CHAPTER I

THE PROBLEM AND ITS SETTING

This chapter presents the introduction, statement of the problem, theoretical and
conceptual framework, significant of the study, scope and limitation and definition of
terms.

Introduction

The Internet has been generating consumer empowerment for over a decade.
Brick-and-mortar stores are slowly but surely closing down because of the rise of e-
commerce. Compared with physical stores, online businesses offer convenience to
customers. Customers can just sit at their home, place their orders, pay via credit card,
and wait until the goods are delivered to their home. E-commerce in Indonesia is
growing fast due to the growth of internet penetration. In March 2017, internet
penetration reached slightly over 50% with 104.96 million internet users (Pires et al.,
2006 and Quora, 2017).

In the early years of online retailing, having an online presence and low prices
were believed to be key drivers of success. More recently, electronic service quality has
become essential as an online marketing strategy. Online stores provide higher service
quality to create online customer loyalty, improve customer satisfaction, and keep a
lasting competitive advantage. According to the literature review, service quality is an
important instrument of developing a competitive advantage in e-business. It is one of
the most critical factors for maintaining long-term relationships with customers, building
customer loyalty, and encouraging repeat purchases. Therefore, service quality has
become a significant factor in determining the success or failure of an online business
by influencing online customer shopping experiences and has a greatly effects both
online customer satisfaction and customer loyalty. However, most past studies focused
on the relationship between e-service quality, e-satisfaction and online purchase
intentions. No empirical studies have explored the relationship between e-service
quality and online repurchase intentions. In other words, this research investigated the
potential for future online purchases by the customers significantly contributing to the
research knowledge base. The purpose of this study was to explore and analyze the
effect of e-service quality on customer intention to repurchase online ( Liu 2012).

Past years have witnessed widespread if internet network and it became possible
for direct interaction from anywhere and anytime at low cost, global market transformed
towards concrete market to market. cognitive explosion was the reason for many
websites and online services, it became necessary attention to electronic service quality
in the light of global competitiveness so stay for the best, e-service quality make buy
and sell through website easier, and deliver the services and products with high
efficiency, and is also the navigation efficiency, and increase the size of the data and
information provided to the customer. Electronic service quality concept is still new and
controversial among in the field of marketing services for the difficulty in measuring the
quality of service, because they are things that are difficult for consumer to evaluate
compared to goods, prior to 1985, there were only a limited number of studies on the
quality of service concepts and its dimensions without address and evaluate methods of
measurement, where attributed the first attempt to measure the quality of service to
Parasuraman and others, regarding the electronic service quality, e-marketing literature
lacked clear concepts (AlHawary and Toahir, 2012).

Online shopping is the act of buying a product or service through any e-stores
with the help of any website or app. Tarhini et al. (2021) stated that shopping through
online channels is actively progressing due to the opportunity to save time and effort.
Furthermore, online shopping varies from direct e-store and indirect e-store about their
perception against the actual experience. Developing countries still face various
conflicts and issues while promoting and utilizing e-commerce to the maximum
compared with the developed countries (Rossolov et al., 2021). In the developing
countries, the difference between the perception and actual experience of the
consumers varies when buying from indirect e-store compared to the direct e-store. On
the contrary, as the world has been suffering from the COVID-19 pandemic, it has
brought drastic changes globally in many sectors, business being one of them.
Statement of the problem

This study aims to examine the impact of service quality on costumer's satisfaction of
Hobby Shoppers Online Business in General Santos City.

Specifically, it will answer the following questions

1. What are the levels of costumer's satisfaction to Hobby Shoppers Online

Business?

2. What is the service quality that the Hobby Shoppers Online Business provides
to the costumers want?

3. What is the service quality impact costumer's satisfaction that provides Hobby
Shoppers Online Business in this generation?

Conceptual Framework
This study examines the impact of service quality on costumer's satisfaction of
Hobby Shoppers Online Business in General Santos City. Costumers satisfaction taken
as dependent and service quality of Hobby Shoppers Online Business as independent
variable.

Costumers satisfaction Service quality of Hobby

Shoppers Online Business
(Independent Variables)
(Dependent Variables)

Figure 1. Conceptual Framework

Significance of the study

By nature, and purpose of this study, the results or findings of the study will bear
significant contributions to the following persons:

To the Readers. To open the reader’s awareness and initiatives the impact of
service quality on costumer's satisfaction to Hobby Shoppers Online Business in
General Santos City.

To the Workers. To help the person that what is online business all about and
how it works in the business industry.

To the Companies. To provide data to the company that the online business is
new kind of income of the society specially in internet industry.

To the Researchers. To serve as a way for other researchers to contribute significantly

to the development of our knowledge to possess these features of the work and to
improve the reader's understanding of how to interpret the reader about the topic of the
impact of service quality on costumer's satisfaction of Hobby Shoppers Online Business
in General Santos City.

Scope

This study aims to know the the impact of service quality on costumer's
satisfaction to Hobby Shoppers Online Business in General Santos City. The
respondents of the study will be the costumers of the Hobby Shoppers Online Business.
There are 40 to 60 customers who are buying their products every week. The study will
be located at Black 36, Lot 16 Tanghal Country Homes Purok San Vicente Brgy, San
isidro General Santos City.

Limitation

This study is limited only in the identification of the impact of service quality on
costumer's satisfaction of Hobby Shoppers Online Business in General Santos City.
Definition of Terms

These are the following unfamiliar terms that are defined conceptually and
operationally by the researchers to further understand the research.

Respondents. Conceptually defined as the person who is asked for certain oral or
written information during a survey. (Business Dictionary,2020)

Service. Conceptually defined as the a government system or private organization that

is responsible for a particular type of activity, or for providing a particular thing
that people need. (Business Dictionary,2020)

Satisfaction. Conceptually defined as the fulfillment of one's wishes, expectations, or

needs, or the pleasure derived from this.

Online shopping. Conceptually defined  as a form of electronic commerce which

allows consumers to directly buy goods or services from a seller over the Internet using
a web browser or a mobile app. (Wikipedia, 2013)

Internet. Conceptually defined as a global computer network providing a variety of

information and communication facilities, consisting of interconnected networks using
standardized communication protocols. (Dictionairy, 2020)
 CHAPTERII

REVIEW OF RELATED LITERATURE

This chapter provided the related literature and studies that gives deeper understanding
what the study is all about.

To facilitate service processes and management effectiveness,

many online businesses encourage new consumers to provide personal information or
preferences to enable the provision of services tailored to consumers' specific needs.
However, personal information disclosure processes for consumers have raised privacy
concerns and privacy risk perceptions. Because personal data security is a major
concern for consumers during online activities, information privacy has become a major
challenge for online businesses in terms of collecting and efficiently utilizing data.
Perceived privacy risk is a key factor discouraging consumers from disclosing
information and one of the most negative factors in e-tailing (Wang, 2019).

Along with the development of the business world, websites in the form of e-
commerce are already a necessity of a business to increase trading activities and
marketing more efficiently, where the use of ecommerce will facilitate promotion,
transactions, cost reduction and speed up the transaction process. The Internet and e-
commerce have opened up exciting new opportunities for supply and demand for
agricultural commodities in developing countries. Actors in various fields, especially in
industrial and agricultural companies from these countries, have used the Internet and
electronic platforms in multiple forms. The cycle of goods and services has a short life
cycle, no longer talking the year even measured by months, days, or even hours.
Consumers want quality, cheap, easy to get, fast delivery, and excellent after-sales, so
a website is created to speed up the sales process. (Warlina, L; Siddiq, F F; Valentina,
T Vlog. 1402, Iss 6, Dec 2019).

Online marketing is a good opportunity for business promotion. Today, many

entrepreneurs want to promote their goods online, because everyone is increasingly
digital and internet users are increasing day by day. Online marketing is one of the
industries that is growing very rapidly in this era. For beginners, online marketing is a
big opportunity because development in this field is faster than in other fields. Marketing
is the process of planning and implementing conception, pricing, promotion, and
distribution of ideas, goods, and services to create exchanges to satisfy the needs of
customers and companies at the same time also explained that sales are the company's
main activity in generating income, for large and small companies. Sales are the
ultimate goal of marketing activities because in this section there are prices, negotiation
and acceptance agreements, as well as agreements on payment methods agreed upon
by both parties, to reach the point of satisfaction. (Yunanto and Paizal
Vol. 662, Iss. 3, Nov 2019)

Some people have used information technology to be able to see opportunities

and create direct information that makes online businesses grow. Because with this
technology, we can inform and convey information about online business. Besides
technology, the role of the internet is also important as a medium for doing business.
Explained that the more widespread use of the internet, the internet is used as a global
communication medium. Skills in using the internet become an important asset in
society, information that starts from a brief history of information technology has
undergone changes and has increased demands on people who use it. (Wulandari, A
R; Purfini, A P Vol. 662, Iss. 3, Nov 2019)

Social media is currently being popular among various ages and becoming a
Media marketing business that is currently being taken up by entrepreneurs around the
world. In online business, social media should be able to attract potential buyers '
attention so they can buy products sold and provided in the business. If used properly,
the use of social media can be used for business. Social Media is a platform that is
essentially used to communicate between organizations, communities, or individuals.
Therefore, many companies want to use social media as a medium to market their
products. Paul A. Tess explained in her research that social media has a very important
role as it can be used as a source of information for buyers. Whereas Stephanie et al.
explained that social media is known to people as a component of marketing strategies
and marketing goals. Before social media is used as a marketing medium,
entrepreneurs must consider that funding in marketing must be detailed and minimalistic
which is difficult. Now with social media, business people can minimize marketing costs
and facilitate detailing.( Soegoto and Huda,  Vol. 662, Iss. 3, Nov 2019).

According to Khristianto, Kertahadi and Suyadi (2012), customer satisfaction is

commonly viewed as a result of comparison between the consumption expectation and
experience; and customer satisfaction is achieved when the final deliverable (i.e.,
experience) meets or exceeds a customer's expectation. Satisfaction and loyalty are the
key elements that determine the success of market concept implementation (Khristianto
et al., 2012). Satisfied customers are most likely to have the intention to repurchase if
the service provider reached or exceeded their expectation (Alam & Yasin, 2010).
Identifying the variables of customer satisfaction is significant as it acts as a
benchmark of the business performance, and it also serves as guidelines for future
improvement (Alam & Yasin, 2010). Guo et al. (2012) have identified eight
determinants of customers' satisfaction, which are website design, security, information
quality, payment method, e-service quality, product quality, products variety and
delivery services. On the other hand, Mustafa (2011) presents user interface quality,
information quality, perceived quality and perceived privacy for his framework. For the
purpose of this study, the effects of website design, security, e-service quality and
information quality on customer satisfaction are examined. Subsequently, the
influence of customer satisfaction on e-loyalty in online shopping environment is also
tested.

Many organizations are resorting to virtual online retailing platforms due to its
exponential growth, futuristic potential and global-reach capability. Convenience, cost-
effectiveness and the speed offered by online shopping suites most agile businesses
operating in dynamic consumers markets. It is acknowledged that consumers’ shopping
habits have changed and their Internet usage rate has increased especially with the
advances in virtual channelling. The Internet usage has increased due to the
advancement of technology and the dynamics of virtual communications, coupled with
the pervasive knowledge of the consumer. Therefore, understanding online consumers
is important in today’s economy. It is also important to understand buyer motivation and
the satisfaction of online customers after making a purchase. (Dubihlela, Jobo, Chauke
and Difference; Vol. 13, Iss. 3, 2016)

E-commerce growth has grown exponentially in recent years. An e-commerce

transaction starts when the seller advertises products on a website, and customers

show acceptance, evaluate the products’ features, prices, and delivery options, buy

products of interest, and then check out (Ribadu & Rahman, 2019). Tailoring these

products to specific markets and targeted customer groups increases online retail sales

volumes and reduces the costs for updated information that customers access, showing

the important role that e-commerce plays in determining how effective online retailers

can leverage innovative technologies to deliver customer satisfaction value (Gupta et

al., 2020).

Technology has developed rapidly over the past decade and has changed
consumer behaviour in exploiting opportunities. Because internet users have spread
rapidly, consumers are shifting from passive consumers to being active and informed.
Electronic media, such as online discussion forums, electronic bulletin board systems,
and newsgroups, are essential sources of information influences that facilitate
information exchange among consumers. Web-based technology has created many
opportunities for electronic word-of-mouth communication with the help of the internet;
consumers can find much information they need about goods and services provided by
other consumers or to share their opinions and experiences using goods and services
with many other consumers. Active consumers trust online reviews posted by unknown
consumers more than they believe in traditional media, just as they listen to personal
recommendations from friends or family.(Dwisanty, R and Shiam, S .
Vol. 662, Iss. 3, Nov 2019).

According to Delone, William H., and Ephraim R. Mclean, Information technology

and the Internet have a dramatic effect on business operations. Companies make
significant investments in e-commerce applications, but it is challenging to evaluate the
success of their e-commerce systems. The Information Systems Success Model can be
adapted to the challenges of measuring the new e-commerce world.

The ascendance of neoliberal ideology and the concomitant shifts in education

and labor market policies have placed universities under increasing pressure to produce
employable graduates (Bridgstock 2009; Giroux 2010). The focus on employability has
coincided with a period of rapid growth in both business school enrolments and
business degree granting colleges and universities (Pfeffer and Fong 2002). This
success has created a number of challenges for business schools. Inevitably, larger
class sizes have led to reduced levels of interaction and transmissive teaching and
assessment approaches that favor knowledge acquisition over the teaching of
employability skills (Arias and Walker 2004).
 CHAPTER III

METHODOLOGY

This chapter includes method of research used, research locale data gathering
instruments, data gathering procedure, sampling technique, statistical instrument and
respondent of the study.

Method of Research Used

The correlation method of research will be used for this study. The purpose of
this study is to contain a precise profile data of the people, event or situation. Two types
of data we gather for this research. These include primary and secondary data. The
primary data we deliver from the questionnaire the respondents provide during the
survey and interview process moreover, the secondary data we acquire form publish
reports and illustrate that we relate costumers satisfaction questionnaires. These
includes are both quantitative and quantitative approach of research with use of survey
questionnaire and interview.

For these reasons the research chose a descriptive research methodology and
design a questionnaire survey tool interview and library research to know the impact of
service quality on costumer's satisfaction of Hobby Shoppers Online Business in
General Santos City.

Research Locale

The researchers conduct their study the impact of service quality on costumer's
satisfaction of Hobby Shoppers Online Business in General Santos City. The researcher
chooses Hobby Shoppers Online Business as their research locale because the
researchers want to know what the impact of service quality on costumer's satisfaction
of Hobby Shoppers Online Business.
Data Gathering Procedure

Figure 1.3 Data Gathering Procedure

Step 1
Preparation of intention letter for the business and survey questionnaires

Step 2
Approval of intention sector and survey questionnaire by the researcher adviser

Step 3
Asking of intention to the company through sending approval letter

Step 4
Dissemination of survey questionnaires to the respondents

Step 5
Collect the survey questionnaires answered by the respondents

Step 6
Tabulate the result of the answers from the answered survey questionnaires

Step 7
Interpretation, conclusion and recommendation of findings
Sampling Technique

This study will use purposive sampling is a form of non – probability sampling in
which researchers rely on the own judgment when choosing member of the population
to participate in their study.

Respondents of the Study

This study uses purposive respondents, wherein the researcher chose

respondents in the company who best meet the purpose of the study.

Research Instrument

The instrument use in this study was survey questionnaire made by the
researchers as an obtaining concrete answers for the study interpretation of data.

It consists of two parts. Part I used the percentage and frequency distribution in
order to determine the costumer's satisfaction of the respondents and Part II use the
weighted arithmetic mean to determine the service quality.

Data Gathering Instrument

The researchers use qualitative and quantitative approach. The study uses
combination of book-based and internet-based questionnaire to gather data needed for
the study which is the impact of service quality on costumer's satisfaction of Hobby
Shoppers Online Business in General Santos City.

The questionnaires are composed of two main sections; survey questionnaire

and survey proper. The costumer's satisfaction that to determine how the costumer are
satisfy to the products. The survey questionnaire discussed if what are the impact of
service quality on costumer's satisfaction of Hobby Shoppers Online Business in terms
of service quality that the Hobby Shoppers Online Business in General Santos City.
Questionnaire: Quantitative Approach

It is main instrument for collection for data in survey research. Basically, it is a set
of standardized questions, often called terms, which follow a fixed scheme to collect
individual data about one or more specific topics.

Statistical Treatment

In treating the data gathered, the researchers use the weighted mean and the
frequency for the percentage.

Percentage is also utilized to determine the distribution of every subcategory of

the given descriptive data.

Weighted mean for the sub-problem the responses were tallied and computed
using the weighted mean to determine the impact of service quality on costumer's
satisfaction of Hobby Shoppers Online Business in General Santos City.

The table below shows the legend in interpreting the result of weighted mean for
each problem.

Formula:

WM=Σfx
N

Where

WM= Weighted mean

Σfx= summation of the product of the frequency and x

n= total number of respondents

The table showed the legend of the resulted weighted mean and its verbal interpretation

Legend Weighted Mean Verbal Description

5 4.21 – 5.00 Strongly Agree

4 3.41- 4.20 Agree

3 2.61- 3.40 Neither Agree nor Disagree

2 1.81- 2.60 Disagree

1 1.01- 1.80 Strongly Disagree

The questionnaire will use Likert’s scale to determine effectiveness of reward system to
the employees. The five-point rating scale will be used in rating the responses of the
respondents; thus, Strongly Agree 5points, agree 4points, Neither Agree Nor Disagree
3points and Disagree 2points and Strongly Disagree 1point.

Frequency Distribution is also using to construct table that provides view of

characteristics of the dataset. To describes the mean, median and its skewness.

Pearson correlation is used to measure the strength of the two variables to

determine the relationship that provides greater impact to the study associated by a
linear data and the variables are normally distributed.
 SURVEY QUESTIONAIRE

Direction: Kindly checked the box that will correspond to your answer as to the impact
of service quality on costumer's satisfaction of Hobby Shoppers Online Business in
General Santos City.

Part I. What are the levels of costumer's satisfaction of Hobby Shoppers Online
Business?

5 4 3 2 1
Q1. Have a physical store that can approach

Q2. Good quality product and services to the

costumers.
Q3. Affordable price and suitable to the costumers.

Q4. All products good and brand new.

Q5. Trustable and have a good relationship to the

costumers.

Part II. What is the service quality that the Hobby Shoppers Online Business provides to
the costumers want?

5 4 3 2 1
Q1. Patient to the costumers wants.

Q2. Build a good relationship to costumers.

Q3. Discounts and freebies offer to all costumer.

Q4. Product on time delivered to the costumers

Q5. Secure the costumers identity.

Part III. What is the service quality impact costumer's satisfaction that provides Hobby
Shoppers Online Business in this generation?

5 4 3 2 1
Q1. Business legitimate in their products and services.

Q2. Product and services are applicable or reliable to the

costumers.
Q3. Approachable in there complains.

Q4. Positive influence to the new generation.

Q5. Accept suggestion to the product and services.