CUSTOMER SATISFACTION TOWARDS SERVICE

QUALITY OF DEPARTMENT STORE

BY
Akesh Dangol

A Summer Project Report Submitted to

Faculty of Management, Tribhuvan University
In partial fulfillment of the requirements for the degree of

Bachelor of Business Administration

at the
Prime College
Tribhuvan University

Khusibhu,Nayabazar
February/2020
 CHAPTER I
INTRODUCTION
Background
A department store is a retail outlet offering a wide range of products and services for customers
under the same building. There are various categories of products which are being offered in
department store like food, clothing, accessories, home appliances, baby products etc which is
organized by various departments. Every departmental store aims to fulfill customer
requirements and customer satisfaction at one place along with the facilities and comforts which
a small retailer can’t provide. Because the customers can purchase of the all of the basic
household requirements under the same building, it provides maximum shopping convenience.
Quality of the service being delivered will determine whether or not they are satisfied with that
service and whether or not they shall want to work with the service provider. It can be defined in
different ways to depending on area which the term is being used.. It can be defined in different
ways to depending on area which the term is being used. . “Services are deeds,performances,and
processes provided or coproduced by one entity or person for and with another entity or
persons(Zeithaml er al,2009)“.Quality is one of the important things that consumers look for and
desires. The quality of a good or service is the perception that a customer has about it. It is a
consumer's mind-set who accepts a specific good or service and acknowledges its ability to meet
his or her needs. Service Quality is defined as an assessment of how well a delivered service
conforms to the client’s expectations. Service business operators often assess the service quality
provided to their customers in order to improve their service,to quickly identify problems,and to
better assess client satisfaction

Customer satisfaction is defined as a measurement that determines how happy customers are
with a company’s products, services, and capabilities. Customer satisfaction information,
including surveys and ratings, can help a company determine how to best improve or changes its
products and services. Customers derive satisfaction from a product or a service based on
whether their need is met effortlessly, in a convenient way that makes them loyal to the firm.
Purpose of the study
Purpose of the study is to assess the performance of departmental store in terms of customer
satisfaction. The primary objectives of this study are;

 To identify the relationship between price, service quality, employee behavior, customer
perceived value and customer satisfaction.
 To understand customer expectations and improve customer satisfaction towards
department store.
 To analyze and identify customer satisfaction in regards to department service quality.

Significance of the study

The significance of the study is for developing our theoretical knowledge into practical form so
as to cope with any situation that may arise in the future related to business and research. We
consider departmental store as the part of the service industry because they deal with retailing of
goods to consumer they offer services in order to facilitate shopping experience of the
consumers. As the primary need of the study is to identify and analyze the customer satisfaction
toward the service quality of the departmental store. It also determine the knowledge of factors
that influence customer satisfaction in order to provide qualitative and quantitative services to
the customers. It will also enable to find out factors that affect customers' satisfaction towards
service quality in other related factors.
Theoretical Framework

A theoretical framework is a collection of interrelated concepts, like a theory but not necessarily
so well worked-out. Generally theoretical framework consists of two variable: independent and
dependent variable. Where any change in independent variable directly affects the dependent
variable.

Pricing

Service Quality

Employee Behaviour Customer Satisfaction

Dependent variable

Customer perceived value

Independent variable
Literature Review

A literature review is both a summary and explanation of the complete and current state of
knowledge on a limited topic as found in books and articles. Customer satisfaction and service
quality which leads to the conceptual frame work of the study. Without literature survey, the
complete research will not be possible. Literature survey is an essential part of research study, it
gives you a direction in the area of your research. It helps you set a goal for your analysis thus
giving you your problem statement. A literature review contains a critical analysis and the
integration of information from a number of sources, as well as a consideration of any gaps in the
literature and possibilities for future research. Thus, it justifies the research

(Kuo et al., 2009) studied on the relationships among service quality, perceived value,
customer satisfaction, and post-purchase intention in mobile value-added services. The
purposes of the study was to construct an instrument to evaluate service quality of mobile
value-added services and have a further discussion of the relationships among service
quality, perceived value, customer satisfaction, and post-purchase intention. Structural
equation modeling and multiple regression analysis were used to analyze the data collected
from college and graduate students of 15 major universities in Taiwan. The major findings
are as follows: (1) service quality positively influences both perceived value and customer
satisfaction; (2) perceived value positively influences on both customer satisfaction and post-
purchase intention; (3) customer satisfaction positively influences post-purchase intention;
(4) service quality has an indirect positive influence on post-purchase intention through
customer satisfaction or perceived value; (5) among the dimensions of service quality,
"customer service and system reliability" is most influential on perceived value and customer
satisfaction, and the influence of "content quality" ranks second; (6) the proposed model is
proven with the effectiveness in explaining the relationships among service quality,
perceived value, customer satisfaction, and post-purchase intention in mobile added-value
services.
(Anderson, 1996) studied on Customer satisfaction and price tolerance. The purpose of the study
was to investigates the association between customer satisfaction and willingness-to-pay or price
tolerance. The goal is not only to determine whether the association between customer satisfaction
and price tolerance is positive or negative but also to gauge the degree of association. The Swedish
Customer Satisfaction Barometer provides the data. The empirical analysis indicates a negative
association between the level of customer satisfaction provided by the firm and the degree of price
tolerance exhibited by its customers. However, a positive association is found between year-to-year
changes in the levels of customer satisfaction and price tolerance.

(Cronin et al., 2000) studied on assessing the effects of quality, value, and customer satisfaction on
consumer behavioral intentions in service environments. The study both synthesizes and builds on
the efforts to conceptualize the effects of quality, satisfaction, and value on consumers' behavioral
intentions. Specifically, it reports an empirical assessment of a model of service encounters that
simultaneously considers the direct effects of those variables on behavioral intentions. The study
builds on recent advances in services marketing theory and assesses the relationships between the
identified constructs across multiple service industries. Several competing theories are also
considered and compared to the research model. A number of notable findings are reported including
the empirical verification that service quality, service value, and satisfaction may all be directly
related to behavioral intentions when all of these variables are considered collectively. The results
further suggest that the indirect effects of the service quality and value constructs enhanced their
impact on behavioral intentions.

(Martín-Consuegra et al., 2007) studied on an integrated model of price, satisfaction and loyalty: An
empirical analysis in the service sector. The purpose of the study was to investigate the effects of
customer satisfaction both directly and indirectly (through loyalty) on price acceptance. Price
fairness is considered as an antecedent of customer satisfaction and loyalty. It is based on a
theoretical discussion regarding the relationship among price fairness, customer satisfaction, loyalty,
and price acceptance, empirical research was conducted to test the proposed relationships. Multiple-
item indicators from previous studies were employed to measure the constructs. The results from the
study provide empirical support, suggesting that perceived price fairness influences customer
satisfaction and loyalty. The analysis also suggested that customer satisfaction and loyalty are two
important antecedents of price acceptance.The study ponders the relationship between customer
satisfaction and loyalty and price acceptance, while other factors that have an influence on price
acceptance are not considered. The research results suggest that perceived price fairness in service
industries can be viewed as a threshold factor in order to maintain satisfied and loyal customers. It
should be noted that managers should consider price acceptance depends on the level of satisfaction
and loyalty.

(Sureshchandar et al., 2002) studied on the relationship between service quality and customer
satisfaction – a factor specific approach. The nature of the exact relationship between service quality
and customer satisfaction (especially in the way the two constructs have been operationalized) is still
shrouded with uncertainty. Many researchers have operationalized customer satisfaction by using a
single item scale and many others have used multiple item scales. The present study adopts a
different approach and views customer satisfaction as a multi dimensional construct just as service
quality, but argues that customer satisfaction should be operationalized along the same factors (and
the corresponding items) on which service quality is operationalized.The link between service
quality and customer satisfaction has been investigated. The results have indicated that the two
constructs are indeed independent but are closely related, implying that an increase in one is likely to
lead to an increase in another.

(Siddiqi, 2011) studied on interrelations between service quality attributes, customer satisfaction and
customer loyalty in the retail banking sector in Bangladesh. The main objective of the study was to
find the interrelationships between service quality attributes, customer satisfaction and customer
loyalty in the retail banking sector in Bangladesh. The study sought to identify the most important
attributes in bank settings, which may be used to review characteristics of the banks as experienced
by customers.A survey was conducted to collect data. The sample size of 100 retail banking
customers was drawn from different banks in Bangladesh. The result shows that all the service
quality attributes are positively related to customer satisfaction and customer satisfaction is
positively related to customer loyalty in the retail banking settings in Bangladesh. Empathy
demonstrates the highest positive correlation with customer satisfaction and tangibility shows the
least positive correlation with customer satisfaction. This study suggests that SERVQUAL [service
quality model] is a suitable instrument for measuring the bank service quality in the Bangladeshi
context. Therefore, bank managers can use this instrument to assess the bank service quality in
Bangladesh.

(Hsin Chang & Wang, 2011) studied on the moderating effect of customer perceived value on online
shopping behavior. The purpose of the research was to examine the impact of e-service quality,
customer perceived value, and customer satisfaction on customer loyalty in an online shopping
environment. There were two studies performed in this research. Study 1 validated the self-
regulating processes; Study 2 tested the moderating effects of customer perceived value between
satisfaction and loyalty. Structural equation modelling techniques and linear hierarchical regression
models were used to test the causal model. The study demonstrated that e-service quality and
customer perceived value influence customer satisfaction, and then influence customer loyalty. The
study found that customers with a high perceived value have a stronger relationship between
satisfaction and customer loyalty than customers with a low perceived value. They found that there
are emotional and rational routes influencing customer loyalty in the online shopping process. This
will contribute to other research that clarifies the influencing process of online shoppers' motivation
and behaviour. In the pre-purchase stage, online retailers should focus on attracting consumers by
the quality of e-service. In the purchase stage, online retailers should address the emotional factors,
such as customer satisfaction. In the post-purchase stage, rational factors – such as customer
perceived value – play important roles because they can strengthen the relationship between
satisfaction and loyalty. This study viewed the purchase process as a different stage as consumers
may make a choice at each of the purchase stages.
(Kattara et al., 2008) studied on the impact of employee behaviour on customers' service quality
perceptions and overall satisfaction.The results of the current study revealed that all employees'
behaviours, either negative or positive, are highly correlated to the customers' overall
satisfaction. The study also traced the impact of behaviours on customers' perceptions and
overall satisfaction through studying the relevant literature and by gauging opinions on the
impact of employees' behaviours on customers' perceptions of quality and overall satisfaction. It
was also concluded that employees' behaviours have great effect on overall customer satisfaction
regardless of customers' gender, nationality, and purpose of visit, number of visits and length of
stay. The study ends up by offering suggestions and practical implications for hotel practitioners
to think strategically and implement effective tools to motivate employees towards behaving
positively with customers.

(Alhelalat et al., 2017) studied on the impact of personal and functional aspects of restaurant
employee service behaviour on customer satisfaction. The study aims to bring a deeper insight of
the impact of restaurant employee service behaviour on customer satisfaction. Using survey
approach, the current study collected data from 212 tourists who had a dining experience in
Jordan. The results of data analysis showed that both functional and personal aspects of service
behaviour where able to explain customer satisfaction, with higher contribution of personal
aspects over the functional ones. Depending on study's findings, some implications were
suggested including a recommendation to foodservice managers to adopt reinforcement
programs that improve functional and personal aspects of their employees. A further
recommendation was proposed to marketers, to give a higher attention to personal aspects of
foodservices in their marketing activities.

(Torres & Tribó, 2011) studied on customer satisfaction and brand equity.The study found that
customer satisfaction may have a positive effect on brand equity, except when managers show
excessive customer orientation, in which case the effect is negative because of reductions in
shareholder value. The empirical analysis uses incomplete panel data pertaining to 69 firms from
11 nations during the period 2002-2005 and supports the theoretical contentions. This result
warns of the perverse effect on brand equity of implementing policies focused exclusively on
satisfying customers at the expense of shareholders' interests.

Research methods used for data collection and analysis

A research method is a systematic plan for conducting research. Sociologists draw on a variety of
both qualitative and quantitative research methods, including experiments, survey research,
participant observation, and secondary data. Quantitative methods aim to classify features, count
them, and create statistical models to test hypotheses and explain observations. Qualitative
methods aim for a complete, detailed description of observations, including the context of events
and circumstances. Research methods used to the analyze the study of relation between various
variables and element. The research part is divided into five sections. First section deals with the
brief description of research design. Second section described selection of population and sample
of study. Third section explains the nature and sources of data employed. Forth section is about
the description of variables. And finally the fifth section includes the limitations of the study.

Research Design
Research design is the framework of research methods and techniques chosen by a researcher.
The design allows researchers to hone in on research methods that are suitable for the subject
matter and set up their studies up for success.A research design will include how data is to be
collected, what instrument will be employee, how the instrument will be used and the intended
means for analyzing data collected.It includes surveys fact findings enquiries of different kind.
The descriptive research is chosen to learn the profile of respondents, presentation and
description of the data collection and describe the factors that affect customer satisfaction. . It is
undertaken in order to ascertain and be able to describe the characteristics of the variables of
interest Research design is selected for the study to examine the relationship between the
dependent variable and independent variables under this study. It assumes that if there is a
change in one variable, then the relationship between two variables will also change.

Population and sample of the study

Population is defined as group of individuals of the same species occupying a particular
geographic area.. In this study, customers of all the departmental stores are the population of the
study because the study is based on all the people who are customers of departmental stores. For
the study, consideration of all the population is not possible so, for convenience, we took sample
customers from different places. The samples are the customers who were willing to provide
their valuable time for this study. A sample of questionnaire is prepared and administered to
respondents.

Nature and sources of data

This research is primarily based on primary data. Primary data are the data that are collected by a
researcher from first-hand sources, using methods like surveys, interviews, or experiments. It is
collected with the research project in mind, directly from primary sources Primary data are
original in nature and directly related with problem and current data. The primary source of data
has been used to determine the perception of customer satisfaction on service quality of
Department store.

Primary data
Primary data is data that is collected by a researcher from first-hand sources, using methods like

surveys, interviews, or experiments. It is collected with the research project in mind, directly

from primary sources. The study is based on primary data sources. Primary method of data

collection is the method in which the information is collected first hand from the environment or

research area. Here structured questionnaire are used to collect the data.. The survey has been

basically designed to understand the opinions of respondents to explore the perception of

customer satisfaction on service quality in context of Department store..As the questionnaire can

be provided to large groups and respondents we chose questionnaire as our instrument to collect

data. The questionnaire contained questions in the form of 5 point Likert scale. The instrument

we have designed is reliable and valid since we anticipated the questions which were closely

related and relevant to our topic.

Definition of the variables

A variable is defined as anything that has a quantity or quality that varies. The
dependent variable is the variable a researcher is interested in. An independent variable is
a variable believed to affect the dependent variable. There are various variables that are used in
the study in the form of the dependent and independent variables. The definitions of each
variable that are used in our study is given below.
Price
The price is the quantity of payment or compensation given by one party to another in return for
one unit of goods or services. The price of something is how much you paid for it or how much it
is on sale for. In other words, the value that will purchase a quantity, weight or other measure of
good or service is price. It is one of the factors which effect the customer satisfaction.

Service quality
Service quality is defined as an assessment of how well a delivered service conforms to the
client's expectations. Service business operators often assess the service quality provided to their
customers in order to improve their service, to quickly identify problems, and to better assess
client satisfaction. The quality of service provided by the store also affects the customer
satisfaction.

Employee behaviour
Employee behavior is defined as an employee's reaction to a particular situation at
workplace. Employees need to behave sensibly at workplace not only to gain appreciation and
respect from others but also to maintain a healthy work culture. The way employee behaves in
the department store affect the buying decision of the customer and also the customer
satisfaction.

Customer perceived value

Customer perceived value is the notion that the success of a product or service is largely based
on whether customers believe it can satisfy their wants and needs. When making a purchase,
a customer values a product's benefit higher than its function. For example, a customer doesn't
buy a drill to have a drill. He buys a drill to have the capacity to make holes. It is also one of the
factor that affect customer satisfaction.

Customer satisfaction
Customer satisfaction measures how product and services supplied by a company meet or
surpass customer expectation. Customer satisfaction defined as the number of customer or
percentage of total customers, whose reported experience with a firm, its product, or its services
exceeds specified satisfaction goals.

Limitations of the Study

There were certain limitations in this study. Some of the limitations are as follows:
 Study can’t be considered as comprehensive as only limited respondents were contacted
because of time constraint
 Study conducted was more objective and completely based on the views of individual
customers.
 Customer responses may be biased as the questions and response had to be explained to
the respondents.
References

Anderson, E. W. (1996). Customer satisfaction and price tolerance. Marketing

Letters. https://doi.org/10.1007/BF00435742
Cronin, J. J., Brady, M. K., & Hult, G. T. M. (2000). Assessing the effects of
quality, value, and customer satisfaction on consumer behavioral intentions in
service environments. Journal of Retailing. https://doi.org/10.1016/S0022-
4359(00)00028-2
Hsin Chang, H., & Wang, H. W. (2011). The moderating effect of customer
perceived value on online shopping behaviour. Online Information Review.
https://doi.org/10.1108/14684521111151414
Kattara, H. S., Weheba, D., & El-Said, O. A. (2008). The Impact of Employee
Behaviour on Customers’ Service Quality Perceptions and Overall
Satisfaction. Tourism and Hospitality Research.
https://doi.org/10.1057/thr.2008.35
Kuo, Y. F., Wu, C. M., & Deng, W. J. (2009). The relationships among service
quality, perceived value, customer satisfaction, and post-purchase intention in
mobile value-added services. Computers in Human Behavior.
https://doi.org/10.1016/j.chb.2009.03.003
Martín-Consuegra, D., Molina, A., & Esteban, Á. (2007). An integrated model of
price, satisfaction and loyalty: An empirical analysis in the service sector.
Journal of Product and Brand Management.
https://doi.org/10.1108/10610420710834913
Siddiqi, K. O. (2011). Interrelations between Service Quality Attributes, Customer
Satisfaction and Customer Loyalty in the Retail Banking Sector in Bangladesh.
International Journal of Business and Management.
https://doi.org/10.5539/ijbm.v6n3p12
Sureshchandar, G. S., Rajendran, C., & Anantharaman, R. N. (2002). The
relationship between service quality and customer satisfaction – a factor
specific approach. Journal of Services Marketing.
https://doi.org/10.1108/08876040210433248
The impact of personal and functional aspects of restaurant employee service
 behaviour on customer satisfactionAlhelalat, J. A., Habiballah, M. A., &
Twaissi, N. M. (2017). The impact of personal and functional aspects of
restaurant employee service behaviour on customer satisfaction. International
Journal of Hospitality Management.
https://doi.org/10.1016/j.ijhm.2017.07.001
Torres, A., & Tribó, J. A. (2011). Customer satisfaction and brand equity. Journal
of Business Research. https://doi.org/10.1016/j.jbusres.2010.12.001