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MEASURING SERVICE QUALITY IN DEVELOPING RETAIL

STRATEGIES FOR SUPER MARKETS IN SRI LANKA.

By

Nishan C. Perera

Dip.M (UK), MCIM , MSLIM , Chartered Marketer (UK)


Certified Professional Marketer (Asia Pacific)

A Research Paper submitted to the


Postgraduate Institute of Management
University of Sri Jayewardenepura
in partial fulfilment of the requirements
of the Master of Business Administration Degree

Colombo 08 – Sri Lanka

2003
This is to certify that the research paper on “Measuring Service Quality in
Developing Retail Strategies for Super Markets in Sri Lanka”

By

Nishan C. Perera

has been accepted by the


Postgraduate Institute of Management
University of Sri Jayewardenepura
in partial fulfilment of the requirement
of the Master of Business Administration Degree

………………………... ………………….
Research Supervisor Director - PIM

Date : Date :
LIST OF ILLUSTRATIONS

Figure 01 Types of service quality gaps 08


Figure 02 Service continuum for a product 10
Figure 03 Service quality and the extended marketing mix for services 11
Figure 04 Nordic model of perceived service quality 12
Figure 05 Gaps model on service quality 14
Figure 06 Customer assessment of service quality 14
Figure 07 Service quality dimensions of the three-component model 16
Figure 08 Service quality levels of the multilevel model 17
Figure 09 Service quality dimensions of the hierarchical approach model. 18
Figure 10 Conceptual framework of the CALSUPER model 19
Figure 11 Tracking service quality 20
Figure 12 Service quality and customer satisfaction 23
Figure 13 Functional & technical service quality and willingness to buy 23
Figure 14 Retail planning process 26
Figure 15 Merchandising mix strategies 28
Figure 16 Influences on store location strategy 32
Figure 17 Store facility management mix elements 32-33
Figure 18 Retail promotions mix 35
Figure 19 Types of sales promotional incentives directed to the consumer 37
Figure 20 Customer service strategies in store selection and purchasing 38
Figure 21 Customer service strategy 39
Figure 22 Classifications of in a retail organisational structures 41
Figure 23 Merchandising logistics strategies 42
Figure 24 Original CALSUPER model and suggested modifications 57-58
Figure 25 Broad organizational structure of RPD 62
Figure 26 Business functions of Cargills group 66
Figure 27 Organizational structure of Cargills Food City supermarket 67
Figure 28 Broad organizational structure of Jaykay Marketing Services 70
Figure 29 Organizational structure of SATHOSA 74
LIST OF ILLUSTRATIONS (continued)

Figure 30 Organizational structure of SENTRA 77


Figure 31 Service quality recognition matrix of the five supermarkets 79
Figure 32 Polarization of supermarket segments 84
Figure 33 Overall conclusion of the research 99
Figure 34 Four step process model 102
Figure 35 Service quality gaps identified in the pilot study 122
Figure 36 Service quality gaps identified in the pilot study-graph 123
Figure 37 Classification of the retail industry in Sri Lanka 129
Figure 38 Turnover of the five supermarkets 134
Figure 39 Growth in turnover of five the supermarkets – 2000/2002 135
Figure 40 Change in sales share between five supermarkets 136
Figure 41 Growth in supermarket outlets 137
Figure 42 Super market retail life cycle 138
Figure 43 Complains handling procedure - SATHOSA 141
Figure 44 Frequency of visits 142
Figure 45 Gender break down of the respondents 143
Figure 46 Marital status of respondents 144
Figure 47 Age distribution of respondents 145
Figure 48 Household income distribution of respondents 146
Figure 49 Gap method – service quality 165
Figure 50 Gap method – product quality/prices paid 166
Figure 51 Percentage method 167
Figure 52 Percentage method – Service quality – graphical 169
Figure 53 Percentage method – Product quality/prices - graphical 170
Figure 54 Importance perception matrix – service statements 171
Figure 55 Importance perception matrix – product statements 172
Figure 56 Importance perception matrix – sub dimensions 173
Figure 57 Importance perception matrix – dimensions 174
Figure 58 Gaps & strategy interface 175
LIST OF TABLES

Table 01 Results of the pilot study 02

Table 02 Elements of the extended marketing mix for services 10

Table 03 Considerations in retail location planning 32

Table 04 Considerations for Store facility management elements 33

Table 05 Retail pricing strategies 34

Table 06 Income distribution of respondents and price expectations 83

Table 07 Names of supermarkets operating in Sri Lanka 130

Table 08 Geographical distribution of super markets 132

Table 09 Customer satisfaction index – Arpico 139

Table 10 SUPER TEST - KEELLS 140

Table 11 Correlation between income level and price expectations 147

Table 12 Correlation between service quality and overall satisfaction S1 148

Table 13 Correlation between service quality and overall satisfaction S2 149

Table 14 Correlation between service quality and overall satisfaction S3 150

Table 15 Correlation between service quality and overall satisfaction S4 151

Table 16 Correlation between product quality and overall satisfaction 152

Table 17 Correlation between prices paid and overall satisfaction 153

Table 18 Hypothesis testing of H1 using a null hypothesis 157

Table 19 Hypothesis testing of H2 using a null hypothesis 158

Table 20 Hypothesis testing of H3 using a null hypothesis 159

Table 21 Summary of regression model for all supermarkets 160


LIST OF APPENDICES

Appendix I

I-A Report of the pilot study to establish the research problem. 115

I-B Questionnaire used for the pilot study 119

I-C Respondent profile of the pilot study 121

I - D1 Service quality gaps identified in the pilot study 122

I - D2 Service quality gaps identified in the pilot study-graph 123

Appendix II

II - A Guidelines used for the interviews 124

II - B Questionnaire used for the main study 125

Appendix III

III - A Classification of the retail formats in Sri Lanka 129

III - B Names of supermarkets operating in Sri Lanka 130

III - C Geographical distribution of supermarkets 132


III - D Geographical distribution of supermarkets - map 133
III - E Turnover of the five supermarkets 134
III - F Growth in turnover of five supermarkets – 2000/2002 135
III - G Change in sales share between five supermarkets 136
III - H Growth in supermarket outlets 137
III - I Supermarket retail life cycle 138

III - J Customer satisfaction index – Arpico 139

III - K Keels Super Test , service quality measurement technique. 140


III - L Complains handling unit at the ministry of commerce 141
LIST OF APPENDICES (Continued)
Appendix IV

IV - A Frequency of visits 142


IV - B Gender break down of the respondents 143
IV - C Marital status of respondents 144
IV - D Age distribution of respondents 145
IV - E Household income distribution of respondents 146
IV - F Correlation between income and price expectations 147
IV - G 1- 4 Tabulation of results for service quality – S1 to S4 148
IV - H Correlation between product quality and overall satisfaction 152
IV - I Correlation between prices paid and overall satisfaction 153
IV - J Results of the multiple regression analysis 154
IV - K 1-3 Hypotheses Testing 157
IV - L Summary of the regression analysis 160

Appendix V

V-A SUPER GAP TEST questionnaire 161


V-B Score method 162
V - C1 Gap method – service quality 165
V - C2 Gap method – product quality/prices paid 166
V - D1 Percentage method – table for all 167
V - D2 Percentage method – service quality – graphical 169
V - D3 Percentage method – product quality/prices - graphical 170
V - E1 Importance perception matrix – service statements 171
V - E2 Importance perception matrix – product statements 172
V - E3 Importance perception matrix – sub dimensions 173
V - E4 Importance perception matrix – dimensions 174
V-F Gaps & strategy interface 175
V-G SUPER GAP MONITER – Index to monitor performance 177
ACKNOWLEDEGEMENT

The writer would like to acknowledge the contribution made by several individuals in making
this research study a success.

A special note of appreciation is extended towards, Dr. Uditha Liyanage, for his insights in
guiding and supervising this research study.

The PIM librarian staff together with the librarians of the University of Colombo, University of
Sri Jayewardenepura, and the American Center is commended for an excellent job done in
extracting important articles required for the research.

The managers and the executives of Jaykay Marketing, Cargills Food City, Sentra, Sathosa and
Arpico supermarkets needs a special word of thanks for the support extended in carrying out this
study. The contribution by Mr. Shantha Kularatne at Arpico, Mr. Kumar De Silva at Jaykay
Marketing, Mr. Daraniyagala at Sentra and Mr. Wasantha Wanigasooriya at Sathosa is
appreciated for spending time explaining their operations and coordinating arrangements for the
writer in carrying out the study in their supermarkets.

Mrs. Niranjala Sendanayake at Lanka Market Research Bureau, Mr. Lohitha Karunaratne at
Arpico, Mr Dusty Alahakoon at Ceylon Tobacco Company is thanked for the extended support
given in helping the writer to compute and analyse data in interpreting the outcome of the study.

The director, the members of the faculty and all the staff at PIM, are acknowledged for their
immense contribution extended to me during my stay at PIM.

Finally I would like to thank my wife Tania for her unstinted support given in making this a
reality and my son Arith, as young as he is, in understanding his father spending long hours
away from him in completing this study.
ABSTRACT
The focus of this research study is measuring service quality as a basis for developing retail
strategies for the supermarkets in Sri Lanka. The study limits its scope to supermarkets, which
sells fast moving consumer goods (FMCG).

As identified in literature, service quality assessment is the discrepancy between the


expectations of a service and the perceived performance of that service. If perceived
performance meets or exceeds the expectation, then service quality could be regarded as good
(positive or no gap) and if it falls short of the expectation, then service quality could be stated as
poor (negative gap). The core problem that this research addresses is the non-recognition of
service quality gaps by Sri Lankan supermarkets in serving their customers. The writer argues
that this may result in a decrease in the overall satisfaction among customers in shopping in
supermarkets. The writer defines non-recognition of service quality as a combination of
measurement and awareness of service quality gaps by the supermarkets.

In studying the above problem, this research study unfolds four clear objectives.

The first objective is to assess the state of service quality recognition levels in the supermarkets
in Sri Lanka. In achieving this objective the writer develops the service quality recognition
matrix, which is a combination of two dimensions, as per the definition given for service quality
recognition. Through the intersection of these two dimensions, four types of supermarkets are
argued to be in force. These are

S1 type – Supermarkets that measure and are aware of service quality gaps.
S2 type – Supermarkets that measure but are not aware of service quality gaps.
S3 type – Supermarkets that does not measure but has an idea of the service quality
S4 type – Supermarkets that does not measure neither are aware of service quality gaps.

Five of the largest supermarkets, which sell FMCG products in Sri Lanka, were studied and
were plotted into this matrix based on their level of awareness and how they measure service
quality gaps in their supermarkets

The second objective set for the research was to study the relationship between the recognition
of service quality and the overall satisfaction in shopping in supermarkets. The writer questioned
the relationship between service quality gaps and the overall satisfaction in shopping in
supermarkets in depth and presented his argument that S1 type supermarkets would increase
their customer satisfaction with service quality leading to a higher impact on the overall
customer satisfaction than the rest. A conceptual model was developed where three hypotheses
were presented for testing which essentially stated that the overall satisfaction of customers who
shop in S1 type supermarkets are greater than customers who shop in either S2, S3 or S4 types.
The rationale for this argument was that supermarkets, which had a high level of service quality
recognition level, understood the gaps better than the others. Through the development of retail
strategies they were able to close some of those negative gaps efficiently than the rest.

The third objective set for the research was to identify the influence of satisfaction with product
quality and satisfaction with prices paid on the overall satisfaction of the super market customer.
In order to test the second and the third objectives, a questionnaire survey was carried out among
4 supermarkets representing each of the quadrants of the service quality recognition matrix. The
overall satisfaction of those supermarkets was arrived at by measuring gaps in service quality,
product quality and satisfaction with prices paid. The questionnaire was adapted by a similar
study done in supermarkets in Spain with minimum changes. The findings suggested that the
overall satisfaction of S1 supermarkets were higher than S2, S3 or S4 in terms of an average.
However during the hypotheses test, although S1 satisfaction was significantly higher than S2
and S3, it was not significantly different from S4. This lead to the rejection of hypotheses three.
(S1 satisfaction > S4 satisfaction).

In understanding the possible reasons for the above relationships through correlation analysis,
multiple regression analysis, and analysis of supermarket customer segments and through other
cross analysis, the following conclusions were arrived at.

The customers of the four supermarkets could be clearly segmented into two distinct groups
based on their level of income and price expectations. They are price inelastic customer
segments (S1 and S2) and price elastic customer segments (S3 & S4)

Service quality appears to have a significant impact on the overall satisfaction of all
supermarkets.

Satisfaction with product quality acted as a qualifying criterion in influencing the overall
satisfaction of supermarket customers irrespective of segments.
In more price inelastic markets, service quality acts as a clear determinant of overall
satisfaction while satisfaction with product quality and prices paid acts as qualifiers. In more
price elastic markets, satisfaction with prices would become a clear differentiator of overall
satisfaction while product quality and service quality would act as qualifiers.

The above findings explain why the third hypothesis which compared overall satisfaction with
price inelastic (S1) and price elastic (S4) market segments had different levels of influence from
service quality and prices. The original conviction of the writer, which stated service quality as a
determining criterion of satisfaction did not hold true for every situation. The overall conclusion
was that the impact of service quality, product quality and prices paid in influencing the overall
satisfaction needs to be understood and commented based on the respective market segments the
supermarkets were targeting to.

The fourth and the final objective of this study was to make strategy recommendations in closing
service quality gaps. As recommendations the writer will present a four-step model, which gives
new insights as to how, service quality, product quality and gaps in prices paid should be
measured using the SUPER GAP TEST as suggested by the writer. Insights into how gaps could
be quantified using three techniques namely the score method, gap method and the percentage
method will be discussed in length. Recommendations were also made giving the supermarkets
two strategy tools, which could be used as diagnostic tools in bridging the gaps in service
quality. A proposal is made in developing an index in measuring and monitoring the
implementation of the strategies in closing gaps. Finally the writer also recommends two generic
strategies for supermarkets to consider influencing the overall customer satisfaction for both
types of segments that were identified in the research.
TABLE OF CONTENTS

List of Illustrations …………………………. ii


List of Tables …………………………. iv
List of Appendices …………………………. v
Acknowledgement …………………………. vii
Abstract …………………………. viii

PART I

CHAPTER I - INTRODUCTION

1. Background …………………………. 01
2. Research problem …………………………. 01
3. Justification of the problem …………………………. 02
4. Objectives of the study …………………………. 03
5. Significance of the study …………………………. 04
6. Scope of the study …………………………. 05
7. Chapter framework …………………………. 06

CHAPTER II - LITERATURE REVIEW

1. Introduction …………………………. 07
2. Definition of service quality …………………………. 07
3. Service quality and the service marketing mix …………………. 09
4. Techniques in measuring service quality ……………….………… 12
5. Service quality, product quality, prices and customer satisfaction 21
6. Developing retail mix strategies ………………………….. 25
7. Summary …………………………. 44
CHAPTER III - CONCEPTUAL FRAMEWORK & METHODOLOGY

1. Introduction …………………………. 45
2. Research question …………………………. 45
3. Argument …………………………. 45
4. Conceptual framework ………………………… 46
5. Hypothesis ………………………… 49
6. Definition of key concepts ………………………… 50
7. Operationalisation ………………………… 51
8. Methodology ………………………… 55
8.1 Methodology of collecting information ……………………. 55
8.2 Selection of the sample ………………………… 55
8.3 Questionnaire design ………………………… 55
8.4 Method of data analysis ………………………… 57
9. Limitations of the study …………………………. 58
10. Summary …………………………. 59

PART II

CHAPTER IV – PRESENT SERVICE QUALITY RECOGNITION LEVELS

1. Introduction …………………………. 60
2. Super markets at a glance ………………………… 61
3. Arpico Super centers ………………………… 62
4. Cargills Super markets ………………………… 66
5. Keells Super markets ………………………… 70
6. Sathosa Super markets ………………………… 74
7. Sentra Super markets ………………………… 76
8. Service quality recognition matrix for the five supermarkets …….. 79
9. Summary …………………………. 80
CHAPTER V – DATA ANALYSIS AND DISCUSSION OF FINDINGS

1. Introduction ………………………….. 81
2. Target market profile of the sample ………….……………….. 81
3. Identifying super market segments …….……………………. 83
4. Findings on service quality recognition and overall satisfaction…… 85
5. Findings on product quality and overall satisfaction ……………… 86
6. Findings on prices paid and overall satisfaction ……………..……. 86
7. Discussion of finding of the multiple regression analysis …………. 87
8. Testing of hypothesis ………………………….. 89
9. Summary ………………………….. 91

CHAPTER VI – CONCLUSIONS

1. Introduction ………………………….. 92
2. Service quality recognition in Sri Lankan supermarkets .…………. 92
3. Relationships between gaps and satisfaction of those attributes…… 92
4. Relationships between service quality and overall satisfaction ..….. 94
5. Relationships between product quality and overall satisfaction ..….. 94
6. Relationships between prices paid and overall satisfaction ……….. 95
7. Service and prices vs overall satisfaction ………………………….. 96
8. Conclusions from hypothesis testing …………………………. 97
9. Overall conclusion of the study …………………………. 99
10. Summary …………………………. 100
CHAPTER VII – RECOMMENDATIONS

1. Introduction …………………….… 101


2. Four step process approach in closing gaps ………. .…………….. 102
3. Step one – Measuring gaps …………………….… 103
4. Step two – Analysing the gaps .……………………… 104
5. Step three – Building strategies to close gaps …..…………………. 106
6. Step four – Monitoring gaps .………………………. 110
7. Overall strategies based on research findings ……………………… 112
8. Summary ………………………. 114

Appendix I - Pilot study results …………………………. 115


Appendix II - Questionnaires used for the research …………... 124
Appendix III - Glance at the supermarket industry in Sri Lanka 129
Appendix IV - Survey data …………………………. 142
Appendix V - Recommendations …………………………. 161

List of references …………………………. 179

Bibliography …………………………. 182

Interview schedule …………………………. 183


Chapter I

INTRODUCTION

1. Background

Service quality is an essential element in the customer satisfaction process. However


the supermarkets under study, does not heed to recognise the importance of measuring
service quality and identifying gaps that may have caused by the existing retail strategies
in practise. This research paper is an attempt to find out the relationship between the
service quality recognition levels and customer satisfaction in the Sri Lankan
supermarkets selling FMCG products and recommending the measurement of same as a
basis for developing retail strategies to close such gaps.

2. Research Problem

“The non-recognition of service quality gaps by the supermarkets in Sri Lanka in


serving supermarket customers.”

Service quality assessment relates to the discrepancy between customer expectations and
perceived performance of the service delivery. This will be explored in depth under the
literature review. As per this short definition of service quality, three types of service
quality gaps could be identified. They are the no gap situation, positive gap situation and
the negative gap situation. Out of the three, the most adverse situation would be negative
service quality gaps where by the perceived service delivery falls short of customer
expectations.

As per the problem statement, the writer is of the view that supermarkets in Sri Lanka
does not recognise service quality gaps in serving supermarket customers who shop in
their supermarkets. The result of this would be poor levels of satisfaction with service
quality, which may lead to a decrease in the overall satisfaction in shopping in
supermarkets. In focusing on the problem, the writer argues that non-recognition of
service quality gaps may occur due to one or many of the following;

Not measuring service quality in the supermarkets


Not knowing the existence of service quality gaps in the supermarkets.

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3. Justification of the Research Problem

Lack of published empirical studies on the supermarket industry in Sri Lanka deprives
the writer in quoting previous work in providing evidence that the problem stated is in
existence. A pilot study was commissioned for this purpose.

In order to prove that there is a state of non-recognition of service quality in supermarkets


in Sri Lanka, highlighting the existence of service quality gaps would provide sufficient
evidence for the existence of the problem at hand. Out of the three service quality gaps
that the writer mentioned above, the existence of negative service quality gaps (where the
expected service falls short of the perceived service level) might seem to be harmful to
the supermarkets. No supermarket would like to operate with these negative gaps if they
are aware of its existence. On the other hand a “No gap” situation or a “Positive gap”
situation will help the organisation in satisfying its customers. Table one would present
the nature of the service quality gaps that seem to exist in a selected sample of
supermarkets based on the results of the pilot study.

Table 01 - Results of the pilot study

Not Responded
Negative Positive
Service No Service Service
Service sub dimension Quality Gap Quality Gap Quality Gap
Expectations> Expectation= Expectation<
Perceived Perceived Perceived
performance performance performance
Polite Staff 62% 31% 6% 1%
Staff willing to help 62% 29% 8% 1%
Staff advice best buy 52% 26% 19% 3%
I am treated equally 46% 38% 10% 6%
Kept very clean 54% 40% 2% 4%
Layout helps to find products 55% 41% 3% 1%
Outlet design helps easy movement 61% 34% 2% 3%
Products appropriately displayed 50% 38% 5% 7%
Prices clearly marked 62% 30% 4% 4%
Special offers communicated 66% 29% 3% 2%
Short waiting time at the cash registers 71% 20% 7% 2%
Stock availability 66% 25% 4% 5%
Car parking facilities 68% 27% 4% 1%
Overall Service Quality Gap 59% 32% 6% 3%
Source - Pilot study carried out by the writer

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The above table clearly indicates that almost in all the dimensions tested, more than 50%
of the respondents felt that the perceived performance of the service had fallen short of
their expectations of that service. The overall negative percentage was 59%. Only 6%
felt that the perceived performance encountered was more than their expecatations. 32%
experienced a no gap situation meaning that they were satisfied with the experience when
comparing with their expectations.

When you analyse the above service quality gaps, one could say that if supermarkets
recognise service quality gaps then no supermarket would allow the existence of negative
service quality gaps as it may lead to customer dissatisfaction. This it self proves that the
level of service quality recognition by supermarkets at present is very low.

The reader is requested to refer appendix one A – D of this study for the methodology
used, the sample chosen, the questionnaire used and the detailed quantification of the
service quality gaps of the pilot study.

4. Objectives of the Study

There are four objectives set to achieve in this study. They are as follows;

1) To assess the present service quality recognition levels of the supermarkets, which
sell FMCG products in Sri Lanka, based on the existing techniques used in
measuring service quality and their level of awareness of such gaps.

2) To study the relationship between the recognition of service quality and the
overall satisfaction in asserting their level of influence on the overall satisfaction
of supermarket customers.

3) To ascertain the influence of satisfaction with product quality and prices paid on
the overall satisfaction of supermarket customers.

4) To recommend a process in closing gaps to increase overall satisfaction of


supermarket customers by developing retail strategies.

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5. Significance of the Study.

The significance of this study is presented from the three points of view as identified
by the writer.

The significance of service quality in the overall satisfaction of supermarket customers.


The significance of the study to the super market operators in Sri Lanka.
The significance of the supermarket industry to the Sri Lankan consumers

In assessing the significance of service quality for the overall satisfaction, literature
clearly points out the significance of service quality in influencing the overall satisfaction
of the customers in terms of the pre purchase evaluation as well as the post purchase
satisfaction of customers. This will be explored in the literature review in detail.

In discussing the significance of the study to the super market operators in Sri Lanka the
following are sited as valid inputs.

The assessment of present service quality recognition levels in the industry would give
the major operators an opportunity to asses their stand in the process. This study will
present techniques in measuring service quality in quantifying the existing gaps. This in
turn would help supermarkets to understand gaps more preciously in finding solutions.

The investigation of the relationship between service quality, product quality and the
prices paid in influencing the overall satisfaction process would help supermarkets to
prioritise those three elements in their strategies as per their influence.

The suggested tools and strategies in closing service quality gaps would allow the
operators in enhancing overall customer satisfaction levels in the industry inducing the
non users to patronise supermarkets for their shopping needs.

In terms of the importance of the supermarket industry to the Sri Lankan consumer, the
following trends would allow the reader to understand its significance.

Lifestyle of the Sri Lankan consumer is fast changing. It is moving away from a
traditional timeless orientation to a more time bound orientation. The large number of
women entering the work force, the increased number of women opting to higher
education has made time, a factor that most Sri Lankans tend to compete today. This has
made convenience, a number one priority among many customers. In this regard the

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concept of one stop shopping which the supermarkets promote would allow a continuous
growth opportunity for the industry.

The number of supermarkets operating in Sri Lanka in recent times has expanded rapidly.
As per the data available there are approximately 270 supermarket outlets offering FMCG
products in major areas in the country where the super five chains control 75% of the
outlets. The change in government policy in expanding the service facilities in this sector
through restructuring of the market leader SATHOSA, has created precedence a new set
of norms are being imposed on the industry enhancing customer service.

The high-end supermarkets, which traditionally served the higher segments in society, is
moving down to the middle and lower segments having identified there potential. The
entry of the Sentra supermarket chain together with the restructuring of the SATHOSA
chain has brought the concept of discounted super marketing into the country taking super
marketing into the masses.

The above reasons will justify the significance of this study.

6. Scope of the Study

The scope of the study is limited to the retailing supermarket industry, which sells fast
moving consumer goods (FMCG). The qualifying criteria in identifying them would be
outlets, which offer;

Goods to the retail customers for final consumption


Goods which are on self service display
Outlets which sell FMCG goods

Examples of organizations that are involved in this industry would be, Cargills Food City,
Keells Super, Arpico Supercentres, Sentra, Crystals, Sathosa supermarkets & other
regional supermarkets. Other retail outlets, which sell different goods or similar goods
without self-service, will not be included into this study for reasons of manageability. As
an outcome of this study, specific organisations would be able to recognise service quality
gaps and build retail strategies in reducing negative gaps influencing an increase the
overall satisfaction of supermarket customers.

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7. Chapter Framework

The proceeding chapters of this study will be organised as follows.

Literature review will present the following


 Definition of service quality
Chapter Literature Review  Service quality and the service
Two marketing mix
 Present techniques in measuring service
quality gaps
 Relationship between service quality
and customer satisfaction
 Retail mix strategy components

 Research question and the argument


Methodology and  Conceptual framework
Chapter conceptual  Hypotheses
Three framework  Operationalisation and definition of key
concepts
 Methodology
 Limitations of the study

The existing service quality recognition


Present recognition levels will be understood by studying the
Chapter levels of service super five in terms of how they measure
Four quality gaps in service quality and to which extent they
supermarkets understand the service quality gaps and
plot them into the service quality
recognition matrix.

Four supermarkets representing each of


Analysis of data, the service quality recognition levels as
Chapter testing hypothesis & presented in the conceptual framework
Five discussion of findings will be studied using a questionnaire and
the results will be discussed in validating
the relationships discussed in the
hypotheses presented.

 The relationships between gaps and


satisfaction levels of service, product
Chapter Conclusions of the quality and prices will be concluded.
Six study  The composite influence from service
quality, product quality and prices paid
in influencing the satisfaction.
 The conclusions of the hypothesis
testing will be discussed.

Recommendations will be presented as a


Chapter Recommendations process in measuring gaps, analysing
Seven them and how strategies should be
developed to close them.

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Chapter II

LITERATURE REVIEW

1. Introduction

The literature review is presented in several sections in this chapter. Section two will
examine the definition of service quality. Section three will identify the elements of the
service marketing mix that would fall under service quality. Section four will present
knowledge of the existing dimensions & techniques used in measuring service quality in
general for the service industry and in particularly for the selected retailing supermarket
industry. This section will also discuss how service quality could be monitored over time
very briefly. Section five will review existing knowledge on the relationships between
service quality and customer satisfaction and other influences of customer satisfaction.
Finally section six will look at the components of the retail mix strategies in getting more
insights in building retail strategies.

2. Definition of Service Quality

The following are some definitions given by some researchers who have pioneered the
service quality theory.

The perceive service quality will be the result of an evaluation process in which
customers compare their perceptions of service delivery and its out come against what
they expect ” (Christian Gronroos : 1984)

The discrepancy between customer expectations and perceptions of service


(Parasuraman, Zeithamal and Berry: 1988)

A measure of how well the service level (perception) matches customer expectation.
Delivering quality service means conforming to customer expectations on a
continuous basis. (Lewis and Booms: 1989).

The above definitions clearly identify two components of service quality. They are

1) Expectations of the service


2) Perceived performance of that service encounter.

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Service quality is essentially the gap that consumers experience between the
expectation of the service and the perceived performance of the service experience.
Based on the above definitions and the two essential components of service quality, the
gaps that a consumer could experience could be conceptually presented as follows.

Figure 01 – Types of Service Quality Gaps

Service Quality

GAP Perceived Performance by


Customer expectations of 3 types the customer (as a consequence
the service of gaps of the service encounter)

Negative Gap No Gap Positive Gap


Expectations > Perceived Expectations = Perceived Expectations < Perceived
of the performance of the performance of the performance
service of the service service of the service service of the service

Source – Presented by the writer based on the review of literature

As one may see, there could be three types of gaps in measuring service quality. A
“negative gap” could be where the perceived performance of the service delivery falls
short of customer expectations. A “no gap” is a situation where the perceived
performance of the service matches with the expectations. A “positive gap” is where the
perceived performance of the service is higher than the expectations. A negative gap is
one major factor that could lead to customer dissatisfaction. A no gap situation would
influence customer satisfaction and a positive gap may influence customer delight.

It would be interesting to further understand the two components of service quality in


brief.

(i) Customer expectations. Parasuraman, Zeithamal & Berry (1990) says that customer
expectations could be influenced by four factors. They are word of mouth, personal
needs, past experience of a service and external communications. There have been many
other studies, which has looked at the formulation of customer expectations.

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(ii) Perceived performance. Bitner (1994) says that customer’s perceived performance is
created through the “moments of truths” that occur whenever the customer encounters the
service organization. Through such moments of truth encounters, perceptions of service
accumulate over time leading to the determination of service quality gaps by a
comparison of the perceived performance against the expectations.

Service quality is an important issue due to many reasons.

The first aspect would be that over half of our gross domestic production is contributed
from the service industry. This is also a trend world over.

Secondly almost all organizations compete to some degree on the basis of service.

Thirdly superior service quality is proving to be a winning strategy in gaining competitive


advantage. The importance of the concept is self-evident.

3. Service Quality and the Service Marketing Mix.

In many literature on service, it has been argued that the four “P”s of the traditional
marketing mix does not reflect the entirety of the service situation, as a service is
differentiated from a physical product with features such as intangibility, perishability,
variation of the service delivery and inseparability. The traditional marketing mix has
been extended to seven “P”s for service situations. Zeithaml and Bitner (2000) present the
elements of the extended marketing mix for services as follows. Please refer table two in
page ten.

In determining which elements of the service marketing mix is represented by service


quality, one may have to understand the nature of the service on offer it self. Levitt says

That there is no such thing such as service industries. There are only industries whose
service components are greater or less than those of other industries. Every body is in
service. (Levitt : 1972)

Based on Levitt’s argument the service continuum was developed which indicates
different degrees of tangibility/intangibility of a product. Please refer figure two in page
ten for the service continuum of a product.

9
Table 02 – Elements of the Extended Marketing Mix for Services
Physical goods features Price level
Quality levels Terms
Product assortment Discounts
Product Packaging, warranties Price Allowances
Branding Flexibility
Service mix offered Differentiation
Channel type Promotional blend
Exposure Advertising
Place Intermediaries Promotions Sales promotions
Outlet location Publicity
Transportation Sales personnel
Storage
Facility design Flow of activities
Equipment Process Steps in a transaction
Physical Signage Customer involvement
Employee dress Customers
evidence Other tangibles like – Employees – Recruitment,
People
reports, business cards, Training, motivation,
statement of guaranties rewards, team work
Source - Zeithamal and Bitner, 2000, pp. 187-190

Figure 02 – Service Continuum for a Product.

Haircut, baby-sitting
Service
dominated
Advertising agency
product
( intangible)
Air travel
Restaurant/supermarket

Balanced
Automobile
House

Balanced items
Good
dominated
Salt

product
(tangible)
Source – Marketing Fundamentals, BPP Text 2001, P. 345

10
Based on this continuum one will see that each product will have different levels of
physical product elements and service elements in the product offer. If you take super
marketing, it would come under the balance item where the quality of the physical goods
and the intangible aspects such as service elements are equally important in the product
composition in satisfying the customer.

In the seven “P”s presented above, we would look at the tangible component of the
product quality and the branding aspect separately as they are tangible in nature. However
the services mix elements, which are part of the product design, is taken under service
quality, as it is essentially intangible. Price would be presented separately as price by its
own could influence customer satisfaction either way. The other elements of the service
marketing mix could be bundled into aspects of service quality. Please refer the below
figure for the concept presented above.

Figure 03 – Service Quality and the Extended Marketing Mix for Services

Price

Product
1. Branding
Service 2. Physical products
Marketing 3. Service Mix
Perceptions
Mix Promotions
created by
Service
quality

Place Customer
the marketer
Physical evidence Expectations
through
People
these
Processes
elements

Source – Presented by the writer based on literature review

The relationships between product quality, price and service quality on customer
satisfaction levels will be explored in section 5. The next section (4) will present
information as found in literature on various attempts made by researchers in building
models of service quality dimensions and measuring them.

11
4. Techniques in Measuring Service Quality

In this section the writer will examine the dimensions and techniques used to
measuring service quality. Also literature, which discusses how service quality measures
are monitored over time, are also explored.

There are many methodologies suggested in literature in measuring service quality and
service quality dimensions. The origins of the service quality theory lie in the literature
presented on product quality and customer satisfaction. However in recent times there had
been much research on service quality. It is said that service quality is the most
researched topic to date. The following are some of the important elements of the service
quality theories presented by different researchers. They are as follows

(i) The Nordic Model by Gronroos in 1984.

This is one of the earliest models of service quality presented in 1984 by Christain
Gronroos. It essentially highlights two service dimensions in measuring service quality.
The following diagram will elaborate this further.

Figure 04 – Nordic Model of Perceived Service Quality

Expected Service Perceived Service Quality Perceived performance


of the service

Technical Quality Functional Quality


 Attitudes, behaviour
 Technical solutions  Customer contacts
 Know how  Accessibility
 Computerized systems  Appearances
 Machines  Service mindness
 Internal relations

Source – Gronroos, 1982, p. 79 (adopted)

As presented above, the Nordic model presents service quality as the interaction between
expected service and the perceived performance of the service. The gaps are similar to
that presented in the definition.

12
The two service quality dimensions as elaborated by the Nordic model are the technical
quality and the functional quality of the service. As indicated above, the technical quality
reflects the outcome of the service act or what the customer receives in the service
encounter. They include aspects such as technical solutions; know how, computerized
systems and the machinery used to deliver the service.

Functional quality represents how the service is delivered. They deal with the attitudes of
the staff that deliver the service, their level of contact with the customer, accessibility, the
staff appearances, service mindness, behaviour and internal relations. Subsequent
research has shown that the functional quality of a service is very important in creating a
positive service quality as identified.

Both these dimensions would relate to the service quality as suggested by the Nordic
model.

(ii) The SERVQUAL based on Gaps Theory (The American model) by


Parasuraman, Zeithamal and Berry 1988.

To date this is the most widely used and maybe the most researched model of service
quality. These researchers introduced a groundbreaking model called the “gaps model”
indicating five types of gaps. Also they developed a technique called the SERVQUAL
scale in measuring service quality in the service industry. Please refer figure five in page
14 for the gap model presented by the authors.

Parasuraman, Zeithamal and Berry (1990) found that there could be five types of gaps
that would occur in a typical service encounter. They defined the fifth gap as service
quality. Their research proved that gap one to four leads to gap five. In order to measure
service quality they came up with a scale called SERVQUAL, which was, constructed
with five service quality dimensions. (initially ten later revised to five). Those dimensions
are presented in figure six in page 14.

13
Figure 05 – Gaps Model on Service Quality

Expected Service

Gap 05 – known as service quality

Perceived service
Customer
Service External
Service provider delivery Gap 04 communications
Gap 03
Gap 01 Service quality specifications

Gap 02
Management perceived
performance of customer

Gap 01 – Customer expectations and management perceptions gap


Gap 02 – Management perceptions and service quality specifications gap
Gap 03 – Service quality specifications and service delivery gap
Gap 04 – Service delivery and external communications gap
Gap 05 – Gap between customer expectations and perceived performance
Source - Parasuraman, Zeithamal and Berry , 1990 , p. 46

Figure 06 – Customer Assessment of Service Quality

Expected Service Perceived Service


Perceived Service Quality

Reliability Responsiveness Empathy Assurance Tangible

Source - Parasuraman, Zeithamal and Berry , 1990 , p. 23

Within these five service quality dimensions, the SERVQUAL scale has 22 questions.
They used a seven-point scale to capture the customer expectations and their perceived

14
performance separately. The gaps are arrived by subtracting the scores for perceived
performance from the expectations scores. The nature of the service quality gap is then
assessed. They found in the five industries that they carried their research namely the
retail banking, credit cards, securities brokerage, long distance telephone call and product
repair industry, for most dimensions the scores were negative, indicating the perceived
service quality performance did not meet the expectations of the customer.

Parasuraman, Zeithamal and Berry (1990) indicated that the SERVQUAL scale could be
used as a generic model for almost for all of the industries although their research was an
outcome of five industries. However Finn & Lamb (1991) concluded that the
SERVQUAL scale is not valid in a retailing scenario. The CALSUPER study also
concluded that the SERVQUAL is not generic scale and it cannot be used without
adapting to the retail setting.

It is believed that SERVQUAL is not a generic model as intended by the researchers but
needs to be adapted to industry settings and the type of services that are being measured.
However this research brought light into the need to measure service quality and gave
researchers insight into further development of service quality techniques. One could say
that the contribution made by these researchers has become the foundation to all service
quality measures where various researchers are either improving or coming up with
different dimensions as opposed to the given original SERVQUAL scale.

(iii) The Three-Component Model by Rust and Oliver in 1994.

Rust and Oliver (1994) expanded the Nordic model and added a third dimension. They
emphasised the need to look at the service environment as an important dimension of
service quality.

The first service dimension, which was the service product, was the relevant feature of the
service. This is the service that is designed to be delivered. In involves specific features of
the service. In other words it was the technical quality of the service.

The second is service delivery, which is linked to the role of performances in the delivery
of the technical quality of the service. In other words as Gronroos identified, it is
essentially the functional quality of the service.

15
The third and the new element, which is service environment, could be viewed as the
internal environment, which is focused on organisational culture, and external
environment which primary looks at the physical ambience of the service setting. They
also brought the physical product into the service setting. The following diagram will
show their conceptualisation.

Figure 07 – Service Quality Dimensions of the Three-Component Model

Expected Service Perceived Service Quality Perceived Service


performance

Service Environment
(Functional Quality)

Service Product
Service Delivery

Physical

(Technical
product

Quality)

Source – Rust and Oliver, 1994, pp. 1-18

Based on the above dimensions, one could measure service quality and the gaps could be
identified.

(iv) The Multilevel Model by Dabholkar ,Thorpe and Rentz in 1996.

Until this model was presented, service quality was measured using dimensions of
one level. Dabholkar revealed that there are sub dimensions that also need attention
within a service dimension. They primarily categorized primary dimensions and sub
dimensions in measuring service quality. They also looked at service quality in a retailing
scenario. Their conceptual thinking is presented as follows.

16
Figure 08 – Service Quality Levels of the Multilevel Model

Retail Service Quality

Primary dimension

Sub dimensions

Source – Journal of Marketing, July 2001, p.35

Their contribution was that in measuring service quality, one should understand the
primary dimensions and then the sub dimensions of those primary dimensions. By
measuring the sub dimensions one would arrive at the primary dimensions and then arrive
at the final service quality. This model lead to a further expansion of the service quality
theories.

(v) The Hierarchical Approach by Brady and Cronin Jr. in 2001

Using the multilevel model and the three-factor model, the above researchers came out
with the “ The Hierarchical Approach” with three primary service quality dimensions and
nine sub dimensions of service quality. This was one of the most comprehensive models
presented on service quality dimensions.

Please refer figure nine for the conceptual framework of the model.

One very interesting sub dimension, which this research produced, was the concept of
valence. Valence captures attributes that control whether customers believe the service
outcome is good or bad regardless of their evaluation of any aspect of the experience. For
example bad weather conditions, bad credit situations, effects the customer’s judgement
of the service quality. This seems to be a fairly balanced model of service quality
dimensions.

17
Figure 09 - Service Quality Dimensions and Sub Dimensions of the Hierarchical
Approach Model.

Service Quality

Interaction quality Physical Environment Out come quality


quality

Social Factors

Waiting Time
conditions

Tangibles
Expertise
Behavior

Ambient
Attitude

Valence
Design
.

Source - Brady and Cronin Jr, 2001, p. 37

However the researchers conclude that this model might not be representative across all
industries as the study was restricted to fast foods, photograph developing, amusement
parks and dry cleaning which are more pure services. Also a 12-month time lag between
data collection seem to have influence levels of expectations against perceived
performance.

(vi) CALSUPER Model (Supermarket Retailing Industry) by Vazquez et. el in 2001

The constant criticism of the SERVQUAL scale as a generic model led researchers to
find out the validity of the scale to be used in various industries. One such outcome was
the CALSUPER study. This was a study done in Spain adopting the SERVQUAL scale
specifically to the supermarket retailing industry. It uses four primary dimensions and 18
sub dimensions to measure service quality in supermarkets. The model and the
dimensions are presented in figure ten

The CALSUPER model has been specifically developed to measure service quality in a
super marketing retailing industry. This is a specific study for a specific industry based on
self-servicing principles. For the measurement of service quality in the retailing service
industry in Sri Lanka this scale could be used with minimum modifications.

18
Figure 10 – Conceptual Framework of Service Quality of the CALSUPER Model

Service
Quality

Physical Reliability Personal Policies


Aspects Interaction

Doing it well
Convenience
Appearance

Responsive

assortment
Assurance

Technical
promises
Keeping

quality

Brand
V14 V17 V22 V1 V6 V5 V9 V10
V18 V2 V20 V16 V12
V19 V8 V24
V11 V25
V14 Appearance The store is characterized by is cleanliness & efficient running
V17 The section layout enables customers to easily find the products
V18 The outlet design helps customers to move around with ease
Convenience
V19 The products are appropriately displayed on the shelves
V22 Keeping promises There are always stocks of products/brands desired by customers
V1 In this out let product prices are clearly indicated
V2 This outlet gives punctual information on its sales promotions
V8 Doing it well Clearly specified sales slips are given out
V11 Waiting time at cash registers are short
V6 Responsiveness Employees are always willing to help customers
V5 The public contact staff (Shelf stackers, cash registers, perishable
section, security personnel) is always polite to customers.
V20 Assurance Employees (perishable section) instill confidence in customers,
advising them on the best possible buy.
V9 The carries fresh fruits and vegetable sections
V16 The meat section is characterized by its freshness and quality
Technical
V24 quality The fish section is characterized by its fresh, quality products
V25 The retailers own brand products are high quality
V10 Brand The brands of the stores assortment are very well known
V12 assortment A broad assortment of products and brands are offered

Source - Rodolfo Vazquez, et.el., 2001, p.4, 10

19
(vi) Others

There were also other methods introduced such as the SERPERF by Cronin and Taylor
(1992) using direct measures to what extent customers consider their perceptions of
performances of the service to be superior, similar or inferior to the expected service.

The above are some methods available for service organisations in measuring service
quality.

(vii) Monitoring Service Quality by Zeithaml, Parasuraman and Berry 1990.

In this section the writer would discuss literature, which discusses how service quality
gaps, which are measured & quantified, could be monitored over time or compared with
competitors. Review of literature gives very few insights into this area. However notable
comments were made by Zeithaml, Parasuraman and Berry (1990). These researchers
present a simple methodology in tracking customer expectations and perceived
performance over time based on each dimension. The graphical chart presented below
would give some insights on this.

Figure 11 – Tracking Service Quality

7 E
Average
Expectation 6
( E)
& 5
Average
Perceived 4 P
performance(
P) 3
Scores
On 2
reliability
1

1 2 3 4 Time period

Source – Zeithaml, Parasuraman and Berry, 1990, p.178

The above chart indicates how the expectations and perceived performance of one
dimension could be monitored over time. One could calculate a weighted average of all

20
the dimensions and monitor the change every time a measure is made on service quality.
By doing this, organisations would be able to monitor how expectations change over time
as well as perceived performance of the service experience. Also this would be very
useful in monitoring the effectiveness of any retail strategies implemented and correcting
any negative service quality gaps, which was identified, by a previous measure of service
quality. It would also be an effective tool for performance measurement over time.

Similarly one could take the overall scores and plot it against their immediate
competitors. This would give insights in how one is standing against other competitive
retailing supermarkets.

5. Service Quality , Product quality, Prices and Customer Satisfaction

In this section, our attention would be to review literature, which discusses the
relationship between service quality and customer satisfaction. In other words what is the
significance of service quality in the customer satisfaction process. In determining this the
influence from product quality and prices paid for customer satisfaction process will also
be explored for completeness sake. As a prelude some definitions of customer
satisfaction are explored below.

As noted by Oliver (1993), satisfaction is derived from the Latin word “satis” (which
means enough) and “facere” (which means to do or make). The related word is
“satiation” which loosely means “enough” or “enough to excess”. This term implies that
satisfaction refers to a fulfillment response. Based on above, Oliver (1997) defines
satisfaction as follows

Satisfaction is the customer’s fulfillment response. It is a judgment that a product or


service feature, or the product or service itself, provides a pleasurable level of
consumption – related fulfillment. (Oliver:1997:85)

As per Oliver, satisfaction is the customer’s evaluation of a product or service in terms of


whether that product or service has met their needs and expectations.

Fournier & Glen (1999) concluded that the above process of satisfaction was based on the
paradigm of “Comparison Standards”. They called this the CS Paradigm. According to
them the CS paradigm basically states that consumers hold pre consumption product
standards, observe product performance, compare performance with their standards, form

21
confirmation or disconfirmation perceptions, combine these perceived performance with
standard levels and then form summary satisfaction judgements.

Fournier & Glen (1999) brings out a new paradigm on consumer satisfaction called the
balancing paradigm, which looks at a more holistic, context dependent and dynamic
process of satisfaction. They say that it is a multi model, multi modal blend of
motivations, cognitions, emotions and meanings embedded in socio cultural settings,
which transforms during progressive and regressive consumer-product interactions. This
brings light that customer satisfaction is more than a mere comparison between pre
consumption standards (expectations) and perceived performance.

Oliver (1989) expanded the customer satisfaction theory as a consumer experience. He


conceptualised this experience as a combination of “satisfaction as contentment”,
“satisfaction as surprise”, “satisfaction as pleasure”, and “satisfaction as relief”.

Pine and Gilmore (1998) in their ground breaking article also concluded that today
customers are mostly looking for experiences and elaborated the characteristics of such
experiences in terms of four realms. Today most customer satisfaction theories present
customer satisfaction as a process rather than a mere activity of fulfilment.

In turning our attention to the relationships between service quality and customer
satisfaction, the work of Zeithaml and Bitner ( 2000) needs to be highlighted. They
presented a model in depicting the relationship between satisfaction with service quality
and customer satisfaction and points out that product (Physical) quality and prices paid
are also important variables in the customer satisfaction process. Please refer figure 12 for
their model. They acknowledge the CS paradigm where customers form expectations of
preconceived notions of product quality, expectations of value and expectations of service
standards and compare their perceived performance with those in forming conclusions.

Their attention was mainly on the service quality whereby the comparison of service
expectations and perceived performance of the service, was instrumental in formulating
the perceived service quality. While highlighting product quality and price, Zeithaml and
Bitner (1990) also concluded that situational factors and personal factors could also affect
the customer satisfaction process.

22
Figure 12 – Service Quality and Customer Satisfaction

Expectations Situational
Service factors
Quality

Perceived
performance
Customer
Product satisfaction/
Quality dissatisfaction
Adopted by
Customers
the
emotional
researcher
Price responses
Personal Attributions
factors
Perceptions
of equity
Source - Zeithaml and Bitner, 2000, p.75

In essence this model suggests that service quality as a significant aspect of customer
satisfaction. While product quality, pricing in particular has an equal share in gaining
customer satisfaction; service quality could be sited as an important aspect in contributing
towards customer the overall satisfaction levels. The above model talks mainly about post
purchase customer satisfaction.

Figure 13 – Functional & Technical Service Quality on Willingness to Buy

Functional service quality

Technical service quality


Value Willingness
Product quality to buy

Relative price

Source - Jillian, Geoffrey and Lester, 1996, p.45

23
Jillian, Geoffrey & Lester (1996) in their study “Retail service quality and perceived
value, a comparison of two models” concludes that perceived performance of service
quality during a service encounter influences consumer’s willingness to buy more than
perceptions of product quality itself. Please refer figure 13 in page 23 for their model,
which they validated through research. Their conclusion was that in the pre purchase
stage, customers perceived service quality, influenced the willingness to buy, more than
product quality and relative price itself. In assessing the perceived service quality, they
looked at the technical quality and the functional quality separately and they concluded
that the functional quality made a bigger influence in this process.

Based on the two models presented above, it is clear that service quality is an important
element in the customer satisfaction process. We know that it influences both pre
purchase as well as post purchase customer satisfaction levels.

In the definitions of customer satisfaction presented, the writer highlighted that mainly it
was based on the CS paradigm. Until very recently it was the opinion of the research
world that customer satisfaction was a direct outcome of the match between the
expectations of product quality and the performance of the product. The role of product
quality is thus established as a determinant of customer satisfaction.

In understanding the role of price in the customer satisfaction process, the research
carried out by Voss, Parasuraman and Grewal (1998) in assessing the roles of price,
performance and expectations in satisfaction levels conclude that the role of price is not
very important when the perceived performance (product or service) is consistent with the
prices paid. But whenever the perceived performance is not in line with the prices paid,
it will have a major impact on the customer’s satisfaction process.

In summary the literature has identified the impact of product quality, prices and service
quality on the customer satisfaction process. While Ziethamal and Bitner (2000) argues
that perceived service quality is an important element of customer satisfaction (post
purchase satisfaction), Jillian, Geoffrey & Lester (1996) have concluded that service
quality has a higher influence on customer pre purchase willingness to buy than product
quality or the relative prices paid

While there are many research on pre purchase influence and prices, the research done by
Voss, Parasuraman and Grewal (1998) enables us to reasonably assume that when

24
performance (could be product quality as well) is consistent (may even be among
competitors), the role of price in the customer satisfaction process would be insignificant
and in time of inconsistencies, the role of price would be a determining factor in
increasing or decreasing customer satisfaction levels. They highlighted the importance of
this to see the relationship with other determinants of customer satisfaction as well.

6. Developing Retail Mix Strategies

This section of the literature review will attempt to understand the components of the
retail strategy. In order to supplement the readers understanding in building retail
strategies, the retail planning process is discussed in brief as a pre amble.

Retailing is essentially “ All activities involved in selling goods or services directly to


final customers for their personal, non business use” – Kotler (1996). The retailer
essentially solves the discrepancy of assortment between the customer and the
manufacturer (wholesalers) in meeting both their expectations of assortment and
quantity. Retailing deals with all strategies in providing the products to the final customer
and is considered today as a marketing organization, a link between the producer and the
customer, a member in the distribution channel and finally as an image creator.

The retail planning process is no different to normal planning activities, but the
terminology and some of the elements could be quite different in certain situations. In
understanding retail strategy building, one needs to look at this from a total perspective.
The diagram 14 will elaborate the entire retail planning process. The writer has taken the
concepts from literature and arranged for the easy comprehension of the reader. Please
refer this figure for the retail planning process.

With retailing planning process in mind the writer will elaborate the components of the
retail mix strategies in the proceeding section. Supermarket retailing essentially lies in the
middle of the service continuum where the tangible product quality as well as the
intangible service quality would be important to the customer in his satisfaction process.
This is especially true for a self-service super marketing experience. Therefore retail mix
strategies needs to be viewed in parallel to the service marketing strategies, which are
organised within the seven P’s concept.

25
Figure 14 – Retail Planning Process

Where are we now?


Retail environment
1. Micro factors – Suppliers( wholesalers/manufacturers/etc)
retail customers, public at large etc.
2. Macro influences – SLEPT environment
3. Completive environment ( five forces analysis)

Situational Nature of the retail markets


1. Nature of the market (traditional, sophisticated etc)
analysis 2. Stage in the retail life cycle
3. Wheel of retailing
4. Retail market segments

Internal resource capabilities of the retail organization

Retail SWOT

Where do we want to be?


Mission of the organisation, corporate objectives
Influenced by
Retail sales, customer traffic, average basket value, customer
Retail loyalty, retail market share, retail image, vendor relations,
objectives entertaining shopping experiences as types of retail objectives

How do we get there?

Developing the retailing concept


Target market selection, positioning strategy, retail format &
overall branding of the retail store

Overall Overall, competitive strategies for the retail organization


retail Merchandise
strategies Existing New
(Strategic)
customer customer

Retail market Retail merchandise


Existing

penetrative development strategy


Customers

strategy
Retail market Vertical/horizontal integration
development Horizontal/concentric
New

strategy diversification strategies

26
Merchandising strategies (Product)
1. Merchandising mix strategies
2. Private label branding strategies (own retail brands on
products)
3. Service mix decisions

Retail location strategies (Place)


Based on distribution strategies relating to intensive coverage,
selective coverage, exclusive coverage and other strategies
Retail Mix
Strategies Store facility management mix (Physical evidence)
( tactical)
Retail pricing strategies (Price)

Retail promotions strategies (Promotions)


1. Retail advertising strategies
2. Consumer promotional strategies
3. Public relations strategies

Customer service strategies (People/process)


1. Customer service personnel related strategies
1. Recruiting for technical skills & service inclination
2. Developing them to deliver service quality
3. Service organization structure
2. Logistics strategies
3. Managing the “moments of truths”

Other functional strategies such as Finance, Human resource management,


Inventory management & IT.

Implementation, budgeting & control

Source – Created by the writer based on references made from books -See reference
list

(i) Merchandising Strategies

The word product is denoted as merchandise in a retail setting. The reason being that a
retailer needs to offer a wide assortment of merchandise in solving time, place and
quantity utility of the retail customer. The merchandising strategy would not be a part of

27
service quality but will influence the product quality of the consumers. The
merchandising strategy is made out of merchandising mix strategies; private labelling
branding strategies and the service mix strategies in a retailing scenario.

(a) Merchandising mix strategies.

Merchandising mix refers to the full range or mixture of products that the retailer offers
to the customer. The merchandising mix should represent an appropriate combination of
products to meet specific requirements of the target market. Due to the unlimited
combinations of merchandise the consumer may require, it is generally a difficult task to
operationalize this. Effective merchandising mix planning is essential for a supermarket
to operate effectively. In doing this a retailer will have to give thought to the degree of
perishability of many products.

Also developing the merchandise mix, a retailer would need to pay close attention to the
classifications of products. A retailer will carefully plan different product lines based on
typical target market requirements and purchasing sequence and group them as product
item groups and present individual product units within them.

The matrix presented in figure 15 would give insights on the various merchandising mix
strategies available to a retailer based on merchandise variety and assortment
combinations.

Figure 15 – Merchandising Strategies based on Merchandise Variety/Assortment


Variety
No of product lines
Few Many
number of product items within

Narrow Variety Wide Variety


Few
each product line
Assortment

Shallow assortment Shallow assortment

Narrow Variety Wide Variety


Many

Deep assortment Deep assortment

Source - Lewison, 1997, p. 391

28
Based on the above matrix the following four merchandising mix strategies could be
formulated.

Narrow variety/shallow assortment strategy. Offers the most limited product selection
to any of the combination strategies. Good example would be vending machines offering
limited types of newspapers, drinks, candy etc. Generally this strategy suffers from poor
image and less customer loyalty other than that generated by convenience.

Wide variety/shallow assortment strategy. The basic principle of this is “ stock a little
of everything”. The retailer offers a wide selection of different product lines but limits the
assortment of brands, styles, and sizes, and so on within each line. This strategy appeals
to a broad market, satisfying customers in terms of product availability, promoting one
stop shopping and permitting reasonable control over inventories. The disadvantage of
this would be loss of sales and customer disappointment with lack of selection within
product lines.

Narrow variety/Deep assortment strategy. This is a specialality philosophy. This is


where a retailer would appeal to a selected group of consumers by offering a few lines
with an excellent selection in each line. By offering a specialised mix of products the
retailer develops distinct store image and a loyal customer base. The limitation would be
the retailer is dependent on single or limited product lines.

Wide variety/Deep assortment strategy. One stop shopping is the basic philosophy in
this all inclusive merchandising mix strategy. This would allow the retailer to create a
board appeal, while satisfying most of the product needs of a specific target market. The
disadvantages in this strategy would be, high level of investment in inventory, low stock
turnover ratio, high usage of space, fixtures and equipment required to display
merchandise.

It needs to be highlighted that within the retailing concept that is developed based on the
target market, positioning and the retail format, a retailer could follow any of the above
four merchandising mix strategies in offering his products to the customers.

29
(b) Private label branding strategies.

Private label branding (own retail branding) occurs when products are sold under a
retail organisations house brand name and are sold exclusively through their retail
organisation outlets. The latter aspect of exclusivity is a matter of scale of the private
label brand, where large retailers may also sell their own brand products in other outlets.

There are two basic types of private label branding strategies available for a retailer.

Integrated strategy – Here the retailer is integrated with his or her own manufacturing
capability.

Independent contracting – Here the retailer persuades a manufacturer to supply products


labelled with the name of the retail company.

Private label branding have made tremendous in roads in the retail industry. The success
of private label brands have been limited to certain product categories and segments of
consumers nevertheless retailers seem to expand the domain of private label offerings.
They represent a significant threat to their national label competitors. Most retailers use a
lower cost/lower quality position in the private label brands in offering customer value.
However this is not the only objective of private label branding. The long-term objective
would be to increase the bargaining power of the retailer with suppliers.

Devon DelVecchio (2001) concludes the following as determinants of private label brand
offerings by retailers.

Consumer perceptions of quality on the product categories where private label brands
are offered were an important determinant.

The functional quality of the products would allow them to effectively compete with
national brands, as the majority of consumers tend to believe that private label brands
should be competitive on functional quality against national brands.

The perceived quality of the private label brand names was positively affected by the
use of symbolic cues.

With the above findings retailers could use some of that knowledge in building private
label brands in their retail outlets.

30
(c) Service mix decisions

Service mix decisions are analysed from pre transactional, transactional and post
transactional requirements. The following service mix could be on offer.

Pre transaction services Transaction services Post transaction services


 Parking facilities  Credit card facilities  Delivery service (for
 Shopping basket facilities  Gift wrapping service certain products)
 Store opening & closing  Shopping assistance  Returns of products
hours  Customer check out  Complaints resolution
 Customer information  Porter services

The decision to offer the above services needs to be decided by analysing the qualifying
requirements (minimum expectations of the customers) and the determining requirements
(which may differentiate one retailer from another) of the target market. For an example
adequate parking facilities would be a qualifying requirement of a pre transactional
service in a supermarket. Taking orders over the phone for weekly grocery requirement
may be a determining requirement of a pre transactional service. Based on this a retailer
needs to decide his service mix.

(ii) Retail Location Strategies

It is said that there are three successful criteria in retailing. They are “Location”,
“Location” and “Location”. Having the right location is important in terms of
convenience to the customer. For the retailer, if a mistake is made on the location, it is
almost impossible to correct it.

Retail location strategies are influenced by the three important place strategies in
marketing. That is intensive distribution, selective distribution and exclusive distribution.
The decision of selecting either one of the above strategies are largely influenced by the
geographical distribution of the target market, the frequency of their visits, the retailing
format that the organisation wishes to follow etc.

It is widely believed in the retailing industry, the location could be over ridden by the
concept of destination. A destination is where a consumer will find the retailer, wherever
the retailer is, irrespective of the location. In order to create this, one has to positively
differentiate themselves from their competitors, in terms of product offerings, positioning,
service or with some other motivating factors. However the store location strategy is
influenced by the following factors to a very large extent.

31
Figure 16 – Influences on the Store Location Strategies
External Factors Target market Internal factors
 Size of the market  Geographic distribution  Nature of company
 Future level of of the target market  Corporate objectives
growth  Main purchase criteria  Distribution
 Population trends of the target market objectives
 Economic base  Retailing format
 Demographic base followed
 Customer base
 Regional shopping Store location strategy
areas Intensive presence Intended positioning
 Supplier access Selective presence in the target market
 Infrastructure Exclusive presence

Source - Davies and Rogers, 1984, pp. 237 and Cox and Britian, pp.77. (adopted)

In planning for the selection of retail locations, the retailer would go through a rigorous
and a systematic analysis of estimating and evaluating details. Some of it would be

Table 03 – Considerations in Retail Location Planning

Identification, Market potential Population characteristics, housing


evaluating and analysis characteristics, buyer behaviour characteristics,
selecting retail environmental characteristics
markets Operational Distribution ability, competitive placements, legal
aspects requirements
Identification, Spotting Catchment area analysis, license surveys,
evaluating and techniques customer surveys, customer records,
selecting trading Quantitative Converse breakeven point model, Huffs
areas procedures probability model, Reilly’s law
Identification, Site identification Free standing isolated sites, emergence of
evaluating and secondary business areas, competitive placements
selecting specific Site evaluation Interceptions, store congestion, accessibility,
retail site customer traffic analysis

Source - Lewison, 1997, pp. 306-352 (adopted)

(iii) Store facility management mix

Store facility management is also referred to as SERVICESCAPE. This is an


abbreviation for Service landscape. This deals with the physical aspects of the store,
which gives physical evidence to the consumer of the quality of the service. Next to the

32
site location strategy, this would be the most decisive criterion for retail success. Store
facility management mix is quite a vast topic. In order to get a glimpse of the extent of it,
the reader is requested to refer figure 17 for a brief overview.

There are many considerations that one need to pay attention to each of these elements.
The following table is an attempt to highlight some of those considerations for the
elements described in figure 17. The store facility management strategies will be the
manipulation of these elements in achieving the retail objectives and overall retail
strategies.

Table – 04 Considerations that needs to be made for Store Facility Management


Elements

Element Sub elements Considerations


Store Image External impression created by the position of the store
This is the site, architectural design, storefront, entrances, window
personality of the displays etc
Store Environment

store Internal impressions created through colours, layout,


aisles, arrangement of store displays, store lighting etc
Store atmosphere Refers to the overall aesthetic and emotional effect
created in the store. This is done through sight, sound,
scent, touch and the taste appeals in the store.
Store Theatrics This is a concept of making retailing experience as
what one experience in a theatre. Created with various
décor themes & in store events.
Store position Aspects on store visibility, the compatibility of the site
Exterior store design

with the nature of the products & the convenience


created to the customer in visiting it.
Store architecture This is where the architecture of the store makes it a
promotional facility along with its functional facilities.
Store marquee It is basically a sign (marquee), which helps a customer
identify the store at a distance.
Store frontage This is essentially the design of the store front using
different layouts, window displays, entrance type etc.
Store Aesthetics This is how the store’s physical facilities create sensory
Interior store

experiences. It deals with the creation of perceptions


using size, shape & colour.
design

Space planning Deals with planning the store for space utilisation,
productivity, organising and space allocation.
Store layout Deals with the actual location of merchandise and the
sales floor arrangements, equipment in retailing.

33
Element Sub elements Considerations
Display types These are the use of selection displays, special
displays, point of sale and audiovisual displays.

merchandising
Display concepts The display concept is the concept of presenting
merchandise to customers. It deals with various display
Visual

elements, principals and components of display.


Display content This is the type and amount of merchandise to be set
off
Display Arrange the display such as using Pyramid, Zigzag,
arrangement step or fan arrangements
Customer/ In every self-service store there will be a certain
Security

employee thefts amount of shoplifting that will take place. Also the
Store

& felony theft employees could also get involved in pilferage. The
store should be equipped to minimise these thefts

Source – Lewison, 1997, pp. 256-297

(iv) Retail Pricing Strategies

The manufacturers set retail prices in supermarkets. The amount of manipulation that a
retailer could do is quite limited. However there are numerous strategies available for a
retailer in setting his price. The following table will elaborate some of them.

Table 05 – Retail Pricing Strategies

Pricing strategy Mechanism


Single pricing This is charging the same price for all buyers for the same products
in all of the chain outlets.
Flexible pricing This is where the final price could be negotiated by the buyer. Not
practised in self-service supermarkets.
Multiple pricing The objective is to increase the quantity purchased. Here discounts
are given for purchases for a particular value or a quantity.
Price Bundling/ This is where selling few products together as a package deal. The
captive pricing final individual values of the bundled items are lower than if bought
separately. Another variation of this is captive pricing where few
essential products are priced very low and the others higher.
Concept selling Charging a higher price by packaging a concept together. Charging
prices higher price per unit for goods, which are ordered by telephone and
delivered to the customer’s destination.
Odd pricing Strategy of setting prices with the end of an odd number. E.g. Rs
99.90. The consumer feels that it is cheaper as it has not gone above
the psychological barrier over Rs 100.

34
Pricing strategy Mechanism
Unit pricing Pricing products based on one common unit. E.g. price per Kg
Price lining Setting retail prices to meet the requirements of the target market
directly
Trail pricing Setting prices low to induce trail of a product
Leader pricing Pricing key merchandise below the normal mark-up while selling
the other merchandise at the normal mark up. The objective is to
pull customer traffic into the store.
Everyday low Pricing situation where maintaining various price points at the same
pricing low-level year around.
High – Low Buying a mix of merchandise in a larger quantity, pricing some of
pricing them at lower prices using the reduce purchase prices received due
to bulk purchases. For the balance items, charging above average
margins
Price Matching Strategy to match the lowest advertised price of the competitor.

Source - Lewison, 1997, pp. 469-476

The above strategies are an outcome of cost based, demand based and a competitive
based approach to pricing.

(v) Retail Promotions Strategies

The retail promotional strategies essentially deal with the retail promotional mix. The
elements of the retail promotional mix are as follows.

Figure 18 – Retail Promotions Mix

Retail Advertising
Sales promotional

Retail Publicity

Retail
campaigns

promotions
mix

Source – Lewison, 1997, p. 531 (adopted)

35
Figure 17 - Store Facility Management Mix Elements

Display Display Display Display


type concept arrangement content

Customer
atmosphere Image
Store

theft
Visual Merchandising

Store Secuiruty
Environmnet
Store

Store Facility Management Mix -


Store

Employe
etheft
SERVICESCAPE
theatrics

Felony
Store

theft
Interior Design Exterior Design

Store Space Store Store Store Store Store


Layout Planning Aesthetics Position Architechture Marquee Frontage

Source - Lewison, 1997, pp.256-291 ( adopted) and presented by the writer

36
(a) Retail Advertising

It is an indirect, impersonal communication carried by a mass medium and paid by an


identified retailer. The purpose of using retail advertising is to inform, persuade and
remind the target audience of the retailer’s offerings. There are several types of retailer
advertising.

Institutional advertising – The objective is to sell the store as an enjoyable place to shop.
It communicates the positioning strategy and builds the image of the store.

Product or special campaign advertising – This is mostly to inform customers of a special


sales campaign or a bargain offer on a particular range of products. The retailer could also
advertise its own retail brands through these types of campaigns

Cooperative advertising – This is where when a supplier carries out a promotion with a
particular chain of outlets and whereby the retailer also pitches in advertising its store.

Spreng and Droge (2001) concluded that providing inaccurate information to customers
by either understating or overstating attribute performance, results in lower satisfaction.
This study has rejected the traditional managerial advice based on the disconfirmation
theory (based on the CS paradigm) that managing expectations down should produce
higher satisfaction than managing expectations to match performance. The above study is
very useful in developing retail-advertising strategies to ensure not to over state or
understate any performance claim.

(b) Retail Sales Promotions.

The objective is to give various incentives to consumers to induce purchase and to


pull traffic into the store. Sales promotions could be directed to customers as incentives as
well as in store activities to pull traffic. Figure 19 will indicate some of the incentives that
a retailer could offer as sales promotions directed to the customer.

It is believed once the customer comes in to the store, in most cases end up buying
unplanned items through impulse. In order to stimulate this, in store promotional
activities such as demonstrations of product usage, playing live music, Sunday Pola inside
the super market, free entertainment for children could be organised.

36
Figure 19 – Types of Sales Promotional Incentives Directed to the Consumer

Coupons Contests and sweep tickets.


Manufacturers/retailers publish coupons in A time-based incentive-giving customer
mass media and on submission of these the opportunity win prizes based on
coupons they will be entitled for discounts minimum purchase requirement in a store

Sales incentives
Sampling Specialty advertising
Giving customers free products to get Giving a useful article to the customer that
hands on experience. Most retailers is imprinted with an advertisement with no
private label brands are promoted this way obligation to the customer.

Premiums Tie Ins


Giving customers free products or at extra Where you tie in an event, person or an
reduced rate to induce another retail activity in giving customers some
product or both. excitement and a bargain in a purchase

Source - Lewison, 1997, p.551 (adopted)

Zenor, Bronnenberg and McAlister (2001) conclude the following relationship with
advertising to sales promotions.

Products or merchandise that are advertised have a higher level of sales and a more
negative relationship with price elasticities
Products or merchandise, which are constantly, promoted using sales promotional
schemes seem to be achieving lower level of sales.

Although their study was not conclusive due to limitations of the gathered data, their
work may trigger a reversal of retailers allocating more promotional budgets on sales
promotion and diverting them into retail advertising.

(c) Retail Publicity Strategy

A proper publicity programme and a “Public relations disaster management


programme” should be in place for any retailer. Store outlet expansion generally creates
positive publicity where the retailer should take full advantage. Handling customer
complains efficiently would enable a retailer to mitigate the negative public relations

37
issues being raised. This is an area mostly neglected by retailers but a very powerful
medium in creating strong customer convictions about a retail store or a chain of outlets.

(vi) Customer Service Strategies.

Customer service reflects an essential part of the retail mix strategies. Cook and
Walter (1991), states that customer service strategy has a greater impact on a customer’s
store selection process and the purchasing process.

Cook and Walter’s analogy is presented below.

Figure 20 – Customer Service Strategy in Store Selection and Purchasing Process

Loyalty to the store


Store selection
Customer
service

Repeat purchase
Purchasing
process
Satisfaction
Search Comparison Transaction/use

Dissatisfaction

Exit

Source – Cox and Walters, 1991, p.157 (adopted)

The importance of customer service strategy is highlighted above and marketers need to
focus more attention to this.

Customer service strategy is built through the service processes that a retail organisation
follows and the use of customer service personnel in delivering those services. Essentially
it deals with both the technical quality as well as the functional quality of the service.

38
The final outcome of customer service strategy is managing the “Moments of truth” of the
customers. So essentially customer service strategy is a mix and a balance between the
service processes (influenced by the logistics strategies) and the interaction of customer
service personnel in meeting the moments of truths in the retail encounter. The above
analogy of customer service is presented in the following illustration based on the
concepts presented by Zeithamal and Britner (2000) and Cook and Walters (1991).

Figure 21 – Customer Service Strategy

Requirements of the Corporate philosophy


Influenced by

target market on the customer

Organizational culture
Positioning strategy
( its manifestation about
of the retailer
the customer)

Customer Service Strategy Components


 Customer service personnel strategy ( people)
• Recruitment of customer service personnel – hiring for service competence and
service inclination
• Developing customer service personnel – Training for technical and interactive
skills, empowering, promoting team work, provision of internal support systems

• Creation of a service culture

• Retail organizational structure.

 Logistics strategies (process)

 Managing the “ Moments of Truths” (people – process interface)

Source – Zeithamal & Bitner, 2000, pp.86-313 and Cook and Walters, 1991, pp.161-
182. (adopted)

39
(a) Customer service personnel strategy

Customer service personnel strategy involves four aspects. They are as follows.

The recruitment strategies of customer service personnel. A retailer should hire people
for both service competencies and for service mindness. The former refers to the skills
and knowledge in doing the job. The latter refers to the interest to do service related work
and having a service oriented personally such as helpfulness, thoughtfulness and
sociability.

Developing customer service personnel. Developing service personnel deals with


training them, empowering them, promoting team work and the provision of support
systems. Training essentially needs to be done to develop the technical skills as well as
interactive skills such as courteousness, caring, responsiveness and empathetic nature.
Front lines should be empowered to accommodate customer request through skills, tools
and authority. Empirical studies reveal when there is teamwork, service personnel
performed very well with customers. Support tools to serve the customers also need to be
provided.

Creation of service culture. Gronroos (1984) defines service culture as

A culture where an appreciation for good service exists, and where giving good
service to internal as well as to the ultimate external customer is considered a natural
way of life and one of most important norms by every one. (Gronroos: 1984:435)

The above denotes three aspects, which are the appreciation of good service, considering
both internal (employee) and external customer and treating service as a natural way of
life.

Retail organisational structure. Retail organisational structure is an important element


in the customer service strategy and dealing with service personnel. There are many
organisational structures available and the following continuum will discuss the degree
based on their levels of rigidity and adoptive nature

40
Figure 22 – Classification of Retail Organisational Structures

Bureaucratic organizations Adoptive organizations


Highly structured and characterized Loosely structured organizations
by central control moving closely with consumers

Machine Divisionalised Professional Simple Adaptive


bureaucracy bureaucracy bureaucracy structure advocacy

Source - Lewison, 1997, p.221 (adopted)

Machine bureaucracy – A retail organisational structure with a tall, highly vertical


structure with precise hierarchical lines of authority.
Divisionalised bureaucracy – A retail organisational structure with a number of
relatively autonomous internal units operating within a common organisational umbrella.
Professional bureaucracy – A flat hierarchical structure with a limited number of
middle managers and a large technical support staff who assist the organisations
professional with administrative functions.
Simple structure – Is a flat organisation with a single top manager and a few middle
managers or support staff.
Adaptive Adhocracy – An organisational structure that limits vertical management
while promoting horizontal working relationships. It is essentially a process-based
structure.

It has been found that more adoptive structures are more suitable for effective customer
service than others.

Customer service personnel strategy is influenced and formulated by the interaction of the
above criteria.

(b) Logistics strategies

Retail logistic strategies would play an important role in the retail service process.
They include

Merchandising logistics. Merchandising logistics involves the merchandising buying


process, merchandising ordering process, merchandising handling processes and the
actual function of merchandising. Figure 24 will give the reader an idea of the

41
merchandising buying, ordering and the handling process. Effective co-ordination of all
these would allow customers to buy the right product at the right quantity at the right
time. These functions are the sole responsibility of the merchandising and the
warehousing teams of the retail outlet. Effective logistics not only affect service quality
but also effects product quality and would allow higher satisfaction levels.

Figure 23 – Merchandising Logistics Strategies

Merchandising Logistics Strategies


Merchandise buying Merchandising Merchandising
process ordering process handling process

Stocking merchandise
Identifying the source

Marking merchandise
Contacting sources of

replenishment system
Evaluating sources of

Traditional purchase
sources of supply
Negotiating with

Quick Response
ordering system
Retail buying

Retail buying

merchandise

merchandise
Receiving

Checking
strategies
of supply

methods
supply

supply

Source – Lewison, 1997, p.416 (adopted)

The actual function of merchandising goes beyond simply ordering goods. Merchandising
is a function in marketing, which ensures presenting the right product, at the right time, at
the right place, in the right quantity in the right quality for the right price. While many
aspects listed under the function of merchandising are covered by the other retail mix
strategies, presentation of merchandise which is a part of the SERVICESCAPE are
discussed under the store facility management mix. This needs to be effectively managed
under the process by the retail staff for effective service quality. Replenishing products on
the shelves, displaying them properly, indicating prices effectively, clearly labelling them,
removing expired products from shelves, ensuring that the displayed merchandising is
clean etc, are important aspects of the merchandising function.

Procedures to be followed. Procedures the customer needs to follow while shopping


needs to be effectively planned to provide maximum convenience to the customer. It is
equally important that those procedures need to be communicated effectively. For an

42
example, where should customers keep their personal belongings while shopping, parking
procedures, entrances and exits, use of cash registers based on cash/credit payment,
quantity of items (less than five counter), assistance at children’s play areas, procedure
for demonstrations, store opening closing hours, opening on holidays, complains handling
procedures etc needs to be clearly communicated. These procedures need to be in line
with customer expectations of convenience.

Various policies governing the customers shopping experience. All organisations


should clearly spell out their policies in interacting with customers. This is an important
part in the formation of expectations thus avoid creating negative service quality gaps by
creating higher expectations and lower perceived performance. Examples of these
policies would be the returns acceptance policy for damaged goods, returns of wrong
goods purchased by the customers, return of excess goods purchased by customers, return
of wrongly invoiced products by the cashier, policy on complains, policies on carrying
private labels, policies on carrying or sourcing special types of products, policies on
assisting disable shoppers, policies on credit purchase, credit period, special deliveries,
treating all customers irrespective of status, income equally etc. Clear communication of
these policies will help customers to form their expectations thus avoid negative service
quality. For example if a retailer clearly mentions that returns will only be accepted with
the original bill or without the product being used or without any alterations, excess
goods purchased will not be accepted, wrongly billed goods will be accepted without any
questions asked, etc the customers would form their expectations accordingly.

What is important is once a policy is communicated, it needs to be followed without


making it red tape or with out varying it too much to suite different people or situations.
A certain amount of flexibility is required but the broad framework needs to be followed.

(c) Managing the moments of truth

The effective interaction of service processes and the service personnel together with
other functional strategy out comes would make an impact on the moment of truths of the
customer. Moment of truth is essentially all the points that a customer comes into contact
during the service encounter. From these moments of truths, customer receives a snap
shot of the organisations service quality and each encounter contributes to the overall

43
formation of perceptions of service quality. Managing moments of truths would manage
customer’s perceived performance of the service. Managing the moments of truth is
essentially the interface between customer service personnel and its processors.

7. Summary

Literature under several sections was discussed in this chapter. Section two looked at
the definition of service quality assessment, which was stated as the discrepancy between
customer expectations and the perceived performance. Based on this definition, three
levels of service quality gaps, which were the negative gap, no gap or a positive gap, were
identified.

In section three we explored elements of the service marketing mix and we ascertained
that based on the continuum of service, service quality was clearly represented by certain
elements of the marketing mix. We noted that product quality and pricing was different to
service quality based on the tangibility component.

Section four discussed various service dimensions used and techniques in measuring
service quality. We observed that most of those were revolving around the elements
identified which lead to the determination of service quality. We also discussed in very
brief various discussions on how to monitor service quality over time.

Section five discussed the relationship between service quality and customer satisfaction
level. Based on various theories we noted that service quality has been stated as an
important element in the customer satisfaction process. We also referred to literature,
which has indicated the influence made by physical product quality, and prices paid in
determining customer satisfaction.

Finally in section six we discussed in length the components of the retail mix strategies

In the next chapter we will discuss the conceptual framework of the proposed research
study in detail.

44
Chapter III

CONCEPTUAL FRAMEWORK AND METHODOLOGY

1. Introduction

In this chapter the writer wishes to present the conceptual framework of the research
study. Based on the research problem stated in chapter one, the research question will be
formulated revealing the dependent and independent variables. Stemming from this, an
argument will be presented on possible relationships between those variables. This
argument will lead to the formation of the conceptual framework, which will present the
hypothesis to be tested. The methodology in carrying out the research will present details
of the operational aspects of the study. Finally, limitations of the study will be discussed.

2. Research Question

The following research question is framed through the analysis of the research problem
presented in chapter one and based on the relationships identified in the literature review.

“What relationship if any exists between the recognition of service quality gaps and
the overall satisfaction of supermarket customers in Sri Lanka.”

Based on the problem stated and insights received through literature surveys, the above
research question is formulated to find out the relationship between the service quality
recognition level and the overall satisfaction of the supermarket customers. The following
argument is presented based on the above research question.

3. Argument

Supermarkets that seem to recognise service quality gaps will tend to increase
their customer satisfaction with service quality, which in turn will increase the
overall satisfaction in shopping in those supermarkets.

The argument presented by the writer indicates that those supermarkets that seem to
recognise service quality gaps would increase the satisfaction with service quality of their
customers. This satisfaction with service quality in turn will lead to an increase in the
overall satisfaction in shopping in the concerned supermarket. The rationale behind this

45
argument is, those supermarkets that recognise service quality gaps would be aware of the
service quality gaps which are in existence and by developing effective retail strategies,
they would close such negative service quality gaps resulting in a higher level of
satisfaction with service quality. The writer further argues that this higher level of
satisfaction with service quality would have a greater impact on the overall satisfaction
of the supermarket customers than other influences.

4. Conceptual framework

The following diagram will present the conceptualisation for hypothesis testing.

RECOGNITION OF SERVICE QUALITY GAPS

Knowledge of service
quality gaps

Aware of gaps Not Aware of gaps


Measures

S1 S2
Measures & Measures & not
aware aware Measurement
of service
S3 S4
Does not
measure

quality gaps
Not Measure Not Measure &
but aware Not aware

Higher Lower

Satisfaction with
S1 > S2 or S3 or S4
SATISFACTION

Service Quality
OVERALL

Satisfaction with
Product Quality

Satisfaction with
Prices Paid

46
As per the above framework, the writer argues that non-recognition of service quality
could be either one or both of two aspects. One would be the question whether service
quality is measured, while the other would be whether the service quality gaps are known.
Based on these two dimensions, there could be four types of supermarkets that are found
in the industry. They are as follows.

S1 Supermarkets that measure and are aware of the service quality gaps in their
supermarkets. They are denoted by S1 in the conceptual framework. These
supermarkets would try to make strategy alterations to address the negative service
quality gaps.

S2 Supermarkets that measure service quality but are not aware of the existence of service
quality gaps. They are denoted as S2 in the conceptual framework. These
supermarkets measure service quality without taking the customer expectations into
consideration as a measure of service quality. Although they may find out their
customer sentiments of either positive or negative perceived performances of service,
they would not know the extent of the gap thus might not initiate a change in
strategy.

S3 These are supermarkets that does not measure, but has a general idea of the existence
of service quality lapses. They are denoted as S3 in the conceptual framework. They
would be able to ascertain the lapses in service quality through the analysis of the
customer complains that are received over time. They have a mechanism in capturing
customer complains. However S3 supermarkets may not have a very clear idea of the
extent of the service quality gaps. They seem to think that resolving individual
complains would solve the problem at hand.

S4 Finally supermarkets that do not measure service quality nor are aware of the
existence of service quality gaps in their supermarkets. They are denoted by S4 in the
conceptual framework. These supermarkets are left in the dark.

Based on the above four situations, the writer states, supermarkets that measure and are
aware of service quality gaps(S1) are in a better position to increase the satisfaction with
service quality which in turn would lead to an overall higher level of satisfaction than the
other three types of supermarkets.

47
In other words S2, S3 & S4 supermarkets may not satisfy their customer as much as the
S1 types.

The framework has also recognised that customer satisfaction could be influenced by
satisfaction with physical product quality and satisfaction with the prices paid by the
customer. The satisfaction with product quality or prices paid would be an outcome of
gaps between expectations of product quality/prices vs. the perceived performances of
product quality/prices actually paid. It is the view of the writer that satisfaction with
service quality may lead to a higher level of satisfaction than these two.

(i) Variables and their relationships

Independent Variables Dependent Variables


Customer expectations of
the service
Service quality gaps
Perceived performance of
the service

Measurement of service
Recognition of service quality gaps
quality gaps
Knowledge of service quality
gaps

Supermarkets that
Measurement of service 1. Measure and are aware of service
quality gaps quality gaps
2. Measures but are not aware of
service quality gaps
3. Does not measure but has an idea of
Knowledge of service service quality
quality gaps 4. Does not measure and are not aware
of service quality gaps

Recognition of service Satisfaction with service


quality gaps quality

Satisfaction with service Overall customer


quality satisfaction

48
Independent Variables Dependent Variables

Customer expectations of
product quality Satisfaction with product
quality
Perceived performances of
product quality

Satisfaction with product Overall customer


quality satisfaction

Customer expectations of
prices to be paid Satisfaction with prices
paid
Perceived performances of
actual price paid

Satisfaction with prices Overall customer


satisfaction
paid

tions of 5. Hypotheses

The following hypotheses have been developed based on the conceptual framework
presented above.

H1 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those who measure but are not aware of those
gaps (S2 type). i.e Overall satisfaction of S1>S2

H2 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those who do not measure but are aware of
their service quality levels. (S3type). i.e. Overall satisfaction of S1>S3

H3 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those who do not measure and are not aware
of those gaps (S4 type). i.e. Overall satisfaction of S1>S4

49
In developing the above hypotheses, the writer maintains that the impact of product
quality and prices paid are constant as service quality would have a higher impact on
overall customer satisfaction. The above is presented with the following line of argument.

Supermarkets are essentially retailers. i.e. they sell products of other manufactures. The
quality of products in one supermarket would be very much similar to that of another
except for private labels brands and perishables like fruits, vegetables, meat and fish
products. The latter items may represent a small proportion of merchandise and even so
there is no big differentiation between them as per the experience of the writer.

The prices that are charged in most supermarkets are fixed by manufacturers themselves
other than for a few items. The amount of differentiation done through prices are
relatively less.

Given the above two conditions, supermarkets generally differentiate themselves through
the service quality criteria. So the writer has formulated the above hypotheses with the
premise that product quality and prices paid are qualifying criteria of customer
satisfaction and service quality would act as a determining criterion of customer
satisfaction.

The writer would re visit the impact made through product quality and prices paid in
determining the satisfaction level of the Sri Lankan supermarket customers before making
his final conclusions.

6. Definition of Key Concepts

The key concepts used in the conceptual model are defined as follows.

Customer expectations – The expectations created by the customer in his mind before
encountering the service in the supermarkets.

Customer’s perceived performance – The perceived performance the customer creates


in his mind about the service based on the service encounter.

Service quality gap – The discrepancy between the expectations of customers and the
perceived performances of the service offer. Could be of three forms.

50
Positive ( Perceived performance> expectations) , No gap ( Perceived performance =
expectation), Negative gap ( Perceived performance< expectation)

Recognition of service quality gaps – Supermarkets identifying service quality gaps as


important elements in satisfying customer requirements. It would be either one or a
combination of measuring service quality in the supermarkets as well as the knowledge
of the existence of service quality gaps.

Satisfaction with service quality - The gratification that is created in the minds of the
customer by meeting or exceeding their requirements in terms of service quality.

Product quality gap – The discrepancy between the expectations of customers on the
quality of the product and their perceived performances of the product quality after usage.

Price gap – The discrepancy between what the customer expected to pay in buying goods
from the supermarkets and the actual prices paid.

Satisfaction with product quality - The gratification that is created in the minds of the
customer by meeting or exceeding their requirements in terms of product quality.

Satisfaction with prices paid - The gratification that is created in the minds of the
customer by meeting or exceeding their requirements in terms of price expectations and
perceived performances.

Overall customer satisfaction – The gratification that is created in the minds of the
customer by meeting or exceeding their requirements in terms of product, prices and
service quality.

7. Operationalisation

The operationalisation of this research is divided into two sections. The first section
would address the present service quality recognition levels in the five supermarkets
under study. The following table provides the reader with the basis used by the writer in
categorising each of the five supermarkets into the four types of service quality
recognition levels as conceptualised in the service quality recognition matrix.

51
Concept Variable Indicator Measure Appendix
2A

Recognition Measurement Capturing the Capturing of customer


level of of service gap between expectations on service
service quality gaps expectations dimensions defined by each
quality gaps in and perceived supermarket.
in super supermarkets performances

Questions 2.1 to 2.9


markets. at present and arrive at the Capturing of customer perceived
service quality performances on service
gap as found at dimensions defined by each
present in the supermarket.
supermarkets Finding out the difference
between customer expectations
and customer perceived
performances and determining
whether they understand the gap
clearly
Not capturing Quantified figures of customer
the gap between perceived performances of

Questions 2.1 to 2.9


expectations service dimensions.
and perceived
Customer feedback received
performances
from focus groups, mystery
but the use of
shoppers, showroom visit reports
other methods
on perceived performances of
to measure
customers and complains
service quality.
analysis.
Level of The knowledge They understand service quality Question
knowledge of the existence as a constituent of customer
of the of 3.1
service expectations and perceived
present quality gaps in performances
service
their Their attitude towards service Question
quality gaps
supermarkets. quality as determinant criterion 3.2
in super
markets in satisfying customers.
Understands that the discrepancy
between the expectations and Question
perceived performances leads to
3.3
service quality gaps, which
could be positive, negative or no
gap situation.
Clearly understands expectations Question
of customers 3.4

52
Concept Variable Indicator Measure Appendix
2A

Recogniti Level of No knowledge Do not understand service Question

on level of knowledge of the present quality as a constituent of 3.1


service of the service quality customer expectations and
quality present gaps in their perceived performances. Looks
gaps in the service supermarkets. at perceived performances only.
super quality gaps Their attitude of service quality Question
markets in super limited to a qualifying criterion 3.2
(Contd.) markets but not a determinant of
(Contd.) customer satisfaction.
They understand service quality Question
as a positive perceived 3.3
performance or lack of a
negative perceived performance
Not understanding the Question

expectations of their customers 3.4


very clearly.

The second section of the operationalisation is the measure of service quality, product
quality, satisfaction levels of relative prices paid and the overall satisfaction in shopping
in supermarkets of S1, S2, S3 and S4 types as identified in the service recognition matrix.
It is operationalised as follows

Concept Variable Indicator Measure Appendix


2-B

Measure The The gap Using a seven-point scale (one


of service dimensions between being not important at all to
quality “physical expectations seven being extremely Section
gaps in S1 aspects”, and perceived important) to capture 01
to S4 “reliability”, performances of expectations on each of the Col B
super and those variables. statements relating to the
markets. “personal identified variables.
interaction” Seven point scale to capture
as identified perceived performances of Section
in the service on each of the statements 01
CALSUPER relating to the identified Col C
study. variables
The gap created by expectations Section
minus perceived performances 01
and identifying negative, no gaps Col C
or positive gap. minus
Col B
Measure The degree High/low levels Use of a ten-point scale to
of of of satisfaction capture overall satisfaction with Sec 01
satisfaction satisfaction with service service quality. (one being Final
with with service quality extremely dissatisfied and ten question
service quality being extremely satisfied)
quality

53
Concept Variable Indicator Measure Appendix
2-B

Measure The The gap Seven point scale to capture Section


of dimension between expectation of product quality 02
product “Policies” expectations Col B
quality identified in and perceived Seven point scale to capture Section
gaps in S1 the performances of perceived performances of 02
to S4 CALSUPER that variable. product quality. Col C
super study Gaps created in product quality Section
markets. created through expectations and 02
perceived performances. Col C
minus B
Measure The degree High/low levels Use of a ten-point scale to
of of of satisfaction capture overall satisfaction with Section
satisfaction satisfaction with product product quality. ( one being 02
with with product quality extremely dissatisfied and ten Final
product quality being extremely satisfied) question
quality .
Measure A new The gap Seven point scale to capture Section
of gaps in dimension between expectation of prices of products 03
prices called expectations Column
paid for “price” and perceived Col B
S1 – S4 performances of Seven point scale to capture Section
supermark that variable perceived performances of prices 03 Col
ets. paid. C
Gaps in prices paid created Section
through expectations and 03
perceived performances. Col C
minus B
Measure The degree High/low levels Use of a ten-point scale to
of of of satisfaction capture overall satisfaction with Section
satisfaction satisfaction with prices prices paid. ( one being 03
with with prices paid. extremely dissatisfied and ten Final
prices paid being extremely satisfied) question
paid .
Overall The degree High/low levels Use of a ten point scale to Section
Customer of customer of satisfaction capture the overall degree of 04
satisfaction satisfaction satisfaction

The questionnaire is based on the above operationalisation. The basis of developing the
questionnaires will be further discussed under the methodology.

54
8. Methodology

(i) Method of Data Collection

Data was collected in two stages. In the first stage the writer interviewed Keells Super,
Cargills Food City, Arpico Super centres, Sathosa and Sentra supermarkets. They were
plotted into the service quality recognition matrix based on how they measure service
quality and their level of awareness of same.

In the second stage though a questionnaire survey, for one supermarket representing a
quadrant in the service quality recognition matrix, data was gathered to test the
hypotheses. The hypotheses are based on the service quality recognition matrix and based
on the results of each supermarket, the relationship with service quality and customer
satisfaction levels was established either confirming or rejecting the hypotheses. The
influences of product quality and prices paid in determining the levels of customer
satisfaction were also checked.

(ii) Selection of the Sample.

The five supermarket chains that are being studied accounts for more than 200
supermarket outlets which could be well over 75% of the total supermarkets in Sri Lanka.
Interviewing these five chains to identify the recognition level of service quality gaps
would represent the majority view.

For the questionnaire survey, 40 supermarket customers from each of the four chains
under study were selected. From each chain, two outlets were studied and data was
gathered. 20 respondents were selected from each location, totalling 40 per supermarket.
A total of 160 respondents were approached from the four supermarkets. The sample of
40 would was selected on a random basis where each household in the population had
an equal chance of being selected into the sample. The writer collected data personally by
interviewing customers on the supermarket floor.

(iii) Questionnaire Design

For the first stage of the research, the writer prepared a simple interview guide. It is
presented in Appendix two A. In this guide, information was collected in three sections.
Section one attempted to obtain some background information of the supermarket in
55
terms of its organisational structure, turn over, number of outlets, employees , history etc.
Section two contained questions to ascertain how supermarkets measured service quality,
the methodology used, the sample, frequency etc. Section three included questions to
check their level of awareness of service quality gaps in supermarkets.

For the second stage of the research, the questionnaire was designed based on the
CALSUPER study carried out in measuring service quality with a few alterations. In this
original model, the founder researchers conceptualised four major service dimensions in
measuring service quality. They were physical aspects, personal interaction, reliability
and policies. The first three dimensions were used to capture service quality and the
fourth element was to capture the product quality of the supermarket experience. In the
CALSUPER study, the impact of prices paid has not been checked as the researchers had
argued that the satisfaction levels from prices paid would be reflected in the service
quality measures.

Some minor changes were made to the CALSUPER model in using it for the purpose of
this study in particular and also taking the Sri Lankan super marketing customer into
consideration. The changes and the structure of the questionnaire are presented as
follows.

Minimum changes were made to a few statements without affecting the basis of its
measure.

The first three dimensions (physical aspects, personal interaction, and reliability) are
used to measure service quality gaps. Expectations and perceived performances were
captured in two separate seven-point scales. This is presented in section one of the
questionnaire. At the end of this section a check on the overall satisfaction with
service quality was presented in a ten-point scale.

The fourth dimension was used to measure product quality gaps. Expectations and
perceived performances are captured in two separate seven-point scales. Some
statements under policies were also slightly modified. This was presented under
section two in the questionnaire. At the end of this section a check on the overall
satisfaction with product quality was presented in a ten-point scale

56
Please refer figure 24 for the original statements and the suggested modifications.

Expectations and perceived performances of prices paid by the supermarket customers


were added into the questionnaire as a new dimension. The same seven-point scale to
capture expectations and perceived performances of prices paid was used. This is
presented under section three of the questionnaire. At the end of this section a check
on the overall satisfaction with prices paid was presented in a ten-point scale.

The overall satisfaction in shopping in the supermarket was captured in a ten-point


scale through the questionnaire under section four. The overall satisfaction would be
an out come of the customer comparing his service, product and price expectations
with his perceived performances.

Finally the consumer’s demographic details were captured under section five of the
questionnaire.

Please refer appendix two – B for the questionnaire used for the survey.

(iv) Method of Data Analysis

For part one of the study, based on the details gathered from interviews, the service
quality recognition matrix was plotted. The findings will be presented in chapter four of
this report.

For the second part of the study, the data from the questionnaire survey will be analysed
in several steps as follows. Findings are discussed in chapter five of this report.

Analysing the respondent profile for each of the supermarkets. This would be
important as behaviour would be directly related to segments and different segments
could emerge from the four supermarkets.

The relationship between recognition of service quality and overall satisfaction will
be analysed in several sections.

Correlation analysis, significance of correlation, co-efficient of determination will


be analysed between service quality gaps and satisfaction with service quality

57
Figure 24 - Original CALSUPER Model and Suggested Modifications to its Statements

Main/Sub dimensions No Statements as in the original CALSUPER model MODIFIED STATEMENTS


MEASURE OF SERVICE QUALITY
Physical Aspects

V14 The store is characterized by is cleanliness & efficient running The store is visually appealing , kept clean & run efficiently
Appearence
V17 The layout enables customers to easily find the products they need The store is located in an area which is convenient to customers.
V18 The outlet design helps customers to move around with ease The outlet design helps customers to move around with ease and find
Convenience
products they need easily
V19 The products are appropriately displayed on the shelves Customers have parking space for their vehicles when visiting the store

Keeping promises V22 There are always stocks of products/brands desired by customers There are always stocks of products/brands desired by customers
V1In this outlet product prices are clearly indicated The prices of products are clearly indicated.
Reliability

V2This outlet gives appropriate and punctual information on its sales This outlet gives appropriate and punctual information on its sales
Doing it well promotions promotions
V8 Clearly specified sales slips are given out The cashiers bill products chosen by customers accurately
V11 Waiting time at cash registers are short Waiting time at cash registers are short
Personal interaction

V6 Employees are always willing to help customers Employees are always willing to help customers
Responsiveness
V5 The public contact staff ( Shelf stackers,cash registers , perishable The public contact staff ( Shelf stackers,cash registers , perishable
section information staff , security personnel) are always polite to section, information staff , security personnel) are always polite to
Assurance customers. customers.
V20 Employees ( perishable section) instill confidence in customers , Employees give individual attention in understanding specific
advising them on the best possible buy. requirements of customers.
MEASURE OF PRODUCT QUALITY
V9 The outlet is characterized by the freshness of products in its fruits The fruits and vegetables that the outlet carry are fresh
and vegetable sections
V16 The meat section is characterized by its freshness and quality The meat and the fish products sold in this outlet are fresh
Technical
Policies

quality V25 The retailers own brand products are high quality The retailers own brand products are of high quality
V24 The fish section is characterized by its fresh , quality products The quality of other products that are sold in this outlet is acceptable (
Eg Not selling expired products, products with damaged packs, etc)
V10 The brands of the stores assortment are very well known All well known brands of products are available in the store
Brand
assortment V12 A broad assortment of products and brands are offered A broad assortment of products and brands are offered
Source - See reference list 25
58
A similar exercise will be carried out to asses the relationship between satisfaction
with service quality and the overall satisfaction.

Relationship between product quality gaps and satisfaction with product quality and
satisfaction with product quality and overall satisfaction will also be subjected to the
same correlation tests as above.

Gaps in prices and satisfaction with prices and satisfaction with prices and overall
satisfaction will also be subjected to a correlation analysis.

In order to identify the composite impact of service quality, product quality and
satisfaction with prices paid in influencing the overall satisfaction, a multiple
regression analysis will be presented.

Finally the three hypotheses presented will be subjected to hypothesis test using the
significance testing at a 5% level of significance.

Various cross analysis will be presented in identifying relationships as suggested by data.

9. Limitations of the Study

The following are sited as limitations in this research study.

1) Alterations done to the CALSUPER study has not been empirically validated for
reasons of manageability and time constrains. All efforts were made to maintain the
original construct of the model with minimum changes. However not validating the
changes would remain as a weakness of the questionnaire.

2) Relative protective policies adopted by supermarkets under study would deprive the
researcher some of the ground situations used at present in measuring service quality
in these organisations and presenting their performance levels. While all efforts will
be made to project the actual situation, the reader would be deprived of some element
of undisclosed facts in the research.

3) The attitude of some of the respondents on the supermarket floor i.e. time constrains,
is sited as a limitation in collecting data. In order to arrive at the sample size , several
more interviews had to be taken as the incompleteness of the questionnaires were high
at times up to 20% affecting the randomness of the sample. This is sited as a
58
limitation and the writer wishes to recommend data collection through a mystery
shopper programme or a focus group study in mitigating this limitation.

4) The conclusions arrived for each supermarket type was based on the measurement of
two outlets for each chain. The target market profile and the measures would at times
be different. Although cross analysis were carried out, there could be variations
among outlets. Also in making generalisations on a supermarket chain, ideally a fair
representation of its outlets needs to be measured. The use of two outlets only would
also act as a limitation on the representative ness.

10. Summary

In this chapter our focus was in presenting a framework of the intended study. The
reader was given a thorough understanding about the relationships in terms of the
research question stemming from the research problem identified. The valid connection
between the argument, conceptual framework and the hypotheses were presented in
testing this model. It was stated that information was collected in two stages where the
first stage was based on a series of interviews in understanding the present service quality
recognition levels in the five supermarkets under study. In the second part, four research
studies using a questionnaire for in each of these supermarkets representing different
service recognition levels were carried out. After measuring the service quality gaps,
through statistical analysis the hypotheses will be validated and the findings of this
research would be presented.

In the next chapter the writer will present his findings on the present service quality
recognition levels in the supermarkets under study based on the conceptual framework
presented.

59
Chapter IV

PRESENT SERVICE QUALITY RECOGNITION LEVELS

1. Introduction

In this chapter our attention is focused in identifying the present service quality
recognition levels of the supermarkets in Sri Lanka. As described in the introductory
chapter, the writer presented that non-recognition of service quality gaps would occur due
to one or either a combination of

Not measuring service quality gaps in supermarkets


Not aware of the present of service quality gaps in supermarkets.

Under the conceptual framework presented in the second chapter, the writer presented a
matrix with four possible combinations of service quality recognition levels as a
consequence of the above two aspects coming into contact. They were

Supermarkets that measure service quality and are aware of the service quality gaps

Supermarkets that measure service quality but are not aware of service quality gaps

Supermarkets that does not measure service quality but has some idea about it.

Supermarkets that neither measure nor are aware of service quality gaps.

In this chapter the writer will identify the present service quality recognition levels of the
five biggest supermarkets chains in Sri Lanka selling FMCG goods based on the four
typologies presented above. Specific information was collected in ascertaining their
existing service quality measurement techniques as well as their present level of
knowledge of those gaps based on the questions presented in appendix two - A. The five
supermarkets under study would be the supermarket operations of ARPICO super centres,
Cargills supermarkets, Keells supermarkets, Sathosa supermarkets and Sentra
supermarkets.

60
2. Supermarkets at a Glance

Super marketing is one retail format found in Sri Lanka out of many. Appendix three A
of this report will give the reader insights into different retail classifications in Sri Lanka.
A list of supermarkets that operates in Sri Lanka is presented in appendix three B. You
may see over sixty organisations operating around 270 outlets around the Island accept in
the war torn areas. The geographical distribution of the outlets of the five main
supermarkets and others under study is presented in appendix three C. You may also see
the density per supermarket around the Island. The figures will state that five chains
account for more than 200 out of 270 outlets with Sathosa clearly leading the list.
Appendix three D will present the above distribution on a Sri Lanka map.

Appendices E to I will indicate some of the performance figures for the five outlets.
Appendix E would give the total sales of the five outlets, which is in excess of 10 billion
rupees for the year 2002. Appendix three F will present the growth levels in turnover of
these five supermarkets, which are growing at phenomenal rates. Appendix three G would
highlight the changes in sales shares of these five outlets over the three years and you
may notice that Sathosa’s market share was on the decline and with the advent of its
restructuring plans it has been able to regain some of its share. Appendix three H will
illustrate the growth in the outlets of the five supermarkets over last three years, which
seem to grow on an overall basis.

Appendix three I will give the reader an idea of the supermarket retail life cycle, which
was adopted by the writer from the works of Davidson, Bates and Bass (1976) and plotted
with available data in the industry. You will clearly see that the industry is in a high
growth period entering into the growth stage of the supermarket retail life cycle.

The above information is presented as a preamble in discussing the different operations of


the five supermarkets understudy. The point to note would be that since the industry is in
the high growth stage at present, any single supermarket will not feel a pinch in their sales
for the next few years. But the real test would be when they enter the maturity stage
where intense competition would grab market share of each other. Supermarkets that
undertake measuring service quality would be in a better position to deal with those
changes in time to come than the ones who may not choose to do so at present.

61
3. Supermarket Operations of ARPICO Super Centers

(i) Background

ARPICO super centers are operated and managed by Richard Pieris Distributors
Limited, (RPD) which is a fully owned subsidiary of Richard Pieris and Company
Limited. It operates three super centers at present, which offers both durable and FMCG
products under one roof, creating yet another new retail format in this country. The focus
of our attention in this study is the supermarket operations of the super centers, which
offers FMCG products.

The first Arpico super center was opened in April 2001 at Battaramulla, the second in
Dehiwala in October 2001 and its third at Hyde Park Corner in November 2002. RPD
has a wide distribution operation and the super marketing operation is organized as
follows.

Figure 25 – Broad Organizational Structure of RPD


RPC Market research
officer

Other subsidiaries RPD

Merchandising Super centre Human Resource Other support


category head operations manager manager functions

Centre Centre Centre Training


manager - manager - manager - manager
Battaramula Dehiwala HPC

Responsible for calculating


Showroom Supermarket the customer satisfaction
manager manager index.
• Executives
• Cashiers Scores are
• Sales assistants connected to Mystery
• workers staff shopper
system
incentives

Source – See interview schedule for Arpico (A5)

62
(ii) Present Service Quality Measurement Techniques

Arpico super centers calculate a customer satisfaction index for each of their
supermarkets on a monthly basis. Please refer appendix three J, table 09 for the
dimensions which are used, the scoring and an example in building the index.

Methodology

Measurement Tool Calculation of a monthly customer satisfaction index based on 36


dimensions.
Sample 10-mystery customers per month per each supermarket.
Selection of sample Based on contacts of management and existing customers
Frequency Every month
Responsibility to Training manager
calculate this index
Method Please refer appendix three J for the method. Mystery shoppers
rate each dimension on a scale of 0, 3 or 5. In allocating points a
standard definition of what each dimension means from the point
of the company is given. As an example “Attentiveness” would
get full marks if “ The staff are observant of the customer”, and
for the “Ceiling” full marks would be given if it is “ free of
cobwebs, free of dust, well painted, free of marks” etc.
Use of scores for Based on the scores for each month, it is compared with an ideal
determining service
score of 180 points (36 dimensions x max score of 5) and a
level
acceptable score of 145 (as determined by management)
Use of the scores for Based on the scores received, if it is lower than the acceptable
decision making
score (145 points), staff incentives are not paid. Also if one or few
dimensions continuously seem to be lower, then the training
manager presents these details to respective managers and it is
their responsibility to rectify them. This tool seems to be
essentially used to monitor the performance of customer service
staff.

Source – See ARPICO Supermarkets interview schedule (A1-A5)

63
Strengths and weakness of the methodology
Strengths Weakness
The use of an index would give Although this is called a customer satisfaction
management insights into the index it only captures the service elements. Thus
continuous change in the will only be a customer service index.
performance of service
The scores are calculated with the use of 10
mystery shoppers who will not be representative of
the total monthly customer base.

The use of a quantitative measure The mystery shoppers provide points based on
and attaching it to performance definitions given by management on what should
gives an idea of the importance the be high/low levels of service quality. At any point
management has placed in the tool does not check what is important or what
improving the service dimension of are the expectations of customers. Essentially this
the supermarkets. is not a service quality measure but only captures
the perceived performance of what they understand
to be service quality specified by management and
not the customer.

Out of 36 dimensions, 19 aspects falls under the


building and 2 aspects under merchandising which
is not directly under the per view of the
supermarket staff. 21 aspects, which are not part of
their actions, are also taken into consideration in
calculating the index thus in paying incentives.

As a conclusion on the techniques in measuring service quality, ARPICO supermarkets


seem to be using some technique in measuring service dimensions, which is pre
dominantly, used in evaluating the performance of its staff.

(iii) Present Knowledge of the Service Quality Levels

The knowledge of service quality gaps were checked as follows

64
What do they understand by “ Service quality is an outcome of what the customer
service quality? feels when he walks out from the store. As a
consequence of service quality, he should come back
to the store or should leave the store without a
negative perception in his mind”
Their attitude towards it “ If you take a scale from 1 to 5, service quality should
be at least around 4.8 and it is very important to keep
customers loyal to your store”
What do they understand by “It is either a positive or a negative experience the
service quality gap? customer gets in our service”
Do you know what your “At the moment based on what we measure, we do not
customers expect from your capture what the customer expects on the elements of
service?
the service we provide. Based on your (writer)
definition of service quality as a gap between customer
expectations and what the customer feels of our
service, No we do not know that gap at present”

Source – See ARPICO supermarkets interview schedule. (A5)

As a conclusion, based on the nature of the tool they use and as per the above details, it is
evident that they are not aware of the existence of service quality gaps of their operations.

(iv) Service Quality Recognition Level

Based on facts presented under ii and iii, the following conclusion on service quality
recognition level could be drawn for ARPICO supermarkets

Service Either one or a Measurement of service quality Yes


quality combination
Level of knowledge of service
recognition
of No
quality gaps
levels at Measures service quality but are not aware of
ARPICO service quality gaps (due to not capturing the
supermarket expectations)

65
4. CARGILLS FOOD CITY Supermarkets

(i) Background

150 years ago William Milne and David Cargill started operations in Colombo as
general warehousemen and importers and eventually diversifying into many business
areas. In 1946 Cargills (Ceylon) Limited became a public quoted company with the
control of the company been passed to Ceylon Theatres Limited. Cargills has being able
to shape trends in the food retailing industry since 1983 with the opening of its first retail
outlet, expanding to more than 30 outlets Island wide today, offering FMCG products in a
super marketing atmosphere. The company claims that it caters to more than 6% of the
registered households in Sri Lanka.

The following diagram will give some insights into the operations of the Cargills Group.

Figure 26 – Business Functions of Cargills Group

Ceylon Theatres Group

Cargills (Ceylon) Limited

Restaurant Segment Retailing Segment Wholesale Segment

Food City Chain Cargills Quality Foods Cargills Quality Diaries Cargills
Operates the Manufactures Distributors
supermarket chain processed meat Manufactures diary Distributes
products products process foods

Source – Adopted from Cargills (Ceylon), Annual report 2002

Our attention would be on the Food City supermarket chain. The following would be a
broad outline of the supermarkets operating structure.

66
Figure 27 – Broad Organizational Structure of Cargills Food City Supermarket

Managing
Director

Executive
Director

Operations Operations Operations Operations Other


manager manager manager manager Marketing Purchasing/ support
Warehousing functions

Outlet managers – each out let manager reporting


to respective operations manager in their region
Assistant managers/Executives/Cashiers/Sales
assistants/Workers

Source – See interview schedule for Cargills (C2) and Annual report 2002.

The organization has a tall structure with different reporting levels. The marketing is
represented by a brand management team with supporting functions. Each operational
manager is responsible for a region with several outlets and is held responsible for
operational activities. A separate unit handles purchasing with new products selected by a
purchasing committee. The company has a central warehouse, which distributes goods to
its locations, while certain products are distributed directly to the locations.

(ii) Present Service Quality Measurement Techniques

Cargills supermarkets measure service quality using professional research agencies. It


does not have a recurring measure but this bi annual measure is used to develop and alter
retail strategies. Please see below for details

Methodology

Measurement Tool Professional research in measuring service quality.


Sample A series of focus groups and independent research on outlet,
based on customer counts.
Selection of sample Selected with the assistance of the research organizations.
Frequency Twice a year.
Responsibility in Marketing department and the Executive Director.
carrying out research

67
Method The organization checks service quality on a wide variety of
service quality dimension. (Unable to produce them, as they are
not shared). They are based on all retail mix aspects. For certain
aspects like customer support, very detailed, intense areas such as
cashier punching speed, service mindness etc, are checked. Each
of them captures importance to the customer and their perceived
performance. As a consequence of one such study, the famous
greeting campaign called “Aubowan” was launched meeting the
expectations of the customers. Focus groups and independent
research are carried out for a sample of outlets separately.
Use of scores for The company identifies service quality levels capturing both
determining service
customer expectations and their perceived performance. Based on
level
this, overall conclusions on service levels are determined.
Use of the scores for There are two types of decisions that are taken at Cargills based
decision making
on these scores. “Quick Fix” and strategy alterations. Quick fix
alterations are done for service dimensions, which could be
altered without a major change. The responsibility is passed to the
respective operations and the outlet manager with a time limit,
which is checked through surprise, visits from mystery shoppers.
Strategy alterations are carried out where major alterations are
required. As an outcome of a recent research study, it was found
out that the staff is not polite and helpful enough as customers
would like them to be. A certain program had been launched to
rectify this.

Source – See interview schedule for Cargills (C2)

Strengths and weakness of the methodology

Strengths Weakness
The service quality measurement studies In most situations based on the results,
that are done are carried out by quick fix decisions are implemented. This
professional research organizations. The might compromise the consistency of
samples chosen are quite representative of service across all outlets.
their customer base.
The results of the bi annual exercise is The check back mystery shopper may not
included into the decision making process be productive due to the differences in the
with a very strict sense. In other words the samples chosen. Checking back only the
results are taken seriously. perceived performance may dilute the
results of the original research.

As a conclusion, based on the techniques used in measuring service quality, Cargills


supermarkets use bi annual professional research in checking its service quality gaps.

68
(iii) Present Knowledge of the Service Quality Levels

The knowledge of service quality gaps were checked as follows

What do they understand by They seem to understand that service quality as a


service quality? comparison between what the customer wants and
want the customer get.
Their attitude towards it Their number one priority is to improve customer
service quality.
What do they understand by They seem to clearly understand that service quality
service quality gap? seems to be a comparison what is expected and what is
experienced.
Do you know what your The bi annual research seems to capture customer
customers expect from your expectations very clearly.
service?

Source – See interview schedule for Cargills (C1, C2)

As a conclusion, gathering from the type of research they do, its basis and how they
qualify what service quality is, they seem to be aware of the existence of service quality
gaps of their customers.

(iv) Service Quality Recognition Level

Based on facts presented under ii and iii, the following conclusion on service quality
recognition level could be drawn for Cargills Food City supermarkets

Service Either one or a Measurement of service quality Yes


quality combination
Level of knowledge of service
recognition
of Yes
quality gaps
levels at Measures service quality and are aware of
CARGILLS service quality gaps (through formal research)
FOOD CITY

69
5. KEELLS Supermarkets

(i) Background

Keells supermarkets are operated by Jaykay Marketing Services Limited (JMSL), a


fully own subsidiary of John Keels Holdings Limited. JMSL is categorized under the “
Food and Beverage” sector of the John Keells Group. The primary function of JMSL is
the efficient running of the Keells supermarket chain. Incorporated in 1991, at present it
operates eight supermarkets where four of them which are fully owned by JMSL
operating under the brand “KEELLS SUPER” while the others are franchise outlets
which are operated under the brand name” SUPER K”. The following will give the reader
an over view of the organizational structure of JMSL.

Figure 28 – Broad Organizational Structure of Jaykay Marketing Services Limited.

John Keels Holdings


Limited

Transport Plantation Food & Leisure IT


Segment Segment Beverages Segment Segment Others
Segment

Jaykay Marketing Services Ltd

Director Director/Sector financial


controller

Purchasing Marketing Operations HR IT Accounts

Operational KEELLS SUPER Franchise


support Outlet managers manager

Executive
Outlet executives
Supervisors
Customer service assistants

Source – See interview schedule Keells (K2)

70
The operational manager looks after the operations of the entire chain with the help of the
outlet and franchise managers. A purchasing committee carries out purchasing decisions.
Marketing is represented by a marketing manager, a brand manager and marketing
executives responsible for the push and pull activities and the overall supermarket brand.

(ii) Present Service Quality Measurement Techniques

Keells carries out an intensive service quality measurement technique in their network.
They call this the “ SUPER TEST ” where five dimensions have been created by the word
super. These are S-“Superior Service”, U-“Understanding Customers”, P–“Product
Related Aspects”, E –“Efficient Running” and R – “Reliability”. Please see appendix
three K for the questionnaire used for the measurement.

Methodology

Measurement Tool SUPER TEST – measuring service and product quality


Sample One mystery shopper per week per each outlet
Selection of sample Selected by the research agency
Frequency Once a week
Responsibility in Compilation done by the research agency. Co-ordination carried
carrying out research out by an executive in the operations department of JMSL.
Ultimate responsibility lies with the operations manager.
Method SUPER test is checking four dimensions of service and one
dimension of product quality.

Customer expectations are measured through frequent focus


group studies where the five main dimensions are checked for
importance. New sub dimensions are added as the need arises and
the not so important ones (as defined by the focus group) are
removed frequently. Within these sub dimensions, 100 points are
distributed based on what is important to the customers.

Perceived performance of those dimensions are checked by a


mystery shopper per week per each outlet for each of the sub
dimensions and marks are allocated for each sub dimension as per
the weights assigned by the focus group.

71
Use of scores for A minimum of 80 points are required to be maintained by each
determining service
level outlet every week. The determination of 80 points have been an
outcome of the maximum tolerance the customer (focus group)
would be willing to go through to be satisfied with the shopping
experience.
Use of the scores for The scores for different dimensions are totaled and these scores
decision making
are discussed with the outlet managers every week by the
operations executive. Improvements to customer service and
merchandise selection etc are carried out based on the results. If
an out let is not performing consistently, the responsibility is
passed to the out-let manager for immediate action to address the
needs. Comments are also made by each mystery shopper and
some times; names of the staff are also taken down. In these
situations the outlet managers concentrate training employees in
developing their customer service skills.

Source – See interview schedule for Keells ( K1-K3)

Looking at the facts presented, we could conclude that Keells uses a technique in
measuring its service quality, which tend to capture customer expectations as well
customer perceptions of their service performances.

Strengths and weakness of the methodology

Strengths Weakness
Customer expectations are checked on a Customer expectations are determined by a
frequent basis through focus group studies. focus group. The perceived performance is
This would allow Keells super to be aware captured by individual mystery shoppers.
of the changes in customer expectations on In certain instances these mystery
shoppers’ expectations might be different
a regular basis.
and their own expectations could also come
into the determination of the perceived
performance.
The perceived performance that is captured The use of only one mystery shopper per
essentially is compared with customer week per outlet might not be representative
expectations. This would give a good in determining the service quality levels of
indication of service quality gaps. its entire customer base.

72
(iii) Present Knowledge of the Service Quality Levels

The knowledge of service quality gaps were checked as follows

What do they under “Service quality would be different from one customer to another
stand by service because each customer’s expectations are different”. Based on
quality? this statement and through probing the supermarket seem to
identify service quality as a combination of customer expectations
and perceived performance of the service.
Their attitude When asked whether service quality is a qualifying criterion or a
towards it? determining criterion for customer satisfaction, the sentiment was
that service quality was a very clear differentiator in satisfying
customers.
What do they under It was explained as “ If we give what the customer wants then
stand by service they will be happy, if we don’t they will not come back again”. It
quality gap? was stated service quality is a difference between what the
customer would like to experience and what the supermarket
chooses to deliver.
Do you know what Customer expectations are documented on a very frequent basis
your customers through the use of focus group studies. They seem to have a good
expect from your idea of them. In fact the development of the recent “Online
service?
shopping” has been through one such finding.

Source – See interview schedule for Keells ( K2)

Based on above, Keells super seem to have a clear knowledge of what service quality
gaps and the nature of those gaps based on the measuring systems adopted by the SUPER
TEST technique.

(iv) Service Quality Recognition Level

Service Either one or a Measurement of service quality Yes


quality combination
Level of knowledge of service
recognition
of Yes
quality gaps
levels at Measures service quality and are aware of
KEELLS service quality gaps (through SUPER TEST)
SUPER

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6. SATHOSA Supermarkets

(i) Background

The Co-operative Wholesale Establishment (CWE) known as SATHOSA was


incorporated by an act of Parliament, 47 of 1949 and commenced operations in 1950. The
objectives of SATHOSA as stated in the act is to procure and supply requirements to
cooperatives, to carry out other business such as exports, wholesale activities and retailing
of goods of every description. Over time SATHOSA have been expanding its outlet base,
which stands at 156 today. With the election of the new government, SATHOSA has
ventured out in opening several “A” grade supermarkets enhancing the present service
aspects of this giant network. At present the government is carrying out negotiations with
the private sector to hand over a 40% stake of SATHOSA including the management
function in order to improve its efficiency levels. The focus of the study is on the super
marketing operations of the retail division of SATHOSA. The present organizational
structure is as follows.

Figure 29 – Organizational Structure of SATHOSA

Chairmen and Board of


Directors

Administration Wholesale Exports and Retail Local Services


division Marketing Imports Marketing Purchase division
division division division division

Additional General Manager

Deputy General Manager(s)


Region 01/02/03 – B grade outlets Sales & Marketing Welisara
Manager – A Grade Supermarket
152 outlets Head

Out let managers


Cashiers, Sales assistants, Shop Aids
Source – see interview schedule for SATHOSA (CWE2)

74
(ii) Present Service Quality Measurement Techniques

SATHOSA does not have a system in place in measuring service quality. It does not
handle customer complains by it self either. There is a complaints book in each outlet but
the shop manager himself handles them. According to SATHOSA sources, these
complain resolutions does not go beyond the manager it self.

However a comprehensive complains procedure is in place under the Ministry of


Commerce in sorting out complains made on SATHOSA directly to this unit. In most
outlets there is a sign encouraging customers to call this unit in case of a complain.

As per the discussions had with SATHOSA, it does not have any system in measuring its
own service quality. Strengths, weakness analysis cannot be done due to the absence of a
formal system in measuring service quality.

(iii) Present Knowledge of the Service Quality Levels

Although SATHOSA does not handle complains on their own, based on the frequent
reports filled on customer complains and the lapses of service quality by the Complains
Handling Unit (CCU) at the Ministry of Commence, SATHOSA seem to have some idea
about their service quality shortfalls in its system. Please see appendix three L on how the
complains handling process takes place in the CCU and how feedback is received to
SATHOSA on service quality lapses. The following will give the reader some
understanding of how SATHOSA management may understand service quality gaps.

What do they understand by “Service quality is ensuring that the customer is served
service quality? as required by him. As an example when a customer
comes to a SATHOSA outlet, if he is in a hurry we
should send him off quickly. If somebody is not in a
hurry then we should let him shop in the pace he
wants. At the end of the day give the customer what
they want.”
Their attitude towards it? “ Service quality is important. But at SATHOSA most
people come to buy goods at a reasonable or at a low
price. Therefore they are willing to buy goods and
remain with us even if the service is poor”.
What do they under stand by “We understand by numerous complains that there are
service quality gap? shortfalls in our system. I am sure at times customers
must not be happy. But it is almost impossible for one
person at SATHOSA to do some thing about it.”

75
Do you know what your “We cannot tell you in so many words what our
customers expect from your customers expect because we do not have a formal
service? system to collect it. But with the long history of our
operations and by analyzing some of the complains,
we have a basic idea what they want. We also know
that we have not met some of them. The initiative
taken by the Minister in introducing “A” grade outlets
is an attempt to give what the customers want.

Source – see interview schedule for SATHOSA. (CWE1-CWE3 and a source, which
did not want to be identified)

Based on the extracts of the above, it is evident that SATHOSA seem to have some idea
of service quality lapses although they do not know them as exact quantified gaps.

(iv) Service Quality Recognition Level

Based on facts presented under ii and iii, the following conclusion on service quality
recognition level could be drawn for SATHOSA supermarkets

Service Either one or a Measurement of service quality No


quality combination
of Level of knowledge of service Yes
recognition
quality gaps (some idea)
levels at
Do not measure service quality but seem to
SATHOSA
have some idea of service quality (through the
supermarkets CCU complains handling reports)

7. SENTRA Supermarkets

(i) Background

Sentra Supermarkets (Private) Limited is a part of the Seneviratna Trading (Private)


Limited which has been running several business initiatives in Mirihana for over 20 years.
Seneviratna Traders at present are the market leaders in the sugar trading business,
accounting for more than 60% of sugar imports to Sri Lanka. It also runs a few
distribution warehouses, wholesale shops, and retail shops in several business hubs in Sri
Lanka and also operates over 30 lorries in the transport hiring business. The first Sentra

76
supermarket was inaugurated in Mirihana in October 2000 as an initiative to compete
with Cargills, which opened one of its showrooms in Pita Kotte. Sentra was a diversion
strategy to protect the existing retail business in Mirihana and also to further consolidate
its sales. At present it operates four supermarkets. The business of the group and the
structure of Sentra are shown below.

Figure 30 – Organizational Structure of SENTRA

Wholesale outlets
Imports of Sugar
SENEVIRATNE
TRADING ( PVT) Transport business
Managing Warehouses LIMITED
Retail outlets

Sentra Supermarkets ( Pvt) Ltd


Chairman

Operations Manager Finance Manager IT Manager

Outlet managers ( 4)
Assistant managers
Supervisors
Sales Assistants ( cum cashers)
Helpers
Source – see interview schedule for SENTRA (SEN1, SEN2)

(ii) Present Service Quality Measurement Techniques

Based on the conversations had with the operations manager, Sentra supermarket does
not have any system in measuring service quality in their supermarkets at present. The
supermarket does not have a systematic complains handling procedure either. The
operations manager on his own seem to be speaking to customers in checking their
general perceptions on the service issues that are being provided to the customers. They
also feel that if customers do not complain then they have provided an adequate service to
the customer.

From the above discussion and on the facts obtained, the writer concludes that the Sentra
supermarkets do not have a service quality measurement system in place at present.

77
(iii) Present Knowledge of the Service Quality Levels

What do they understand by “Service quality is what the customer experience from
service quality? the moment they walk into our store from being
greeted to the time that they leave our store. It is a
combination of services”
Their attitude towards it? “ Service quality is very important. Even more than
100%. It is very important that we ensure that the
customer does not complain about our service. If they
do complain, by solving it we can keep them
contended with our service. Today you cannot do well
without good service”
What do they understand by Service quality gap is understood as either lapses or
service quality gap? not having lapses in the service delivery process. It is
quite clear based on the discussions had with them. A
gap for them is a shortfall in the service as defined by
the operational manager.
Do you know what your “ They expect good service, good prices” When asked
customers expect from your about dimensions of service and customer
service? expectations, specific points could not be given. The
statements given were very general such as being
polite, ready to serve the customer well etc.
Source – See interview schedule for SENTRA ( SEN2)

Every morning they have a meeting in the supermarket floor to discuss aspects regarding
complains. Through these the staff are given advice on serving, the customer and how to
rectify various service quality lapses.

Based on the aspects described above, it is clear that this supermarket is not aware of the
level of service quality gaps although it tends to get feed back from customer on various
levels which are predominantly informal and not systematic.

(iv) Service Quality Recognition Level

Service Either one or a Measurement of service quality No


quality combination Level of knowledge of service
No
recognition of quality gaps
levels at Do not measure service quality and are not
SENTRA aware of service quality gaps
supermarkets

78
8. Service Quality Recognition Matrix for the Five Supermarkets under study.

The writer presented facts by interviewing the operational and managerial personnel of
each of the supermarkets in understanding the service quality recognition levels by each
of them. Based on the conclusions made on each of these sections, the writer wishes to
plot them in the service quality recognition matrix that was conceptualized in chapter
three. Please see figure 31 for the service quality recognition matrix plotted as per the
findings.

Figure 31 - Service Quality Recognition Matrix for the Five Supermarkets

The knowledge of the existence of service quality gaps


Aware of gaps Not aware of gaps

S1 S2
Measures & are aware Measures but are not aware
Measures
Measurement of service quality

of gaps of gaps
 KEELLS
SUPER  ARPICO
SUPER
 CARGILLS
MARKETS
FOOD CITY

S3 S4
Does not measures but has an Does not measure and are
Not measures

idea of service quality not aware of gaps either

 SATHOSA
 SENTRA

Source – Based on the interviews carried out by the writer.

Based on the above you will find that KEELLS SUPER & CARGILLS FOOD CITY falls
into the quadrant “Measures and are aware” of the matrix, where service quality is
measured and service quality gaps are known. These supermarkets seem to have a very
high level of recognition for service quality in their organizations. Due to the intensity of
the measure, it is the judgment of the writer that Keells supermarkets are ahead of
Cargills within this quadrant.

79
ARPICO supermarkets fall into the quadrant “ measures but are not aware ” based on the
facts received during the interviews. Here although they have a good measurement
technique, it does not lead to the identification of service quality gaps, as they do not
capture the customer expectations, which is an essential element of service quality. So the
recognition level of service quality is lower.

SATHOSA supermarkets fall into the quadrant “ does not measure but are aware of
service quality” based on the facts revealed during the study. Here we found that although
SATHOSA does not measure service quality in any form, through its existing customer
complains procedures, they seem to be aware that there is a shortfall in their service when
comparing with their customer expectations. However due to the lack of a measurement
they would not know the extent of this gap. Their recognition level is low.

Finally SENTRA supermarkets fall into the quadrant “ does not measure and does not
know” based on the facts presented above. Here the supermarket does not seem to know
the existence of service quality gaps as well as they do not follow any method either to
measure it. The supermarkets service quality recognition seems to be low.

9. Summary

In this Chapter the writer attempted to find out the present service quality recognition
levels in the five supermarkets that were studied. Based on the interviews carried out by
the writer, the five supermarkets were plotted into the service quantity matrix that was
conceptualized by the writer. The findings suggested that two supermarkets were in the
high recognition category while the balance three was in the lower recognition category.

With the conclusion of this chapter, the first objective set for this study was achieved
which tried to understand the present service quality recognition levels of supermarkets
selling FMCG products in Sri Lanka

In the following chapter, the writer will empirically validate the hypothesis presented
elaborating the relationship between service quality recognition levels of supermarkets in
the four quadrants of the matrix and their customer satisfaction levels leading to
conclusions.

80
Chapter V

ANALYSIS OF DATA AND DISCUSSION OF FINDINGS

1. Introduction

In the last chapter, the writer categorized the five supermarkets under study into four
quadrants of the service quality recognition matrix as conceptualised by the writer. In this
chapter the writer would present data, obtained through the questionnaire survey carried
out for each supermarket representing each of the quadrants in the matrix.

The writer has attempted to identify relationships as suggested by data with the use of
various statistical analyses such as correlation, significance of correlation, determination
of the correlation, multiple regression analysis and hypotheses testing. The relationships
as suggested by data seem to shed light on important conclusions between satisfaction
with service quality, product quality and prices paid in influencing the overall
satisfaction in shopping in supermarkets.

2. Target Market Profile of the Sample for each Supermarket.

In understanding the relationships as suggested by data, the profile of the target market
is analysed under the following demographic factors. The reader is requested to refer to
respective appendices for results.

(i) Frequency of visits of the respondents (Appendix four A)


(ii) Gender breakdown of the respondents(Appendix four B)
(iii) Marital status of the respondents (Appendix four C)
(iv) Age break down of the respondents(Appendix four D)
(v) Household income breakdown of the respondents (Appendix four E)

(i) Frequency of Visits to the Supermarket

As per appendix four A , you may notice that in all supermarkets, the frequent visitors
constitute the majority of the supermarket customers. However in S3 and S4
supermarkets, the frequent visitors are below and the infrequent visitors are above the
overall average. This could mean that a section of customers in S3 and S4 supermarkets
seem to switch either between supermarkets or between other retail formats in buying

81
their FMCG goods. In S1 and S2, the loyal customers seem to be higher than the other
two.

(ii) Gender Breakdown of the Respondents

You may notice that as per appendix four B, the majority of the supermarket
customers are females. This is a common trend in Sri Lanka where the female members
of the family tends to purchase most of the FMCG goods.

(iii) Marital Status of the Respondents.

As per appendix four C, you may note that the majority of the respondents are married.
In this category those married with children (full nest category in the family life cycle)
form the majority. The not married category is relatively higher in S4 supermarkets. The
married with children will typically be the target market of any supermarket as the
composite expenditure on FMCG goods would be the highest among this category as per
the family life cycle concept.

(iv) Age Distribution of the Respondents

Looking at the age distribution and the marital status of the respondents, there seem to
be a very strong interconnection between them. You may see that in S4, the percentage of
non-married respondents and the age between 20-30 are quite close. In a similar note for
S1, the interconnection between married and the general age distribution seem to be
complementary.

As per the figures presented in appendix four D, the majority of the respondents fall
between the age categories of 31 to 50. This age category would represent the best period
of an individual’s life in terms of maturity, income and thinking. The 31-50-age category
would represent the typical target market of supermarkets where the relative income of
this category is higher than the other age groups.

(v) Monthly Household Income of the Respondents.

As per appendix four E, the income distribution of the target markets seem to be
different among certain supermarkets. You will clearly see that in S1 supermarkets, the

82
majority represents high-income groups while in S2 supermarkets, a relatively higher
proportion also accounts from high-income groups.

As for S4 and S3, a comparatively higher proportion of customers seem to fall into the
lower income groups. The higher income groups, which patronise these supermarkets,
seem to be relatively low.

3. 1dentifying Supermarket Segments

In analysing the target market profile of the four supermarkets under study, the
differences in frequency of visits, gender breakdown, marital status and age are quite
similar although it accounts for slight variations. Therefore using the above variables in
segmenting supermarkets would be meaningless. However with regard to the distribution
of income and price expectations of customers, there seem to be two distinct segments,
which are polarised among the above dimensions. The following table will present their
relationships.

Table 06 – Income Distribution of the Respondents and their Price Expectations


S1 S2 S3 S4
Income distribution
Lower Income 3% 15% 33% 35%
Middle Income 40% 55% 53% 50%
Higher Income 57% 30% 14% 15%

Expectations of cheaper prices 4.03 4.1 5.03 5.68


Correlation between income
distribution and price expectations
Significant Significant Significant Significant
(Please refer appendix four F for
workings)
Source – Survey Data

As per table six, you may note that there is a significant correlation between income
levels of the supermarket customer segments and their price expectations. Based on the
price expectations and the income distribution one can categorise the above four
supermarket customers into two distinctive segments as price sensitive or price
indifferent. This could be related to the price elasticity concept as identified in economic
theory. Figure 33 in page 83 will present this polarisation.

83
Figure 32 – Polarisation of Supermarket Segments

Household Income Distribution

Lower middle class Middle class Upper middle class


Below 20,000 P/M 20,001-59,999 P/M Above 60,000 P/M

35% + S4 supermarkets + 62% 3%

33% + S3 supermarkets + 53% 12%

15% 55% + S2 supermarkets + 30%

3% 62% + S1 supermarkets + 35%

Expectations of Cheaper Prices


Expects very Expects very
cheap prices S4-5.68 S3-5.03 S2-4.10 S1-4.03 expensive prices

7 1

Price Elasticity

Price Elastic S4 S3 S2 S1 Price Inelastic

Source – Survey Data

Price sensitive categories would be customers who tend to have high expectations of
buying products at cheap prices and who seem to fall into relatively lower income groups.
They could be labelled as price elastic customers and they would respond more to
changes in prices. You will note that based on expectations and income distribution, S3
and S4 supermarket customers would fall under the price elastic segment.

Price indifferent categories would be the ones who tend to be indifferent to price and who
seem to fall into relatively higher income groups. They could be labelled as price
inelastic customers where they would respond less to changes in price. Based on above,
one could clearly categorize customers of supermarket S1 and S2 into the price inelastic
segments

84
Based on the above findings , supermarkets customers could be clearly segmented into
two categories, which are

Price elastic supermarket segments ( more responsive to price). - S3 and S4


Price inelastic supermarket segments ( less responsive to prices) -S1 and S2

4. Findings on Service Quality Recognition Levels and Overall Satisfaction.


In this section we will first try to understand the correlation between service quality
gaps and the satisfaction with service quality and then the correlation with satisfaction
with service quality and overall satisfaction in shopping in supermarket explored. This is
analysed for all 4 supermarkets. A detailed analysis is available in appendix four G 1-4.

In identifying the correlation, statistical analysis of correlation(r), coefficient of


determination ( r2) and the significance of the correlation will be presented.

(i) Correlation between Service Quality Gaps and Satisfaction with Service
Quality
The reader is requested to refer appendix four G1 to G4 where, columns A and B
would reflect the correlation analysis carried out between service quality gaps and
satisfaction with service quality for the four supermarkets. In the same analysis the
significance of correlation, the determination of correlation is also presented.

You may note that for all supermarkets, the data seem to suggest a high positive
significant correlation between the service quality gaps and the satisfaction with service
quality. Also the high coefficient of determination would indicate that the variation in
satisfaction with service quality is explained by service quality gaps to a very large
extent.

(ii) Correlation between Satisfaction with Service Quality and the Overall
Satisfaction in Shopping in the Supermarkets.

In this section the writer will try to understand the correlation between satisfaction
with service quality and the overall satisfaction in shopping in supermarkets. The nature
of this relationship, its strength and its significance will be explored. The reader is once
again requested to refer appendix four G1 to G4 , columns B and C for the correlation
analysis carried out between satisfaction with service quality and the overall satisfaction

85
in shopping in supermarkets. The test of significance of correlation, the determination of
correlation is also presented..

You may observe that in all supermarkets, the there seem to be a high positive and
significant correlation. You may note that the correlation coefficient for S1 is very high.
Also the very high coefficient of variation of S1 will indicate that 90% of the overall
satisfaction is explained by satisfaction with service

For S3 and S4 this variation is only explained around 60%. Which means for the latter
supermarkets, the balance 40% on average is explained by some other factors.

5. Findings on Satisfaction with Product Quality and Overall Customer Satisfaction

The conceptual model presented by the writer also gave recognition to the fact that
overall customer satisfaction could be influenced by product quality. At this point the
writer will discuss the nature and the strength of the relationship between these variables
and overall customer satisfaction for all supermarkets. Please refer appendix four H for a
summery of the tabulated relationships of product quality for the four supermarkets under
study.

As per the data you may note that product quality seem to be having a lower correlation
in the customers satisfaction process. Based on the r2 , you may have observed that on
average less than 36% of the variation ( for S1-S4) in overall customer satisfaction is
explained through product quality.

6. Findings on Satisfaction with Prices Paid and Overall Customer Satisfaction

Please refer appendix four I for the tabulated correlation between prices paid and the
overall satisfaction for the four supermarkets under study.

Based on the data collected, you may note that the impact on prices paid in S1 and S2
supermarkets have not made a significant impact on the overall satisfaction. For S3 the
prices paid had made a significant impact but the nature of the relationship is low
positive. But it is close to 0.7, which means that the significance of it for overall
satisfaction is relatively high. But an interesting finding would be that for S4
supermarkets, price has made a very high positive significant impact on the overall
customer satisfaction. A high r2 value will also indicate that the changes in overall

86
satisfaction in S4 supermarkets are explained to a very greater extent by the high
satisfaction with prices paid.

As a conclusion the correlation of price to overall satisfaction is high and significant for
certain supermarkets ( S3 and S4) while for others (S1 and S2) it is low and insignificant.

7. Discussion of the findings of the multiple regression analysis in finding out the
Composite impact of Service, Product Quality and prices paid on satisfaction.

In sections 4, 5 and 6, the individual relationships and their strengths between


satisfaction with service quality, product quality and prices paid in influencing overall
satisfaction was explained. In this section the writer attempts to explain the collective
impact of satisfaction with service quality , product quality and prices paid in influencing
the overall satisfaction in shopping in supermarkets.

This analysis is presented based on a multiple regression analysis carried out with
satisfaction with service quality, product quality and prices paid as independent variables
and overall customer satisfaction as the dependent variable. The results of this regression
is attached to appendix four J of this report.

The conclusions from the regression analysis for the four supermarkets and the overall
conclusion of the impact of service , product and price towards overall satisfaction will be
discussed in the next chapter.

Let us discuss the findings of the regression analysis for each supermarket below.

(i) S1 Supermarkets

The regression model for S1 explains a 91.3% of the variation in overall satisfaction
by service quality, product quality and prices paid. Satisfaction with service quality has
contributed in a higher proportion with a very high level of significance. The contribution
from product quality is less with only a slight level of significance. There is no
significance impact from price to the overall satisfaction in shopping in S1 supermarkets.
The data analysis indicate that in S1 type supermarkets, satisfaction with service quality
has become a key determinant of overall satisfaction, while product quality being
indifferent and satisfaction with prices paid not making any impact.

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(ii) S2 Supermarkets

Regression model for S2 explains a 71.7% of the variation in overall satisfaction


through satisfaction with service quality, product quality and prices paid. The balance
28.3% is not explained thus could be explained by other situational conditions. Once
again you may note that satisfaction with service quality has contributed to a higher
proportion with a significant impact on the overall satisfaction. The contribution from
product quality is very small with no level of significance. There is no significance of
price to the overall satisfaction in S2 supermarket as well.

Once again service quality seem to make a significant impact on the overall satisfaction
while satisfaction with product quality and prices paid have not made a significant impact
on the overall satisfaction levels.

(iii) S3 Supermarkets

Regression model for S3 explains a 74.7% of the variation in overall satisfaction


through satisfaction with service quality, product quality and prices paid. The balance
25.6% is not explained thus could be due to other situational conditions. You may note
that satisfaction with service quality has contributed to a higher proportion with a
significant impact for the overall satisfaction. However the regression coefficient is not
very high. The contribution from product quality has made a significant impact on the
overall customer satisfaction while the impact from price is also significant.

In S3 supermarket although service seem to have a bigger impact, product quality and
prices paid seem to have made quite a significant impact on overall satisfaction levels.

(iv) S4 Supermarkets

For supermarket S4, the regression model explains an 88.4% of the variation in
overall satisfaction through satisfaction with service quality, product quality and prices
paid. There is a significant impact made by satisfaction with service quality on overall
satisfaction. According to the P values, the product quality has only a slight significance
in overall satisfaction. One interesting observation is that satisfaction with prices paid has
a higher significance even more than in service quality for S4 supermarkets. In S4, price

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has become the most significant contributor in shaping overall satisfaction while service
also contributes to a larger extent. Product quality has not made any significant impact.

The conclusion on above will be discussed in the next chapter.

8. Testing of Hypothesis.

In this section the writer would subject the null hypothesis of the three hypotheses
under review to the test of significance in either rejecting the null hypothesis leading to
the acceptance of the test hypothesis or providing evidence not to reject the null
hypothesis in rejecting the test hypothesis. The significance test is carried out at a 5%
significance level. The reader is requested to refer appendix four K for the workings of
the hypotheses testing .

(i) Testing Hypothesis One

The first hypothesis presented in the conceptual framework is as follows.

H1 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those that measure but are not aware of those
gaps (S2 type). i.e. Overall satisfaction of S1>S2

The null hypothesis presented for the above H1 is as follows.

H0 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may not satisfy their customers differently than those that measure but are not
aware of those gaps (S2 type). i.e. Overall satisfaction of S1 = S2

Based on the workings in appendix four K1, the null hypotheses was rejected at a 5%
significant level therefore H1 was accepted. In other words the assertion (H0) that
supermarkets that measure and are aware of service quality gaps (S1 type) may not
satisfy their customers differently than those who measure but are not aware of those gaps
(S2 type) cannot be held at 5% level of significance thus leading to the acceptance of H1

(ii) Testing Hypothesis Two

The second hypothesis presented in the conceptual framework is.

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H2 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those that do not measure but are aware of
their service quality levels (S3type). i.e. Overall satisfaction of S1>S3

The null hypothesis for this is as follows.

H0 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may not satisfy their customers differently than those that do not measure but are
aware of their service quality levels(S3type). i.e. Overall satisfaction of S1=S3

Based on the workings in appendix four K2, the null hypotheses was rejected at a 5%
significant level therefore H2 was accepted. In other words the assertion (H0) that
supermarkets that measure and are aware of service quality gaps (S1 type) may not
satisfy their customers differently than those who do not measure but are aware of their
service quality levels (S3type) cannot be held at 5% level of significance leading to the
acceptance of H2

(iii) Testing Hypothesis Three

The third hypothesis presented in the conceptual framework is as follows.

H3 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those that do not measure and are not aware
of those gaps (S4 type). i.e. Overall satisfaction of S1>S4

The null hypothesis presented is as follows.


H0 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may not satisfy their customers differently than those that do not measure and are
not aware of those gaps (S4 type). i.e. Overall satisfaction of S1 = S4

Based on the workings in appendix four K3, the there was no evidence to reject the null
hypotheses was at a 5% significant level therefore H3 could not be accepted. In other
words there is no evidence to reject the assertion (H0) that supermarkets that measure and
are aware of service quality gaps (S1 type) may not satisfy their customers differently
than those who do not measure and are not aware of those gaps (S4 type) at 5% level of
significance. Thus H3 cannot be accepted.

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As a summary based on the significance testing, H1 and H2 has been accepted through the
rejection of their null hypotheses based on the data obtained through the research but H3
has not been accepted due to the lack of evidence to reject the respective null hypothesis.
The conclusions based on the above findings will be discussed in the next chapter.

9. Summary

In this chapter the writer attempted to present data, which was gathered from the
survey carried out among four supermarkets, which represented each of the four
quadrants of the service quality recognition matrix.

Based on the type of relationships identified, it was observed that there was a strong
correlation between gaps in service quality, product quality and prices paid with their
respective satisfaction levels with service quality, product quality and prices paid.

There was also a significant high positive correlation between satisfaction with service
quality and overall satisfaction. While the satisfaction with product quality was
significant, the correlation was only low positive with overall satisfaction. Satisfaction
with price was significant for S3 and S4 supermarkets while for others it was
insignificant.

Composite impact of service quality, product quality and prices paid was also analysed
using a multiple regression analysis.

The hypothesis testing carried out at a 95% level of significance leads us to acceptance of
hypothesis one and two. There was no evidence to reject the null hypothesis of the third
hypothesis at a 95% level of confidence.

In the next chapter the writer will present the overall conclusions made in this study.

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Chapter VI

CONCLUSIONS
1. Introduction

In chapter four, the writer presented information, which led to the acceptance of the
service quality recognition matrix for the supermarkets in Sri Lanka. Chapter five
presented the findings of the questionnaire survey carried out in understanding the impact
of service quality, product quality and prices paid on the overall satisfaction in shopping
in supermarkets. This chapter will consolidate the findings and arrive at the overall
conclusions of the study. They are as follows.

2. Service Quality Recognition in Sri Lankan Supermarkets selling FMCG


Products

“Supermarkets which sell fast moving consumer goods in Sri Lanka could be
categorized into four types based on their service quality recognition levels”

These four types are


S1 type – Supermarkets that measure and know service quality gaps.
S2 type – Supermarkets that measure service quality but are not ware of gaps
S3 type – Supermarkets that does not measure but has an idea of the service quality
S4 type – Supermarkets that does not measure neither are aware of service quality gaps.

3. The relationship between service quality, product quality, price gaps and their
respective satisfaction with service, product quality and prices paid

“There appears to be a very strong positive relationship between


 Service quality gaps and satisfaction with service quality
 Product quality gaps and satisfaction with product quality
 Price gaps and satisfaction with prices paid.”

The gaps that are under discussion here are essentially the difference between the
perceived performance of the service, consuming the product and payment of the actual
prices as against the expectations that were created of that service, product quality and the
intended prices to be paid. For example the gaps would be arrived by

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Perceived performance of the service experienced minus expectation of the service
Perceived performance of the product quality minus expectations of the product quality
Perceived performance of the actual price paid minus expectations of the price to pay

The findings of this research conclude that there is a very strong positive relationship
between the above. In other words the lesser the gaps the higher the satisfaction.

Example from service is presented below


Expectation of Perceived performance of Gap (B-A) Satisfaction
service (A) service (B) with service
6.67 5.08 -1.59 6
6.75 5.58 -1.17 7
6.42 6.00 -0.42 8
7.00 6.67 -0.33 9
Source – Survey data Appendix 5A

The managerial implication of the above is, in increasing the overall satisfaction levels of
the customers in terms of service quality, product quality or on the prices paid,
supermarkets essentially need to understand the gap between expectations and perceived
performances. If they know this gap they can take steps to reduce the negative gap thus
the overall satisfaction in the respective areas could be increased.

As per the research findings you may observe that except in S1 type supermarkets in Sri
Lanka, none of the other types ascertain their customer expectations. As a consequence of
this the overall satisfaction of S1 supermarkets were very much higher than those of the
others as S1 had managed to implement strategies in reducing gaps between expectations
and perceived performances.

In the case of S2 supermarkets, which has taken some initiative in measuring perceived
performances without capturing expectations, the satisfaction with service quality and
overall satisfaction was still low. Although service was measured, this has not helped
them, as they had not understood the nature of the gap that was in existence.

It is important that supermarkets measure gaps especially in the areas of service quality
and price, which are essentially intangible. At times, not understanding expectations of
product quality may not do immediate harm as by way of product complains these gaps
will be known. However due to the intangibility nature of service and prices this might
not be so apparent thus the knowledge of gaps may not be known if not captured.

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In understanding the conclusions presented for sections 4, 5, 6 and 7, the reader is
requested to refer appendix four L of this study.

4. Relationship of Satisfaction with Service Quality on Overall Satisfaction

“Service quality seem to have a significant impact on the overall customer


satisfaction of supermarkets ”

In section four, (i) of chapter V, it was stated that there was a high positive correlation
between service quality and overall satisfaction for all situations. Also it was stated that
the correlation was significant at 1%. The higher r2 value will also explain the % of
variation.

As per appendix four L which gives a summary of the multiple regression analysis, under
the service quality column, you will observe that except in S4, regression coefficient for
service quality is the highest in all supermarkets. The p value less than 0.05 suggest that
significance of service quality on overall satisfaction is high for all supermarkets.

Based on the facts presented above, satisfaction with service quality appears to influence
the overall satisfaction in a significant way. Therefore we can conclude that service
quality is a significant contributor in determining overall satisfaction.

Satisfaction with service Determining criterion


Overall satisfaction
quality

5. Relationship of Satisfaction with Product Quality on Overall Satisfaction

“High levels of satisfaction with product quality did not appear to have a
significant impact on overall satisfaction but low levels of satisfaction would have a
significant impact on the overall satisfaction. Satisfaction with product quality acts
as a qualifying criterion in influencing the overall satisfaction in supermarkets.”

The results of the correlation analysis and the multiple regression analysis presented
different levels of significance between supermarkets for product quality and overall
satisfaction .In the correlation analysis product quality showed a week relationship with
satisfaction and the multiple regression analysis suggested a significant relationship when

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product quality satisfaction was low. In making a conclusion about the impact of product
quality on overall satisfaction, the reader is requested to refer columns of product quality
in appendix four L.

You may notice that the average satisfaction with product quality in all supermarkets was
7.67. In both supermarkets S1 and S4, their average satisfaction was very much higher
than the overall satisfaction in all supermarkets. But the increase of this has only made a
marginal impact on the overall satisfaction of these supermarket customers. This is
indicated by the slight significance shown in the regression analysis.

In S2 supermarkets, the average satisfaction is very close to the overall average. This
could mean that the product quality expectations are met as close to all other
supermarkets. However a mere satisfaction has had no significant impact on the overall
satisfaction.

In supermarket S3, the average satisfaction with product quality is lower than the overall
average and it has had a significant impact on the overall satisfaction.

Based on the above, the writer would like to conclude that satisfaction with product
quality as a basic or a qualifying criterion in determining the overall satisfaction of
supermarkets. What this means is high levels of satisfaction with product quality would
not have an significant impact on overall satisfaction but low levels of satisfaction would
have a significant impact on the overall satisfaction.

Qualifying criterion
If high – no significant
Satisfaction with product impact on overall Overall satisfaction
quality satisfaction
If low significant impact on
overall satisfaction

6. Relationship of Satisfaction with Prices Paid on Overall Satisfaction

“Satisfaction with prices on overall satisfaction for higher income segments (price
inelastic customers) seem to be insignificant while for lower income segments (price
elastic customers) tends to have a significant impact on the overall satisfaction of the
customers”

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Similar to product quality, satisfaction with prices paid resulted in different levels of
significance among supermarkets. This was true both in regression analysis and for the
correlation analysis. In trying to make an overall conclusion, one will have to look at the
behaviour of these variables in relation to the price elasticity of the segments that are
reflected in each of the supermarkets. Please refer columns on prices in Appendix four L.

You may notice that in both S1 and S2 types supermarkets, which were categorized as
supermarkets catering to price inelastic segments, price has not made any significant
impact towards the overall satisfaction of supermarket customers. However if price is
very unreasonable, price may affect the decision process. Therefore a mere higher
satisfaction with prices paid has not made any significant impact on the overall
satisfaction for price inelastic segments.

Where as for S3 and S4 types supermarkets which were categorized as supermarkets


catering to price elastic segments, satisfaction with price has made a significant impact on
the overall satisfaction of supermarket customers.

Based on the above observation, a higher level of satisfaction with prices has lead to a
higher satisfaction among price elastic segments while for price inelastic segments price
has not made a significant impact. The conclusion is depicted in the diagram below.

Satisfaction High Income groups Qualifying criterion


with prices Price inelastic Overall
paid satisfaction
Low Income groups Determining criterion
Price elastic

7. Comparison between Satisfaction with Service Quality and Satisfaction with


Prices paid in determining the Overall Satisfaction

“For price inelastic supermarket customer segments, (high income groups with
low expectations on price) satisfaction with service quality tends to have a higher
impact on the overall satisfaction than the satisfaction with prices paid. In other
words satisfaction with service quality would be a determining variable for overall
satisfaction and price would be a qualifying variable.”

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“For price elastic supermarket customer segments, (low income groups with high
price expectations) satisfaction with prices paid tends to have a higher impact on the
overall satisfaction than the satisfaction with service quality. In other words
satisfaction with price becomes a determining variable and satisfaction with service
quality would become a qualifying variable. ”

Having understood the relationships between service, product and prices on overall
satisfaction the writer would like to explore the relationship between satisfaction with
service quality and satisfaction with prices paid as price and service quality has become
significant contributors to overall satisfaction in different situations. We understood
earlier that product quality would act, as a qualifying criterion for customer satisfaction
thus the net impact on overall satisfaction in a situation where there is no dissatisfaction
with product quality would be the impact between service and price. Also we saw that
price becomes a determining criterion based on the price elasticity of the supermarket
segments.

In validating the above conclusion, the reader is requested to refer columns of service
quality and prices paid in appendix four L. The following behaviour would be noticed.

There is an inverse relationship between the regression coefficients of satisfaction of


prices and coefficients of satisfaction with service quality.

This same inverse relationship continues with the level of significance of price and
service quality for overall customer satisfaction.

The above inverse relationship seems to take place between supermarkets where their
price elasticities are different.

The above factors would explain the reasons for the conclusions made.

8. Conclusions from Hypothesis Testing

The three hypothesis that were presented essentially attempted to test the conviction the
writer had in stating supermarkets who are aware of service quality gaps through
measuring it frequently (S1) would achieve a higher level of satisfaction with service
quality and in turn will lead to a higher overall satisfaction among their customers than

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supermarkets which measure and are not aware (S2) or does not measure but are aware
(S3) or not either of both (S4).

The rationale for this argument was supermarkets that had identified gaps and measures it
frequently, would implement strategies in closing those gaps leading to higher levels of
satisfaction with service quality. It was the presumption of the writer that service quality
would have a bigger impact in the overall customer satisfaction than satisfaction with
product quality and prices paid.

The acceptance of the first hypothesis where the writer argued that supermarkets that
measure and are aware of service quality gaps (S1) would satisfy their customers more
than those that measure but are not aware (S2) strengthened the above conviction.

The acceptance of the second hypothesis where the writer argued that supermarkets that
measure and aware of service quality gaps (S1) would satisfy their customers more than
those who do not measure but seem to have an idea of service quality (S3) once again
validated the above point.

The non acceptance of the third hypothesis where by the writer argued that supermarkets
who measure and are aware of service quality gaps (S1) would satisfy their customers
more than those who do not measure neither are aware of the gaps (S4) lead some
inconsistency in the original argument. The reason being although service quality was
higher than S4, the overall satisfaction of S1 was not significantly higher than S4. From
the multiple regressions we saw that it was price, which had made the bigger impact on
S4 supermarket than service quality.

The above explains the non-acceptance of the H3. Hypothesis three essentially compared
the overall satisfaction of S1 (price inelastic) with S4 (price elastic) supermarket. The
latter supermarket was patronised by a majority of low-income customers who were very
price sensitive (based on the very high expectations on price and lower incomes). A very
high level of satisfaction with price (9 out of 10) had made a significant impact on the
overall satisfaction of these customers. So low levels of service quality essentially did not
lead to lower satisfaction levels in price sensitive segments.

The question why the second hypothesis was accepted where S3 was a price elastic
segment would be raised if the above argument was correct. In S3 case, the lower

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satisfaction with product quality and prices had an impact on overall satisfaction together
with service quality.

9. Overall Conclusion of the Study.

Based on all the facts presented above the writer would present the overall conclusion
of the study.

Figure 33 - Overall Conclusion of the Study.

Price inelastic supermarket Price elastic supermarket


segments (High income) segments (low income)

Satisfaction Satisfaction
Qualifying with service
with service Determining Overall customer criterion
quality criterion quality
satisfaction
Satisfaction Qualifying Satisfaction
with product criterion Qualifying with product
quality criterion quality

Satisfaction
Qualifying Determining Satisfaction
with prices with prices
criterion criterion
paid paid

It is argued that in more price inelastic supermarket customer segments, service quality
would be a clear determinant of overall satisfaction while satisfaction with product
quality and prices paid will act as a qualifier. Where in more price elastic supermarket
customer segments, satisfaction with prices would become a clear differentiator of overall
satisfaction while product quality and service quality would act as qualifiers.

The above findings suggest that the influence of satisfaction with service quality, product
quality and prices paid with overall satisfaction had to be associated with the relative
segments where supermarkets operates and cannot be concluded in isolation. Segments
where essentially differentiated on price elasticity in supermarkets.

The above findings will alter the writers original conviction and would arrive at the
conclusion that the impact of service quality, product quality or prices paid on customer
satisfaction is dependent on the market segment and the target market that the
supermarket caters to. This would also challenge the traditional thinking where it was

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thought that satisfaction in shopping in supermarkets was a combination of satisfaction
with product quality and satisfaction with service based on the placing of supermarkets as
a hybrid in the product service continuum.

10. Summary

This chapter essentially presented the conclusions made from the study. They are listed
down in summary below

Supermarkets which sell fast moving consumer goods in Sri Lanka could be
categorized into four types based on their service quality recognition levels

There appears to be a very strong positive relationship between service quality gaps
and satisfaction with service quality, product quality gaps and satisfaction with
product quality and price gaps and satisfaction with prices paid.

Service quality appears to have a significant impact on the overall customer


satisfaction of supermarkets.

Satisfaction with product quality acts as a qualifying criterion in influencing the


overall satisfaction in supermarkets irrespective of the type of customer.

In more price inelastic markets service quality would be a clear determinant of overall
satisfaction while satisfaction with product quality and prices paid will act as a
qualifier. In more price elastic markets, satisfaction with prices would become a clear
differentiator of overall satisfaction while product quality and service quality would
act as qualifiers.

Based on above, the overall conclusion would be the impact of service quality,
product quality and prices paid on customer satisfaction is dependent on the market
segment and the target market the supermarket operates in.

The conclusion of this chapter lead to the meeting of the second and the third objectives
of the study where relationships between service quality, product quality and prices paid
were concluded based on the findings as suggested by data.

In the next chapter the writer will make strategy recommendations in influencing the
overall satisfaction for different supermarket segments.

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Chapter VII
RECOMMENDATIONS
1. Introduction

This chapter is presented with the intension of achieving the final objective set for this
research study. That is to recommend retail strategies in closing gaps identified in
measuring service quality, product quality and prices paid. In the last chapter we
concluded that service quality was a significant contributor in influencing the overall
satisfaction of the supermarket customers. When understanding the composite impact of
service quality, product quality and prices paid on overall satisfaction, we observed that
in price inelastic supermarket customer segments, service quality was a clear
differentiator of satisfaction while product quality and prices paid acted as qualifying
criteria. In more price elastic segments our conclusion was that service quality and
product quality acted as a qualifying criterion while satisfaction with prices paid, acted as
a clear differentiator. The data indicates that in all supermarkets there were negative gaps
(perceived performance<expectations) for service quality, product quality and for prices
paid.

In this chapter the writer will present a four step process approach in closing service,
product quality and price gaps based on different supermarket segment requirements by
building tactical retail strategies. In the final section of this report, two generic strategies
will be recommended based the findings for the behaviour of service quality, product
quality and prices paid in influencing overall satisfaction in supermarkets.

2. Four Step Process Approach in Closing Gaps in Supermarkets.

The intension of the writer in proposing the above four step approach is to offer a
complete tool to the supermarket industry in measuring service quality, analysing the
gaps, identifying effective strategies that would close those gaps and monitoring its
successful implementation. As suggested the four steps would be
Step one – Measuring service/product quality and price gaps
Step two – Analysing the gaps
Step three – Building effective retail strategies in closing those gaps
Step four – Implementing and monitoring strategies and gaps over time.
The above steps will be discussed in detail in this chapter. Please refer figure 34 for the
complete model and its components as proposed by the writer.

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Figure 34 – Four Step Process for Closing Gaps through Effective Strategy Building

Measuring gaps
Step 01 SUPER GAP TEST - Appendix 6A
Measuring service
quality Focus Groups
Administering
the test
Mystery Shoppers

Score method – Appendix 6B


Step 02
Identifying and
analysing gaps Gap method - Appendix 6C

% method – Appendix 6D

Importance/
Perception matrix
Diagnostic
Appendix 6E
tools in
identifying
strategies Gap strategy
Step 03 interface
Appendix 6F
Strategy building in Strategy
closing gaps Development
Quick Fix

Implementation Focused attention

Strategic
alterations

Responsibility/
Org structure

Step 04 The index will assess – Appendix 6G


SUPER GAP • Effectiveness of strategies selected
MONITOR • Effectiveness of implementation
Monitoring Gaps through • Performance evaluation of managers
the development of a • Payment of incentives to staff
index • Tracking changes in customer expectations
Source – Recommended by the writer.

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3. Step one -Measuring Service Quality/Product Quality & Price Gaps

(i) SUPER GAP TEST

The writer is proposing the use of the above measurement tool in measuring service,
product quality and price gaps in the FMCG supermarkets on a regular basis. This
proposed tool is presented to the reader in Appendix five A.

This test is based on the questionnaire, which was presented in appendix two B in this
research. All the dimensions used to measure service, product and price are presented in a
concise format. The expectations and perceived performances are measured on a scale of
one to seven where one would be for extremely low scores and seven for extremely high
scores. The SUPER GAP TEST comes with a covering sheet giving guidelines to in
filling it. One additional feature that is found in this test is where the respondents are
requested to include comments. This would help the supermarkets to capture any
important qualitative information which otherwise would not.

Overall scales on satisfaction with service quality, product quality and price paid and
satisfaction in shopping in supermarkets has been omitted from the super gap test, as they
were relevant for the research only. If a supermarket wishes, they may include those
scales as well. Also supermarkets could also include other variables, as they desire
without making the questionnaire too long and complicated.

(ii) Administering the Test

It was stated under the limitations that administering the test by an interviewer
speaking to customers on the supermarket floor could lead to problems such as lack of
interest and time constraints by the customer limiting the effectiveness of the test. This
might lead to incomplete questionnaires and even at times bias answers by customers. In
order to avoid this, it is suggested that the test be carried out either in focus group studies
or in a mystery shopper’s programme. While focus group studies would be intense, the
representativeness and the in-store shopping experiences may be compromised. The best
method would be to administer this as a mystery shopper programme. This is practical as
S1 & S2 supermarkets at present have a very strong mystery shopper programme in place.

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The test needs to be carried out for each outlet individually as target market distribution is
based on areas and especially service dimensions would be very much different from
outlet to outlet.

Ideally a sample of 35-40 mystery shoppers per outlet would be a fairy good sample.
Mystery shopper could be an existing customer who visits a particular supermarket outlet
on a frequent basis. It would be ideal if the test could be carried out once in two months
as any period shorter than this would lead to a higher costs and a period longer than this
might not show changes over time. The instruction sheet states the expectations of all the
dimensions to be marked before the mystery shopper goes into the supermarket. This is
strongly recommended; other wise expectations may be influenced by in store influences.
Based on all of the above, the following would be a summary in administering the test.

Tool to measure gaps SUPER GAP TEST


Data collection Mystery shopper programme
Data collected for Each outlet individually
Frequency Once in two months
Sample size Ideal if around 35-40 respondents per outlet
Sample selection Select frequent customers and tie them up for some benefit. The
majority should represent the target market. One can rotate the
sample every year to maintain expectations while this would
reflect changes in perceived performances through strategy
alterations.
Completing the tool Expectations to be indicated before visiting the outlet.
Experiences to be filled while shopping or immediately after

4. Step Two - Identifying gaps

The writer is proposing three levels in identifying and quantifying gaps that were
measured. They are as follows.

(i) Score Method in Identifying the Gaps.

The reader is requested to refer appendix five B for the presentation of gaps using the
score method for one of the supermarkets which was measured in the survey. As per
appendix five B, you may note that average scores of all the respondents for expectations
and perceived performances for each service, product and price dimension is added and
presented. These scores are presented separately for physical aspects, reliability, personal

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interaction, overall service quality, product quality and prices. For each of them under the
total scores you will find a figure called ideal score. This is the sum total of the average
expectations for each of the dimensions. The third row is a proportionate score where the
sum total of average perceived performances are weighted against the sum total of
average expectations and presented as a percentage.

For example for physical aspects the sum total of the average expectations are 24.75
points. ( out of a maximum of 28 points = 7 points x 4 statements in physical aspects).
However the sum total of average perceived performances are 19.68 points (out of a
maximum of 28 points = 7 points x 4 statements in physical aspects). The proportionate
score would be where average perceived performance divided by average expectation
(ideal score) as a percentage. This is 79% (16.68/24.75 as a %) of the average
expectations was represented by the overall perceived performance of the service for that
dimension. The above system will indicate the relative behaviour of expectations and
perceived performances showing that the latter has fallen short of expectations giving
supermarkets a clear idea of its standing on service quality, product quality and prices
paid.

(ii) Gap Method.

The reader is requested to refer to appendix five C 1 and C2 to get an insight of this
method. In this method the average expectations, perceived performances and the gap
across all respondents for each dimension is presented graphically in a line chart. This
method will clearly show the comparative expectations across dimensions where one can
judge the importance of certain dimensions than others and gaps are presented very
clearly. The red line will show the negative gaps (perceived performance<expectation)
and when it turns green it will indicate a positive gap. (Perceived
performance>expectation)

(iii) Percentage Method.

Through this method we will further quantify the gaps identified above. Please refer
appendix 5D1 for this method. Here each degree of the gap is presented as a percentage
for each dimension of all respondents. The intensity of the gap could be identified here.
You may see in appendix 5D2 for stock availability, helpfulness & polite staff the
negative gaps are 100%.

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5. Step three – Strategy Building in Closing Gaps in Service, Product and in Prices.

Step three needs to be evaluated through a further two sub steps. They are as follows.

(i) Diagnostic Tools in Identifying Strategies to Close Gaps

Two following two tools are recommended for supermarkets to use as diagnostic tools
in selecting strategies for different gaps. They are

a) Importance perception matrix - This tool helps the supermarket to identify the
importance of each of the dimensions to the customer vs. their present perceived
performance. The reader is requested to refer appendix five E1 to E4. Service, product
quality and price dimensions are plotted in a matrix using their importance vs. there
perceived performance. The expectation captured in the SUPER GAP TEST would be
the importance dimension, which is ranging from one (low) to seven (high). Perceived
performance also moves on a similar line. Based on these four situations the importance
perception matrix could be presented as follows.

Quadrant one. High importance and high perceived performance will dictate a
competitive strength situation. Supermarkets should maintain or improve them further.

Quadrant two. High importance and low perceived performance will indicate a
competitive vulnerable situation. A supermarket will need to improve these dimensions.

Quadrant three. Low importance and high-perceived performance would be an


irrelevant superiority. The supermarket is good in areas where the customer does not
seem to identify as important. One may continue with very low effect.

Quadrant four. Low importance and low perceived performance – Relative indifferent
situation where effort needs to be reduced.

You may note that as per appendix E1, outlet design, stock availability, accurate billing
and short waiting time, which is important dimensions to the customers, are performing
low. If these are not rectified, the supermarket may loose customers to other
supermarkets. Similarly information on sales promotions and individual attention were
not important to customers but the supermarket has done well in those areas. Maintaining
them without effort and cost is desirable. All other variables fell into the competitive
strength quadrant but based on their placing and the nature of the gap you will see that

106
helpful employees and politeness needs definite improvement although they sit in this
quadrant, which is on the edge. Appendix E2 will also show placements for product and
price statements.

You can carry this out for sub dimensions (E3) and dimensions (E4) of the SUPER GAP
TEST to check their standing. So it is vital that after testing the gaps, this matrix is
developed as you will have to address only the critical ones (competitive vulnerable)
faster in order to protect market share.

b) Service, product, price gap and strategy interface. This is yet another tool that
could be used. Once gaps and their standing in the importance perception matrix are
identified this tool will provide the supermarket which strategies that it should select to
close the gaps. This is found in appendix five F. You will notice that this interface has
married service, product and price dimensions into the retail mix strategies. In appendix
five E1, the importance perception matrix identified that stock availability was in the
competitive vulnerability quadrant. In other words stock availability was important to
customers but the perceived performance of stock availability was low. The interface
would prompt possible strategies that would effect this situation.

Merchandising mix strategies – If the supermarket is following a wide variety and


shallow assortment strategy (stock a little of every thing), then this strategy may effect
this situation.

There could be a mismatch between the display types, concept adopted; content that
could be displayed on the shelf and the customers off take. If too little stocks could be
stored in a given shelf, then constant replenishment needs to be done. Also errors in
display arrangements where products are arranged in a manner, which is not familiar
to normal practise or the typical purchasing sequence, customers may think that
stocks are not available but actually it might be in another location.

The most important contributor for stock availability could be purchasing and
ordering decisions. These may also be affected by the policies and the procedures the
supermarket may follow. Due to complicated centralised procedures there could be a
delay in the stocks being ordered.

Training of staff in handling replenishment. This could be another contributor where


although stocks are available in the showroom feeder stores, they may have not been

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put to shelves due to lack of training in handling replenishment or due to a problem
with the structure of the staff in the store organisational structure.

So based on the existing knowledge of retail strategies, the interface gives sufficient aid
to the supermarkets to choose the correct strategy for the correct problem.

(ii) Strategy Development

Strategy development essentially deals with the selection of the retail mix in closing
the gaps. SUPER TEST measured the gaps and using the score, gap and the percentage
method, the supermarket identified the intensity of those gaps. By analysing the
importance perception matrix, the important gaps that need attention were chosen.

The interface will prompt the supermarket which retail mix strategy would deal with the
given gap. Strategy development is essentially the selection of each of these strategies and
building the retail mix. Since one gap may deal with more than one strategy the retail mix
would be an important issue.

(iii) Implementing the Strategies

Implementation is carrying out the retail mix strategies that were created in closing the
concerned gap. It is the sentiment of the writer, that different methods of implementation
are required for different gaps. They are as follows.

a) Quick fix - This is where the supermarket could quickly make alterations in its
strategies for a given gap. For example if the gap for the cleanliness is highly negative,
the management could fix this very quickly with minimum effort. These are called quick
fix solutions.

b) Focused attention - This is where the given gap deals with a change of attitudes. For
example a negative gap on staff helpfulness, politeness, may need a focus attention of
changing them overtime with a focused training programme. Staff training could be
initiated on politeness and an incentive scheme could be proposed to motivate them. In
implementing this, management would need to focus on these issues for a period in
rectifying them.

c) Strategic alterations - This deals with implementing strategies that may have a
significant impact on cost. For example a problem with location, outlet design, or car

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parking may need a quite an investment to rectify. These needs could be considered as
more strategic or long-term alterations to the retail strategies.

d) Organisational structural support - In this section the writer wishes to make


recommendations about the supermarket organisational structure in measuring service,
product quality and price gaps and carrying out or supporting the function of the entire
four step process approach as suggested.

Out of the five supermarkets that were studied in chapter four, Cargills, Keells and Arpico
had soughed the assistance of market research agencies in measuring gaps. In the case of
Arpico, it was co-ordinated by the training manager, at Keells by the operations unit and
at Cargills by the marketing department. In all three situations, service quality was
measured by people who were directly involved with the operations to some extent. In the
next section the writer would propose the use of these measures to be linked to
performance evaluation.

Keeping all this in mind the writer wishes to propose the establishment of a new position
in the supermarket, giving the sole responsibility to measure, analyse gaps, use of
strategic tools, and monitoring the progress of customer feedback on service, product
quality and satisfaction with prices paid. This position needs to report directly to the
general manager or the managing director by passing other levels to avoid any influences
on the outcome. If there is already a research unit, then this person could be a part of it.

This position to be designated as “Manager, Service Development”. If the supermarket


seeks the assistance of an agency, then an executive position would be sufficient while if
there is a cost issue in working with agencies, a managerial position with two supporting
staff may be adequate for the job fulfilment.

This individual or the unit will be responsible for

i) Refining the SUPER GAP TEST on a periodical basis to suite the expectations of
the customers and the organisation
ii) Carrying out the mystery shopper programme
iii) Analysing the data and identifying the gaps
iv) Presenting them to operations management and the merchandising teams
v) Developing the diagnostic tools

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vi) Co-ordinating with the respective units in identifying strategies.
vii) Calculating the index and presenting its finding on a periodical basis.

With this independent unit, the effectiveness of the whole process could be augmented
and the supermarket will be able to achieve a competitive edge in its performance.

6. Step 04 - Monitoring the Progress and Continuous Evaluation

In most organisations, although strategies are identified, problems of poor


implementation would deprive the organisation to achieve its desired results. In order to
avert such a situation, the writer wishes to propose the development of an index to
monitor few aspects of service, product quality and satisfaction with prices overtime. The
reader is requested to refer appendix five G for the proposed index. It is called the super
gap monitor. The super gap monitor comes with several indices.

Super gap physical index – This index monitors the changing attributes of expectations
and perceived performances of customers overtime of physical aspects of service. This
would be very useful for supermarket designing and new outlet planning.

Super gap staff index - This index monitors the changing attributes of expectations and
perceived performance of customers on the reliability and personal interaction aspects of
service. These are coupled together as both of these attributes mainly deal with
performance of staff.

Super gap SQ index – This would be the index to monitor the service quality changes in
the supermarkets. This would be an outcome of the above two indices.

Super gap PQ index – This index monitors the changes in product quality over time.

Super gap PP index – This index will deal with the changes in gaps in prices paid.

Super gap TOTO index – This would a total index for that supermarket under
consideration. This would be an out come of SQ, PQ and the PP indices.

The methodology in calculating the indices are explained as follows. (Appendix five G)

Data for February are actual figures based on the survey results. Data for April 2003 &
June 2003 are example figures used in explaining the building of the indices.

110
Each index is calculated with the aid of two sub indices.

Sub index A will check the expectations of the customer on the relevant index attribute
under discussion. February 2003 figures were taken as base figures in calculating the
index. For example for the SUPER GAP PHYSICAL INDEX, sub index A, the score is
24.75 from a maximum of 28 points. (7 points x four statements) The index is 100 since it
is the base period. For April the index has moved to 105.05 showing a 5.05% increase in
expectations of the customers. For June it has increased by 9% from the base year. It
tracks the changes in expectations over time. In order to avoid inter segment biasness’,
once the mystery shoppers are selected they could be used for a minimum period of one
year to reduce this error.

Sub index B will check the perceived performances of the customer on the relevant index
attribute under discussion. For April you may notice that the perceived performance of
SUPER GAP PHYSICAL INDEX has only changed slightly. For September it has
improved by 6%. Similarly one can track the changes of the perceived performances,
which are directly related to the implementation of strategy.

The final index is built on a proportion score between the perceived performance and the
expectation of that attribute. Because the ideal situation would be for the supermarket to
meet expectations. For February the proportion score of the physical aspects has been
79.49. (( 19.68 perceived performance/24.75 expectation) x 100). In order words the
supermarket was able to achieve a perceived performance of 79% as against its customer
expectations. This would be the base thus the index is 100. For April the final index has
deteriorated by 3.24% ( 100-96.76). If you look at it closely, this was caused because of
an increase in customer expectations by 5% and an increase in perceived performance by
around 1%. In other words this index captures the performance against expectations,
which is the core of this study.

Other indices are also based on the same principle.

The use of these indices for monitoring purposes Indices could be used to check the
effectiveness of the strategies selected to close gaps. If the strategy selected in closing the
gap does not reduce the gap between the expectation and the perceived performance, then
the effectiveness of the chosen strategy could be judged by the indices. For example if the

111
gaps in staff politeness is high and a strategy of reprimanding staff for lack of politeness
does not yield in the improvement of the index, then the strategy might not be very
effective.

These indices will also indicate the effectiveness of implementation of strategies. For
example, in cleanliness gap, if a chosen strategy yields in low scores in the index would
mean a problem of implementation.

Performance evaluation of managers could be also checked through these indices. In


evaluating the supermarket managers the SUPER GAP TOTO INDEX for each outlet
could be used. In evaluating performance of operations managers, a composite of the
TOTO index for all outlets could be tabulated. In evaluating the performance of the
merchandising teams, a composite index for SUPER GAP PQ and PP indices could be
used.

Paying staff incentives could be based on the SUPER GAP STAFF INDEX. A minimum
basis could be established and based on the movement of the index their incentives could
be calculated. This would promote team performance and put pressure on non-
performers.

Finally these indices could be used to monitor changes in customer attributes and the
changing importance of various dimensions overtime prompting changes to long-term
strategies.

7. Overall Strategies for Supermarkets based on Research Findings.

In our study we concluded that behaviour of service quality, product quality and prices
paid on overall satisfaction was dependent on different supermarket segments. The writer
wishes to propose two generic strategies for the two basic segments that were identified in
the study. These are borrowed from Michael Porter and adopted to the supermarket
situations. They are as follows

(i) Value Focus Strategies

Value focus strategies are suggested for more price elastic supermarket segments. Here
supermarkets, which primarily cater to price elastic segments, will need to be low cost
operators. By focusing on these supermarkets will be in a position to offer high value for

112
money to their customers. High value does not essentially mean giving the lowest prices.
The writer suggests different methods in practising these.

Loyalty programmes attached by price benefits through a points accumulating scheme.


Supermarkets could offer a loyalty card for each customer and let points be accumulated
based on the frequency of visit and average basket value. These accumulated points
would allow customers in getting discounted prices during seasonal periods.
Supermarkets would not loose net profits as reduce margins on products during seasonal
periods will be offset by high turnover.

Best buy offers. Supermarkets have quite a lot of opportunities to offer best buys.
Permanent banded offer counters initiated by the supermarkets could increase the value to
the customers. These should not be seasonal or temporary, but should be permanent.
One-price, items are another value offer where the supermarkets offer similar products at
same prices offsetting higher margins with lower ones.

High utility low value items. Products like sugar, rice and dry rations, effective purchase
planning could give the supermarket better purchase prices. Adopting no margin or low
margin for these items will pull crowds into the outlet. The chances of them buying high
margin products are also higher balancing the overall margins.

Value focus strategies would essentially deal with the pricing and the retail sales
promotions strategies of the retail mix.

(i) Service Focus Differentiators

On the other hand, for supermarkets catering to price inelastic customers,


differentiating strategies using service quality would be most appropriate. Measuring
service quality would be extremely important to these supermarkets as we saw how a
clear differentiation could be carried out by service quality for these segments. These
supermarkets could differentiate themselves with the convenience of location,
servicescape, people and the processes that customers go through in shopping in the
supermarkets. The supermarket would ideally want them to give a unique shopping
experience with additionals such as on line ordering, telephone ordering, delivery, valiae
parking etc. Managing the moments of truths in terms of high levels of service would be

113
very important for these supermarkets. In implementing these strategies, a set of high
calibre management personnel and front line staff will have to be recruited.

8. Summary

In this chapter the writer recommended a four step process in measuring, analysing
gaps in supermarkets in building strategies to close gaps and ensuring effective
implementation and monitoring overtime. The recommendations made would certainly be
useful for all supermarkets, which sell FMCG products in Sri Lanka thus enhancing
shopping experience of supermarket customers. The effectiveness of the
recommendations would also be useful in grabbing market share from other retail formats
which still tends to dominate the FMCG products market as well as grabbing share from
other supermarkets which may not carryout such an exercise. Also the above exercise
would help the reduction of switching between supermarkets and the creation of a loyal
group of customers.

This chapter also discussed two generic strategies for the two supermarket segments
identified in the research study.

The conclusion of this chapter would fulfil the final objective set for this study in terms of
making strategy recommendations in closing gaps in supermarkets with the idea of
enhancing the overall customer satisfaction. The writer would like to make an appeal to
all supermarkets to engage in the above process thus the overall satisfaction levels of the
Sri Lankan supermarket consumer could be increased leading to an increase in the quality
of life.

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Appendix I - A

Report of the Pilot study to establish the research problem.

1. Objective of the pilot study

To ascertain whether there are service quality gaps in the supermarket retailing
industry in Sri Lanka.

2. Scope

As per the objective, the aim of the pilot study was to see whether there are service
quality gaps in the supermarket retailing industry in Sri Lanka and if so to ascertain the
nature of this gap. This pilot study does not intend to study relationship between service
quality and customer satisfaction. It would try to quantify the service quality gaps in a
selected sample of supermarkets which sell FMCG products.

3. Methodology

(i) Model

The pilot study was based on a similar research carried out in Spain, which tried to
measure service quality in the supermarket retailing industry using a scale called
CALSUPER, which had been adopted from the SERVQUAL scale. It is important to
highlight that although some of the sub dimensions used to measure service quality in
CALSUPER was used for the pilot study, the objective was NOT to measure service
quality it self but only to see nature of the service quality gaps.

Some of the service dimensions used in the “CALSUPER” technique were used for the
pilot study. Three service dimensions (out of the four used in CALSUPER) were used
for the pilot study. These are Personal Interaction, Physical Aspects and Reliability. All
sub dimensions under the above three service dimensions were used while adopting
some of the sub dimensions to suite the Sri Lankan scenario as per the researchers
understanding. Dimensions used are as follows.

115
Pilot Study – Service Gap analysis – Service dimensions & Sub dimensions

Personal Physical aspects Reliability


Interactions

Waiting time at
helps customer
Equal treatment

communicated
Staff advice for

Special offers

cash registers
Outlet design

appropriately

Price marked
Helpful Staff

Layout helps

All products

Car parking
Cleanliness
Polite Staff

availability
movement

displayed
choosing

Products
products

products

clearly

Stock
best buy

The fourth dimension used in CALSUPER was not incorporated, as it was too
complicated for a pilot study.

(ii) Questionnaire Development

A seven point scale was used to capture customer expectations on the above
dimensions. “One” was not important at all and “seven” was extremely important and
numbers in between for the different degrees. Another seven point scale was used to
capture customer perceived performance on those dimensions. The customers
demographic details were also collected for analysis. Please refer appendix one B for
the questionnaire used for the pilot study.

(iii) Sample

A survey was conducted among a sample of 215 customers. The sample was a
convenience sample selected form sources which the researcher had easy access. The
respondents who shopped in the supermarkets from the ones, who did not, were
screened from the 1st question. Out of the 215 respondents, 14 were invalid and from
the balance 201 respondents 143 were shopping in supermarkets. The conclusions are
based on the responses given by these 143 respondents

The reader is requested to turn his attention to appendix one C for a general profile of
the respondents of this study. The profile has been given from two dimensions. The first
as the % from the total 201 valid respondents and then second as a % from the 143
supermarket-visiting respondents.

116
(iv) Method of analysis

The gap was arrived at by reducing the score on perceived performance from the
score on expectations The following would interpret the three gaps

Negative gap – Perceived performance fell short of the expectations


( Perceived performance < Expectation )
No gap – Perceived performance was equal to the expectations
( Perceived performance = Expectation)
Positive gap – Perceived performance was higher than the expectations.
( Perceived performance > Expectation)

A percentage was arrived at from the total respondents for each of these scores ( 143 )
and the final scores were arrived as a average of that.

4. Discussion of findings

From the total 143 respondents , 46% visited Cargills , 21% visited Keels Supper ,
6% visited Arpico supermarket , 3% Sathosa , 2% Bahira , 1%, Park and shop , 10%
was other regional supermarkets & 11% did not respondent to this question.

Appendix one D will give the reader the findings on the nature of the gaps of service
quality in the supermarket retailing industry in Sri Lanka.

As you may see for all the 13 sub dimensions, there is a negative service quality gap in
the Sri Lankan supermarket retailing industry. As an average 59% of the respondents
felt that there expectations of the service was not met with the perceived performance of
service they experienced. For certain sub dimensions, the negative service quality gap
was over 70% while for others it was low as 46%.

An average of 32% of the respondents felt that their expectations were met by the
perceived performances while only 6% on average felt that their perceived
performances of service quality exceed their expectation.

117
5. Limitations of the pilot study

If you turn your attention to Appendix one C of this report once again, you would
notice that 79% from the total valid respondents were between 20 to 30 years. The
sample is very much biased on the general opinions of this age category.

Also 44% from the total valid respondents were from very junior grades in terms of
their employment level. This might not be a major impeding factor as it was observed
that among the senior management levels the negative gap was even higher. So if the
sample weight were more towards the senior management there would still be enough
evidence to show even higher levels of negative service quality gaps. One possible
reason could be that their expectations being higher than the junior grades.

Also another limitation is that 66% from the total valid respondents were males.
However from the total supermarket shoppers this had come down to 56%.

Also the sample chosen was a convenience sample and may not represent the total view
of the entire supermarket customer’s opinion.

6. Conclusions

So on the whole, the results of the pilot study gives indicates that there is service
quality gap in the supermarket retailing industry in Sri Lanka. Out of these gaps
identified on several service quality dimensions, the majority of the respondents seem to
be having a negative service quality gap (where there perceived performance of the
service quality had fallen short of their expectations) giving evidence to the existence of
the problem stated.

118
Appendix I - B
Questionnaire used for the pilot study
The following questionnaire is presented with the objective of understanding the customer satisfaction
process when shopping in a super market in purchasing their requirements of consumer goods.

All answers in this questionnaire are used for academic purposes and will be treated in the strictest
confidence.

1. Do you buy your consumer items from a super market? Yes No

If your answer is Yes, then please go to question 2.


If your answer is No, please go to question 7.

2. Please state the name of the super market that you frequently purchase your items.

3. The following sets of questions are raised to find out the levels of service that you expect from the
supermarket that you shop and what you actually experienced. Please circle the number that
describes your closet choice for column B & C based on what is mentioned in column A.
(1 being for “strongly disagree” & 7 being for “strongly agree”)

Column A Column B Column C For


What I expected What I actually experienced official
Area of service Strongly Strongly Strongly Strongly use only
disagree agree disagree agree
Staff always being polite to
customers 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Staff always willing to help
customers 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Staff to advice the best
possible buy 1 2 3 4 5 6 7 1 2 3 4 5 6 7
I feel that I am being treated
equally 1 2 3 4 5 6 7 1 2 3 4 5 6 7
The super market is kept very
clean 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Layout helps customers to find
products easily 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Outlet design helps customers
to move easily 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Products appropriately
displayed on the shelf 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Product prices are clearly
marked 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Details of its special offers are
clearly indicated 1 2 3 4 5 6 7 1 2 3 4 5 6 7
Waiting time at the cash
registers are short 1 2 3 4 5 6 7 1 2 3 4 5 6 7
There is always stocks of
products required 1 2 3 4 5 6 7 1 2 3 4 5 6 7
I am able to park my vehicle
easily 1 2 3 4 5 6 7 1 2 3 4 5 6 7

119
1. Please tick your age category

Below 19 20 - 30 31-40 41-55 55&above

2. Please tick your monthly household income ( Rs)

Below 15,001 to 25,001 to 45001 to 65,001 &


15,000 25,000 45,000 65000 above

3. Please state the city that you live

4. Please state your gender Male Female

5. Please state your occupation

6. Please state the highest qualification that you have attained.

Thank you very much for your valuable time in completing this questionnaire.

Nishan Perera

For official purpose only – Respondent Category

120
Appendix I - C
Respondent profile of the pilot study
Valid questionnaires against invalid questionnaires Total respondents %
Valid questionnaires 201 93%
Invalid questionnaires 14 7%
Total respondents 215 100%
Respondents who buy items from super markets Total valid respondents %
Respondents who shop in super markets 143 71%
Respondents who does not shop in super markets 58 29%
Total valid respondents 201 100%
Geographic segments of the respondents Total Respondents % Super market %
visitors
Urban 49 24% 40 28%
Suburban 114 57% 82 57%
Rural 28 14% 14 10%
Not responded to this question 10 5% 7 5%
Total 201 100% 143 100%
Age wise breakdown of the respondents Total Respondents % Super market %
visitors
Below 19 14 7% 8 6%
20-30 158 79% 110 77%
31-40 21 10% 19 13%
41-55 3 1% 2 1%
55 & above 0 0% 0 0%
Not responded to this question 5 2% 4 3%
Total 201 100% 143 100%
Income breakdown of the respondents Total Respondents % Super market %
visitors
Below 15,000 43 21% 21 15%
15001 - 25000 70 35% 51 36%
25001 - 45000 46 23% 36 25%
45001 - 65000 17 8% 14 10%
65001 & above 10 5% 10 7%
Not responded to this question 15 7% 11 8%
Total 201 100% 143 100%
Gender Break down of the respondents Total Respondents % Super market %
visitors
Male 133 66% 80 56%
Female 63 31% 58 41%
Not responded to this question 5 2% 5 3%
Total 201 100% 143 100%
Occupational break down of the respondents Total Respondents % Super market %
visitors
Clerks/Junior executives 89 44% 61 43%
Middle management 29 14% 26 18%
Senior management 7 3% 7 5%
Lawyers 3 1% 3 2%
Students 39 19% 21 15%
Others 9 4% 7 5%
Not responded to this question 25 12% 18 13%
Total 201 100% 143 100%
Highest qualification attended by the respondents Total Respondents % Super market %
visitors
O/L 5 2% 4 3%
A/L 89 44% 51 36%
Diploma/Degree 77 38% 61 43%
Others 2 1% 2 1%
Not responded to this question 28 14% 25 17%
Total 201 100% 143 100%

121
Appendix I - D2
Figure 36 - Service Quality Gaps as identified in the Pilot study

100%

90%

Not Responded
80%

70%
Positive Service
Quality Gap
60%
% of Respondents

50% No Service Quality


Gap
40%

71%

68%
66%

66%
Negative Service
62%

62%

62%
61%

59%
30%
55%

Quality Gap
54%
52%

50%
46%

20%

10%

0%
Polite Staff
Willing to Staff
help advice
Treated equally
Kept veryFind
cleanproducts
Outlet design
Displays
Prices marked
Special offers
waitingStocks
time availability
Car
Overall
parking
Service Quality Gap

134

Source - Pilot study data


123
Appendix I - D2
Figure 36 - Service Quality Gaps as identified in the Pilot study

100%

90%

Not Responded
80%

70%
Positive Service
Quality Gap
60%
% of Respondents

50% No Service Quality


Gap
40%

71%

68%
66%

66%
Negative Service
62%

62%

62%
61%

59%
30%
55%

Quality Gap
54%
52%

50%
46%

20%

10%

0%
Polite Staff
Willing to Staff
help advice
Treated equally
Kept veryFind
cleanproducts
Outlet design
Displays
Prices marked
Special offers
waitingStocks
time availability
Car
Overall
parking
Service Quality Gap

134

Source - Pilot study data


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Appendix II – A

Guidelines used for the interviews

1. Back ground of the company


1.1 Can you tell some details of the background of your company in terms of its
legal status, brief history, no of outlets , locations, no of employees and turn
overs etc. ( Period of information years 2000 , 2001 and 2002)

1.2 Could you tell me the structure of your organisation and the reporting structure of
of your typical outlets?

2. Present service quality measurement techniques

2.1 What are the techniques or tools that you use in measuring service quality in your
supermarkets?

2.2 What kind of a sample do you use to measure this?

2.3 What is the size of the sample?

2.4 How do you select this sample?

2.5 How frequently do you measure service quality?

2.6 Who is responsible in measuring this?

2.7 Can you explain the method that you use in measuring service quality?

2.8 Using this method how do you determine the service quality in your supermarket?

2.9 How do you use these measures in your decision making process?

3. Present knowledge of the service quality levels

3.1 How would your supermarket interpret the word service quality?
3.2 How important is service quality in your decision making process?

3.3 What do you understand by the term “ service quality gap” ?

3.4 To what extent do you understand your customers expectations when they come to
buy goods in your outlets?

124
Appendix II - B
Questionnaire
The following questionnaire is presented with the objective of gathering data in checking customer satisfaction levels in shopping at
supermarkets. It is presented to you in several sections. All answers in this questionnaire will be treated in the strictest confidence.

Section one – Measure of service quality in shopping in supermarkets.

Section one of this questionnaire attempts to find out the service quality levels in supermarkets. It tries to understand your expectations of service
when you shop in a supermarket and what you actually experienced while you were shopping in that supermarket.

Section two – Measure of product quality in shopping in supermarkets.

Section two of this questionnaire attempts to find out product quality levels in supermarkets. It tries to understand your expectations on product
quality and your actual experience with the quality of the products that you bought from that supermarket.

Section Three – Satisfaction with the prices paid in buying goods from supermarkets

Section three of this questionnaire attempts to find out your satisfaction with the prices you paid in buying goods from the supermarket. It tries to
find out your expectations of price and your experience in the actual prices paid in buying those goods from that supermarket.

Instructions to fill section ONE, TWO and THREE

 There will be several areas listed in column A.

 You will find a scale given in column B for you to indicate your expectations when you shop in a supermarket for areas listed in Column A. If
the given statement is extremely important to you, then you will circle 7 and if not important at all , then you will circle 1. Numbers in
between will list down different degrees of your choice.

 You will find another scale given in column C. Here you are requested to indicate what you actually experienced while you were shopping
in the supermarket for areas listed in Column A. If the given statement agrees with your experience very strongly ,then you will circle 7 and if
you strongly disagree , then you will circle 1. Numbers in between will list down different degrees of your choice

125
Supermarket Location Date Res Code
Section One – Service quality

Column A Column B Column C For


official
What I expected of the services when I What I think of the actual services I get
use only
shop in the supermarket when shopping in this supermarket
Area of service Not
important Extremely Strongly Strongly
at all important disagree agree
The store is visually appealing, kept clean & run
1 2 3 4 5 6 7 1 2 3 4 5 6 7
efficiently
The store is located in an area, which is convenient
1 2 3 4 5 6 7 1 2 3 4 5 6 7
to customers.
The outlet design helps customers to move around
1 2 3 4 5 6 7 1 2 3 4 5 6 7
with ease and find products they need easily
Customers have parking space for their vehicles
1 2 3 4 5 6 7 1 2 3 4 5 6 7
when visiting the store
There are always stocks of products/brands desired
1 2 3 4 5 6 7 1 2 3 4 5 6 7
by customers
The prices of products are clearly indicated. 1 2 3 4 5 6 7 1 2 3 4 5 6 7
This outlet gives appropriate and punctual
1 2 3 4 5 6 7 1 2 3 4 5 6 7
information on its sales promotions
The cashiers bill products chosen by customers
1 2 3 4 5 6 7 1 2 3 4 5 6 7
accurately
Waiting time at cash registers are short 1 2 3 4 5 6 7 1 2 3 4 5 6 7

Employees are always willing to help customers 1 2 3 4 5 6 7 1 2 3 4 5 6 7


The public contact staff (Shelf stackers, cash
registers, perishable section, information staff, 1 2 3 4 5 6 7 1 2 3 4 5 6 7
security personnel) is always polite to customers.
Employees give individual attention in
1 2 3 4 5 6 7 1 2 3 4 5 6 7
understanding specific requirements of customers.

To which extent are you satisfied with the total service quality in this supermarket? Please circle your choice

Extremely dissatisfied 1 2 3 4 5 6 7 8 9 10 Extremely satisfied

126
Section two – Product quality
Column A Column B Column C For
The quality of the products that I My actually experience with the official
expected when I shop in a quality of the goods which I bought use only
supermarket from this supermarket.
Areas of product quality
Quality not Quality is Extremely Extremely
important extremely poor good
at all important quality quality
The fruits and vegetables that are sold in this out let
1 2 3 4 5 6 7 1 2 3 4 5 6 7
are fresh
The meat and the fish products sold in this outlet
1 2 3 4 5 6 7 1 2 3 4 5 6 7
are fresh
The retailers own brand products are of high quality 1 2 3 4 5 6 7 1 2 3 4 5 6 7
The quality of other products that are sold in this out
let is good (E.g. Not selling expired products, 1 2 3 4 5 6 7 1 2 3 4 5 6 7
products with damaged packs, etc)
All well known brands of products are available in
1 2 3 4 5 6 7 1 2 3 4 5 6 7
the store
A broad assortment of products and brands are
1 2 3 4 5 6 7 1 2 3 4 5 6 7
offered
To which extent are you satisfied with the total quality of the products that you buy from this supermarket? Please circle your choice

Extremely dissatisfied 1 2 3 4 5 6 7 8 9 10 Extremely satisfied

Section three – Prices paid


Column A Column B Column C For
My price expectation in buying goods My experience with prices paid in official
from a supermarket buying goods from this supermarket use only
Extremely Extremely Extremely Extremely
Expensive Cheap Expensive cheap
The prices of products that I pay 1 2 3 4 5 6 7 1 2 3 4 5 6 7

To which extent are you satisfied with the prices that you pay in buying goods from this supermarket? Please circle your choice

Extremely dissatisfied 1 2 3 4 5 6 7 8 9 10 Extremely satisfied


127
Section Four – Overall satisfaction in shopping in this supermarket

To which extent are you satisfied with the overall shopping experience in shopping this supermarket? Please circle your choice.

Extremely dissatisfied 1 2 3 4 5 6 7 8 9 10 Extremely satisfied

Section Five – Personal details


In this section you are required to fill in a few vital details?.

1) How frequently do you shop in this supermarket chain

Once a week Once in two Once a Once in every Once every six Any other
weeks month three months months

2) Please state your gender

3) Please tick your age category

Below 19 20 – 30 31-40 41-50 51-60 61 & above

4) Your marital status

Not married Divorced Married – No children Married with children

5) Please state the city that you live Please state your occupation

6) Please tick your monthly household income ( Rs)

Below 20,000 20,001 to 40,001 to 60,001 to 80,001 to 100,001 &


40,000 60,000 80,000 100,000 above

Thank you very much for your valuable time in completing this questionnaire.
128
Appendix III - A
Figure 37 - Classification of Retail Formats in Sri Lanka

Informecials Door to door Internet, e-commerce Not practiced in Sri Vending Stationary Mobile Mannin Malls Plazas
e,g, teleseen marketing
selling
e,g. Damro, internet banking by Lanka as yet in a machines vendors venders market, e.g. Regional e.g Unity
Quantum marketing many banksetc e.g. ATM, e.g. Coca e.g. fishmen Nawala super markets plaza,Liberty plaza
e.g many large scale. Cola stands
Nescafe etc tiles etc
products

Direct selling Business Shopping


Direct response Direct mail Vendor retailing districts centers
retailing
Specialty stores
e.g. drug stores Transportation,
Convenience Based on direct Based on communications
stores Utility services
e.g. various boutiques
marketing

Based on Core
Departmental Finance ,
merchandise

stores
Based on

Real estate,

services
variety

e.g. Millers
CLASSIFICATION OF RETAIL insurance
Super markets
e.g. Cargills , keells, etc FORMATS in Sri Lanka Public
Super centers administration
e.g. Arpico Supercenters

Hyper market Based on operating


e.g. Majestic City Based on pricing of Other services
structure merchandise
Food retailers
e.g. Hotels,fast food

Warehouse Chain Contractual Off price retailing


retailing stores retailing

Warehouse Home center Small Large Franchise Co- Factory out lets One price Independent off prices
showroom e.g.Lanka wall operatives eg DSI e.g disposing products of one item in
chains chains operation retailers
Eg Odel warehouse e.g. around the pavements
tiles Eg French e.g Arpico e.g. e.g Shop 42 in
corner MacDonald island Kohuwala

Source - by the writer based on classifications used in literature.

129
Appendix III - B
Table 7 - Names of Supermarkets operting in Sri Lanka

% share
No of Cumulative
Name Location of
%
outlets
outlets

Sathosa A grade supermarkets Welisara,Jawathha,Rajagiriya,Colombo 02 4


Sathosa B grade supermarkets Island wide 152 57.78% 57.8%
Cargills Food City supermarkets Island wide 31 11.48% 69.3%
Keells Super outlets Liberty plaza, Crescat, Mount Lavinia, 4
Super K franchise Gampaha. Negambo, 4 2.96% 72.2%
Sentra super markets Mirihana,Majaragama, Colombo 06, 4 1.48% 73.7%
Arpico super centers Hyde Park Corner, Dehiwala,Battaramulla 3 1.11% 74.8%
Park and Shop Nugegoda, Kohuwala, Thalawathugoda 3 1.11% 75.9%
Crystals Nugegoda, Nawwina 2 0.74% 76.7%
Dhanasiri Supermarket Kandy 2 0.74% 77.4%
Primart Kirulapona, Seeduwa 2 0.74% 78.1%
Co-operative self service center Wellampitiya,kollonnawa 2 0.74% 78.9%
Anthony's Supermarket Wattala 1 0.37% 79.3%
Ceylon Cold stores Colombo 02 1 0.37% 79.6%
Laugfs SUN UP (Petro Mart) Colombo 05 1 0.37% 80.0%
Helanka Ahayiyagoda 1 0.37% 80.4%
Famous super Ahayiyagoda 1 0.37% 80.7%
Nabula Aluthgama 1 0.37% 81.1%
Basini Super market Ambalangoda 1 0.37% 81.5%
Lakmini super market Ambilipitiya 1 0.37% 81.9%
Seyane Ampara 1 0.37% 82.2%
Alankulama Anuradhapura 1 0.37% 82.6%
Villennium Supper Athurigiriya 1 0.37% 83.0%
Lanka Super Beruwala 1 0.37% 83.3%
Suhada super market Chilaw 1 0.37% 83.7%
Premasiri Super market Colombo 03 1 0.37% 84.1%
Bramas and Beemas Colombo 03 1 0.37% 84.4%
Ariyapala Super Market Colombo 03 1 0.37% 84.8%
The fruitti shop Colombo 04 1 0.37% 85.2%
Paranagama Super Galle 1 0.37% 85.6%
Harischandra Galle 1 0.37% 85.9%
K.G.S super market Galle 1 0.37% 86.3%
Ranjan Lanka Pvt Ltd Gampaha 1 0.37% 86.7%
Raureka Hikkaduwa 1 0.37% 87.0%
Anada Super Horana 1 0.37% 87.4%
Swatnaloka supermarket Ja-Ela 1 0.37% 87.8%
Ambigai Halangium Jaffna 1 0.37% 88.1%
N.S. Super market Jubilee Post 1 0.37% 88.5%
130
Appendix III - B
Table 7 - Names of Supermarkets operting in Sri Lanka

% share
No of Cumulative
Name Location of
%
outlets
outlets

Ranjana's Super market Kalutara 1 0.37% 88.9%


Samarathunga super market Kamburupitiya 1 0.37% 89.3%
Royal garden Super Market Kanady 1 0.37% 89.6%
Sanith Stores Kandana 1 0.37% 90.0%
Apsara super market Kandy 1 0.37% 90.4%
Home needs super market Kandy 1 0.37% 90.7%
Seetha Super market Kandy 1 0.37% 91.1%
Thirasara Supermarket( Pvt) Limited
Kelaniya 1 0.37% 91.5%
Prisca Kiribathgoda 1 0.37% 91.9%
Anusha Maha super market Kiribathgoda Junction 1 0.37% 92.2%
Thushara Super Kochchikade 1 0.37% 92.6%
Puhulyaya supermarket Kohuwala 1 0.37% 93.0%
The best super market Kotte 1 0.37% 93.3%
Thilakama Super market Mahabage 1 0.37% 93.7%
Chitu duwa Marawila 1 0.37% 94.1%
Lanka super market Mawanella 1 0.37% 94.4%
Family Super Mount Lavinia 1 0.37% 94.8%
Ranweli supermarket Negambo 1 0.37% 95.2%
Suhadaseva Negambo 1 0.37% 95.6%
Nihal Super Nittabuwa 1 0.37% 95.9%
Gunewadenas and Sons Nugegoda 1 0.37% 96.3%
Cheap Right Nugegoda 1 0.37% 96.7%
Panadura stores Panadura 1 0.37% 97.0%
Luminex Panadura 1 0.37% 97.4%
Nellies Super market Panadura 1 0.37% 97.8%
Keeth Super Piliyandala 1 0.37% 98.1%
Top shop Rajagiriya 1 0.37% 98.5%
Ratnaloka super Ratnapura 1 0.37% 98.9%
Ranawira Kanthele Trincomalee 1 0.37% 99.3%
Wadduwa Super market Wadduwa 1 0.37% 99.6%
Cooperative super center Wariyapola 1 0.37% 100.0%
Total ( This represents 95% of the supermarkets operating in Sri Lanka) 270
Sources
AC Neilson Lanka Limited
Sathosa, Arpico, Cargills, Keells,Sentra sources
Discussion carried out with 318 students from all over the Island at the Sri lanka Institute of Marketing
131
Appendix III - C
Table 08 - Geographical Distribution of Supermarkets.

Urban Geographical distribution of the supermarkets DENSITY


Total Population
Population % of urban
Districts Population over 18 Sathosa Sathosa Arpico
over 18 Cargills Keells Sentra Others Total over 18
2001 2001 super
2001 A grade B grade centers per out let

1 Colombo 2,234,146 1,628,288 885,817 4 31 17 5 3 4 28 92 9,628


2 Gampaha 2,066,096 1,474,249 219,782 - 16 4 2 - - 1 23 10,466
3 Galle 990,539 656,534 75,287 - 12 - - - - 7 19 6,274
4 Kalutara 1,060,800 738,036 78,860 - 9 1 - - - 7 17 7,886
5 Puttalam 589,344 354,827 68,709 - 8 - - - - 7 15 8,589
6 Matara 761,236 498,763 44,026 - 9 1 - - - 4 14 4,403
7 Kandy 1,272,463 842,791 107,926 - 5 1 - - - 6 12 17,988
8 Ampara 705,342 448,702 40,589 - 5 3 1 - - 1 10 5,074
9 Kurenegala 1,452,369 962,960 25,403 - 7 1 - - - 8 3,175
10 Ratnapura 1,008,164 662,912 40,428 - 6 1 - - - 1 8 5,775
11 Keggale 779,774 529,742 12,714 - 5 - - - - 3 8 2,543
12 Badulla 774,555 488,393 34,981 - 6 1 - - - 7 4,997
13 Hambantota 525,370 334,527 14,650 - 7 - - - - 7 2,093
14 Moneragala 396,173 240,742 No urban - 6 - - - - 6 -
15 Trincomalee Not counted Not counted Not counted - 5 - - - - 1 6 -
16 Nuwara eliya 700,083 443,786 29,013 - 4 1 - - - 5 5,803
17 Auradhapura 746,466 480,959 39,600 - 3 - - - - 1 4 9,900
18 Matale 442,427 292,394 24,298 - 3 - - - - 3 8,099
19 Jaffna Not counted Not counted Not counted - 2 - - - - 1 3 -
20 Battcaloa Not counted Not counted Not counted - 2 - - - - 2 -
21 Polonnaruwa 359,197 234,474 No urban - 1 - - - - 1 -
22 Mannar Not counted Not counted Not counted - - - - - - - -
23 Vavniya Not counted Not counted Not counted - - - - - - - -
24 Mullativu Not counted Not counted Not counted - - - - - - - -
25 Kilinochchi Not counted Not counted Not counted - - - - - - - -
Total 16,864,544 11,313,079 1,743,252 4 152 31 8 3 4 68 270 6,456
Source - Individual Supermarkets, 2001 Census Statistics 132
Appendix III - E
Figure 38 - Turnover of the Five Supermarkets under study for 2000-2002

6,000

5,000

Sathosa (A)
Turn Over - Rs Millions

4,000

3,000 Sathosa (B)

2,000
Cargills

1,000
Keells

0
Year 2000 Year 2001 Year 2002
Sathosa (A) 0 85 242 Arpico
Sathosa (B) 5,022 4,465 4,644
Cargills 2,015 2,468 3,145
Keells 1,200 1,550 2,100 Sentra
Arpico 0 118 350
Sentra 25 115 250
Total
8,262 8,801 10.731
Sources - Company/estimates by writer 134
Appendix III - F
Figure 39 - Growth in Turnover of the Five Super markets for 2000/2002
400%
Sentra

300%
Arpico
Sathosa (A)
200%
Sathosa A
% growth

Sathosa ( B )
Cargills Keells
100%
Cargills

0% Keells

Average Growth Sathosa B


Arpico
-100%
2000/2001 2001/2002
Sathosa (A) 0% 185% Sentra
Sathosa ( B ) -11% 4%
Cargills 22% 27%
Keells 23% 32% Average Growth
Arpico 0% 197%
Sentra 360% 117%
Average Growth 6% 20%

Source - Calculated by writer based on company sources 135


Appendix III - G
Figure 40- Change in Sales Share between the Five Supermarkets 00-02

140%

120%

Sentra
100%
% change in sales

80%
Arpico

60%
Keells
40%

20% Cargills

0%
Year 2000 Year 2001 Year 2002 Sathosa (A)
Sentra 0% 1% 3%
Arpico 0% 1% 4%
Keells 15% 19% 25%
Cargills 24% 30% 38% Sathosa (B)
Sathosa (A) 0% 1% 3%
Sathosa (B) 61% 54% 56%

Source - Company sources 136


Appendix III - H
Figure 41 - Growth in the Supermarket Outlets
210
200 202
190 194
180 177
170
160 158
150 152 152 Sathosa (A)
140
130
120 Sathosa (B)
Outlets

110
100
90 Cargills
80
70
60
50 Keells
40
30 31
20 23 Arpico
18
10 8
0
6 2
1 48
3
0
Year 2000 Year 2001 Year 2002
Sathosa (A) 0 1 4 Sentra
Sathosa (B) 152 158 152
Cargills 18 23 31
Total
Keells 6 8 8
Arpico 0 2 3
Sentra 1 2 4
Total 177 194 202

Source - Company Sources 137


Apendix III - I
Figure 42 - Supermarket Retail Life Cycle - Based on the Five Supermarkets

Early Growth stage Accelarated Growth Stage Maturity Decline


12000
Sathosa (
A+B)
10000
Cargills

8000
Turn over ( Rs Mn)

Keells

6000

Sentra

4000

Arpico

2000

Total sales

Source - Concept from Davidson, Bates & Bass HBR 1976 , Data -Company sources and data extrapolation Period

138
Appendix III - J
Table -9 Customer Satisfaction Index calculated by Arpico Super Centers
SHOWROOM INDEX/CUSTOMER SATISFACTION INDEX
CRITERIA SCORES Calculating the scores for the INDEX
0 - Poor No of respondents per month - 10 for each
3 - Needs outlet ( sample figures used by researcher and
Improvement not reflects the actual scores.)
5-Good 1 2 3 4 5 6 7 8 9 10 Average
HUMAN 0 3 5
1 Greetings 3 3 3 3 3 5 5 5 5 3 3.80
2 Friendly and smiling 3 5 3 3 5 5 5 3 5 3 4.00
3 Grooming 3 5 3 5 0 5 3 3 5 3 3.50
4 Uniforms 5 5 5 5 5 5 5 5 5 3 4.80
5 Name Tags 5 3 5 5 5 5 5 5 5 3 4.60
6 Baskets/Trolleys offer 5 5 3 3 5 5 5 3 5 3 4.20
7 Response to inquiries 3 3 5 5 3 3 5 3 3 3 3.60
8 Availability - People 5 3 5 3 5 3 5 3 3 3 3.80
9 Attentiveness 5 5 3 3 3 5 5 3 3 3 3.80
10 Thanking 5 3 5 3 3 5 5 3 3 3 3.80
11 Cashier Service 5 3 0 3 0 3 3 3 5 3 2.80
12 Politeness 3 5 5 3 0 5 3 3 5 3 3.50
BUILDING
13 Approach 0 5 5 3 5 5 0 5 5 3 3.60
14 Front sign board 5 5 5 5 5 5 5 5 5 5 5.00
15 Walls IN / OUT 3 5 0 5 5 5 5 5 5 5 4.30
16 Windows/Doors 5 3 5 3 3 5 5 3 3 3 3.80
17 Floor 5 3 3 5 3 5 5 3 0 5 3.70
18 Ceiling 5 5 3 5 3 5 3 5 3 5 4.20
19 Lighting 5 5 3 0 5 5 5 5 5 5 4.30
20 Fans/AC 5 5 5 3 5 0 5 0 3 3 3.40
21 Cash counters, 5 3 5 5 5 5 5 0 5 3 4.10
22 Parcel counters 5 5 3 5 3 5 3 5 5 3 4.20
23 Shelves 5 3 5 3 5 3 0 0 0 3 2.70
24 Ice cream freezer 5 5 5 5 5 5 5 5 5 3 4.80
25 Chillers 5 5 3 5 3 5 3 3 3 3 3.80
26 Meat Serve over 5 3 5 3 5 3 5 0 5 3 3.70
27 Fish serve over 5 5 3 5 3 5 0 5 3 3 3.70
28 Stairway 5 5 5 5 5 5 5 5 5 3 4.80
29 Escalator 3 3 3 5 3 3 3 5 5 3 3.60
30 Ramp 0 0 0 5 0 5 0 5 0 5 2.00
31 Office cleanliness 5 5 3 5 3 5 3 5 3 5 4.20
MERCHANDISING
32 Clean 3 5 5 5 3 3 3 5 5 3 4.00
33 Well price products 3 0 5 0 5 3 5 3 5 3 3.20
34 Stock availability 3 3 0 3 5 3 5 5 3 3 3.30
35 Classification boards 5 5 5 5 5 5 5 5 5 3 4.80
36 Showroom layout plan 5 5 5 5 5 5 5 5 5 3 4.80
Actual score 140.20
IDEAL score 180.00
Acceptable score 145.00

Month Score Index Ideal Index acceptable


Calculating the index Score for January 140.20 = 77.89 96.69
Examples Score for February 142.00 = 78.89 97.93
For store X of ARPICO Score for March 152.00 = 84.44 104.83
Source - See interview schedule for ARPICO ( A3, A5)
139
Appendix III - K
Table 10 - Keells - "SUPER" Test service quality measurement technique.

SUPER test dimensions Customer expectation Mystery shopper Comments to


subjected to changes on customer weights through perceived scores be maid by
expectations on a frequent basis frequent focus group the mystery
studies shopper.
Example weights/scores given by writer Example weights Example scores
SUPERIOR SERVICE
Sub dimension 01 (not disclosed) 9 8
Sub dimension 02 (not disclosed) 8 6
Sub dimension 03 (not disclosed) 6 5
Sub dimension etc (not disclosed) 5 3
Superior Service score 28 22
UNDERSTANDING CUSTOMERS
Sub dimension 01 (not disclosed) 4 4
Sub dimension 02 (not disclosed) 5 4
Sub dimension 03 (not disclosed) 6 5
Sub dimension etc (not disclosed) 6 5
Understanding customers score 21 18
PRODUCT RELATED
Sub dimension 01 (not disclosed) 4 3
Sub dimension 02 (not disclosed) 5 4
Sub dimension 03 (not disclosed) 4 3
Sub dimension etc (not disclosed) 4 3
Product related score 17 13
EFFICIENCY IN SERVICE
Sub dimension 01 (not disclosed) 5 5
Sub dimension 02 (not disclosed) 5 4
Sub dimension 03 (not disclosed) 5 3
Sub dimension etc (not disclosed) 5 5
Efficiency in service score 20 17
RELIABILITY
Sub dimension 01 (not disclosed) 3 3
Sub dimension 02 (not disclosed) 3 3
Sub dimension 03 (not disclosed) 4 3
Sub dimension etc (not disclosed) 4 3
Reliability score 14 12
Score for week 6 , 2003 82 Overall
Maximum score that could be earned 100 comments are
Minimum score expected 80 also taken
Superior service, understanding customers,efficient service,reliability measures service quality
and product related measures product quality.
Source - Created by the writer based on the interview with Keells ( see interview schedule(K2)

140
Appendix III - L

Figure 43 - Complains Handling Unit ( for SATHOSA) at Ministry of Commerce

Customer

Makes a complain about a service


situation appoligising and what action was initiated
Communicates with the customer explaining the

shortfall at SATHOSA

Take down as much information


as possible about the complain

Customer Care Unit (CCU) at CCU handles customer complains


Ministry of commerce made on the following 12 departments
Manned by one director and 8
officers
1. CWE ( SATHOSA)
Opens a complains file 2. Department of Internal trade
3. Registrar of Companies
Speak to the respective outlet 4. Intellectual Property department
and inquire about the situation. At 5. Lanka General Trading Company
times the location is visited 6. Fair Trading Commission
7. Sri Lanka Inventors commission
Makes a fair assessment of the 8. Department of Commerce
situation and compiles a report 9. Measurements/standards Dept
recommending action to 10. Salusala
compensate or resolve the 11. Department of import/export control
complain 12. Mahapola higher education funds

If the issue is SATHOSA The CCU is restricted in carrying out its


serious a further functions due to the short age of
investigation is Copy of personnel in handling complains. It was
called and report sent to
the DGM at stated that about 70% of the complains
necessary action
is taken SATHOSA in relate to SATHOSA. Based on the
charge of the frequency and the nature of the
out let region complains both the CCU and the
SATHOSA personnel seem to know of
the existance of service quality short
Action
falls in the system.

Source - Interview had with Mr. George Fernando , Director Customer Care Unit at the
Ministry of Commerce ( CWE3-see SATHOSA interview schedule)

141
Appendix IV - A
Figure 44 - Frequency of Visits
90%

80% once a week

70%

60%
Once in two
50% weeks
% of respondents

40%

30% Once a
month
20%

10%
Once in 3
0% months
S1 S2 S3 S4
once a week 60% 80% 50% 58%
Once in two weeks 23% 12% 22% 20%
Once a month 13% 8% 18% 18% Once in 6
Once in 3 months 4% 0% 5% 4% months
Once in 6 months 0% 0% 5% 0%

Source - Survey Data Super market types

142
Appendix IV - B
Figure 45 Gender Breakdown of the Respondents
80%

70%

60%

Male
% of respondents

50%

40%

30% Female

20%

10%

0%
S1 S2 S3 S4
Male 30% 35% 27% 28%
Female 70% 65% 73% 72%

Source - Survey Data Super market type

143
Appendix IV - C
Figure 46 Marital Status of the Respondents
100%

90%

80%
Not married
70%
% of respondents

60%
Married but No
50%
Children
40%

30% Married with


children
20%

10%
Divoced
0%
S1 S2 S3 S4
Not married 3% 7% 17% 23%
Married but No Children 10% 20% 3% 12%
Married with children 87% 70% 80% 65%
Divoced 0% 3% 0% 0%

Source - Survey Data


Supermarket types

144
Appendix IV - D
Figure 47 - Age Distribution of the Respondents

60%

50%

40%
% of respondents

30%

20% 20-30

31-40
10%
41-50

0%
S1 S2 S3 S4 51-60
20-30 7% 22% 25% 30%
31-40 50% 18% 40% 31% 61 above
41-50 33% 25% 12% 18%
51-60 5% 25% 13% 18%
61 above 5% 10% 10% 3%

Super market type


Source - Survey Data
145
Appendix IV - E
Figure 48 - Household Income Distribution of the Respondents
70%

60%
Low Income
groups
50%
Less than Rs
% of respondent

20,000 per
40% month

30%
Middle Income
groups
20%
Between Rs
20,001 - 59,999
per month
10%

0%
S1 S2 S3 S4 High income
Low Income groups 3% 15% 33% 35% groups
Middle Income groups 40% 55% 53% 62% Above Rs
60,000 per
High income groups 57% 30% 14% 3% month

Super market
Source - Survey Data

146
Appendix IV - F
Table 11 - Correlation between Income Levels and Price Expectations

S1 S2 S3 S4

expectations

expectations

expectations

expectations
Respondent

Average

Average

Average

Average
income

income

income

income
Price

Price

Price

Price
numbers

1 5.00 50,000 4.00 50,000 6.00 30,000 6.00 30,000


2 3.00 70,000 4.00 50,000 4.00 50,000 7.00 10,000
3 5.00 30,000 4.00 70,000 1.00 150,000 6.00 30,000
4 4.00 50,000 4.00 90,000 5.00 30,000 7.00 10,000
5 3.00 150,000 4.00 150,000 3.00 50,000 7.00 10,000
6 4.00 50,000 6.00 10,000 6.00 10,000 5.00 30,000
7 3.00 70,000 4.00 30,000 5.00 50,000 6.00 50,000
8 5.00 30,000 6.00 10,000 4.00 30,000 6.00 10,000
9 4.00 90,000 4.00 70,000 6.00 30,000 5.00 10,000
10 5.00 50,000 5.00 30,000 7.00 10,000 6.00 10,000
11 4.00 90,000 5.00 30,000 4.00 70,000 3.00 90,000
12 4.00 30,000 5.00 30,000 6.00 10,000 4.00 50,000
13 3.00 90,000 2.00 150,000 5.00 30,000 4.00 70,000
14 2.00 150,000 2.00 150,000 6.00 10,000 6.00 50,000
15 4.00 50,000 5.00 30,000 5.00 30,000 7.00 10,000
16 3.00 150,000 5.00 30,000 6.00 10,000 4.00 70,000
17 3.00 90,000 4.00 50,000 6.00 30,000 5.00 50,000
18 4.00 90,000 4.00 90,000 6.00 10,000 7.00 10,000
19 3.00 90,000 4.00 70,000 6.00 10,000 6.00 30,000
20 4.00 70,000 4.00 50,000 6.00 30,000 6.00 30,000
21 5.00 50,000 5.00 10,000 6.00 10,000 6.00 10,000
22 4.00 50,000 4.00 50,000 5.00 30,000 6.00 30,000
23 5.00 30,000 4.00 50,000 6.00 10,000 6.00 50,000
24 5.00 30,000 4.00 10,000 5.00 30,000 5.00 30,000
25 4.00 70,000 4.00 10,000 5.00 50,000 5.00 50,000
26 5.00 50,000 5.00 90,000 6.00 30,000 4.00 70,000
27 5.00 50,000 1.00 150,000 4.00 30,000 6.00 50,000
28 6.00 30,000 5.00 50,000 5.00 50,000 6.00 10,000
29 5.00 50,000 4.00 30,000 4.00 50,000 6.00 30,000
30 4.00 70,000 4.00 50,000 3.00 30,000 6.00 30,000
31 4.00 70,000 4.00 30,000 4.00 70,000 6.00 10,000
32 3.00 90,000 4.00 50,000 5.00 50,000 7.00 10,000
33 4.00 70,000 3.00 150,000 6.00 10,000 5.00 30,000
34 4.00 90,000 4.00 10,000 6.00 10,000 7.00 10,000
35 4.00 70,000 4.00 30,000 3.00 70,000 6.00 30,000
36 6.00 10,000 2.00 150,000 5.00 50,000 5.00 30,000
37 2.00 150,000 4.00 50,000 2.00 90,000 4.00 70,000
38 3.00 90,000 4.00 50,000 7.00 10,000 6.00 30,000
39 4.00 70,000 5.00 30,000 6.00 10,000 5.00 70,000
40 4.00 70,000 5.00 30,000 5.00 50,000 7.00 10,000
Averages 4.03 70,000 4.10 58,000 5.03 35,128 5.68 33,000
Correlation -0.8321 -0.7606 -0.8450 -0.8057
Significance Significant Significant Significant Significant
r2 69% 58% 71% 65%
Source - Survey Data

147
Appendix IV - G1
Table 12 - Correlation between Service Quality and Overall Satisfaction - S1
Satisfaction Overall
Averages of all service quality dimensions with Service satisfaction in
Location
Expectations Perceptions GAP quality shopping
A B C
S1/Loc01/Res01 6.17 5.75 -0.42 9 9
S1/Loc01/Res02 6.83 6.67 -0.17 9 9
S1/Loc01/Res03 6.42 5.83 -0.17 9 9
S1/Loc01/Res04 6.92 6.75 -0.17 9 8
S1/Loc01/Res05 6.75 6.75 0.00 10 10
S1/Loc01/Res06 6.42 6.33 -0.08 9 9
S1/Loc01/Res07 6.50 6.25 -0.25 9 9
S1/Loc01/Res08 6.67 6.08 -0.58 8 8
S1/Loc01/Res09 7.00 6.58 -0.42 9 9
S1/Loc01/Res10 6.75 6.25 -0.50 8 8
S1/Loc01/Res11 6.92 5.92 -1.00 7 7
S1/Loc01/Res12 6.58 4.08 -2.50 6 6
S1/Loc01/Res13 6.42 4.83 -1.58 7 7
S1/Loc01/Res14 6.58 6.58 0.00 10 10
S1/Loc01/Res15 6.50 5.25 -1.25 7 7
S1/Loc01/Res16 6.50 6.00 -0.50 8 8
S1/Loc01/Res17 6.75 6.00 -0.75 8 8
S1/Loc01/Res18 6.42 6.08 -0.33 9 9
S1/Loc01/Res19 6.83 6.42 -0.42 9 9
S1/Loc01/Res20 6.75 6.08 -0.67 8 8
S1/Loc02/Res21 6.50 5.75 -0.75 8 8
S1/Loc02/Res22 6.25 5.92 -0.33 9 9
S1/Loc02/Res23 6.83 5.92 -0.92 8 8
S1/Loc02/Res24 6.67 6.33 -0.33 9 9
S1/Loc02/Res25 6.75 5.00 -1.75 7 7
S1/Loc02/Res26 6.58 5.75 -0.83 8 8
S1/Loc02/Res27 6.67 5.92 -0.75 8 8
S1/Loc02/Res28 6.83 6.58 -0.25 9 9
S1/Loc02/Res29 6.67 6.00 -0.67 9 9
S1/Loc02/Res30 6.75 5.00 -1.75 7 7
S1/Loc02/Res31 6.67 5.75 -0.92 8 8
S1/Loc02/Res32 6.58 5.75 -0.83 8 8
S1/Loc02/Res33 6.67 5.83 -0.83 8 8
S1/Loc02/Res34 6.67 5.67 -1.00 8 8
S1/Loc02/Res35 6.67 6.17 -0.50 9 9
S1/Loc02/Res36 6.42 5.42 -1.00 8 8
S1/Loc02/Res37 6.75 5.08 -1.67 7 7
S1/Loc02/Res38 6.58 5.58 -1.00 8 9
S1/Loc02/Res39 6.33 5.25 -1.08 8 8
S1/Loc02/Res40 6.92 5.67 -1.25 8 9
Overall averages 6.64 5.87 -0.75 8.25 8.28
Standard Deviation 0.87 0.88
Correlation between service quality gaps &
0.9170
satisfaction with service quality ( A & B)
Correlation between satisfaction with service
0.9500
quality and overall customer satisfaction ( B &
Nature of correlation High Positive High Positive
Level of significance of the correlation 1%
Significant Significant
( 0.4182 - 0.3932)
Co-efficient of determination 84.09% 90.25%
Overall average satisfaction in shopping in S1 super markets 8.28
148
Appendix IV - G2
Table 13 - Correlation between Service Quality and Overall Satisfaction - S2
Satisfaction Overall
Averages of all service quality dimensions with Service satisfaction in
Location
Expectations Perceptions GAP quality shopping
A B C
S2/Loc01/Res01 7.00 5.75 -1.25 7 8
S2/Loc01/Res02 6.75 5.58 -1.17 7 7
S2/Loc01/Res03 6.67 5.08 -1.58 6 6
S2/Loc01/Res04 6.42 6.00 -0.42 8 7
S2/Loc01/Res05 6.50 5.67 -0.83 7 7
S2/Loc01/Res06 6.25 6.08 -0.17 8 7
S2/Loc01/Res07 6.58 5.67 -0.92 6 7
S2/Loc01/Res08 6.67 4.25 -2.42 4 5
S2/Loc01/Res09 6.50 4.83 -1.67 6 7
S2/Loc01/Res10 6.92 6.08 -0.83 8 8
S2/Loc01/Res11 6.75 5.92 -0.83 8 8
S2/Loc01/Res12 6.67 4.42 -2.25 5 5
S2/Loc01/Res13 6.42 3.83 -2.58 4 5
S2/Loc01/Res14 6.67 5.83 -0.83 8 8
S2/Loc01/Res15 6.83 5.92 -0.92 7 8
S2/Loc01/Res16 7.00 6.17 -0.83 8 8
S2/Loc01/Res17 7.00 6.67 -0.33 9 9
S2/Loc01/Res18 6.58 5.92 -0.67 8 8
S2/Loc01/Res19 6.67 5.58 -1.08 7 6
S2/Loc01/Res20 6.92 4.75 -2.17 6 5
S2/Loc02/Res21 6.75 5.42 -1.33 7 7
S2/Loc02/Res22 6.83 5.25 -1.58 7 7
S2/Loc02/Res23 6.58 6.33 -0.25 9 9
S2/Loc02/Res24 6.58 5.92 -0.67 8 7
S2/Loc02/Res25 6.50 5.75 -0.75 7 7
S2/Loc02/Res26 6.92 5.75 -1.17 7 6
S2/Loc02/Res27 6.92 5.25 -1.67 6 5
S2/Loc02/Res28 6.50 4.50 -2.00 6 7
S2/Loc02/Res29 6.83 4.92 -1.92 6 7
S2/Loc02/Res30 6.67 5.08 -1.58 6 5
S2/Loc02/Res31 6.33 5.25 -1.08 7 7
S2/Loc02/Res32 6.50 5.00 -1.50 7 6
S2/Loc02/Res33 6.92 6.67 -0.25 8 9
S2/Loc02/Res34 6.42 4.83 -1.58 7 7
S2/Loc02/Res35 6.83 6.33 -0.50 9 9
S2/Loc02/Res36 6.33 5.42 -0.92 7 7
S2/Loc02/Res37 6.42 5.42 -1.00 7 7
S2/Loc02/Res38 6.50 4.25 -2.25 4 5
S2/Loc02/Res39 6.75 5.83 -0.92 8 8
S2/Loc02/Res40 6.50 5.25 -1.25 7 7
Overall averages 6.66 5.46 -1.20 6.93 6.95
Standard Deviation 1.25 1.20
Correlation between service quality gaps &
0.9017
satisfaction with service quality ( A & B)
Correlation between satisfaction with service quality
0.8381
and overall customer satisfaction ( B & C)
Nature of correlation High Positive High Positive
Level of significance of the correlation 1%
Significant Significant
( 0.4182 - 0.3932)
Co-efficient of determination 81.31% 70.24%
Overall average satisfaction in shopping in S2 super markets 6.95
149
Appendix IV - G3
Table 14 - Correlation between Service Quality and Overall Satisfaction - S3
Satisfaction Overall
Averages of all service quality dimensions with Service satisfaction in
Location
GAP quality shopping
Expectations Perceptions
A B C
S3/Loc01/Res01 6.17 5.08 -1.08 7 7
S3/Loc01/Res02 6.75 3.83 -2.92 3 3
S3/Loc01/Res03 6.75 4.00 -2.75 5 5
S3/Loc01/Res04 6.00 4.92 -1.08 7 6
S3/Loc01/Res05 6.33 4.50 -1.83 6 7
S3/Loc01/Res06 6.42 4.42 -2.00 6 6
S3/Loc01/Res07 6.67 4.00 -2.67 4 5
S3/Loc01/Res08 6.50 3.42 -3.08 3 4
S3/Loc01/Res09 6.08 3.50 -2.58 5 6
S3/Loc01/Res10 5.75 4.00 -1.75 6 5
S3/Loc01/Res11 6.83 4.25 -2.58 5 4
S3/Loc01/Res12 6.33 4.33 -2.00 6 6
S3/Loc01/Res13 6.75 4.42 -2.33 6 6
S3/Loc01/Res14 6.08 5.33 -0.75 7 6
S3/Loc01/Res15 6.83 5.17 -1.67 7 7
S3/Loc01/Res16 5.67 4.08 -1.58 6 6
S3/Loc01/Res17 6.25 4.83 -1.42 7 7
S3/Loc01/Res18 5.67 3.83 -1.83 6 6
S3/Loc01/Res19 6.42 4.75 -1.67 6 6
S3/Loc01/Res20 6.25 4.33 -1.92 6 6
S3/Loc02/Res21 6.67 3.67 -3.00 3 4
S3/Loc02/Res22 6.50 4.42 -2.08 6 7
S3/Loc02/Res23 6.67 4.08 -2.58 4 5
S3/Loc02/Res24 6.08 4.75 -1.33 7 7
S3/Loc02/Res25 6.33 4.75 -1.58 6 7
S3/Loc02/Res26 6.58 4.25 -2.33 6 6
S3/Loc02/Res27 6.33 4.33 -2.00 6 6
S3/Loc02/Res28 6.75 5.17 -1.58 7 6
S3/Loc02/Res29 6.50 5.00 -1.50 6 5
S3/Loc02/Res30 5.25 4.83 -0.42 8 7
S3/Loc02/Res31 6.42 4.92 -1.50 7 6
S3/Loc02/Res32 6.33 4.17 -2.17 6 6
S3/Loc02/Res33 6.33 5.17 -1.17 7 7
S3/Loc02/Res34 6.00 5.42 -0.58 8 7
S3/Loc02/Res35 6.50 5.33 -1.17 7 6
S3/Loc02/Res36 6.83 5.08 -1.75 6 6
S3/Loc02/Res37 6.92 5.08 -1.83 6 6
S3/Loc02/Res38 6.83 4.92 -1.92 6 6
S3/Loc02/Res39 6.50 4.83 -1.67 6 6
S3/Loc02/Res40 6.42 4.67 -1.75 7 6
Overall averages 6.38 4.55 -1.84 5.98 5.90
Standard Deviation 1.21 0.96
Correlation between service quality gaps &
0.9030
satisfaction with service quality ( A & B)
Correlation between satisfaction with service
0.8193
quality and overall customer satisfaction ( B & C)
Nature of correlation High Positive High Positive
Level of significance of the correlation 1%
Significant Significant
( 0.4182 - 0.3932)
Co-efficient of determination 81.55% 67.13%
Overall average satisfaction in shopping in S3 super markets 5.90
150
Appendix IV - G4
Table 15 - Correlation between Service Quality and Overall Satisfaction - S4
Satisfaction Overall
Averages of all service quality dimensions with Service satisfaction in
Location
Expectations Perceptions GAP quality shopping
A B C
S4/Loc01/Res01 5.92 4.50 -1.42 8 9
S4/Loc01/Res02 5.67 5.08 -0.58 9 9
S4/Loc01/Res03 6.08 5.92 -0.17 9 8
S4/Loc01/Res04 5.92 5.00 -0.92 8 9
S4/Loc01/Res05 6.00 5.00 -1.00 8 8
S4/Loc01/Res06 6.17 5.00 -1.17 8 8
S4/Loc01/Res07 6.17 4.92 -1.25 7 7
S4/Loc01/Res08 5.83 4.42 -1.42 8 9
S4/Loc01/Res09 5.92 5.67 -0.25 9 9
S4/Loc01/Res10 5.67 4.75 -0.92 9 9
S4/Loc01/Res11 6.00 4.67 -1.33 7 7
S4/Loc01/Res12 6.17 5.00 -1.17 8 9
S4/Loc01/Res13 6.33 3.92 -2.42 6 6
S4/Loc01/Res14 6.42 4.42 -2.00 6 5
S4/Loc01/Res15 6.17 4.67 -1.50 8 8
S4/Loc01/Res16 6.58 4.67 -1.92 6 7
S4/Loc01/Res17 6.25 5.83 -0.42 9 8
S4/Loc01/Res18 6.25 5.83 -0.42 9 9
S4/Loc01/Res19 5.67 5.25 -0.42 9 9
S4/Loc01/Res20 6.17 5.25 -0.92 8 8
S4/Loc02/Res21 6.17 5.75 -0.42 9 9
S4/Loc02/Res22 6.42 5.67 -0.75 8 8
S4/Loc02/Res23 6.08 5.58 -0.50 9 9
S4/Loc02/Res24 6.17 5.58 -0.58 8 9
S4/Loc02/Res25 6.17 5.42 -0.75 8 9
S4/Loc02/Res26 6.25 5.17 -1.08 8 8
S4/Loc02/Res27 6.42 4.25 -2.17 6 6
S4/Loc02/Res28 6.00 5.17 -0.83 8 9
S4/Loc02/Res29 6.50 4.42 -2.08 6 6
S4/Loc02/Res30 5.92 4.50 -1.42 7 8
S4/Loc02/Res31 6.17 4.92 -1.25 8 8
S4/Loc02/Res32 5.83 4.17 -1.67 7 7
S4/Loc02/Res33 6.25 5.25 -1.00 8 9
S4/Loc02/Res34 6.17 5.08 -1.08 8 9
S4/Loc02/Res35 5.92 4.50 -1.42 6 7
S4/Loc02/Res36 6.33 5.17 -1.17 8 8
S4/Loc02/Res37 6.17 5.75 -0.42 9 8
S4/Loc02/Res38 6.25 4.67 -1.58 7 8
S4/Loc02/Res39 6.08 5.08 -1.00 8 8
S4/Loc02/Res40 6.00 5.25 -0.75 8 8
Overall averages 6.11 5.03 -1.09 7.83 8.05
Standard Deviation 0.98 1.04
Correlation between service quality gaps &
satisfaction with service quality ( A & B) 0.9015
Correlation between satisfaction with service quality
and overall customer satisfaction ( B & C) 0.8131
Nature of correlation High Positive High Positive
Level of significance of the correlation 1%
( 0.4182 - 0.3932)
Significant Significant
Co-efficient of determination 81.27% 66.12%
Overall average satisfaction in shopping in S4 super markets 8.05
151
Appendix IV - H

Table 16 – Correlation between Product Quality and Overall Customer Satisfaction

S1 S2 S3 S4

Average overall product quality gap


-0.48 -0.85 -1.33 -0.68

Average satisfaction with product


quality 8.45 7.45 6.33 8.43

Average overall satisfaction in


shopping in supermarket 8.28 6.95 5.90 8.05

Correlation of satisfaction with


product quality and overall
satisfaction in shopping in 0.6603 0.4868 0.6338 0.5988
supermarkets

Nature of the correlation Low Low Low Low


Positive Positive Positive Positive

Statistical Critical
significance of this values range 0.4182 – 0.3932
correlation at 1%
significance level
Conclusion Significant Significant Significant Significant

Coefficient of determination r2 =0.44 r2 =0.24 r2 =0.40 r2 =0.36

Interpretation of r2
% of variation in overall satisfaction
in shopping could be explained by 44%. 24% 40% 36%
the satisfaction product quality

Source – Survey Data

152
Appendix IV - I

Table 17 – Correlation between Prices Paid and Overall Customer Satisfaction

S1 S2 S3 S4
Overall average gaps in prices paid
-0.65 -1.35 -1.53 -0.33

Average satisfaction with prices


paid 8.50 6.78 6.35 9.00

Average overall satisfaction in


shopping in supermarket 8.28 6.95 5.90 8.05

Correlation of satisfaction with


prices paid and overall satisfaction
0.3241 0.2674 0.6554 0.9111
in shopping in supermarkets

Low Low Low High


Nature of the correlation
positive positive positive Positive

Statistical Critical
significance of this values 0.4182 – 0.3932
correlation at 1% range
significance level Conclusion
Not Not
Significant Significant
Significant Significant

Coefficient of determination
r2 =0.11 r2 =0.07 r2 =0.43 r2 =0.83

Interpretation of r2
% of variation in overall
satisfaction in shopping could be
11% 7% 43% 83%
explained by the satisfaction prices
paid

Source – Survey Data

153
Appendix IV - J

Results of the Regression Analysis done using Mini Tab


Computer Package.

Note to the reader


1. For each super market the regression analysis is done separately
2. Satisfaction with service quality, Satisfaction with product quality
and satisfaction with prices paid would be the independent variables
3. Overall satisfaction in shopping in the supermarket would be the
dependent variable
4. For S1, S2 and S3 super markets several regression models ( S1-2,
S2-3 & S4-2 ) have been done where in subsequent models omitting the
least important independent variable in further checking the
explanatory power of the balance variables in explaining overall
satisfaction.
5. For S3 super markets only one model was done as all the variables
was significant enough in explaining the relationship with overall
satisfaction

Line of best fit

For each model if r-sq > 75% it would be a good fit. Based on the results
the comment of the best of the regression line is as follows.

Super market Model 01


S1  Done for service, product& prices
 R-sq > 91.3%
 Very good fit

S2  Done for service, product& prices


 R-sq > 71.7%
 Not a good fit

S3  Done for service, product& prices


 R-sq > 74.9%
 A Good fit

S4  Done for service, product& prices


 R-sq > 88.4%
 Very good fit

154
Regression Analysis: S1 type super markets

The regression equation is


overall = - 0.129 + 0.871 service + 0.115 product + 0.0293 prices

Table of Coefficients
Predictor Coef StDev T P
Constant -0.1288 0.5112 -0.25 0.802
service 0.87075 0.06565 13.26 0.000
product 0.11488 0.05892 1.95 0.059
prices 0.02935 0.04387 0.67 0.508

S = 0.2698 R-Sq = 91.3% R-Sq(adj) = 90.5%

Analysis of Variance

Source DF SS MS F P
Regression 3 27.3543 9.1181 125.25 0.000
Residual Error 36 2.6207 0.0728
Total 39 29.9750

Source DF Seq SS
service 1 27.0530
product 1 0.2688
prices 1 0.0326

Durbin-Watson statistic = 1.63

Regression Analysis - S2 type super markets

The regression equation is


overall = 0.48 + 0.745 service + 0.182 product + 0.0037 prices

Predictor Coef StDev T P


Constant 0.480 1.124 0.43 0.672
service 0.74483 0.09702 7.68 0.000
product 0.1820 0.1390 1.31 0.199
prices 0.00372 0.09715 0.04 0.970

S = 0.6633 R-Sq = 71.7% R-Sq(adj) = 69.3%

Analysis of Variance

Source DF SS MS F P
Regression 3 40.061 13.354 30.35 0.000
Residual Error 36 15.839 0.440
Total 39 55.900

Source DF Seq SS
service 1 39.265
product 1 0.796
prices 1 0.001

155
Durbin-Watson statistic = 1.86

Regression Analysis - S3 type super markets

The regression equation is


overall = 0.650 + 0.428 service + 0.259 product + 0.185 prices

Predictor Coef StDev T P


Constant 0.6499 0.6989 0.93 0.359
service 0.42842 0.09424 4.55 0.000
product 0.2592 0.1009 2.57 0.015
prices 0.18550 0.09167 2.02 0.050

S = 0.4980 R-Sq = 74.9% R-Sq(adj) = 72.8%

Analysis of Variance

Source DF SS MS F P
Regression 3 26.6709 8.8903 35.84 0.000
Residual Error 36 8.9291 0.2480
Total 39 35.6000

Source DF Seq SS
service 1 23.8984
product 1 1.7568
prices 1 1.0157

Durbin-Watson statistic = 1.29

Regression Analysis - S4 type super markets


The regression equation is
overall = - 1.06 + 0.331 service + 0.162 product + 0.573 prices

Predictor Coef StDev T P


Constant -1.0591 0.6313 -1.68 0.102
service 0.33077 0.08964 3.69 0.001
product 0.16240 0.08198 1.98 0.055
prices 0.57252 0.09097 6.29 0.000

S = 0.3676 R-Sq = 88.4% R-Sq(adj) = 87.4%

Analysis of Variance

Source DF SS MS F P
Regression 3 37.036 12.345 91.37 0.000
Residual Error 36 4.864 0.135
Total 39 41.900

Source DF Seq SS
service 1 27.704
product 1 3.980
prices 1 5.352

Durbin-Watson statistic = 1.61

156
Appendix IV – K1

Table 18 - Testing the H0 in accepting/rejecting H1 using significance test

H0 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may not satisfy their customers differently than those who measure but are not aware
of those gaps (S2 type). i.e Overall satisfaction of S1= S2
H1 - Supermarkets that measure and are aware of service quality gaps (S1 type) may
satisfy their customers more than those who measure but are not aware of those gaps
(S2 type). i.e Overall satisfaction of S1>S2
Confidence level 95%
Nature of the test One tail
Standard error Where
2 2 σx1 = Standard deviation around S1 mean
σ (x1-x2) = σx1 σx2
+ σx2 = Standard deviation around S2 mean
n1 n2 n1 = sample of S1 supermarkets
n2 = sample of S2 supermarkets

σ (x1-x2) = 0.882 + 1.20 2


40 40
= 0.2352
Confidence 95% = 1.96
Critical value = 0 + 1.96(0.2352)
= + 0.4609
The difference S1 = 8.28
between sample S2 = 6.95
means of S1/ Difference = 8.28-6.95 = 1.33
S2
The difference between sample means of S1 and S2 ( 1.33) exceeds the critical
value. The difference between the overall mean satisfaction of S1 supermarkets and
the mean overall satisfaction of S2 supermarkets is significant.
Hence, H0 is rejected with the acceptance of H1
The assertion (H0) that supermarkets that measure and are aware of service quality
gaps (S1 type) may not satisfy their customers differently than those who measure
but are not aware of those gaps (S2 type) cannot be held at 5% level of significance
thus leading to the acceptance of H1

Source – survey data

157
Appendix IV – K2

Table 19 - Testing the H0 in accepting/rejecting H2 using significance test

H0 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may not satisfy their customers differently than those who do not measure but are
aware of their service quality levels. (S3type). i.e Overall satisfaction of S1 = S3
H2 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those who do not measure but are aware of
their service quality levels. (S3type). i.e Overall satisfaction of S1>S3
Confidence level 95%
Nature of the test One tail
Standard error Where
σx1 = Standard deviation around S1 mean
σ (x1-x2) = σx12 σx22
+ σx2 = Standard deviation around S3 mean
n1 n2 n1 = sample of S1 supermarkets
n2 = sample of S3 supermarkets

σ (x1-x2) = 0.882 + 0.96 2


40 40
= 0.2059
Confidence 95% = 1.96
Critical value = 0 +1.96(0.2059)
= + 0.4035
The difference S1 = 8.28
between sample S3 = 5.90
means of S1/ Difference = 8.28-5.90 = 2.38
S3
The difference between sample means of S1 and S3 ( 2.38) exceeds the critical
value. The difference between the overall mean satisfaction of S1 supermarket and
the mean overall satisfaction of S3 supermarket is significant.
Hence, H0 is rejected with the acceptance of H2
The assertion (H0) that supermarkets that measure and are aware of service quality
gaps (S1 type) may not satisfy their customers differently than those who do not
measure but are aware of their service quality levels (S3type) cannot be held at 5%
level of significance leading to the acceptance of H2

Source – survey data

158
Appendix IV – K3

Table 20 - Testing the H0 in accepting /rejecting H3 using significance test

H0 - Supermarkets that measure and are aware of service quality gaps (S1 type) may
not satisfy their customers differently than those do not measure and are not aware of
those gaps (S4 type). i.e Overall satisfaction of S1= S4
H3 - Supermarkets that measure and are aware of service quality gaps (S1 type)
may satisfy their customers more than those do not measure and are not aware of
those gaps (S4 type). i.e Overall satisfaction of S1>S4
Confidence level 95%
Nature of the test One tail
Standard error Where
σ (x1-x2) = σx12 σx22 σx1 = Standard deviation around S1 mean
+
n 1n σx2 = Standard deviation around S4 mean
2
n1 = sample of S1 supermarkets
n2 = sample of S4 supermarkets

σ (x1-x2) = 0.882 + 1.04 2


40 40
= 0.2154
Confidence 95% = 1.96
Critical value = 0+ 1.96(0.2154)
= + 0.4221
The difference S1 = 8.28
between sample S4 = 8.05
means of S1/ Difference = 8.28-7.05 = 0.23
S3
The difference between sample means of S1 and S4 ( 0.23) does not exceed the
critical value. The difference between overall mean satisfaction of S1 supermarkets
and the mean overall satisfaction of S4 supermarkets is not significant.
There in no evidence to reject H0 at 5% significant level. Thus H3
cannot be accepted.
There is no evidence to reject the assertion (H0) that supermarkets that measure and
are aware of service quality gaps (S1 type) may not satisfy their customers
differently than those do not measure and are not aware of those gaps (S4 type) at
5% level of significance. Thus H3 cannot be accepted

Source – survey data

159
Appendix IV - L
Table 21 - Summary of Regression Model for all Super Markets

(X1) Service quality (X3 ) Prices paid (X2) Product quality


(Y) Overall
satisfaction
Nature of the
Markets type

Significance Significance Significance


segments

R -sq

Satisfaction

Satisfaction

Satisfaction
with Prices
Regression

Regression

Regression
coefficient

coefficient

coefficient
Super

with SQ

with PQ
> of X3 for y of X3 for y of X2 for y
75%
P<0.05 P<0.05 P<0.05

0.0000 0.5080
8.45
0.5900
S1 In 8.28 91.3% 8.25 0.871 Significant 8.50 0.029 Not significant 0.115 Slightly
elastic 110%
Significant
0.0000 0.9700
7.45
0.1990
S2 In 6.95 71.7% 6.93 0.745 Significant 6.78 0.004 Not significant 0.182 Not
elastic 97%
significant
0.0000
0.185 0.0500 6.33 0.0150
S3 Elastic 5.90 74.4% 5.98 0.428 Significant 6.35 Significant 0.259
83% Significant

0.0001 0.0000 8.43


0.0550
S4 Elastic 8.05 88.4% 7.83 0.331 Significant 9.00 0.573 Significant 0.162 Slightly
110%
significant
7.67
Source – Survey Data 100%

160
Appendix V - A

Instructions to fill SUPER GAP TEST


The objective of the SUPER GAP TEST is to
• Measure service quality, product quality and price gaps of the supermarket customers
on a periodical basis in understanding customer expectations and the perceptions
created through the performance of the super market.

The super gap test is presented in three sections


Section one - Measure of service quality
Section two - Measure of product quality
Section three - Measure of price gaps.

For each of the three sections, the respondent is required to fill in the expectations column
(column B) and the experience column ( Column C) based on the statements given in
Column A.

Expectations (Column B)
This would be the respondents expectations when shopping in the supermarket in terms of
service quality, product quality and the prices to be paid. If the given statement in column
(A) under each section is extremely important to the respondent, then he/she will indicate
7 in the respective row. If the statement is not important at all, then he/she will indicate 1.
The level of importance in-between will be reflected by 2 to 6. The respondent is expected
to rate this before visiting the store.

Experience ( Column C)
In this column the respondent will indicate his/her rating based on the actual experience
while shopping in the supermarket. For service quality, if the service experience on given
aspects strongly agrees with the respondent, then mark 7. If strongly disagrees then mark
1. For product quality if the statements agrees with the experience fully then 7 and if does
not agree fully mark 1. For prices paid if prices are extremely cheap then 7 and if
extremely expensive mark 1. For all above, the respondents are requested give his/her
opinion on a scale of 1 to 7.
Please use this link to go to the super gap test

161
SUPER GAP TEST
Scores for expectations
Location 1- Not important at all
Respondent Code 7 - Extremely important
Date 2-6 degrees in between

Column A Column B Column C


SECTION ONE Expectation Experience
1-strongly disagree
MEASURE OF SERVICE QUALITY
7-Strongly agree

S1 The store is visually appealing and kept clean


S2 The location of the store is convenient.
S3 Outlet design helps to move around easily & find products
S4 Customers have adequate parking space for their vehicles
S5 There are always stocks of products/brands as desired
S6 The prices of products are clearly indicated.
S7 This outlet punctual information on its sales promotions
S8 The cashiers bill products chosen by customers accurately
S9 Waiting time at cash registers are short
S10 Employees are always willing to help customers
S11 The public contact staff are always polite to customers.
S12 Employees give individual attention to customers.

SECTION TWO Expectation Experience


1-Extremly poor
MEASURE OF PRODUCT QUALITY
7-Extremly good

P13 The fruits and vegetables that are sold are fresh
P14 The meat and the fish products sold in this outlet are fresh
P15 The retailers own brand products are of high quality
P16 The quality of other products sold in this out let is good
P17 All well known brands of products are available
P18 A broad assortment of products and brands are offered

SECTION THREE Expectation Experience


1-Extremly
MEASURE OF PRICE GAPS expensive
7-Extremly cheap

X19 The prices of products of this out let is reasonable

Comments

162
Appendix V - B

SUPER GAP TEST - Score method


Location

SECTION ONE Expectation Experience


MEASURE OF SERVICE QUALITY

Physical Aspects of service


S1 The store is visually appealing and kept clean 6.15 5.18
S2 The location of the store is convenient. 6.80 6.10
S3 The outlet design helps to move around with ease and 6.40 3.80
S4 Customers have parking space for their vehicles when 5.40 4.60

Total score - Physical aspects 24.75 19.68


Ideal score ( Avg expectations) 24.75
Proportionate score(( avg perception/avg expectation)*100) 79.49%

Reliability of service
S5 There are always stocks of products/brands as desired 6.80 2.40
S6 The prices of products are clearly indicated. 6.50 5.00
S7 This outlet gives appropriate and punctual information 3.00 5.90
S8 The cashiers bill products chosen by customers 7.00 3.00
S9 Waiting time at cash registers are short 6.80 3.20

Total score - Reliability 30.10 19.50


Ideal score ( Avg expectations) 30.10
Proportionate score(( avg perception/avg expectation)*100) 65%

Personal Interaction
S10 Employees are always willing to help customers 6.20 4.10
S11 The public contact staff are always polite to customers. 6.70 4.10
S12 Employees give individual attention in understanding 3.00 5.00

Total score - Personal Interaction 15.90 13.20


Ideal score ( Avg expectations) 15.90
Proportionate score(( avg perception/avg expectation)*100) 83%

Total service quality


Total score - Service quality 70.8 52.38
Ideal score ( Avg expectations) 70.75
Proportionate score(( avg perception/avg expectation)*100) 74%

163
Appendix V - B

SUPER GAP TEST - Score method


Location

SECTION TWO Expectation Experience


MEASURE OF PRODUCT QUALITY

P13 The fruits and vegetables that the out let carry are fresh 6.83 4.98
P14 The meat and the fish products sold in this outlet are 6.80 5.93
P15 The retailers own brand products are of high quality 6.78 4.83
P16 The quality of other products that are sold in this out let 6.63 5.60
P17 All well known brands of products are available in the 6.65 5.35
P18 A broad assortment of products and brands are offered 6.63 5.53

Total score - Product quality 40.30 32.20


Ideal score ( Avg expectations) 40.30
Proportionate score(( avg perception/avg expectation)*100) 80%

SECTION THREE Expectation Experience


MEASURE OF PRICE GAPS

X19 The prices paid in this out let is reasonable 5.00 3.50

Total score - Price gaps 5.00 3.50


Ideal score ( Avg expectations) 5.00
Proportionate score(( avg perception/avg expectation)*100) 70%

Measure for the total super market

Score - Total super market 116.05 88.08


Ideal score ( Avg expectations) 116.05
Proportionate score(( avg perception/avg expectation)*100) 76%
Source - survey data

164
Appendix V - C1
Figure 49 - Gap Method - Service Quality

8.00

6.80 6.80 7.00 6.80


6.50 6.70
6.40 6.20
6.00 6.15 6.13
5.90
5.40
5.18 5.00 5.00
4.60
Expectations / Perceptions /Gaps

4.00 4.10 4.10 Average


3.80 Expectation
3.00
2.90 3.00 3.00 3.00
2.40
2.00 2.00

Average
perception
0.00
Location

Sales promotions

Helpful employees

Polite employees
Visually, clean,efficient

Parking

Prices of products placed

Accurate billing

Individual attention
Stock availability

Short waiting time at registers


Outlet design

-0.67 -0.80
-0.98
-1.50
-2.00 -2.10
Average
-2.60 -2.60 negative gap

-4.00 -4.00 -3.80


-4.40

-6.00
Dimensions
Source - Survey Data

165
Appendix V - C2
Figure 50 - Gap Method - Product Quality/Prices Paid
8.00

7.00
6.83 6.80 6.78 6.63 6.65 6.63
6.00 5.93
5.60 5.53
5.35
5.00 4.98 5.03 Average
4.83 Expectations
4.00
Expectation/Perception/Gap

3.50
3.00
Average
2.00 Perception

1.00

0.00 Others products quality Average

Availability of well known brands


Fresh fish/meat

Broad assortment
Retailers brand quality good

Prices gap
Fresh fruits/vegetables

negative Gap
-1.00 -0.87 -1.03 -1.10
-1.30
-1.53
-2.00 -1.85 -1.95

-3.00

Dimension
Source - Survey Data
166
Appendix V - D1
Figure 51 - Percentage Method

Negative Service Quality Gap No gap Positive Service Quality Gap


Expectation=
Dimension Statements Expectations>Perceived Expectation<Perceived
Perceived
Performance Performance
Performance
-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6

The store is visually appealing , kept clean & run 0% 0% 0% 8% 23% 33% 2% 0% 0% 0% 0% 0%
Physical aspects

efficiently 63% 35% 2%


The store is located in an area which is convenient to 0% 0% 0% 3% 18% 25% 5% 0% 0% 0% 0% 0%
customers. 45% 50% 5%
The outlet design helps customers to move around with 3% 5% 5% 18% 38% 8% 3% 0% 0% 0% 0% 0%
ease and find products they need easily 77% 25% 3%
Customers have parking space for their vehicles 0% 0% 10% 3% 14% 8% 0% 0% 0% 0% 0% 0%
34% 65% 0%
Overall Physical Aspects Gap 55% 44% 2%
There are always stocks of products as desired 8 11 11 7 3 0 0 0 0 0 0 0 0
20% 26% 28% 18% 8% 0% 0% 0% 0% 0% 0% 0%
100% 0% 0%
The prices of products are clearly indicated. 0% 3% 8% 5% 31% 28% 0% 0% 0% 0% 0% 0%
Reliability

75% 25% 0%
This outlet gives information on sales promotions 0% 0% 0% 0% 0% 3% 10% 43% 30% 8% 3% 0%
3% 3% 94%
The cashiers bill products accurately 3% 0% 3% 25% 20% 31% 0% 0% 0% 0% 0% 0%
82% 18% 0%
Waiting time at cash registers are short 3% 0% 8% 23% 23% 23% 3% 0% 0% 0% 0% 0%
79% 18% 3%
Overall Reliability Gap 68% 13% 19%
Employees are always willing to help customers 0% 8% 23% 20% 26% 23% 0% 0% 0% 0% 0% 0%
interaction

100% 0% 0%
Personal

The public contact staff are always polite to customers. 0% 5% 18% 29% 28% 20% 0% 0% 0% 0% 0% 0%
100% 0% 0%
Employees give attention in understanding specific 0% 3% 3% 5% 33% 35% 0% 0% 3% 0% 0% 0%
requirements of customers. 79% 18% 3%
Overall Personal Interaction Gap 93% 6% 1%

Overall Service Quality Gap 72% 21% 8%


Appendix V - D1
Figure 51 - Percentage Method

Negative Service Quality Gap No gap Positive Service Quality Gap


Expectation=
Dimension Statements Expectations>Perceived Expectation<Perceived
Perceived
Performance Performance
Performance
-6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6

Gaps in Product Quality

The fruits and vegetables that the out let carry are fresh 0% 0% 3% 28% 29% 28% 0% 0% 0% 0% 0% 0%
88% 12% 0%
The meat and the fish products sold in this outlet are 0% 0% 3% 5% 13% 36% 0% 0% 0% 0% 0% 0%
fresh 57% 43% 0%
The retailers own brand products are of high quality 0% 0% 3% 34% 25% 30% 0% 0% 0% 0% 0% 0%
Policies

92% 8% 0%
The quality of other products that are sold in this out 0% 0% 3% 0% 25% 42% 0% 0% 0% 0% 0% 0%
let is acceptable ( Eg Not selling expired products, 70% 30% 0%
All well known brands of products are available in the 0% 0% 3% 15% 23% 29% 0% 0% 0% 0% 0% 0%
store 69% 30% 0%
A broad assortment of products and brands are offered 0% 0% 3% 13% 15% 34% 3% 0% 0% 0% 0% 0%
64% 33% 3%
Overall Product Quality Gap 73% 31% 0%

Gaps in Prices Paid


Prices

Prices paid in buying goods in the super market 0% 0% 0% 13% 49% 15% 0% 0% 0% 0% 0% 0%

Overall Gap in prices paid 77% 23% 0%

Source - Survey Data

168
Appendix V - D2
Figure 52 - Percentage Method - Service Quality

100%

90%

80%

70%
Positive
Service
60%
Quality Gap

100%

100%

100%
% of Respondents

50%
No Service

82%

79%

79%
Quality Gap
40% 75%
77%
63%

30%
Negative
45%

20% Service
34%

Quality Gap

10%
3%

0%
Kept cleanLocation
Outlet design
Parking Stock
space availability
Price marking
Infor special
Billing
offersaccurately
Short waitingHelpful
time staff
PoliteIndividual
staff attention

Source - Survey Data


169
Appendix V - D3
Figure 53 - Percentage Method -Product Quality and Price Gaps

100%

90%
Positive
80% Service
Quality Gap
70%

60% No Service
% of respondents

Quality Gap
50%
92%
88%

77%
40%
70%

69%
Negative

64%
Service
57%

30%
Quality Gap

20%

10%

0%
Fresh Fresh fish/meats Quality of retailers Quality of other Availability of well Broad assortment Price gaps
fruits/vegetables brands goods known brands

Source - Survey Data


170
Appendix V - E1
Figure 54 - Importance Perception Matrix for individual aspects of Service Quality
8.0
Location
Irrelavent Superiority Competitive strength
MAINTAIN with out MAINTAIN Outlet design find
7.0
Effort products
Parking

6.0
Stock availability

Prices of products
5.0
placed
Sales promotions
Importance

4.0
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Accurate billing

Short waiting time at


3.0 registers
Helpful employees

2.0
Polite employees

Competitive Individual attention


Relative indifference 1.0
REDUCE effort Vulnerability
IMPROVE Visually,
clean,efficient
0.0
Source - Survey Data Perceived Performance

171
Appendix V - E2
Figure 55 - Importance Perception Matrix for individual aspects of product quality and prices
8.0
Fresh
Irrelavent Superiority fruits/vegetables
MAINTAIN with out Effort Competitive strength
7.0 MAINTAIN

Fresh fish/meat

6.0

Retailers brand
5.0 quality good
Importance

Others products good


4.0 quality
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

3.0 Well known brand


available

2.0
Broad brand
assortment
Relative indifference Competitive Vulnerability
REDUCE effort 1.0 IMPROVE
Price gaps

0.0
Source - Survey Data Perceived Performance

172
Appendix V - E3
Figure 56 - Importance Perception Matrix for the subdimensions of Service,Product & Price
8.0
Irrelavent Superiority Competitive strength Appearance (SQ)
MAINTAIN with out Effort MAINTAIN
7.0
Convenience (SQ)

6.0
Keeping
promises(SQ)

5.0 Doing it well (SQ)


Importance

4.0 Responsiveness
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 (SQ)

Assurance (SQ)
3.0

Technical quality(PQ)
2.0

Brand
Competitive Vulnerability assortment(PQ)
Relative indifference 1.0
IMPROVE
REDUCE effort Price gaps

0.0
Source - Survey Data Perceived Performance

173
Appendix V - E4
Figure 57 - Importance Perception Matrix for the Dimensions of Service, Product & Price

8.0

Irrelavent Superiority Competitive strength Physical


MAINTAIN with out MAINTAIN Aspects(Service
Effort 7.0 Quality)

6.0
Reliability (Service
Quality)

5.0
Importance

Personal interaction
4.0 (Service Quality)
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

3.0
Policies ( Product
quality)
2.0

Relative indifference Competitive


REDUCE effort 1.0 Vulnerability Price gaps
IMPROVE

0.0
Source - Survey Data Perceived Performance
174
Appendix V - F
Table 58 - Service Quality, Product Quality, Prices Gaps and Retail Mix Strategy Interface

Service Quality , Product Quality and


Price Gap Dimensions Retail Mix Strategies

Retail location

Retail pricing
Merchandi Store facility management Mix Promotion Customer service strategies
sing strategies
Subdimension

strategies

Moments of Truths
Store security

Retail sales promotion


Service mix strategies

Retail publicity

Procedures & policies


Merchandising mix

Retail advertising
Private label branding
Store Interior Exterior design Visual Customer Logistic
Dimension

environment design merchandising service strategies


SUPER GAP TEST

Display concept

Display content
Store aesthetics
Space planning

service culture
Store marquee
statements

Store theatrics

Store frontage
Store position

Arrangement
Display type
Architecture

Recruitment
Atmosphere

Store layout
Store image

handling
Structure
Training

ordering
Buying
Physical Aspects

Appreance Visually appealing/clean/run


Location is convenient
Outlet design -move around
Convenience
and find products easily
Parking space available

Keeping Stock availability


promises
Reliability

Prices are marked clearly


Information on s/promotions
Doing it well
Accurate billing
Short waiting time - registers

Responsive Employees willing to help


interaction
Personal

Public contact staff polite


Assurance Individual attention to
customers
Appendix V - F
Table 58 - Service Quality, Product Quality, Prices Gaps and Retail Mix Strategy Interface

Service Quality , Product Quality and


Price Gap Dimensions Retail Mix Strategies

Retail location

Retail pricing
Merchandi Store facility management Mix Promotion Customer service strategies
sing strategies
Subdimension

strategies

Moments of Truths
Store security

Retail sales promotion


Service mix strategies

Retail publicity

Procedures & policies


Merchandising mix

Retail advertising
Private label branding
Store Interior Exterior design Visual Customer Logistic
Dimension

environment design merchandising service strategies


SUPER GAP TEST

Display concept

Display content
Store aesthetics
Space planning

service culture
Store marquee
statements

Store theatrics

Store frontage
Store position

Arrangement
Display type
Architecture

Recruitment
Atmosphere

Store layout
Store image

handling
Structure
Training

ordering
Buying
Fresh fruits and vegetables
Product quality (Policies)

Fresh meat and the fish


Technical
quality Quality own retailers brand

Quality of other products

Well known brands available


Brand
assortment Broad assortment available

Prices Gaps in prices

176
Appendix V - G
SUPER GAP MONITOR

SUPER GAP PHYSICAL INDEX - (Physical Aspects of service)


Proportion of
Expectations Perception perception from
Expectations
Period
Average Average Proportion
Sub Index Sub Index Final
Score (from Score (from Score
A B Index
28) 28) ( from 100)
February 2003
( base -actual data) 24.75 100.00 19.68 100.00 79.49 100.00
April 2003
(Say for example) 26.00 105.05 20.00 101.65 76.92 96.76
June 2003 (Say
for example) 27.00 109.09 21.00 106.73 77.78 97.84

SUPER GAP STAFF INDEX - (Reliability & personal interaction of service)


Proportion of
Expectations Perception perception from
Expectations
Period
Average Average Proportion
Sub Index Sub Index Final
Score (from Score (from Score
A B Index
56) 56) ( from 100)
February 2003
( base -actual data) 46.00 100.00 32.70 100.00 71.09 100.00
April 2003
(Say for example) 46.00 100.00 35.00 107.03 76.09 107.03
June 2003 (Say
for example) 51.00 110.87 36.00 110.09 70.59 99.30

SUPER GAP SQ INDEX - (Total service quality)


Proportion of
Expectations Perception perception from
Expectations
Period
Average Average Proportion
Sub Index Sub Index Final
Score (from Score (from Score
A B Index
84) 84) ( from 100)
February 2003
( base -actual data) 70.80 100.00 52.38 100.00 73.98 100.00
April 2003
(Say for example) 71.00 100.28 54.00 103.09 76.06 102.80
June 2003 (Say
for example) 78.00 110.17 57.00 108.82 73.08 98.78
177
Appendix V - G
SUPER GAP MONITOR

SUPER GAP PQ TEST INDEX - (Total product quality)


Proportion of
Expectations Perception perception from
Expectations
Period
Average Average Proportion
Sub Index Sub Index Final
Score (from Score (from Score
A B Index
42) 42) ( from 100)
February 2003
( base -actual data) 40.30 100.00 32.20 100.00 79.90 100.00
April 2003
(Say for example) 40.50 100.50 38.00 118.01 93.83 117.43
June 2003 (Say
for example) 40.60 100.74 40.00 124.22 98.52 123.31

SUPER GAP PP INDEX - (Price gaps)


Proportion of
Expectations Perception perception from
Expectations
Period
Average Average Proportion
Sub Index Sub Index Final
Score (from Score (from Score
A B Index
7) 7) ( from 100)
February 2003
( base -actual data) 5.00 100.00 3.50 100.00 70.00 100.00
April 2003
(Say for example) 5.20 104.00 3.50 100.00 67.31 96.15
June 2003 (Say
for example) 5.00 100.00 3.75 107.14 75.00 107.14

SUPER GAP TOTO INDEX ( total gap index)


Proportion of
Expectations Perception perception from
Expectations
Period
Average Average Proportion
Sub Index Sub Index Final
Score (from Score (from Score
A B Index
133) 133) ( from 100)
February 2003
( base -actual data) 116.05 100.00 88.08 100.00 75.90 100.00
April 2003
(Say for example) 117.70 101.42 96.50 109.56 81.99 108.02
June 2003 (Say
for example) 123.60 106.51 100.75 114.38 81.51 107.40
178
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INTERVIEW SCHEDULE
Chapter 04 – Finding out present service quality levels
Organization Name of person interviewed Designation
ARPICO Super Centers
Richard Pieris A1-Mr. Lasitha Vitharana Human Resource Manager
Distributors Limited
A2-Mr. Shantha Kularatne Head of Sales
A3-Mrs. Chitrangani Gunaratne Head of Merchandising
A4- Ruwan Perera Center Manager
Hyde Park Corner
Richard Pieris and A5- Mr. Lohitha Karunaratne Market Research Officer
Company Limited
CARGILLS FOOD CITY Super markets
Cargills (Ceylon) C1- Mr. Sidath Kodikara Executive Director
Limited
C2 - Ex Managers of Cargills Ceylon Limited
KEELLS SUPER markets
Jaykay Marketing K1- Mr. Rajiv Dharmendra Chief Executive Officer
Services ( Private) Ltd
K2- Mr. Kumar De Silva Operations Manager
K3- Ex showroom manager – Keells for verification
SATHOSA Super markets
Co-operative Wholesale CWE1 Manager – Sales &
Establishment – Retail Marketing
Mr. Wasantha Wanigasekara
Division
CWE2 Additional General Manager
Retail division
Mr. Vimal Jayasekara
Ministry of Commerce – CWE3 Director – Customer
customer care unit Complains Unit
Mr. George Fernando
SENTRA Super markets
Sentra Super Markets SEN1 Finance Manager
( Private) Limited
Mr. Deeptha Wickremaratne
SEN2 Operations Manager
Super markets.
Mr. N.P. Deraniyagala

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