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2 AUTHORS:
Velummailum Gobiraj
Nimalathasan Balasundaram
University of Greenwich
University of Jaffna
2 PUBLICATIONS 1 CITATION
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Abstract
Every organization is ready to pay any means to identify and understand the customers and
their needs. It is an effective reaction of the consumers when their desires and expectations
have been either met or exceeded in the course of experiencing the service. In the context of a
retail supermarket, satisfaction could be interpreted as just meeting the expectations of the
customers, not any sort of exceeding of failing short of the expectations. Most of the retailers
try to achieve competitive advantage by taking the responses of the customers beyond the
level of just satisfied towards exceeding their expectations. Therefore, this study attempts
to fill this gap by examining the relationship between customer satisfaction and customer
loyalty in leading super markets in United Kingdom (UK). Operational hypotheses were
formulated. The first hypothesis (H1) is supported by the results, as a positive correlation was
found between the two variables; customer satisfaction and customer loyalty. In addition, the
second hypothesis (H2) is sustained by the results, as a regression was originated between the
two variables; the result reveals that customer satisfaction has great impact on customer
loyalty. The contribution of this study to the literature is that of customer satisfaction and
loyalty outcome not only other sectors but in retail super markets in UK.
Keywords: Customer Satisfaction, Customer Loyalty, Super Markets.
1. Introduction
Every organisation is ready to pay any means to identify and understand the customers and
their needs. It is an effective reaction of the consumers when their desires and expectations
have been either met or exceeded in the course of experiencing the service. In the context of a
retail supermarket, satisfaction could be interpreted as just meeting the expectations of the
customers, not any sort of exceeding of failing short of the expectations. Most of the retailers
try to achieve competitive advantage by taking the responses of the customers beyond the
level of just satisfied towards exceeding their expectations. Customer satisfaction is
expected to be achieved when the value of customer service provided through a service
experience is either meeting or exceeding consumer expectations. If the expectations are not
met, the consumer will be dissatisfied. Another consequence can be that if the satisfaction
scores are very low, the service provider might be susceptible to attacks by the competitors
who are prepared to deliver superior value to the customers.
In the case of profit oriented organisation, there is less customer satisfaction compare to
service sector. However, every organisation in present tough competitive business
environment has to pay more attention on feedback from the customers over their production.
Otherwise, any firm cant earn the profit and their existence might be questionable as well.
Marketing starts with customer (i.e. marketing research to identify the potential market
opportunities) and ends with them (by delivering goods and service after sales) as well.
Customer satisfaction has become a crucial point of differentiation in a retails store, where
consumers make weekly, fortnightly or monthly trips ( to preferred super market) and then
spend more on these trips than other times, especially in countries like ours when competition
in retailing is very fierce. Unfortunately in retail industry, most of the unsatisfied consumers
do not complain, they just go shopping somewhere else. So the lesson for the retailers is that
customer expectations always move upward and it is only the satisfied customers that are
more likely to remain loyal in the long run.
3. Objectives
In line with the issues identified above, the main purpose of the study is to examine the
relationship between customer satisfaction and loyalty of retail supermarkets in UK. In order
to materialize this broad objective, the following sub objectives have been considered.
1. To find out the variables determining customer satisfactions.
2. To focus on the variables determining the loyalty.
3. To identify the impacts of customer satisfaction and loyalty in UK retail sectors.
4. To suggest some measures to enhance the customer satisfaction and customer loyalty
in UK Supermarkets.
companies which invested large amount of energy in their branding had higher level of
customer satisfaction than loyalty
Wong & Sohal (2003) pointed out that service quality was positively associated with
customer loyalty. Keiningham, Cooil, Aksoy &Andreassen (2007) examined different
satisfaction and loyalty metrics (satisfaction; expectations, value etc.)
Customer loyalty with other variables such as quality, service and communication has been
done many researches. But, there are also some researches on loyalty and customer
satisfaction. But, there is no research examining the relationship between customer
satisfaction and loyalty in UK retail groceries super markets.
scale from strongly disagree (-3) to strongly agree (+3) was adopted to identify the variables
of customer satisfaction and loyalty. The study has an idea of pre-test the questionnaire in
order to receive optimal outcomes from the study.
6.5 Reliability and Validity
The reliability value of our surveyed data was 0.883 and 0.897 for variables of customer
satisfaction and loyalty respectively. If we compare our reliability value with the standard
value alpha of 0.7 advocated by Cronbach (1951), a more accurate recommendation
(Nunnally & Bernsteins, 1994) or with the standard value of 0.6 as recommendated by
Bagozzi & Yis (1988). Researchers find that the scales used by us are highly reliable for data
analysis.
Validation procedures involved initial consultation with expert researchers. The experts also
judged the face and content validity of the questionnaires as adequate. Based on their
comments, some contents and words were revised to make the meaning clear. Hence,
researchers satisfied content and construct validity.
6.6 Types of Statistical Techniques
In the present study, we analyze our data by employing factor analysis; correlation and
Regression. For the study, entire analysis is done by personal computer. A well known
statistical package like Statistical Package for Social Sciences (SPSS) 13.0 Version was
used in order to analyze the data.
7. Research Findings
This section presents the findings of the study and is divided into two-sections. Section one
begins with Factor analysis. The final section presents the hypotheses testing.
7.1 Analysis of Measures
An exploratory factor analysis with an orthogonal varimax rotation and a Kaizer- Guttman
criterion of eigen value greater than 1.00 was conducted for the 24-item customer
satisfaction; 29-item customer loyalty. For 24-item customer satisfaction seven components
(or factors) with eigen value greater than 1.00 were extracted. The total variance 71.9 % and
as Hair, Anderson, Tatham and Black (1995) suggest that for social science studies, it is not
uncommon to consider a solution of about 60 percent as satisfactory. However, the general
criterion of eigen value greater than 1.00 may misjudge the most appropriate number of
factors (Gorsuch, 1983), thus the scree plot was carefully examined. The scree plot was also
confined to seven factors. To facilitate easy interpretation, these factors were then rotated
using the varimax criterion for orthogonal rotation. Only statements or items with factor
loadings of 0.50 and above in the rotated factor matrix was considered as significant in
interpreting the factors [Here 2-items (clarity of information; packaging) factor loadings is
less than 0.50, these are ignored for analysis). Table-1 shows the factor matrix indicating the
factor loadings and communality estimates (h2) of every variable on these seven factors.
Factor-1(F1) to Factor-2(F2) comprised of seven; three; three; three; two; three and one
items, respectively. By analyzing the items in the factors, some dimensions were identified
and thus, Factor-1 was labeled as Responsiveness and the like.
Table 1: Scale Items, Component Loading and Communality Estimates for SevenFactors of Customer Satisfaction Scale.
Item
F1
F2
Responsiveness
0.880
Ease of finding information 0.795
Understanding your needs 0.771
Professionalism
0.735
Friendly atmosphere
0.640
Service quality
0.616
General Satisfaction
0.569
Repeat Purchase
0.783
Parking facilities
0.720
Usage experience
0.654
Price
First use experience
Quality
Choices of product
Competitiveness of Products
0.502
Ease of contacting the person
Advertising
Convenient location
Written or postal enquires
Problem solving
Environmental friendly
Overall satisfaction of product quality
Eigenvlaue
Percent of Variance
Cumulative Percent
h2
Factor loadings
7.085
29.552
29.552
2.811
11.713
41.234
F3
F4
0.770
0.690
0.504
0.815
0.680
0.667
1.818
7.576
48.810
h2 = Communality Estimates
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1.616
6.733
55.543
F5
F6
F7
0.673
0.678
0.774
0.801
0.753
0.575 0.683
0.706
0.822
0.787
0.841
0.828
0.729
0.767
0.824
0.699
0.702
0.755
0.702
0.735
0.728
0.863
0.786
0.632
0.681
0.579
0.737
0.701 0.623
1.542 1.318 1.071
6.424 5.492 4.463
61.968 67.459 71.922
Similarly, an exploratory factor analysis with principal component analysis was conducted on
customer loyalty. However, the results for both of these scales have shown what Thurstone
(1947) referred to as simple structure in which each of the variables loaded strongly on nine
components, and each component being represented by a number of strongly loading
variables ( Pallant,2005). As illustrated in Table-2, for both scales, all items loaded strongly
on this nine factor, 0.5 and above.
Table-2: Scale Items, Component Loading and Communality Estimates for NineFactors of Customer Loyalty Scale.
Item
F1
Provision of information 0.724
Clarity of information
0.706
Written or postal inquires 0.704
Quality of brand
0.592
Easy access to employees
0.554
Management
Good employees
Problem solving
Public relations
Supermarket relationship
Access of information
Recommendation P & S
Recommendation of supermarket
Repeat purchase
Consistency of the Brand
Sales promotion
Coupons and Premiums
Loyalty schemes
Loyalty card
New brand
Manufacturer brand
Supermarket brand
Innovative
The Value of brand
Satisfaction with brand
Friendly organization
Benchmarking
h2
Factor loadings
F2
0.801
0.722
0.694
0.645
0.544
0.519
F3
F4
F5
F6
F7
F8
F9
0.731
0.726
0.792
0.827
0.741
0.754
0.774
0.762
0.896
0.842
0.714
0.788
0.646
0.743
0.613
0.707
0.811
0.579
0.684
0.776
0.764
0.766
0.823
0.763
0.827
0.730
0.814
0.810
0.780
0.710
0.803
0.616
0.838
0.795
0.825
0.723
0.783
0.624
0.827
0.873
0.826
0.879 0.811
Eigen value
7.928
2.546
Percent of Variance 29.363 9.428
Cumulative Percent 29.363 38.792
h2 = Communality Estimates
Table-2 illustrates the factor matrix indicating the factor loadings and communality estimates
(h2) of every variable on these nine factors. Factor-1(F1) to Factor-2(F2) comprised of five;
five; four; four; three; one; two; one and one items, respectively. By analyzing the items in
the factors, some dimensions were identified and thus, Factor-1 was labeled as Provision of
information and the like.
7.2 Testing of Hypotheses
Correlation analysis was performed to test the strength and direction of the liner relationship
between two sets of variables; customer satisfaction and customer loyalty. Further, the
preliminary analyses were performed to ensure no violation of the assumptions of normality,
linearity and homoscedaticity.
Table-3: Pearson Product- Moment Correlation between Measures of Customer
Satisfaction and Customer loyalty
Total CS
Total CS
Pearson Correlation
0.715**
Sig (2-tailed)
0.000
N
Total OC
Total CL
50
Pearson Correlation
Sig (2-tailed)
50
0.715**
0.000
50
50
As per the results from the table-3, there was a positive correlation between the two variables
[r= 0.715, n=50, P<0.01], with customer satisfaction and customer loyalty. The first
hypothesis, which stated that there is a significant relationship between customer satisfaction
and customer loyalty was thus supported. However, as many authors in this area suggest, the
focus should be directed at the moment of shared variance, rather than at statistical
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significance (Pallant, 2005), the coefficient of determination was calculated for the above two
variables. With a correlation of r=0.715, it can be said that customer satisfaction has helped
explain nearly 51% of the variance ( 0.715x 0.715) in respondents scores on the customer
loyalty.
The second hypothesis was tested following the A enter wise variable selection is used in the
regression analysis and table-4 provides coefficients for predictors of total customer loyalty.
Table -4: Coefficients for predictors of CL
Models
1
Constant
Total Customer Satisfaction
Unstandardized
Coefficients
.553
.682
Std.Effor
.181
.097
Standardized
Coefficients
Beta
.715
3.052
7.008
In the above model, t value for CS is highly significant at 1 percent level. Which means that
with increasing level of CS, will be increased 7.008 levels. Hence hypothesis two is also
accepted.
8. Conclusion
The first hypothesis (H1) is supported by the results, as a positive correlation was found
between the two variables; customer satisfaction and customer loyalty. Thus, the findings are
in line with those of Keiningham et al., (2007) and Grnholdt (2000)
In addition, the second hypothesis (H2) is sustained by the results, as a regression was
originated between the two variables; the result reveals that customer satisfaction has great
impact on customer loyalty.
The contribution of this study to the literature is that of customer satisfaction and loyalty
outcomes not only other sectors but in retail super market in UK.
9. Policy Implications
This study attempts to mention policy implementation for the retail Supermarket to improve
satisfaction of their customers, to earn the loyal customers and to make the loyal customers
into more loyal, i.e. to improve along with the loyalty pyramid. In this context, the following
policy actions may be considered worthwhile.
Customer care through Service quality of the employees
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Sig
.004
.000
Customer care should be improved further by enhancing the service quality to make
dissatisfied customer to satisfied customers; satisfied customers to loyal customers and loyal
customers to more loyal. As these are big super markets, most of employees worried about
the job allotted them.
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