of service quality and customer satisfaction have direct and indirect impact on organizational performance and customer behavior. Thus, the provision of high service quality will ultimately lead to customer satisfaction and profitability (Ladhari et al. 2011). Nowadays, management want at all cost to satisfy customers’ needs, as this will make customers loyal. On the other hand, customers are obsessed about quality, innovation and eco-products rather than just discounted prices. Therefore, supermarkets that are in position to provide quality services to customers, capture strong market position and goodwill on the market.

In Mauritius, supermarkets have gained significant recognition in the retailing field over the recent years. These retail outlets require aggressive marketing strategies in order to attract and retain customers while competing with rivals. While the unique characteristics: intangibility, heterogeneity, inseparability and perishability, make it difficult to measure service quality, it has in fact become a crucial factor to differentiate from competitors since the products are usually the homogenous in every supermarket.

Customer satisfaction represents to what extent the customer is satisfied with a product or service after having tried it. In fact, there exists a direct relationship between customer satisfaction and future buying patterns of customers. This is why service quality and customer satisfaction are often based on customer’s expectation and perception. When an experience goes beyond the expectation, the customer is overwhelmed. Unsatisfied customers may eventually shift to the firm’s competitors. Thus, it is imperative for Winner’s Supermarket to devise a systematic way of measuring customer satisfaction and take immediate actions if customers are unsatisfied. This helps in knowing the perceptions of clients about services and ultimately builds strategies to convert the weaknesses into strengths of the business in order to achieve competitive advantage over its rivals.

Chapter breakdown of the dissertation

The structure of the study is as follows:

Chapter 1: Introduction

This chapter gives an introduction to customer satisfaction and the concept of service quality. Indeed, the company profile is stated as well as a light description of the other chapters is introduced.

Chapter 2: Literature Review

This chapter stresses on the theoretical background of the study while focusing on the influence of customer’s expectations and perceptions on the quality of service and customer satisfaction. This allows a deeper understanding of the subject matter. Moreover, the dimensions of service quality, the SERQUAL model and the Gap analysis are discussed.

Chapter 3: Research Methodology

This chapter provides a framework of the methodology to be used so that the dissertation is completed in a systematic way beginning from the problem definition to the final presentation of the report. A sample size of 200 people, selected using a quota sampling method, was surveyed.

Chapter 4: Analysis and Interpretation of data

The findings of the survey being carried out at Winner’s Supermarket are presented in chapter four. SPSS software is used to analyse the questions in the questionnaire. Cross tabulation and correlations were also generated to present the findings in a more understandable manner.

Chapter 5: Recommendations

In this section, recommendations are drawn based on the analysis of the data being collected. This can eventually help to improve the level of service quality at Winner’s Supermarket and attract more customers.

Chapter 6: Conclusion

This chapter represents the final part of the dissertation and indicates whether the aims of the study have been achieved through the various steps undertaken in all the above mentioned chapters.

Company Profile

Winner’s Supermarket, founded in 1995, is a branched self-service store offering a broad variety of food and household commodities. The supermarket’s motto has been designed as”Mon superbonmarché près de chez moi!” which reflects the easy accessibility and low cost products to its customers. Its wide variety products include frozen foods, consumer goods and numerous non-food goods comprising pharmaceutical products and pet supplies. Moreover, Winner’s has its own bakery offering a variety of pastries and breads.

At present, Winner’s has an outlet in practically every region around Mauritius and this totaled to 19 branches across the island and these are:

Port-Louis

Coromandel

Chemin Grenier

Bambous

Curepipe

Centre de Flacq

Terre-Rouge

Triolet

Goodlands

Rose-Belle

Vacoas

St Pierre

St Martin

Roche Bois

Belle Rose

Bel Air

Rivière du Rempart

Plaine Magnien

Perebère

Besides, Winner’s also provides various facilities for its customers including ease of parking, free delivery of groceries at door step and also the shopping hours which is often extent till late in the evening.

Vision of Winner’s

The company pursues a vision to “be the reference of the large distribution in areas where we are engaged”.

Mission of Winner’s

The mission statement includes “work as a team with passion and dedication to focus on quality and innovation to provide a unique shopping experience”.

Background of the problem

Quality is the key element that each and every organization is focusing on since much emphasis is being laid on quality by customers. Quality is always associated with consistency. Once a customer is happy with the first buying experience, he/she will want to experience the same happiness each and every time. Thus, quality should be ‘this time’, ‘next time’ and ‘every time’ in order to retain and attract customers. Nowadays, the concept of quality is the prime concern of every organization since quality is often linked with the reputation of the business. High quality service will eventually help in building a good image of the firm and achieve competitive muscles to deal with rivals on the market.

Mauritius has been cited as an example for the southern African of an economy due to its successful tourism destination (World Bank, 1992; Hwedi, 2001). The emergence of the tourism sector has indeed contributed significantly to the GDP of the country but yet its future trend has now been doubted due to the current financial crisis which is affecting the entire globe. Thus, to stay in business, quality service should be regarded as the most crucial aspect in the service industry. Satisfied customers become loyal customers as there is high probability that they will re-purchase the service in the future. Thus, organizations should aim at excellence in standards in to reap high profitability.

Problem Statement

Research Objectives

The Management of Winner’s Supermarkets is putting much effort to attract and retain customers. Management believes that customers’ views are crucial to improve the level of service being offered. Ultimately, the aim of this study is analyses the contributions of service quality in encouraging repeat purchases and building customer loyalty by understanding customer’s expectations and perceptions.

The following are the specific objectives of the study:

To point out the main causes of poor service quality

To study the dimensions of service quality the customers value the most

To explore the expectations and perceptions of customers on the services being offered.

To determine the level of customer satisfaction through the Gap analysis

To analyze the impact of service quality on customer satisfaction

Research Questions

What are the main causes of poor service quality?

What are the dimensions of service quality valued by customers?

What are the customers’ expectations and perceptions with regard to the services offered?

How to determine the level of customer satisfaction?

To what extent service quality can impact on customer satisfaction?

Aim of study

The main objective of this study is to focus on the relationship between the supermarket and the customers. More specifically, this study aims at determining to what extent customers are satisfied with the level of service being offered by conducting the gap analysis and what can be done to improve the current quality of service at Winner’s Supermarkets in order to gain customer loyalty and build a strong goodwill on the market.

Introduction

Driven by fierce competition on the market, supermarkets are constantly fighting for greater profitability and survival. Customers have, nowadays, become more obsessed about quality service. Thus, quality service is pivotal not only for service organisations but also for manufacturing firms (Rust et al., 1995) and according to Oliver et al. (1997) “every organisation must provide services”. Thus, firms that produce and deliver quality service can easily gain strong position on the market.

In addition, Parasuraman, Berry and Zeithaml (1991) believed that customers’ expectations are crucial if a firm wishes to deliver quality services. Thus, it is important to meet or exceed these expectations in order to gain customer satisfaction which will ultimately derive higher profit margin. In addition, Macaulay and Cook, (1994) argued that to be successful, firms not only need to attract customers but also need to retain them. “A 2% increase in retaining customers projects the same effect on profits as cutting costs by 10%” (Kotelikov, 2008).

Definition of Service

When referring to ‘service’, intangible products are being linked rather than tangible products. Lockyer, K., (1986) argued that services differ from products in various ways. So, service is viewed as an experience as the buyer does not acquire the exclusive ownership compared when purchasing an item. Moreover, services are distinguished from goods due to various characteristics which comprises: intangibility (they cannot be touched, seen or felt), inseparability (they cannot be separated from the service provider), perishability (they cannot be stored) and heterogeneity due to different customers’ perceptions (Parasuraman et al. 1985; Edgett and Parkinson, 1993).

Services are processes, not things. According to Christian Grönroos, (2001), “a service firm has no products, only interactive processes”. Hence, service is a process whereby production and consumption occurs at the same time and the customer participates in the service production process (Ghobadian, Speller and Jones, 1994). In this essence, service can be regarded as the interaction between customers and the service system which include facilities, contact with staff, environment and equipment.

Service Quality

Today, due to fierce competition, delivering quality service is fundamental to attract and retain customers. Service quality is recognized as a key element in distinguishing between organisations which in term helps to gain competitive edge (Rashid and Jusoff, 2009). According to Lehtinen (1983), service quality is related to “process quality” and “output quality”. The customer will assess the “process quality” during a service while “output quality” is being assessed after the service has been experienced by the customer.

Moreover, Parasuraman et al.,(1988) argued that customers judge service quality by comparing their expectations with their perceptions while others cited that service quality is judged after comparing performance with ideal standards (Teas, 1993) or from the perceived performance only (Cronin and Taylor, 1992). Thus, it can be said that service quality is assessed only by customers and not management.

Service quality: challenges for organisation

The difficulty in explaining ‘service quality’ lies in the nature of the service itself (Voss et al, 1990; Edvardsson, 1988) and this also makes it difficult to measure and control (Smith, 1987; Parasuraman et al., 1988; Dabholkar et al., 1996; Bienstock et al., 1997).

According to studies based on service quality management, service providers may be paying little attention to service planning development (Edgett, 1994; Heskett et al., 1990; Martin and Horne, 1993). The planning activities undertaken by firms will determine to what extent they will be successful (Cooper et al., 1994; de Brentani, 1995). Furthermore, the most difficult challenge is faced by service managers when it comes to appease unhappy customers after the service has failed. In addition, various authors have argued that poor quality planning by service providers represents typically 25-35 per cent of total costs (Crosby, 1979; Juran and Gryna, 1993). Others have suggested that preventing service failures are crucial to delight customers (Bank, 1992) because service recovery from a failure is actually more expensive than avoiding such failure at the very first moment (Georgantzas and Madu, 1994).

Under present economic conditions, many firms are aware that satisfying customers’ needs is vital (Chen and Ting, 2002). Following Kim (2001), satisfying customers’ needs is the best practice for firms to gain competitive advantage. However, many firms have realized that they are unable to capture the evolving interests of customers. This is probably because customers’ needs are endless and firms find it difficult to satisfy a consumer’s “every need” (Chen and Ting, 2002). In this essence, Coyne (1989) argued that meeting all needs of a customer is not only practically impossible but is also “financially unrealistic”.

The Growing Importance of Service Quality in Supermarkets

In today’s business world, supermarkets are facing intense competition (Holz-Clause and Geisler, 2007). Indeed the fierce competition on the market makes supermarkets vulnerable and its success depends largely on its ability to retain its customers. The more the supermarket is able to retain its customers, the more profitable it will be (Reichheld and Sasser, 1990; Lovelock and Wright, 2002). As per Soriano (2002), there is no guarantee that a satisfied customer will repeat visit but it is practically sure that an unsatisfied customer will not come back. Moreover, Ensuring high quality of service can actually provide competitive advantage over a firm’s rivals (Leonard and Sasser, 1982; Albrecht and Zemke, 1985; Bennett and Brown, 1989; Macaulay and Cook, 1994).

Despite a wide choice of products presented, features such as ease of shopping and a wide and comfortable area in supermarkets leads to customer satisfaction (Jin and Kim, 2001). In addition, various service attributes such as fast-service checkout lines, better lighting, convenient accessibility and free advice are helping customers to distinguish between retail stores (Hokey Min, 2010). In this scope, service quality has an impact on the repurchase behavior of both the existing and potential customers. According to Ghobadian, Speller and Jones (1994), the expectations of quality of customers are continuously rising and their tolerance for poor service quality is decreasing. Thus, customers prefer to migrate to competitors that offer high service quality. Furthermore, Dabholkar et al (1996, 2000) claim that there exists a relationship between retail service quality and the possibility of recommending and repeat purchase (Bloemer et al., 1999; Siu and Cheung, 2001).

Dimensions of Service Quality

It is vital to list down the various characteristics that are essential in assessing the quality of service. Johnston (1995) argued that identifying the determinants of service quality help to measure, control and improve customer perceived service quality. Moreover, Nordic School believed that service quality is made up of two or three dimensions. Lehtinen and Lehtinen (1985) identified three dimensions:

Physical quality. Elements from the environment such as condition of building.

Corporate quality. This is linked to the firm’ image and profile.

Interactive quality. This refers to the interaction between personnel and customers.

Grönroos (1984) also contend that “service quality” consists of three dimensions:

Technical quality of outcome. The outcome is often assessed by the customer in an objective way.

Functional quality. This refers to the interaction of the service provider and the customer which is often viewed in a subjective manner. For example, politeness to customers.

Corporate image. This is associated to the company’s image which is usually dependent on the technical and functional quality.

Further research made by Parasuraman, Berry and Zeithaml (1985) led to ten dimensions of service quality: reliability, access, understanding the customer, responsiveness, competence, courtesy, communication, credibility, security and tangibles. However, some years later, Parasuraman et al. (1988) published evidence based on studies in five service industries which summarizes the ten above dimensions into five dimensions of service quality:

Tangibles – physical facilities, equipment, and the appearance of personnel.

Reliability – ability to realise the promised service accurately and consistently.

Responsiveness – willingness to assist customers and to provide prompt service.

Assurance – knowledge and courtesy of employees and their ability to convey trust and confidence.

Empathy – caring and personalized attention to customers.

SERVQUAL: A Measurement of Service Quality

Measuring service quality requires the comparison of a customer’s expectation prior a service experience and their perception of the actual service received (Grönroos, 1982; Lewis and Booms, 1983; Parasuraman et al., 1985).

As discussed above, the nature of ‘service’ makes it difficult for firms to measure, control and evaluate service quality. According to Voss et al. (1990), customers constantly assess the level of service quality during and after delivery. Hence, measuring ‘service quality’ can in fact helps firms to gain marketing muscles and to be pro-active (Jabnoun and Khalifa, 2005).

The SERVQUAL model is a widely used method to measure service quality. It has been founded in 1985 by Parasuraman, Berry and Zeithaml with subsequent refinements in 1988 and 1991. The SERVQUAL model, indeed, measures the gap between customers’ expectations and their perceptions using the five mentioned dimensions of service quality (Tangibles, Reliability, Responsiveness, Assurance and Empathy).

The SERVQUAL instrument comprises of two sets of 22 items: the first set determines the customer’s expectations of a firm: for instance, “the firm should have a clean environment”, while the other set seeks the customer’s perceptions of that firm: for example, “the firm has a clean environment”. Positive and negative gaps in the firm’s performance are recognized based on the five above mentioned dimensions. The difference between the two scores (performance minus expectations) will determine the gap between the expectations and perceptions. Hence, the smaller the gap, the closer customer’s perceptions are from expectations. Moreover, Parasuraman et al. (1988) recognized the following five gaps that can lead to ineffective service delivery:

Gap 1: Gap between customer expectation and management perception. Management may not understand the customer’s expectations. This may be due to lack of market research and customer focus.

Gap2: Gap between management’s perception and service quality specification. This gap results when management does not set quality specifications or the latter are unclear to the personnel. Management should ensure that the right quality specifications are set and executed properly.

Gap 3: Gap between service quality specification and service delivery. This is caused when the delivery of service is not as specified by the guidelines. This can be due to poor performance of staff.

Gap 4: Gap between service delivery and external communication. This gap results when the promises made by the firm through its communication campaigns does not meet customer’s expectations. Hence, there is a disparity between what has been said in the communication or promotional activities and actual service delivery.

Gap 5: Gap between perceived service and delivered service. This gap occurs when one or more of the above mentioned gaps occur.

The model below suggested by Parasuraman et al. (1998) tries to identify the firm’s activities that are likely to influence the perception of quality. In addition, it shows the relationship between these activities which are significant to produce satisfactory level of service quality. Hence, it helps management to identify gaps between different variables affecting the level of service quality.

Figure 1: Quality Gap Analysis Model

Source: Parasuraman, A., Zeithaml, V.A. and Berry, L.L., “A Conceptual Model of Service Quality and its Implications for Future Research”, Journal of Marketing, Vol. 49, pp.44

. “Expectations” are the customers’ wants that they feel a service provider should offer while “perceptions” are the customers’ evaluation after the service has been received (Lim and Tang, 2000). Hence, it is crucial to understand the determinants of customer’s expectations so that performance meets or exceeds expectations.

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