AN EXAMINATION OF THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND STORE LOYALTY A CASE STUDY ON TESCO SUPERMARKET

BY

SHAMSUL MORSHED MANIRUL HAYAT CHOWDHURY

A DISSERTATION

In partial fulfilment of the requirements For the degree of

BA (Hons) Business Studies

JANUARY 2008

A Dissertation title

An examination of the relationship between service quality, customer satisfaction and store loyalty A Case Study on TESCO Supermarket
By

Shamsul Morshed Manirul Hayat Chowdhury

We hereby certify that this Dissertation submitted by Shamsul Morshed Manirul Hayat Chowdhury conforms to acceptable standards, and as such is fully adequate in scope and quality. It is therefore approved as the fulfilment of the Dissertation requirements for the degree of BA (Hons) Business Studies.

University of Wales Institute, Cardiff January 2008 CERTIFICATION STATEMENT

I hereby certify that this paper constitutes my own product, that where the language of others is set forth, quotation marks indicate, and that appropriate credit is given where I have used the language, ideas, expressions or writings of another.

Digitally signed by Shamsul Chowdhury Reason: I am the author of this document Date: 2008.03.13 18:23:37 Z

Shamsul Morshed Manirul Hayat Chowdhury

ACKNOWLEDGEMENT

This dissertation leaves me heavily indebted to many people. First I would like to thank my supervisor Dr. Rajendra Kumar of London School of Commerce, London for re -introducing me to qualitative and quantitative research some time ago, and more recently guiding me through the entire dissertation process. His regular feedback and constructive comments have been extremely valuable, and at times inspirational. I am indebted to all the respondents who took the trouble to complete questionnaires, as without their participation in this research could never have taken place. I would like to thank my parents for giving effective support during my study. Special thanks should go to my father Mohammad M H Chowdhury for his efficient unstinted support of my Bachelor degree during the past year.

ABSTRACT
Using in-depth interview and questionnaire survey of 20 shoppers, examines the relationship between service quality, customer satisfaction, and store loyalty with the Tesco supermarket. In this study author test two complementary models that examine the relationship among the service quality, customer satisfaction, and store loyalty.

Empirically examined the relative attitude, gap analysis and retail service quality scale. The results indicate that service quality influence customer satisfaction and loyalty with supermarket. Satisfaction influences relative attitude, repurchase, and recommendation. Study also indicates that not only service quality make customers loyal. Other factors like distance to shop, parking facilities, and opening hours these matter also impact the customer satisfaction and loyalty. Fostering favourable relative attitude and getting customers to recommending the product or service holds key to fostering store loyalty. Results also indicate the RSQS support to measure the relationship.

An Examination of the Relationship between Service Quality, Customer Satisfaction and Store Loyalty, A case study on Tesco Supermarket
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1. Introduction
1.1 Research Questions 1.2 Nature of the issue 1.3 Objectives in Addressing Problem 1.4 Rationale for the chosen topic 1.5 The Structure of the Dissertation 2. Literature Review 2.1 Introduction 2.2 Service Quality 2.3 Retail service Quality 2.4 Customer Satisfaction 2.5 Loyalty 2.6 Relationship among the service quality, customer Satisfaction and loyalty 3. Research Methodology 3.1 Introduction 3.2 The Research Process 3.3 Research Object 3.4 Research Methods 3.5 Research Design 3.5.1 Exploratory Research 3.5.2 Conclusive Research 3.6 Research Approach 3.7 Data Collection 3.8 Limitation 3.9 Ethical Issue 4. result, Analysis and Discussion of findings 4.1 Introduction 4.2 findings and Analysis 4.3 Results 4.4 Discussion 4.5 Managerial Implication 5. Conclusion 5.1 Future Research 5.2 Suggestion 5.3 Limitation 6. Reference 7. Bibliography 8. Appendix

1. Introduction The world is moving and changing fast with the new concept, technology and globalization. With the increasing of population, the consumption rate and production rate goes high. In the increasing production environment lots of businesses enter in the environment to manage the demand. By that way monopoly concept eliminate from todays economics. Now the market is full of competitors, all the businesses try to sell their product in the existing market. However, it is not possible to survive in the market without making consumers and make them happy. Companies can only do better service quality and customer service other steps will automatically happen. When Service quality goes up customer satisfaction will also goes up and both will create store loyalty. In an increasingly competitive environment companies must be customer oriented (Kotlar, 2003) In the grocery retail industry the situation is same from all possible aspects. In the UK grocery retail industry increasing and competition among these also increase rapidly. However, this competition brings customer service expectation and service quality. In this study researcher tried to examine the relationship between store quality, customer satisfaction and store loyalty of TESCO Supermarket. Service quality is main attraction of todays marketing concepts. When service quality is standard, customer will observe the service and management, and then if they satisfy with the service quality they the company will earn customer satisfaction. Satisfied customer will come again for repurchase and will be loyal with the store. The relationship can be showed using this model

Figure 1, Source: International Journal of Retail & Distribution Management, Vol. 28, 2000. pp 77

Service quality is the main and first step of this study and examination, when customer gets quality service they will get satisfied and come again for repurchase which automatically make them loyal and create loyalty with the store. Nowadays, the companies based in UK expending billions of () pounds only for customer service and satisfaction. It is not surprising that companies spend substantial resources to measure and manage customer satisfaction. In the Supermarket sectors it is a burning true, which are focusing on the discount store and specialty products. (International Journal of Physical Distribution and Logistics Management, Vol.26 1996) On the other hand service quality can bring new customers and make them loyal which is related to the recommendation of other loyal customer. From the AIDA concept it can be showed.
Awareness of the service quality from a friends and family Interest on the service and also on the company which is providing that service

This will automatically create loyalty with the store

Desire to get that service and planning to do that

If the service really pleased him the customer must come again for repurchase

Action / physically go to get or check the service or buy that one

Figure 2, Source: Kotlar, P., (2003)

1.1 Research Questions In this dissertation, some questions are examined. They are: What are the service quality method TESCO supermarkets using? Is the current service quality helping to increase customer satisfaction? Does the existing technology of the store really fulfil the purpose of the store or its construct unsatisfied customer desire? How the customer satisfaction processes is formulated and do the store has enough facilities to serve the customer needs and wants? Is the consumer really attracted by the TESCO Supermarkets loyalty program?

1.2 Nature of the issue The research is on an examination of the relationship between service quality, customer satisfaction and store loyalty. Research will be conduct on TESCO supermarket. In the TESCO three specific area of marketing like service quality, ma customer satisfaction and store loyalty are examined to build a relationship with each other. Service quality of TESCO supermarket is examined in the study. Service quality that the supermarket provides in the store is completely controlled by the mangers and maintained by employees of the store. In the TESCO modern machine and technologies are also involved in the service quality. Self service till management ty avoid queue is the good service in TESCO, but is the customer found it as a best service or not? What are the methods used in TESCO to maintain and control service quality? How inventory and product availability checked in the store? All the service related objects are examined in this research. Customer satisfaction is create when a company meet the entire requirement in surpass of the customer. There is no doubt that we are living in a customer oriented r. in era. Nowadays consumer behaviour is changed; they are now wanted best products and services with best options. In the competitive market companies are trying to catch customer by providing better service, offer and satisfying them. If customer is satisfied with the company then the company gain the customer satisfaction badge. Customer will satisfy on the company when they provide quality or standard service. What are the steps TESCO takes to measure customer satisfaction? And are the customer really satisfies with their service? all these are examined in this research. TESCO is focusing on the consumer loyalty and introduce TESCO Clubcard 1995 a loyalty program. Loyalty program of TESCO is for society also collecting and reusing bags and provide green point for every time you reuse your bag. However, these are the reason TESCO try to make their consumer loyal with their store. The research will tell in what reason consumer use a store is he/she really loyal with this store or helpless is the reason to be loyal with the store. 1.3 Objectives in Addressing the Problem .3 This dissertation aims to address the problem through careful consideration research and analysis, to measure the importance and effect of product features, service quality of the store, establish customer satisfaction and store loyalty. In this way it might also provide answers to why people loyal with one store, and what the services store provide for their customer, and what might influence or restrict such choice. The st answers the research could provide area: What service quality method the store is using Is the service quality enough to fulfil the consumer demand? Does the customer get benefit with the service? Is the current service helping to increase customer satisfaction Does the existing technology of the store really fulfil the purpose of the store or its construct unsatisfied customer desire?

The order of importance of such criteria to a consumer during their decision making process? How the customer satisfaction processes is formulated and do the store has enough facilities to serve the customer needs wants? In what condition consumer chose a store and loyal with that store 1.4 Rationale for the chosen topic ti Author has decided to conduct the research on this proposed area due to his individual interest on the relationship between the service quality, customer satisfaction, and store loyalty. The author strongly believes that this examination of the relationship is one of the most interesting and also important subjects for marketing and customer me relationship management. Furthermore, since author determined his area on marketing, he believes that he will face and have to demonstrate these kinds of practices everyday in his career. To make the examination perfectly with service quality, customer satisfaction and store loyalty, author desired to explore the entire hypothesis in this area. Correspondingly, in addition to theory, author examined the quality management, operation management practices in this area. Therefore, he chooses a successful UKs leading supermarket TESCO, which operates globally with success. The author wishes this research will also help him in his future work as well. 1.5 The Structure of the Dissertation This research project consists of different chapters, these are: Chapter 1 includes the introduction broadly. In the introduction part, informative title stating content provides a clear outline of the purpose of the research question, nature of the issue in focused and thoroughly explained, rationale of chosen topic, objectives in addressing the issue, research questions, and structure & content are briefly outlined. Chapter 2 involves a literature review consistent and relevant with the relationship with service quality, customer satisfaction and store loyalty. Explanation of role of the reviewed literature in the dissertation provided, relevant literature critically reviewed and evaluated. Chapter 3 comprises research methodology. This chapter include explanation of the role of the researcher, provides evaluation of the research philosophy, research approach and research design is provided. Chapter 4 consists of findings, analysis and synthesis. Critical application of relevant theory to data gathered, links between data and data analysis clearly set out. Chapter 5 involves conclusions and implications. Conclusions are related to relevant prior research and address the stated research questions, limitations, bias and ethical issues are critically reviewed, implications for future practice are evaluated, conclusion lead to directions for future research.

2. Literature Review 2.1 Introduction This research paper has appearance with on secondary and primary sources for literature review. The purpose of this dissertation is principally depending on the secondary sources, as the quality and management data are confidential. 2.2 Service Quality In the present situation service quality is considered to be a significant issue in increasing customer satisfaction and loyalty in the retail supermarket industries. According to Parasuraman, A, Zeithaml, V.A, Berry, L.L (1994) perceived quality is the customers judgement and feedback about the products and services overall od excellence or superiority compared to the other substitutes in the market. Service quality is the weapon by which service meets customers needs or rv cu expectations (Lewis and Mitchell, 1990). According to Parasuraman and colleague (1994) Service quality is the difference between customer expectations of companys service and perceived service; if expectations are greater than performance, then the te perceived quality is less than satisfactory and that way dissatisfaction create. To evaluate the service quality in better way it is important to measure the service quality gaps. There are seven common gaps in the service quality concepts, shown in Figure 3. The model is developed by Parasuraman, A, Zeithaml, V.A, Berry, L.L (1994). According to Parasuraman et al., (1994) the service quality concept are explained; and three gaps are very important, which are more allied with the external consumers are Gap1, Gap5 and Gap6; since these are construct a direct relationship ns p5 with customers. (Shahin, A.) Gap 1: Customers expectations versus management perceptions: lack of marketing research orientation, unknown about the customers expectation and their expected service, inadequate upward communication and too many management stages. s. Gap 2: Management perceptions versus service specifications: wrong service ro quality standard adopted, inadequate commitment to service quality, a perception of unfeasibility, insufficient task standardization and absence of aim setting in the management. Gap 3: Service specifications versus service delivery: lack of team work and iv ic perceived control, ambiguity and conflict in the work place, poor employee-job fit and poor technology-job fit, unsuitable supervisory strategy use to control system. Gap 4: Service delivery versus external communication: insufficient straight communications and tendency to over promise given by the company. Gap 5: The inconsistency between customer expectations and their perceptions of the service delivered: Influences applied from the customer side and fall down on the part of the service provider. In this case, customers expectations are raised up by

the point of word of mouth communications and recommendation, personal needs and past experiences. Gap 6: The inconsistency between customer expectations and employees perceptions: Difference construct in the understanding of the customer expectations by the front-line service manager or service provider. Gap 7: The inconsistency between employees perceptions and management perceptions: the variation in the understanding of the customers expectations between managers and service provider, such as lack of communication between the employee and management, lack of participative management, representative participation, works councils, quality circle.

Figure 3, Source: Model of Service quality gaps by Parasuraman, A, Zeithaml, V.A, Berry, L.L (1994) According to Shahin, A. the gap model is one of the best accepted and used model and most heuristically valuable contributions to the service quality literature. The first six gaps are identified which provide and ensure service is delivered, while gap 5 deal with the customer and considered to be the true measure of service quality. What customer expects is the main factor in service quality. Management perception of customer expectations toward service quality specifications is totally depending on service climate and employee retention. Service delivery toward perceived service and

customers expected service together create perceived service quality. Service quality is the effect of the contrast that customers create between the expectation about a service in the firm and their insight of the way the service has been performed (Parasuraman, A, Zeithaml, V.A, Berry, L.L, 1994). Lehtinen and Lehtinen (1982) as give by Caruana, A., (2002) give a three-dimensional view of service quality. Lehtinen and Lehtinen show that in consisting term interaction, physical and ng th corporate quality. However, at the higher level basically from the customers perspective, they see quality in two parts, consisting of output and process ec quality. Grnroos (1984, 1990) as given by Caruana, A., (2002) highlights the role of the output quality and process quality as processing stage, and resulting in, outcome it st quality. Among the service quality measuring scale three methods stand out the SERVQUAL measurement scale to measure customers expectation and perceived service. This is in fact based on the comparative judgement of expectations versus perceived performance (Parasuraman, A, Zeithaml, V.A, Berry, L.L, 1994). fo The SERVPERF scale, is the outweighed perception component of SERVQUAL, SERVPERF is the performance battery of SERVQUAL. Parasuraman and colleague (1994) says, original service quality instrument, SERVQUAL. The last method is the service quality model of Grnroos (1984, 1990). Grnroos recommend three component of service quality: technical quality, functional quality and corporate image. While technical quality can be refer in an objective way, functional quality evaluated in which customer receives the service, it is depends on the skills of the firms employees in dealing with its customers. This measurement of quality is so much related to the buyer-seller interactions and their activities. SERVQUAL has been empirically tasted in a number of studies connecting pure service settings, its use in retail environment s ahs been limited (Mehta, Lalwani and Han, 2000). Parasuraman, A, Zeithaml, V.A, Berry, L.L, (1994) define SERVQUAL is conducted to analyse organizations service quality performance against customer service quality required. SERVQUAL is an empirically obtained method that provide service organizations way to improve service quality. The model of SERVQUAL involved in the development of an understanding of the perceived service needs of target customers. 2.3 Retail Service Quality Service quality construct is attributable to the SERVQUAL instrument developed by Parasuraman, Zeithaml & Berry (1994) for measuring service quality. Service quality in retail industry is different from any other service/product environment. For that difference Dabholker, Thorpe and Rentz (1996) developed the Retail Service Quality Scale (RSQS) for measuring service quality in the retail sector. Dabholker, Thorpe, & Rentz (1996) duplicated their and own study and found all the RSQS elements and dimensions and sub-dimensions to be valid the US markets. Mehta, Lalwani, Han (2000) found this model appropriate while measuring the service quality in the perception of Singapore consumers. Kim and Jin (2001) as given by Subhashini (2005) report that RSQS a constructive scale for measuring service quality in the discounted stores in two different cultural backgrounds of US and South Korea, for a four and not a fine dimensional through they reported empirical sustain structure.

Retail Service Quality Scale (RSQS)

Figure 4: The Retail Service Quality Scale (RSQS) Key: Item 1-28 as given in Appendix I. All dimension and sub-dimensions are correlated amongst each other not depicted in diagram for sake of clearness. 2.4 Customer Satisfaction There is no doubt that we are living in a consumer-oriented era. Retailers and manufacturer are no longer deciding what they can supply to the consumer, but they are fulfilling the consumer need and expectations and measuring consumer behaviour (Merwe, D.V.D., 2005). e, According to Oliver (1989) as given by Boshoff & Gray (2004), customer satisfaction is an outcome creating form the consumption experience. The affect experienced during the acquisition and consumption of the product and service such as pleasure in shopping, joy, happiness, and disgust can also have significant influence on satisfaction judgment. Satisfaction judgement can have a significant impact on customer expectations for subsequent consumption occasions (Oliver, 1996). According to Oliver (1997), customer satisfaction, a post consumption evaluation is a specific type of attitude. Over repeated consumption experience provide consumer more information, customer get more information about the product and service, following that way customer judgement certainly increased (Fazio 1989; Smith and Swinyard 1983, as give by Homburg, Koschate, & Hoyer, 2006). According to Rust, Lemon, and Zeithaml (2004), customer satisfaction is the marketing variables that influence some productivity metrics such as marketing efficiency, before it has a financial impact. Customer- related outcomes of customer satisfaction affect specific facets of productivity in the marketing field. As an example ec customer satisfaction encourage customer behaviours such as free word-of-mouth advertising, firms with higher customer satisfaction invest more in their service to make it more efficient in future marketing communication (Luo and Homburg, 2007).

Customer satisfaction is related to the employee satisfaction, satisfied employee serve and ensure the better customer service which will create customer satisfaction. Superior levels of customer satisfaction may also have beneficial effects that are not driven by customer behaviour. However, firms with higher customer satisfaction are more attractive employers and that way they can hire better people, because they em renowned their self as a best employer and best place to work.; as a result such a firms are able to enjoy superior human capital performance (Dess and Shaw, 2001, as given by Luo and Homburg, 2007). Increasing the firms human capital performance there is in a more positive atmosphere in firms with the satisfied and loyal customers however employees enjoy their jobs more and voluntarily work harder (Reichheld and Sasser 1990, as given by Luo and Homburg, 2007). Customer satisfaction encourage behaviours such as free advertising, loyalty, willingness to pay; which should help the firm become more efficient in its future communication activities. Free advertising reduces the necessity for the company to conduct expensive communication programs to attract new customers, as satisfied customers will likelihood recommend the store and service to the friends and family and colleague. Through this for a given sales level, marketing costs would be reduced when there is a higher customer satisfaction. The marketing costs can be invested in the service quality improvement and communication services scheme (Luo and Homburg, 2007). Customer satisfaction reduces the advertising costs and transaction costs because it is om cheaper to retain and serve the loyal customers than to gain new customers (Fornell, us 1992). Recent empirical research also show that satisfied customers less price sensitive and willing to pay a higher price premium like in UK Waitrose and M&S etc. (Homburg, Koschate, and Hoyer, 2005 as given by Luo and Homburg, 2007). Thus: Human capital performance and positive attitude of the firms can increase customer satisfaction. Customer satisfaction saves the marketing costs that can be used in improving service and for better customer care. Boshoff and Gray (2004) define customer satisfaction as a process, that satisfaction or sf nd dissatisfaction is not natural in the product and service but, instead, this is the individuals perceptions of the products attributes as they related to that individual. Moreover, they also discussed that satisfaction is idiosyncratic and as a construct, this is formed by the interaction of perceptual interrelations of the service and consumer in ac expectations of that service. As a result, different customers have different levels of satisfaction, as some like the service some dislike (putting 1 to take a shopping tray) and this varying levels of satisfaction for an experience which is essentially the same. 2.5 Loyalty Loyalty is the most talked topic in the both service and product industries. Every one wants their customer to be loyal with them. The concept of the loyalty construct has evolved over the years. Dick and Basu (1994) suggest that an attitudinal theoretical framework that also predict the loyalty construct as being composed of relative attitude and patronage behaviour. Singh & Sirdeshmukh (2000) says keeping customers loyal is not ease, but the important matter is to be overstated. Customer loyalty has been described as the market place currency for the 21st century. Customer loyalty can be described from a probability of repurchase to proportion of purchase. In a general concept, customer loyalty is a positive propensity toward a to

store and brand (East, Hammond, Harris & Lomax, 2000; as given by Boshoff and Gray, 2004). Loyal customers are competitive assets for any kinds of organization, because with customer loyalty organization can gain competitive advantage and loyalty serves as a barrier to competitive entry and that way, by implication, loyalty help to increase market share which is very important for any company to survive in the market (Aaker, D.A., Kumar, V., Day, G.S., 1995). 5) Loyalty generally means stick with an organization or service and product. Repurchase and repeat purchase can be loyalty. Bloemer and Ruyter (1998) say that, repeat visiting behaviour is the actual revisiting of the store; and such a behaviour measure in loyalty. Store loyalty is the purchases of a specific brand and product if percentage at a selected store. Jacoby and Chestnut (1978) as given by Bloemer and Ruyter (1998), define store loyalty as: The random behaviour of revisit a store, expressed long time, by some decision-making until with respect to one store out of a set of stores, which is totally a function of psychological processes, because human psychology all always thing straight. Store loyalty is constructed by store commitment, when store fulfil their commitment customer will automatically keep revisiting and become loyal. Store commitment is a necessary condition for store loyalty to take place (Dick and Basu, 1994). Customer loyalty measured by customers product preferences, propensity of brandswitching, frequency of purchase, regency of purchase and total amount of purchase (Pritchard and Howard, 1997; as given by Bowen and Chen, 2001). Loyal customers are the customers who hold constructive attitudes toward the company, commit to repurchase the product/service, and recommend the product to others. Loyal customers indeed provide more repeat business and were less likely to shop around for the best deal than non-loyal customers (Bowen and Chen, 2001). It is discussed that long-standing and happy customers are more loyal; more likely to provide al recommendations and positive word of mouth (Zeithaml, Berry, and Parasuraman 1996). The relationship experience such as duration, valence, and business volume; will effect the translation of satisfaction into loyalty (Chandrashekaran, Rotte, Tax, ka and Grewal, 2007). The relationship between a customers commitment and acquiescence, propensity to leave, and cooperation, all of which can be regarded as behavioural outcomes of relationship (Wulf et al.,2001 as given by Liang and Wang, 2006). Behavioural loyalty is constructing on consumers purchasing frequency and amount spent at a retailer compared with the amount spent at other retailers from which the consumer buys (Liang and Wang, 2006). an 2.6 Relationship among the service quality, customer satisfaction and loyalty In increasing competitive market every one has to struggle to survive in the market place with success. To survive in the market the company need to differentiate themselves from competitors (Lamb, Hair, McDaniel, Boshoff & Terblanche, 2004). As most of the differentiating variables suggested in the literature are easily copied by competitors, many firms are focusing their efforts on quality of customer service as er mean of differentiation. Non-substitutable or costly to imitate the mostly talked core competency method of largest management consultancy firm McKinsey & Co. are can be used to gain the market share and its only possible by develop service quality

and customer satisfaction and both with automatically create loyalty to the store. Waitrose and M&S both are now focus on quality. In this competitive market service quality is the weapon with that the retail industry can gain competitive advantage over the competitors. As long as the service quality that meet up or exceed customer expectations has become a major source of competitive advantage for many firms as it reduces price elasticity and constructs loyalty and customer preservation (Anderson & Fornell, 1994). Service quality is also has importance and shown to be an important driven of customer satisfaction from theoretical point of view and empirically substantiated in a variety of industries (Boshoff and Gray, 2004). Anderson and Fornell (1994) specify that the literature is not very clear about the relationship between quality and ip satisfaction. However, satisfaction is a post consumption experience which is compared by the perceived quality with expected quality, whereas service quality consign the global evaluation system of the companys delivery and distribution mp ti system (Anderson and Fornell, 1994). The relationship among the service quality, 4) customer satisfaction and store loyalty is largely valued in the todays industry. Service quality and customer satisfaction both are related to each other and loyalty is relation to both of them. Seiders, Kathleen, Glenn Voss, Dhruv Grewal, and Andrea ee Godfrey (2005) state that marketing literature is consistently identifies customer cu satisfaction as a major antecedent to the loyalty and repurchase. The increasing importance placed on the customer satisfaction could be a part of the overall decline of customer loyalty. The decline has been attributed by a wide number of elements, el such as greater choice and information available to the customers, the io commoditization of several products, and increased foreign competition (Anderson and Fornell, 1994). A recent issue of Marketing News cites a report that one in ten customers switch retailers after just one bad customer service experience. ft ce pe Moreover, Luo and Homburg (2007) argue that customer satisfaction is the more important cornerstone for the customer-oriented business and multitude of companies operating in diverse industries. According to Yu, Chang, and Huang (2006) the customer satisfaction can influence significantly the operation performance of the firm. With proper assessment tools, the precisely assess of customer satisfaction can provide products and services that meet customer expectations. Customer satisfaction se with the relationship is observed as an important outcome of the buyer-seller relationships (Liang and Wang, 2006). The most central findings in this situation are that satisfaction increases the customer loyalty and influences future repurchase and likelihood recommend friends/family (Olsen and Ottar, 2002). Overall, there is a significant impact of the customer satisfaction and some evidence in the marketing literature that show customer satisfaction is an important driver of an organizations profitability (Anderson, Fornell and Lehmann, 1994). More recently researchers have found that satisfaction boosts in the market of share and shareholder value by increasing cash flow growth and reducing its volatility (Fornell, 2006). In todays situation most of the customer motivated by the loyalty and keep loyal with a company. As a result most of the retail company aim to enhance loyalty by increasing the level of customer satisfaction (Ibanez, Hartmann, and Clavo, 2006). Anderson and Fornell (1994) point out that customer loyalty is determined to a large expansion of customer satisfaction. Satisfaction has a positive impact on loyalty.

Dick and Basu (1994) introduced a notion of relative attitude which provide better theoretical foundation to the loyalty construct. Relative attitude is a favourable attitude which is highly compared to possible alternatives. This suggest that loyalty is evidenced both by a more favourable attitude toward a brand and repeat purchase. Dick and Basu suggest that low relative attitude with low repeat purchase represent absence of loyalty, However low relative attitude with high repeat purchase indicates spurious loyalty. Consumers who repurchase from a store due to inactivity may be easily switch to other store when offered price-cut, coupon, or enhanced point of purchase visibility. In that way favourable relative attitude and not just repurchase create loyalty. Service quality and customer satisfaction can make customer attached with the store and create store loyalty. Service quality is perceived quality; and different from objective or actual quality; being a judgement usually made within a customer evoked set. Perceived service quality is a cognitive antecedent of relative attitude; because service quality will influence the accessibility, centrality, and clarity y, of attitudes (Dick and Basu, 1994). Satisfaction has a positive effect on relative attitude. Service quality has a positive impact on relative attitude. This study point out that satisfaction leads to increased likelihood of recommending friends/family, repurchasing, and loyalty. Satisfaction is positively relative with repurchasing intensions, likelihood to recommending the store and its services, loyalty and profitability (Anderson and Fornell, 1994). Confirmation and disconfirmation arises from inconsistencies between customer expectations and actual performance. Tse and Wilton, 1988 (as given by Caruana A. 2002) defines the consumers response to the evaluation of the perceived inconsistency between customer expectations and the actual performance of the product as perceived after its consumption. Focusing on this definition this is very similar to that put forward for service quality. From this view it is clear that customer ut satisfaction is post-decision customer experience while quality is not (Parasuraman, A, Zeithaml, V.A, Berry, L.L, 1994). Dick and Basu (1994) found that greater customer satisfaction means greater intention to repurchase and recommendation. Anderson and Fornell (1994) found that satisfaction manipulate repurchase intentions. Dissatisfaction has been pointed as a primary reason for customer defection or discontinuation of purchase. In the process of service, service quality takes place in front, and leads to the overall ce to customer satisfaction and loyalty. Service quality is the only one in the service factor which contributing to customers satisfaction judgements (Caruana A. 2002). Overall customer satisfaction with an experience can lead to the loyalty. Parasuraman, Zeithaml, and Berry (1994) argue that customer satisfaction is important to the sellers as it is generally assumed to be a significant determinant of repeat sales, positive word of mouth and recommendation to friends and families and customer loyalty. Bloemer al and Kesper (1995) say that loyalty not only concerns but only behaviour of repurchase but also take into account that actual behaviour represent. Loyalty and customer satisfaction both depends on service quality, service quality measure the customer satisfaction and loyalty while loyalty and customer satisfaction both are dependent variable; and likelihood of recommending and repurchasing has a positive impact on store loyalty.

3. Research Methodology 3. 3.1 Introduction In the second chapter the author presented the literature review relevant and consistent with the relationship between service quality, customer satisfaction, and store loyalty theory as well as factors that affect the relationship between service quality, customer satisfaction and store loyalty. In this chapter the aim is to outline the selected research methodology. In this chapter the researcher will present and discuss the contents of the research approach and design used throughout the study. 3.2 The Research Process In this study, very useful and highly recommended research processes were followed. At first the research topic was identified from the chosen marketing issues. Then, the author presents a discussion of the theory and methodology and results. After that, author illustrated the service quality and customer satisfaction relationship, and customer satisfaction and store loyalty relationship. The theoretical part discussed which was based on academic knowledge and literature ideas and lecturer comment on the research issue. This step influenced the data collection method. The data were re collected mostly according to the chosen method. Finally, author concludes the study mo with a discussion of the research and findings of the relationship between service quality, customer satisfaction and store loyalty and provides directions for the future research. The research process is a set of six steps which defines the task to be accomplished in conducting a research. The research process order is the same as the table below.
The research process Identify research topic Developing an approach to the problem Research Design formulation Fieldwork, data preparation and analysis Report generation and presentation

Figure 5, Source: Malhotra, N. & Birks, D. (2000), Marketing Research, European Ed., Prentice Hall. 00), p. 16

The European society for opinion and marketing research (ESOMAR), define of marketing research is the systematic and objective identification, collection, analysis and dissemination of information for improving decision-making related to the identification and solution of problems and opportunities in marketing. Research is es undertaken to identify the issues that work behind the veil and problem that cause error in the system (Malhotra and Birks, 2000)

3.3 Research Objectives The main objective of this dissertation is to examine the relationship between service quality, customer satisfaction and store loyalty. Development with this objective, the dissertation discusses with existing theories and field research together becomes an empirical finding of researcher. The researchers empirical part undertakes explore and depth research on the UKs largest supermarket chain TESCO, which has a good reputation on service quality, customer satisfaction and store loyalty in the home and international market. 3.4 Research Methods Problem definition is the most important step in a research project. Since only when a problem has been clearly and accurately identified can a research project is conducted properly (Sheth, 1981). The methodologies part explains in this part that has been used for the research. In this part the aim is to check out the most valued way to reach the research objectives. To fulfil the term of the research an outline and structured method is necessary. Research design and methods were chosen and the reasons for chose that design were also explained in short. In this dissertation both qualitative and quantitative approaches were used. In qualitative research issues of representative are not so important as much as the quality of individuals targeted for investigation and the quality of response extracted (Malhotra and Birks, 2000). Nevertheless, qualitative analysis was prior to al quantitative analysing since qualitative analysis is more subjective in its nature mo (Clifton, P., Nguyen, H. and Nutt, S., 1992). The qualitative part of the research study tries to explore the market situation, depth and complexity of consumers, understand er he of the consumer and examine existing theories in the literature review and interpret findings on the examination of the relationship of the store quality, customer satisfaction and store loyalty; and also evaluate different data collection method and analysis. Exploratory research method worked to examine the relationship between ry service quality, customer satisfaction and store loyalty, a case study on TESCO ya supermarket. 3.5 Research Design ea According to Malhotra and Birks (2006) research design is a frame work or blue print for conducting a marketing research project. To solve the marketing research problem and to obtain information on specific market area research design specifies the details of the procedures. The potential respondents to any marketing research investigation play a vital role in deciding which research design will actually work in practice. Certain methods are ea more likely to build up a relationship and trust in these circumstances, putting the respondent in the right frame of mind, and getting them to respond in a full and sincere style.

As well as understanding how respondents may react to particular issues, researchers he As should also understand how the context or environment may affect respondents.

Context or environment where Respondent is questioned

Nature of Respondent

Nature of issue under investigation, as perceived by respondent

Figure 6, Source: Malhotra and Birks (2006), Marketing Research, 2nd European ed. se

Research design specifies the methods and procedures for conducting a specific research project. It is the detailed blue print used to guide the implementation of a me research study towards the realization of its objectives. A good research design serves much purpose: it forms the essential framework for research action, minimizes the danger of collecting haphazard data, ensures that the data collected meets the research objectives and more importantly, fulfils the information needs (Quee, W.T., 1999). Malhotra and Birks (2006) broadly classified as exploratory or conclusive: 3.5.1 Exploratory Research According to Malhotra and Birks (2006), a characterised research design by a flexible and evolving approach to understand the situation those are inherently difficult to measure. Exploratory research is employed when a greater understanding of concept employed (Quee, 1999). Also Zikmund (2000) says exploratory research can be used for three interrelated purposes: (1) diagnosing a situation, (2) screening alternatives, and (3) discovering new ideas. The general objective in exploratory research is to gain insight and ideas (Churchill, G.A., 1995). Exploratory research can be used to established priorities in research and competing explanations (Sheth, 1981). According to these classifications, exploratory research is the most useful research method for this study to understand the relationship between the service quality, customer satisfaction and store quality of TESCO. Notwithstanding the flexibility, research experience has demonstrated that literature surveys, experience surveys, focus groups, and the analysis of selected cases are particularly productive in exploratory research. Exploratory research is used widely where the output of the research cannot be ra he measured in numerical value or where the process of measurement cannot realistically represent particular qualities. Exploratory research is also useful for establishing priorities among research questions and for learning about the practical problems of ro carrying out the research (Aaker, Kumar, Day, 1995). It also be used in cases where you must define the problem more precisely, identify relevant courses of action, or se gain additional insights before going on to confirm findings using a conclusive design (Malhotra, Birks, 2006).

In this circumstance, author used both exploratory and conclusive research in this research study. Descriptive research helped to formulate specific research questions and hypotheses, which clearly defined the information needed. Descriptive research design specially for selecting the sources of information and for collecting data from those sources In addition, via the casual research author tried to form a situation which simulates, as much as possible, the real conditions of the situation. Due to the nature of the research questions, casual research was important for this dissertation in order to determine the nature of the relationship between the casual variables and the effect to be foreseen. Exploratory research helped author to gain new ideas and insights to the topic of study, it also helped to increase familiarity with the problem, especially when the area is new to the researcher. It also used to clarify the concepts of the author (Churchill, G.A., Brown, T.J., 2007). 3.5.2 Conclusive Research Conclusive research is a research design to help in determining, evaluating, and selecting the best method to resolve the issue (Malhotra, Hall, Shaw, Oppenheim, be 2002). Conclusive research is more structured and formal than exploratory research. Conclusive research designs may be either descriptive or casual (Malhorta, N.K., Birks, D.F. (2006). (a) Descriptive research se The major purpose of descriptive research is to descriptive characteristics of a population or phenomenon (Zikmund, 2000). In this type of research, research need to be productive, questions should be designed to secure specific kinds of information, related, perhaps, to product performance, company performance, customer behaviour, company strategies, customer re-action, consumer want and competitive strategies, etc. This type of research also conducted in public-opinion polls and various industrial, commercial, and public-sector surveys. The objectives of this type of surveys are to identify and describe the selected area and problem. However, such surveys are constructive and frequently attempt to give insights into behaviour as well as measuring particular attributes and habits (Chisnall, P.M., 2001). Also according to Zikmund (2000) accuracy is of highest important in descriptive research. While, this cannot totally stop mistakes or errors, good researchers strive for descriptive precision. Descriptive research is also known as statistical research, describe data in actual standard and show the percentage of the population or phenomenon being studied (McDaniel, Gates, 2001). (b) Causal Research Causal research is a type of conclusive research which is used to obtain evidence regarding cause-and-effect relationships (Zikmund, 2000). In causal research focus is on the relationship that needs to be explained. Causal research design on prove and evidence of the relationship between the factors. Causal research attempts to establish that when one thing is done, another thing will follow (Zikmund, 2000). According to

(Malhotra, Hall, Shaw, Oppenheim, 2002), causal research need a planned and structured design. Its can determine the degree of association between variables; it is not perfect to examining casual relationship. 3.6 Research Approach Research approach can be quantitative or qualitative According to (Riley, Wood, Clark, Wilkie, and Szivas 2000) Qualitative research is a type of research method where no-numerical data exist. Qualitative researches ta demonstrate the data only, that doesnt show or calculate any numerical value. Qualitative research established to measure the actual feeling and situation relative to the variables. Unstructured analysis expose by the qualitative method, all sorts of likes ar and dislikes about a specific matter, subject or person. Qualitative research can add totally new dimensions to an issue or question under study. However, depending on the type of research and aim of research, qualitative research method may produce the accepted result and most appropriate technique or even the only possible technique to get the best output from the research. According to (Zikmund 2000), the qualitative research is not based on numerical values and not on numbers. However, it based on words and observations; feelings, demands, want visual portrayals, meaningful characterizations, interpretation, and other expressive descriptions. To indicate the economic trends a researcher may search for numbers, nevertheless mathematical analysis and rigorous calculation doesnt perform. Qualitative research is used to measure things while qualitative methods are mainly used to achieve an understanding of the subject (Hague and Jackson, 1996). Quantitative research conducted for numerical data collection that requires major te concentration to the measurement of market phenomena and often involves statistical analysis and calculation. For example, a retail supermarket might ask its customers to rate its overall service as excellent, good, poor or very poor. (Sims) This will provide ro quantitative information that can be analysed statistically. In quantitative research the main rule is that every participant will be asked the same series of questions. The large number of interviews/questionnaire is conducted in quantitative research approach (Dickman 2007). Quantitative research produces a large number of responses that are suitable for statistical analysis. The objective of the quantitative research is to quantify the data and generalize the results from the sample to the ch population of interest. The sample size is large, data collection is structured, data analysis is statistical and the outcomes are recommending a final course of action (Easterby-Smith, Thorpe, Lowe, 2004). Clearly state the research objectives of the se study is doubly so with qualitative research because of its ill-defined and unstructured nature. Qualitative research is frequently undertaken in conjunction with quantitative investigations. This combination of research methodologies can be very powerful if the roles of both types of studies are clearly delineated and two types are made to be complementary (Davis, D., 2000). Additionally Zikmund (2000) says, Most, but certainly not all, exploratory research design provides qualitative data. Usually exploratory research provides greater understanding of a concept or crystallizes a problem rather than providing precise measurement or quantification.

In quantitative design issues the target population need to be determined, survey method, sample size, sampling procedure, measurement and scales, question topics and question content. However, in the qualitative research design issues have to determine the participant specification, number of groups or in-depth interviews, group or respondent recruitment method, qualitative survey method or specialist techniques, and preliminary discussion or interview guide (LSC Research Methodology Handout). gy Quantitative research typically set to parameters of what is interesting and valued in the factors, instead of to their subject. Quantitative research frequently study population or subjects attitudes to various facets (Bryman, A., 2000). Qualitative and quantitative researches are often combined in to a single study or li rc series of studies. The patterns displayed in quantitative research can be enriched with the addition of qualitative information (Proctor, 2003). In addition, qualitative research is less expensive to carry out than the quantitative studies; and it helped to ha describe the statistical results in details and prove the efficiency of qualitative research (McDaniel, Gates, 2001). Qualitative versus Quantitative Research Qualitative research Objective To gain a qualitative understanding of the underlying reasons and motivations; seek the facts, causes of social phenomenon.

Data Collection

Data Analysis

Unstructured data no collection with measurement of the value. Observation, obstructive ct and controlled measurement, With nonstatistical result.

Quantitative research To quantify the data and generalized the results from the sample to the population of interest; concerned with understanding behaviour ha from players own frames of reference. Structured data collection with the exact numerical value and Naturalistic uncontrolled observation, the result comes in statistical value.

Table 1, Source: LSC Research Methodology Handout 1

From the above discussion and explanations, this dissertation took up both qualitative and qualitative research designs; nevertheless qualitative research was used prior to quantitative. The survey out comes were usually in quantitative but the description and describe in qualitative study. In this study, qualitative research is used to conduct face-to-face and in-depth interviewing. Quantitative research is conducted for experimental investigation into TESCO supermarket, the case company used to hub on the subject of the research. Moreover, deductive research method was conducted for this study. In this dissertation researcher define this method as considering how a conceptual and theoretical structure is developed and tested by empirical observation; therefore particular instances are deduced from general to particular (Collis & Hussey, 2003).

Along with these the dissertation subject was researched and was found in theoretical ti journals, magazines, newspapers, article, and etc. definitions and explores ideas on the s, pl subject. After that these journals, books and other theoretical definitions and ideas were applied and tested on TESCO supermarkets managers, supervisors, staffs, and more important customers, using the questionnaire, conducted interview, and observation. As a result, the findings were analysed and presented in the dissertation. 3.7 Data Collection In this dissertation two basic types of data collection methods are used, which are primary data collection and secondary data collection. According to Malhorta (2004) secondary data are that already have been collected for the selected research purpose other than problem at hand. Primary data are data that originated for a specific purpose of addressing the problem at hand. Collecting primary data is expensive and time consuming. Primary data collection involves all the steps of research process (page 13). Most of the secondary of this study collected from Journal of Retailing, Journal of Marketing, Journal of Retail & Distribution Management, Journal of Physical Distribution and Logistics Management, Business t, Review and so on. Secondary data offer numerous benefits over primary data. Secondary data is easily accessible, relatively inexpensive than primary data, and immediately obtained. Most of the secondary data are collected from the e-sources of ec the uwic/library, Emerald, EBSCO, Netlibrary, British Council Library, East London University Library, Business Library, etc. Malhotra and Birks (2006) pointed the ib differences between primary data and secondary data. Primary Data Secondary Data Collection purpose is for the problem at Collection purpose is for other problems hand Collection process is very involved and Collection process is Rapid and easy pr direct from the subject and area. Collection cost is very high, and Collection cost is relatively lower than primary data expensive to conduct the collection Its time consuming Collection time is short
Table 2, Source: Malhotra and Birks, Marketing Research (2006)

Although secondary data cannot provide all the answer to a non-routine research problem, in this instant such a data can be useful in a variety of ways. Secondary data also helped to identify the problem, better define the problem, develop an approach to the problem, formulate an appropriate research design, answer certain research questions and demonstrate some hypotheses, and interpret primary data more insightfully. In this dissertation, respecting the research objectives both secondary and primary data was collected. Firstly, in this study a large number of secondary data were used tu to construct a historical establishment of the theory and the factors that affect in the examination of the relationship between service quality, customer satisfaction and store loyalty. For this study journals were collected from the reputable journal site re such as Emerald, EBSCO, Harvard Business Review, London Business School Business Strategy Review and Marketing Review were chosen carefully and eliminated according to their use in this study. The journals were structured into a

separate categories; service quality strategy, customer satisfaction strategy and store loyalty & loyalty strategy and the factors that affecting the relationship between the service quality, customer satisfaction and store loyalty. Although the study subject has a huge empirical evidence and academics have bulk knowledge. Large volume of articles, books and journals helped to access and examine on the subject. Secondly, primary data was collected from various sources. Personal interviews and questionnaires were the most important data in this study. Saunders, Lewis, Thornhill (2006) says personal interviews were influential in obtaining the trust and cooperation of the responding personnel and respondents. In addition they got permitted to greater control, provided instant feedback and an opportunity for clarification of issues. However, the questionnaire is a very important element in the research process. Interview form, schedule, or measuring instrument is a form of questionnaire to obtaining information from respondents. A standardized questionnaire or form ensured comparability of the data, increase speed and accuracy of recording, and ac facilitate data processing (Malhotra, 2004). at Questionnaires are associated with both positive and phenomenological methodologies. While a positive approach offers that closed questions are appropriate since closed questions are very suitable for collecting data, phenomenological approach suggests that open ended questions are appropriate for this methods since this type of questions offer to respondents to give their opinions (Collins and Hussey, 2003). In this dissertation, personal interviews were conducted with the customer and user of the departmental store (TESCO supermarket). The most of the interviews were taken from the East London area where most of the dwellers are foreigner. Kept that in mind ordinary words were used in the questionnaire and that matched the vocabulary level of the respondents. In choosing words also considered that the average person in the United Kingdom has a high school, not a college, education. Probability or representative sampling is conducted. With this it is possible to answer research questions and to achieve objectives that required author to estimate statistically the characteristics of the population of the sample. The systematic sampling is conducted for the 20 customers and 1 manager sample size from the east London area TESCO th supermarkets. Respondents were asked about their departmental store shopping experience. Researcher asked the respondents to focus on the service they get within the past two months. The author also asked about their choice in choosing the departmental stores. This enable author to obtain a variety of perspective rather than what he would have obtained had author just asked respondents to focus on why TESCO is their favourite wh departmental store. Researcher asked respondents questions about: Shopping frequency, overall satisfaction with the store, likelihood to recommend the store to others, service quality measurement, measurement of visiting local departmental store, frequency to visiting TESCO supermarket, related shopping behaviour, demographics. (Please see the Appendix for the Survey full survey questionnaire). ti Research participants received no incentives for completing the interview. Telephone and mail respondents are not identified because of the answers came from unknown ns location.

The questionnaires were prepared to be sent to the managers before the interview took place, according to their request. All questions in the questionnaires were arranged in a logical way according to the information that they aim to reveal. Every question on the questionnaire focused directly or indirectly on a specific issue and it was ensured that questions were clear and where appropriate with its statements. 10 percent Openended type questions have been applied in order to obtain precise data about the key issues and 90 percent close-ended types questions to examine the relationship. To obtain the data about the company and the service and quality managers interview was important. Firstly, personal telephone calls were placed to find the most appropriate manager in the store who can help the study. Then author request and invite them to contribute in the study. After positive response from the line manager and warehouse & stock manager of the TESCO, the first questionnaires were sent with cover a cover letter. 2 senior staffs were carefully selected by the store manager, er ca for answer all the questions and help in the study. In the interview all the rules were strictly followed. An aspect of supervising that ensure that the interviews strictly follow the sampling plan rather than select sampling units based on convenience or accessibility (Malhotra, 1996). During the interview, respondents were required to give information, attitudes, and beliefs on the subject. The interview started with general questions. An open ended question has been applied for that interview. Close ended questions are used; approximately 80% questions were close ended. 3.8 Limitation In this research researcher faced different kinds of problem in collecting primary data. In collecting the primary data the college support was nil. The organizations belief was less on the researchers. However, lots of Survey Company acting in the UK, to fear of discloses of data of the organization to others the company didnt disclose and share more valued information with the researchers. The researchers didnt have enough time to collect the primary data and useful secondary data related to the examination of the relationship between service quality, customer satisfaction and store loyalty. Some external limitation was also there, like the research results comes out it doesnt make any decisions, and research does not guarantee success. 3.9 Ethical Issue In this study the ethical issues are determined. All the questionnaires were constructed following the subject related and which doesnt contain and personal information. In this research organizations information was only used for academic and research purpose, this information will never disclosed to any individual and organization.

4. Results, Analysis and Discussion of Findings 4. 4.1 Introduction TESCO is one of the giant companies in the world. TESCO is running 1,988 stores in all around the UK with 25.2 million square ft. sales area and over 3,000 stores worldwide. TESCO is the UKs number one Supermarket with 33% market share. TESCO is currently employ 270,000 member of staff in the UK. Last month TESCO announce it has made good progress in last quarter. TESCO the UKs biggest grocery chain posted like-for-like sales, excluding petrol, up 4.1 per cent in the line ce nt with City forecasts. The present economic conditions are forcing consumers to cut back on spending. But TESCO said it was pleased with the present performance, noting that price inflation was holding steady. Recently supermarket giant TESCO TE te dy announced 4.1% sales rise, where total company sales rose 11.8 percent, up from 9.2 percent in the first half. Chief executive Sir Terry Leahy said that We have maintained pleasing progress. TESCO is now worlds third-biggest retailer behind the US group Wal-Mart and Frances Carrefour. But it achieves about 80 percent of its sales and profits from its range of near 2000 stores in Great Britain (Eugene. Henderson, 2007). Tescos success is now the biggest achievement in the UKs retail re industry. Tesco is successful because of the finance and location. Finance is the parents of a organization, proper financing and management gives Tesco sky touching achievement. Tesco have good financial back up which helps it to provide good ha service quality, ensure excellent customer satisfaction and loyalty. Tescos financial growth increase in last five months (see Appendix II) against FTSE 100; on 6th I) December 2008 companys last trade was 476.75p, volume 16, 572, 831, Average volume (3m) 36, 172, 300, and market capture 37.37 B (Appendix II). ur 4.2 Findings and Analysis In this study the element of marketing service quality, customer satisfaction and loyalty are examined on the UKs largest supermarket Tesco. The relationship among the service quality, customer satisfaction and loyalty is a very important issue now in the industries. In the literature review author focus on the relationship, how they impact to the store success and improvement. Retail service quality is also discussed ai in the literature review where RSQS is discussed and five dimensions are examined.

Figure 7, Source: Caruana, A., European Journal of Marketing (2002), 36, 7/8

Service quality is the main constituent of the success of a store. Service quality creates customer satisfaction and loyalty. Here service quality is independent variable and customer satisfaction, loyalty is dependent variable. If service quality is good it will create customer satisfaction and loyalty. Author research on Tesco supermarket and find the materials of service quality, customer satisfaction and store loyalty in a store. The findings are shown below:

TESCO Supermarket (UK)

Service Quality

Customer Satisfaction
Product Availability

Store Loyalty
Store, area environment creates loyalty

Service Quality Measurement

Stock Representation and Product Presentation

Reasonable price

Loyalty card

Carriage and Baskets Availability and flexibility

Product Quality

Better service and known people

Compare the machine and other services

Service Quality

Refund and change of goods

Variety of Products

Payment methods available

Parking facilities

Product delivery support

Customer service assistants helps while shopping and fi di d t Search monitor in the store

Self service (Machineries performance)

Taking After sale feedback

Pleasure in Shopping

Figure 8, Authors own plan to measure the relationship As author discussed in the literature that the main point of the company success is service quality. In the survey marked that the respondents 50% regular supermarket user was considered, the service quality of Tesco supermarkets as good or very good while about (35%) percent rated it as neither poor or good. Only (three) (15%) respondents rated the service as poor and no one gave a very poor. That shows that the mean rating of service quality of Tesco supermarket is (6.67). Tesco is the giant supermarket in the UK and expanding worldwide. Its service quality can be measured by the success it is gaining worldwide. However, what the

customers are getting from the Tesco superstores in real is the important issue. Are the customers really loyal with the Tesco brand; are the customers satisfied with the br Tescos service? Service quality is important constituent for Tesco to be successful in this competitive market? These questions are the main findings of this study. The author conduct in-depth interview of the manager of Tesco superstore in east London area; the discussions are given below: Q1. How do you define your store location in terms of availability? Managers Answer: the store is located in the residential area. Tesco is already a good brand name which people look for. Peoples are coming to this store for their convenient goods as this is an express store we only serve the main convenient products which people daily needs. There is no other store near by and some stores are little far from the Tesco. Local shops are not enough good and prices are more an pr than the Tesco offer. Service quality is main matter as customers cannot trust the local shop about the service quality, product quality and assurance. When people come here for shop they look for quality and service of the store. As an example if they go to another shop they do not buy some specific product such as milk, bread, sandwich, etc. because they trust that Tesco brand about these products. However, in this store we serve approximately 700 customers a day and we measure that 500 customers are loyal with the Tesco brand and its products and services. All the local people hit the store for their convenient goods especially those are strongly loyal with Tesco. Bromley by Bow road is accessible by bus, tube station is near (2 minutes walk), and because of residential area across the road most of the people know that store. Most of the people are here from the lower income and they look for the best in the cheapest. th For the location this store is hit. Because of the offices around the store it is more success. More important thing is that there is no Tesco supermarket and any other supermarket in the to Mile end and Bow road area. Near the Whitechaple station Sainsburys has their extra superstore and the next Tesco store is in Bethnal Green. Customers find their store when they attract with the brand. Q2. How do you define customer satisfaction of your store? For example do you think less complain means higher customer satisfaction; do you think higher sales means higher Customer satisfaction; higher visit means higher customer satisfaction. Managers answer: customer satisfaction is the main aim of Tesco as well as this store. We always work to fulfil all the demand of the customers. As I believe that customer satisfaction is an attitude of customers toward a brand or store. What customers are looking in the store; are they feel ease to get that is the main focus of our team. I believe that customers are the main aspect of the business, no customer no business. If customers are not satisfied why they will come; they will never come to ll this store again. Customers has choice in the market, they can switch to another store. To keep them loyal we Tesco offer loyalty card which offer points and voucher on their shopping scale. We are serving customers the best products at cheapest price. This is not available in the other local convenient stores. From my point of view I think higher visit means higher customer satisfaction. People are coming to Tesco because they like it. They visit the store to find the product with which they are loyal,

or the product they are looking for are expensive to them and visit and give re-visit to check the product price and availability. Higher visit means they are highly satisfied with the Tesco. Nevertheless, if they are not satisfied with this brand they never visit. Moreover, less complaint doesnt mean higher customer satisfaction in real. Here in east London most of the residents are foreign they generally do not bother to complaint about the lack of the service. They just stop visiting the store. Thats stop us to find the lack of our service. Basically complaints help to improve service quality and suggest the best to do. Customers are very choosy in this area if they do not find the product they look for they do not like to go for the alternative. In such a situation we have to maintain the stock with daily demand. Same scale of goods are replenish every day as the frequent sale occur. Customer satisfaction is mainly focused in the store and all the employees dealing with customers are specially trained to conduct a customer with their best. Q3. Do you think store loyalty is dependent on service quality and customer satisfaction? If yes, then among them which influence most to the store loyalty? Managers Answer: we are working here with customers. Serving them with the Se re products and services they need. They come here by the service quality and customer satisfaction. Of course store loyalty is dependent on service quality and customer satisfaction. I explained that before if they are not satisfied they will not come again in this store. Between the service quality and customer satisfaction, service quality is the most which influence the loyalty. Service quality is the best thing that we follow to attract customers. Good looking shop, using modern equipment in the store, ease store layout, better service, product availability and varieties of product all these things will help to create store loyalty. Tesco have its own brand of products in every section like Tesco bread with the regular Kingsmill bread, Tesco Cola with Pepsi and coke, etc. These products are best value with money. Most of the customer prefer es on Tesco brand instead of the other brands. Its all because of service quality. We use the best supply chain to make our product availability in the store. Tesco Information Exchange (TIE) is an electronic data interchange with the suppliers. So there is less product waste and excess stock maintain. Customer satisfy with service quality of Tesco so customer satisfaction is dependent on the service quality as far I thing. However, customer satisfaction also creates store loyalty. For an example, customers visit the Tesco and found the service quality is excellent and product availability and verities of products is there, that customers never disappointed with the store. When ever they come for shopping they found all the products and good services. These groups of customers are satisfied with the store and its service. So the store wins its customers satisfaction. These satisfied customers will revisit the store and recommend the store when they recommend the product he/she buys from that store to his/her friends and families. Therefore, service quality attracts the customers, make them satisfied and create loyalty with the store. In this store we mainly focus on our service quality and then on the customer satisfaction. Loyalty program is running to create customer loyal with the brand but that will not create store loyalty. However, most of the customer do not use loyalty card as they feel its a burden to carry an extra things.

Q4. How do you define customer? Are they cooperation? If no then how do you deal with them? Are they pricing conscious? If yes, how do you define your price than other store around? Are they very argumentative? If yes, how do you deal with them? Did you give any special training to your staff to handle these customers? How you make them satisfied? Managers Answer: As I told you that everyday approximately 700 customers visit the store. They are not acting in the same way. In these area customers are mostly cooperative. They help their self to find a product and solve any problem by their self. They ask any question when they really find hard to get a product neither not. Its ease to handle these kinds of customers and these kinds of customers are I prefer most in an st my store. Some customers are price conscious, they want the best deal and looking for variety of products. We find that hard to deal with that kind of customers. They get around the whole floor then choose one product and ask the details of the products. To make them satisfied Tesco have its own brand Tesco value which is comparatively low price than any other brand in the store. In every section we have Tesco value to help customers to find the cheap one. In the other shop around this store cannot offer low price than Tesco value. For an example, Tesco offer Tesco value bread in 0.59 and Tesco whole milk in 0.68 which is hard for the local shop around the Tesco. Comparing the other store customer will be happy to shop at Tesco. Some customers are very argumentative and never compromise with thing. We train our staff to deal with these kinds of customers very politely and handle them with care as they are very sensitive. These types of occurrences happen in terms of goods returns and change of goods. We usually change the goods if we saw that the good is really in bad condition and effected or damaged from the manufacturer. We refund the money instant way to prefer that customer first. These kinds of steps help to make them satisfied and loyal with the store. Q5. How are you going to improve your store service quality in future? Like employee performance measurement, product variety in the store, Stock availability, quality control, software use to maintain service quality. Managers Answer: Tesco is growing internationally, now it is operating also in the USA. Tesco service quality is the best service quality. However, Waitrose and Mark and Spencer keep their service quality higher. But their price is also higher. Now in the society people are paying for quality. Quality products and services are mostly preferred by the UK people. Tesco is also offering service quality. Tesco shop floor is well designed and planned. In the future the store service quality will improved by setting up stores own stock management by setting with the demand and sells. In present Tesco is managing TIE to maintain supply. Its help reducing the effort required setting up promotions as well as minimizing stock outs and production waste. Employee induction and training will be designed with some practical way. That will help the employees to understand the customer better way. By the next year we are ye going to extend the store capacity that will help provide more varieties of products and services in the store. At present we need to replenish the shelf three times a day because of demand and place are not equal. The extension will help to serve the better service quality to the customers. Store security and relax shopping is ensured in side the store. Employees performance measure is the best way to get the best service from the employee. At present we are not doing any performance measurement

programme at this store at the moment. However, in future we will introduce the program to fulfil the lacking in the store. Q6. Is the current service quality helping to increase customer satisfaction? Managers Answer: Current service quality at Tesco helping to increase customer to satisfaction. Service quality is the important constituent toward customer satisfaction. Service quality like stock representation, self service till, hygiene store, clean dressed on employees, quality food, standard replenishment, ease to find a product, help with a customer service assistant, etc. are helping to increase customer satisfaction. Selfserving till will help to save time in check out. Paying by credit/ debit card for shopping, change of goods and refund the money all these will helping to increase customer satisfaction in Tesco superstores. ti 4.3 Results Respondents were almost equally split between males (45%) and females (55%), 20 per cent respondents were under 25, 45 per cent were 26 34, 25 per cent were 35 40. and 10 per cent respondents were over 40 years old. Age Group Under 25 26 34 35 40 Over 40 Number Customer 20% 45% 25% 10% of

Respondents segment

Male, 45%

Male

Female
Female, 55%

Age of Respondents

Under 25

26-34

35-40

over 40

From the above data, it is showed that Tesco supermarkets most visited customers

are female. In the age deviation, most of the customers are from the age group 26 34. These age group people prefer shopping form Tesco supermarket than any other supermarket.
Respondents Status
Service/Job
40% 35% 30% 25% 20% 15% 10% 5% 0% Service/Job Business Student Housew ife
10%

Business

Student

Housew ife

40%
35%

15%

Among the respondents, statuses of 35 per cent were in service/job, 10 per cent were involved in business, 40 per cent respondents were students and 15 per cent were house wife. Respondents rating of service of Tesco superstore are measured. In the survey questions showed that 85 per cent customers marked the facilities of Tesco are attractive, while only 15 per cent customer marked just satisfied. 75 per cent customers marked that strongly agree on, the employees were neatly dressed, while 25 per cent were marked just satisfied. About the design and instruments, objects question no one marked that they are agree on the questions and 95% per cent customer marked strongly disagree. 90 per cent customers are strongly agreed on the cleanness environment, where only 10 per cent customers marked just satisfied. About the layout and store instruction question 70 per cent respondents were marked as strongly agreed with the routes are clearly instructed, while only 10 per cent disagree with them. Near 95 per cent customers fined the product and facilities are neatly arranged. 90 per cent customers found that the foods are clean and quality. Respondents rating about the service of the store staff is poor. In the question your questions are answered in real time 45 per cent customers/ respondents disagreed with this. In fact the Tesco should be the best in customer service. However, 45 per cent customer marked as the Tesco services meet their needs. 65% customer strongly agreed that the Tesco product quality is assured, while 10 % of them disagreed and not satisfied with the service of Tesco. Approximately 85 per cent respondents strongly agreed that the Tesco is soundly operating with good image. Sunday Times news paper released on 25th November Tesco is soundly operating in the Europe and US. The services are again affected where 45% customers marked disagreed about the question sales person serve you actively, while only 25% respondents marked strongly agreed. Staff and employees service in Tesco superstore seems very depressing. While 50 per cent respondents marked disagreed and 45 per cent marked strongly disagreed (question 13 in Appendix). In the (question 14 in Appendix) service question 40 per cent respondents marked disagreed with the question, while only 25% respondents marked just satisfied. Sales person serve you at their best

condition 35 per cent respondents marked disagreed and 30 per cent of them marked just satisfied. About the price of Tesco products and services 40 per cent of respondents were strongly agreed with the price setup and 45 per cent were satisfied with the Tesco products price (item 16 in the Appendix). Sales person have no professional product knowledge about the products. 70 per cent of respondents show ts their dissatisfaction on that question. Customers are feeling good in transaction and paying for goods and services in Tesco. About 60 per cent respondents marked satisfied when the do transaction in Tesco.
Sales Person Doesn't care abt Customer's interest

Customer prefer Tesco as their supermaket

Like Tesco
Agreed
Disagreed

Don't Like Tesco

75 per cent respondents marked as the sales person did not take care of customers maximum interest. However, 70 per cent respondents marked that they like Tesco as their superstore.

16 14 12 10 8 6 4 2 0 Do you lik e Tesco Yes No 14 6 Is there any other supermark et in 9 11 Any Do you have a family/friends of Tesco Club card yours work in 8 12 5 15

All the category questions clarify that 55 per cent respondents marked that there are no supermarket in their area, while 45 per cent agreed that they have. That means they found that service quality of Tesco is preferable to them. The service quality of Tesco is enough to win customer satisfaction. The satisfied customers are involved with Tesco and become loyal with the supermarket. The rating of the Tesco Clubcard loyalty program, 60 per cent respondents marked they dont have Clubcard or do not use Clubcard. Tesco is offering good deal with Clubcard but customers are not attracted by the Clubcard programme. Customers likes Tesco because of its quality and service standard. Clubcard strategy is not worthy in that situation. Only 5 respondents marked that they have friends/family working in Tesco and another 15 marked they dont have. It is also clear that customers are not shopping because of their known person work there. Customers come here attracted by service quality of Tesco supermarket. Survey finds that 20% respondents hold only one loyalty card, ca

35% respondents hold two loyalty cards, and 25% respondents hold more that four ca loyalty cards.

No. of time visit/ Shop @ Tesco supermarket Once a week Twice a week Thrice a week Once a month Total
No. of time visit/shop @ Tesco supermarket

Number Customers 8 5 2 5 20

of

8 7 6 5 4 3 2 1 0 Series1 Once a week 8 Twice a week 5 Thrice a week 2 Once a month 5

In the ratings of visiting and shopping at Tesco superstore 40 per cent customers visit Tesco once a week, 25 per cent respondents visit Tesco twice a week, 10 per cent respondents visit Tesco thrice a week, and 25 per cent respondents visit Tesco only once a month. The ratings were expected to be on the high side for both the contexts as respondents were asked to evaluate the service quality of the Tesco supermarket. Survey showed that 70% respondents have no option to shop in their area. Thats why 25% respondent shops from Tesco once a month.
18 16 14 12 10 8 6 4 2 0 Do you lik e to recommend the store to other 13 7 Are you mark ed Tesco's customer service is excellent 11 9 Do you prefer to deposit 1 to tak e a trolley for shopping @ 17 3 No No Yes Yes No Yes

Yes No

The mean of satisfied with Tesco service quality was 8.85 (SD = 6.88). The mean of strongly dissatisfied with Tesco service was 2.35 (SD = 4.43). Nevertheless, 65 per cent (13) respondents are happy to recommend Tesco supermarket to their friends and families. Moreover, 55% respondents are pleased with the customer service of Tesco supermarket. 85% respondents say that they feel good with the systems of Tesco supermarket services, deposit 1 to take a shopping trolley is good says 85% of respondents, because when they keep it in the place they got back their money. They support that because if Tesco do not do that they might lose their trolley and the store place could be messy with the trolley, because customers feel that its not their responsibility to keep that in a safe place. But when they deposit pound for that they want back their pound and they take the trolley to the right place. 4.4 Discussion: Tesco is become a well renowned brand in the UK as well as in the international market. Tesco superstore, Tesco finance, Tesco electronics every sectors Tesco have their own brand of products. Psychologically, people feel good with a specific brand. In the present situation branding has become a key strategic edge in the minds of decision-makers not only in manufacturing businesses, but also in service industries including retail industries (De Chernatony and Riley, 1998). In grocery retailing industries, retailer brands play important strategic role in these days, Tesco has its own brand in every section such as Tesco bread in bread section, Tesco milk in milk section (Burt, S., 2000). Most of the retailers have traditionally used to sold us manufacturer brands and basic products, but over last twenty years they have loyal substantial resources to developing their own brands in order to increase margins and retailer power as a supplier power and buyer power, to expand category varieties, to build retailer image and customer loyalty and differentiate themselves from competitors (Burt, 2000). Brand becomes famous and acceptable when it provides co better service quality to its customers. Service quality depends on the supply chain and product availability of products. In 1999, established retailers acknowledged the il il ab ck growth of interest in applying internet protocols to supply chains and to the transaction taking place between retailers and their suppliers. There was an application system with which retailers were confidentially well-known and where the leading members of the part were representative a high degree of potentiality. Tescos Information Exchange (TIE) was electronic data interchange towards open standards extranet. This interchange helping in planning, tracking and evaluation of promotions, reducing the effort required setting up promotions as well as minimizing the risk of stock outs and product waste. Tesco set up the system not only with the largest suppliers like Proctor & Gamble, CCSB, Nestle, Britvie, Kingsmill, St Ivel, Coca Br e, cola, Pepsi, Unilever, etc., but also some smaller suppliers St Merryn Meats, Kingcup mushroom, Pride vegetable oil etc. It is a natural extension to use Internet protocols to assume these processes (Reynolds, 2000). Following these procedure Tesco maintain their stock and ensure service quality in their stores. qu In the research author find the relative attitude control the service quality and satisfaction in this case. Independent variable service quality moved to both relative attitude and satisfaction. Relative attitude and satisfaction move to loyalty. The relationship is given below:

Source: International Journal of Retail and Distribution Management, 2000, Vol. 28, p.77

In this study, author tried to examine the relationship among the service quality, customer satisfaction and loyalty in the Tesco supermarket. Author finds that service quality influences satisfaction with Tesco superstore. The authors results indicate that relative attitude influenced both by satisfaction and service quality, and in turn it influences likelihood of recommendation. Consequently the customer maintenance and customer creation appears to be the nurturing of a favourable relative attitude among Tesco superstore shoppers; and a favourable relative attitude is created by satisfying the customers and improved service quality. Service quality is an importance influencer of customer satisfaction. As discussed earlier, service quality also influences the relative attitude customers hold about Tesco superstore. In addition, service quality influences the likelihood of recommending the Tesco to the friends and families that helps Tesco to increase market share and its sales. Service quality has been found to be an important input to customer satisfaction. However, the management main focus should be on customer satisfaction, of which service quality is a significant precursor. Beside service quality ti there are various elements which contribute in the overall customer satisfaction. Other elements that could impact customer satisfaction are transaction satisfaction, value and corporate reputation or image. In the same way it is hard to identify other po elements, in addition to customer satisfaction, that have a direct impact on loyalty. An us obvious conception as to the sequence of relationship between service quality, customer satisfaction, loyalty and eventually the performance of Tesco supermarket can help to guarantee better targeting of limited marketing resources. Loyalty is also depending on the education social class and income. Less shopping place can cause the loyalty to a specific store in some area. This research indicates that consumers satisfied with service quality are results to loyalty. Author measure the loyalty in terms of percentage of visit. Customer may visit the store because they are loyal with the store, in fact they are not purchasing any items but they are loyal and passing product information to their friends and families and recommend the store to them.

In this way satisfaction also directs the likelihood of recommending the supermarket as well as repurchase but has no direct impact on loyalty. Jones and Sasser (1995) say, Satisfaction in itself will not translate into loyalty. Nevertheless, satisfaction will encourage loyalty to the extent that it is a prerequisite for keeping a favourable relative attitude and for recommending and repurchasing from a selective supermarket. Once customers recommend the superstore it encourages both repatronage and loyalty towards that store. Generally customers are possibly to recommend a supermarket when they are satisfied with that stores service quality and when they have a positive relative attitude towards that store. Author fined that most of the people are coming to the store because it is near to their home. They are not attracted by any kinds to loyalty program and offers. In fact they calculate the travel cost to go to another shop which they like is higher than to shop at this store. A number of customers come to the store because they become friendly with that stores staff and layout of that store; they feel good when they come to shop, feel comfortable to ask any questions they might want to know. Customers want something natural and try to feel that in real. Tesco operate its self-serving till at their stores, but most the people stand in the queue instead of going to the vacant selfserving till. Researcher fined that human natures want something natural and ease na way. People don not want to involved when any one else are doing the same thing for nt them; socially people want someone to greet them (say hello), ask for help in packing, have some chat. These are critical to measure with service quality and customer satisfaction. However, firms own monitoring and benchmarks establishment can help to solve the lacking. Moreover, such monitoring can be extended to include a comparison of the Tescos performance on the service quality, customer satisfaction and loyalty constructs. Much of the attention focused on the service quality build is attributable to the SERVQUAL tool developed by Parasuraman, Zeithaml & Berry (1994) for measuring service quality. Service quality in retail industry is totally different. As discussed in the literature review Dabholker, Thorpe and Rentz (1996) developed the Retail Service Quality Scale (RSQS) for better and only measuring retail service quality. RSQS measure five Dimensions that help retail industries to maintain service quality. In the Appearance Dimension (Appendix) discussed about the store appearance such as modern-looking equipment and fixtures, the store has clean, attractive and convenient physical facilities (restrooms, fitting rooms), Convenience like store layout at this store makes it easier for customers to find what they need, Sign for every fo product in every row, Store layout makes customer easier to move around in the store. All the dimensions in RSQS are followed in the retail industries to make sure better si service quality in the store. In addition, the elements the store gives customers individual attention (a personal interaction item, Appendix) and the item store has clean physical facilities (related di to physical aspects) loaded onto the same issue. This also explains why the personal interaction dimension correlates highly with the Policy dimension. The supermarket ensuring the employees has the knowledge to answer customers questions is the es store responsibility. The store policy loaded in the exploratory factor analysis; and problem solving, which help supermarkets to identify the issues and then solving ways. UK customers are service quality oriented and influenced to satisfaction and loyalty.

Figure 9, Source: Cortinas, Elorz and Villanueva (2004), Int. Rev. of Retail, Distribution and
Consumer Research, Vol.14, No.4

Another side of customer satisfaction and loyalty element is trading hour. Trading hours or particular location of a grocery store may increase a customers satisfaction with shopping there, simply by suiting persons needs. But the research also indicates that a customer may remain loyal to a store because it is near to home, without necessarily obtaining any more satisfaction from shopping there than elsewhere. Issues such as store trading hours or distance from the customers home or workplace, consequently, could be effective in keeping store customers, either through their effect on customer satisfaction or by directly generating loyalty. The personnel nature and cleanliness of premises variable make up the factor that most adds to customer satisfaction with the service received at supermarket. Service quality measurement followed in order of importance first by range and variety of products and then by opening hours and prices. The better retailer succeeds in meeting these needs, the most satisfied customers. Self-service, Ease and speed of payment, fHome delivery, Ease of shopping, Information available are also the fact on customer satisfaction and loyalty.

4.5 Managerial Implications This finding also has managerial implications too. In the supermarket like Tesco management should not concern about the amount of satisfaction of the store. This is also the elaboration of the service quality they provide to their customers. The levels of service management provide the same level of satisfaction and customer they can count. Management can motivate customers to complex on their choice by activating the motivation and the ability of the consumers to evaluate the choice. Managers have traditionally focused on customer satisfaction and service quality. The key to customer creation and retention appears to be the development of a relative attitude among supermarket shoppers. So this is not enough to satisfy customer, the customers attitude towards the supermarket should be more favourable as compared to other competitors, and favourable relative attitude could be created by satisfying the customers and improve service quality.

5. Conclusion Author aim to understand the current service quality, customer satisfaction and store loyalty of retail industry with questionnaires made to visitor to Tesco supermarket in London. The study helps to understand the real scenario of the relationship between service quality, customer satisfaction and store loyalty. Examination on Tesco supermarket results that the customers are more focus on service quality then the brand or price. Service quality in the Tesco is over all good. Tesco is running its operation with sound image. A number of examinations can be made regarding the most significant conclusions to be drawn from the results of this research. In the first place, effective proof was obtained of the fact that there are relationship between service quality, customer satisfaction and store loyalty with respect to the nature of link between service quality, customer satisfaction, and satisfaction and loyalty. It can be asserted that more satisfied supermarket customers are also customers that are loyal. When it comes to retail industry, service quality influences both satisfaction and loyalty. However, service quality is independent on service quality of the Tesco. So it is that, by improving in supermarkets service quality, only direct effect on satisfaction (Store attractiveness, personnel nature, customer service, cleanliness of premises), and customer loyalty will also be improved. In Tesco supermarket, it is more essential to act upon those service features that will directly influence loyalty by increasing habit of purchase and repurchase intentions (e.g. store location, opening hours). Even so, it will probably also be necessary for supermarket manager, to take an effective action to keep customer satisfaction levels up by taking initiative actions on aspects such as the opening hours, ease of purchase, free parking facilities, change of goods and refunds facilities, competitive price. ce The service features to which managers need to pay attention to increase customer ma as es satisfaction those create loyalty. Increasing the range and variety of products, nd ar availability of products, ease of purchase, personnel nature and neatly dressed, ea el cleanliness of environment, store and product information available to the customers, pricing measuring competitors. Researcher found a specific difference between primary loyalty and specific store loyalty. Some people are loyal with Tesco brand at primary level and can be switch to any other brand any time; other way people are not loyal for the brand but the store such as Tesco supermarket, Bow, Tesco supermarket, Becton. Different customers different perceptions prefer what they will like. For example, Tesco customer perceived quality, convenience and value factors in order of importance, whilst Sainsburys customers perceived quality, value and convenience factors when considering Tesco. To increase store loyalty in Tesco it is worth enhancing any factors that contribute towards customer satisfaction as well as those variables that load directly onto loyalty bl such as store location and opening hours of the store. Customer satisfaction at Tesco ca can be determined primarily by the convenience of the outlet, whereas aspects of service quality, such as, helpful personnel available at the shop floor, clean environment, pleasant product presentation, ease price view, and ease of purchase

determine customer satisfaction and repurchase tendency. Socio-demographic en variables, such as sex, age group and status level, influence the probability of nonresponse and the response profile of the respondents. Researcher use RSQS and five dimensions of the scale to determine the Tescos service quality. Service quality measurement gap developed by Parasuraman, A, Zeithaml, V.A, Berry, L.L (1994) by also provide great contribution to examined the relationship between service quality, ti customer satisfaction and store loyalty. The service quality gap theory is a great ce ti impact in service industry and in this research too. Researcher concludes that the gap used in this research influence a great option. Researcher also concludes that the scale of retail service quality studied by Kaul (2005) has a great impact in this research study. The service quality in Tesco was totally examined by following that model and shows a great success in the Tesco UK. The well appearance of the store is a big impact of a supermarket in the UK, employee attitude and nature at shop floor, the stores physical facilities like trial rooms, restrooms, ease access to the store should be or visually attractive, materials associated with the stores service such as shopping bags, loyalty cards and store catalogue are need to be appealing to the customers. The scale li also presented reliability test which help to find the promises store made and fulfil that. Finally researcher found that there is an interaction between scale used and status. Survey showed that 40% customers at the Tesco were students, and 35% ey customers were in service/job. This survey cleared that (40+35=75%) respondents education levels are at a society level and can understand good or bad. The service, satisfaction and loyalty related survey questions were marked with good sense and the results researcher found are might be accurate. However, the sample size of this survey was small and the future study on this topic might vary. Results obtained from the questionnaire and survey questions provide great helps in examining the relationship between service quality, customer satisfaction and store loyalty. The survey questions on service quality helps to examine the actual service provided at Tesco supermarket and how customers satisfied with their service and are the loyal with Tesco and recommend the store to the others. The purpose of the study fulfils in making the relationship and prepares a result. Results obtained that the Tesco service quality is good, but the customers are not satisfied with the customer service, Tesco supermarkets appearance is excellent as respondents marked 70% strongly ts agreed with this. Customer satisfaction is liked with service quality as discussed in the finding that the service quality is independent and customer satisfaction is dependent st on service quality. Tescos improving in service quality means to increasing customer satisfaction, increasing customer satisfaction means to increase market share. Satisfied customer will visit and revisit the store that creates loyalty with the store. Loyal re customer are likelihood recommend other friends and families to visit the store. Research finds that most of the customers are come to visit, because visits are more than sale in the store. Manager could take some initiative to make the visitor as a customer such as offering discount in some products and services in store (buy two in ones price), however, more visit means satisfied customers. Tesco liking better supply chain with renowned brands helps to keep its service quality better. Disappointment of customers can effect serious in business. Tesco maintain a good supply chain management and software TIE that help to maintain its stock and avoid empty basket and production waste. From the gap analysis of importance and satisfaction of service quality, researcher fined that all averages of satisfaction are lower than those of importance, which means that Tesco supermarket still need to improve their service quality. Author find the significant correlation between all

dimensions of service quality of retail industry and overall customer satisfaction and store loyalty correlation is also significant. It is clear that the service quality of retail industry is clearly related to loyalty. That means service quality and overall customer satisfaction affect customer loyalty. Finally, due to limited time and rush of Christmas and New Year eve break and cost, researcher only conduct only one managers interview and survey questionnaires on visitors to Tesco supermarket, Bow. The following studies can be focused on service ed quality of retail industry with long-term collection of information. Moreover, re researcher also fined the service system design of retail industry (RSQS, Gap analysis) will affects service delivery and quality. Commitment of the supermarket and keeping the promises to the customer might help in satisfaction and loyalty, om employees commitment to the Tesco and job satisfaction will also have direct or indirect impact on service quality of Tesco supermarket. These factors require further exploration in the future. on 5.1 Future Research This study provides lots of directions for future research. Study can focus on identifying and possibly developing an exclusive measure of service quality, customer satisfaction and loyalty for a retail framework. It is also possible to look at developing a richer model that incorporates other constructs beyond the models studies in this study and consider their interactive effects. The function of the value and its exact 5.2 Suggestion Research shows that the customers are not getting better service quality from Tesco ws supermarket. However, the facilities are good and the products qualities are maintained. Some products qualities are very worst, like cheap products from China, are very low quality. That impact Tesco brand as a poor class brand, which helps competitors to rise up in the market. People are going for quality for in every where in the world. That why Chairman of Waitrose say Quality food cost what it cost Chairman, Waitrose. Instead of offering cheap low quality products Tesco supermarket should offer quality products in the supermarkets. Employees need et exceptional training to handle the customers and make them loyal with the store. Most of the supermarket has their customer service at the front of the store or back of the store. In a large supermarket if customer need assistant then customer need to go to front to find out what they want. As discussed in the RSQS the appearance should be clear to the customers. The supermarket can installed a monitor including all the product information and layout of the store in every corner of the store. Which help the customer to find out what they are looking for. Generally research says that people do not buy lots of things because they dont like to talk. Argos helps its business in self ordering systems. Customers order their products and pick up. They even dont nd talk to any body in the store. In the case of price check, customers some times confused with the price of a product. There are no price tags on the product but on the shelf. Customer confused what is the price for that product, they look for assistant but the assistants are not available every time on the shop floor. If they tag the price on the product Tesco may increase its sales.

5.3 Limitation All the research has its limitations and this study is no exception. In a firm sense the results of the findings relate only to the respondents and generalisations to a wider nd ge population or industry should be done with caution. The sample size is not large but adequate for the type of analysis undertaken. While there is an argument for the relationship examination to be undertaken with more than one sector to support the findings this needs to be balanced with chameleon effects that are likely to creep in and cause the meaning of customer satisfaction to vary as a result of different research fa context . In the short time it was really hard to survey and make findings of the study. And rising of the professional survey company the companies become less interested to give appointment and do not like to share all the company situation and information. The college did not provide any support of collect information from several source and access. One more limitation of this study is the use of a relatively small sample and of the study being restricted to the East London. This might impact the extent to which these results can be extrapolated to other retail industries and cities. Relationship to service quality, customer satisfaction and store loyalty could prove to be an interesting area of study.

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Appendix I: The RSQS Items used in the Instrument Dimension 1 Physical Aspects Sub-Dimension 1 Appearance 1. The store has modern-looking equipment and fixtures 2. The store and its physical facilities (trial rooms and restrooms) are visually attractive 3. Materials associated with this stores service (such as shopping bags, loyalty cards and catalogues) are visually appealing 4. The store has clean, attractive and convenient physical facilities (restrooms, fitting rooms) Sub-Dimension 2 Convenience 5. The store layout at this store makes it easier for customers to find what they need 6. The store layout at this store makes it easier for customers to move around in the store Dimension 2 Reliability Sub-Dimension 3 Promises 7. When this store promises to do something (such as repairs, alterations) by a certain time, it will do so 8. This store provides its services at the time it promises to do so Sub-Dimension 4 Doing-it-Right 9. This store performs the service right the first time 10. This store has merchandise available when the customers want it 11. This store insists on error-free sales transactions and records Dimension 3 Personal interaction Sub-Dimension 5 Inspiring Confidence 12. Employees in the store have the knowledge to answer customers questions 13. The behaviour of employees in this store instils confidence in customers 14. Customers feel safe in their transactions with this store Sub-Dimension 6 Courteousness/Helpfulness 15. The employees in this store give prompt service to customers 16. Employees in this store tell customers exactly when services will be performed 17. Employees in this store are never too busy to respond to customers requests 18. This store gives customers individual attention 19. Employees in this store are consistently courteous with customers 20. Employees in this store treat customers courteously on the telephone. Dimension 4 Problem Solving 21. This store willingly handles returns and exchanges 22. When a customer has a problem, this store shows a sincere interest in solving it 23. Employees of this store are able to handle customer complaints directly and immediately. 34 Dimension 5 Policy 24. This store offers high quality merchandise 25. This store provides plenty of convenient parking for customers 26. This store has operating hours convenient to all their customers 27. This store accepts all major credit cards 28. The store has its own credit card

Appendix II Tesco Financial (1) Financial Times Stock Exchange 100 and Tesco plc

(2) Volume market TESCO

(3) FTSE 100 report

Mean of service quality

Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count Confidence Level(95.0%) 2.35 1.013787 0 0 4.533791 20.55526 9.995361 2.995764 19 0 19 47 20 2.12188

Regression
SUMMARY OUTPUT Regression Statistics Multiple R 0.601887259 R Square 0.362268272 Adjusted R Square 0.326838732 Standard Error 5.648546064 Observations 20 ANOVA df Regression Residual Total 1 18 19 SS 326.2406926 574.3093074 900.55 Standard Error 1.430547289 0.285823777 MS 326.2407 31.90607 F 10.22503 Significance F 0.004988

Intercept X Variable 1

Coefficients 10.99782358 0.913967482

t Stat 7.687843 -3.19766

P-value 4.3E-07 0.004988

Lower 95% 7.992355 -1.51446

Upper 95% 14.00329 -0.31347

Lower 95.0% 7.99235

-1.5144

Mean of strongly agreed customers

Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count Confidence Level(95.0%) 8.85 1.539438 7.5 0 6.884575 47.39737 -1.56864 0.167801 19 0 19 177 20 3.22208

Personal Information Gender Age

Male 9 Under 25 4 Service/Job

Female 11 26 34 9 Business 2 Satisfied/ Agree 3 5 0 2 3 1 2 4 7 5 3 4 1 5 6 9 2 12 4 2 No 6 11 12 15 Two 7 Twice a week 5 Three 4 Thrice a week 2 Above four 5 Once a month 5 35 40 5 Student 8 Disagree 0 0 1 0 2 0 0 9 4 2 0 9 10 8 7 3 14 2 10 15 Over 40 2 Housewife 3 Strongly Disagree 0 0 19 0 1 0 0 0 0 0 0 2 9 4 3 0 4 0 3 2

Status Service Items 1. Are facilities attractively to you? 2. Are employees neatly dresses? 3. Are there any hardware and incident objects worth visiting? 4. Is the environment clean? 5. Are the routes clearly instructed? 6. Are products and facilities neatly arranged? 7. Foods are clean? 8. Your questions are answered in the real time. 9. Services meet your needs. 10. Products quality is assured. 11. The company is soundly operated with good image. 12. Sales persons serve you actively. 13. Employees tell you the new company information. 14. Sales persons respond to you even through they are busy. 15. Sales persons assist you in their best condition. 16. Prices of products are reasonably set. 17. Sales persons have professional knowledge on the products. 18. The transaction procedures make customers feel convenient. 19. Sales persons care about needs of customers. 20. Customers maximum interests are taken care of. Loyalty 21. Do you like TESCO? 22. Is there any other supermarket in your area? 23. Do you have a Tesco Clubcard? 24. Any friends/ family of your work in Tesco?

7 Strongly Agree 17 15 0 18 14 19 18 7 9 13 17 5 0 3 4 8 0 6 3 1 Yes 14 9 8 5 Only one

25. How many loyalty cards do you have?

4 Once a week 8

26. How often do you shop at Tesco?

27. Why you prefer Tesco rather than other supermarket? Yes 28. Do you like to recommend the store to other? 29. Are you marked Tescos customer service is excellent? 30. Do you prefer to deposit 1 to take a trolley for shopping in Tesco? 13 11 17 No 7 9 3

Survey questions: Relationship between service quality, customer satisfaction and store loyalty, a case study on Tesco supermarket