CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

This chapter includes the introduction, statement of the problem, significance of the study, and
scope and delimitation.

Introduction

Service quality has become a significant research subject in the previous years due to its
apparent relationship to customer satisfaction. In the present competitive retail supermarket, the
conveyance of high service quality has for quite some time been treated as the basic retailing
technique.
It has been defined that “Service” appraised to the fundamental characteristics of the particular
service while “quality” was defined by making use of primarily a user-based approach. Service
quality is acknowledged by businesses as an essential strategy for success once they improve
their service quality and it is a survival in today’s competitive economic environment.
According to Wisniewski, service quality is an idea that was aroused significant interest and
discussion in the research literate due to the distinct “definitions” with respect to what is implied
by service quality. One that is normally utilized characteristics service quality as the extent to
which an assistance lives up to customers’ needs or desires.

According to Venetis & Ghauri, (2002); Wantara, (2015), service quality is considered to be a
key factor in service sector performance, that is, profitability. Service quality not only attracts
new customers away from competitive firms but also prompt customers’ repurchase intentions
(Venetis & Ghauri, 2002; Wantara, 2015).

Mauri, et al. (2013) define service quality as “a multidimensional concept, assessed and
perceived by consumers, according to a set of essential parts, grouped in five categories, namely:
tangibility, reliability, responsiveness, assurance and empathy”.
According to Rauch, et al., (2015), indicate that the concept of service quality was initially used
as part of a framework of marketing strategies, by making customers the focal point. This
strategy became popular after a growing concern with quality assurance.

The retail stores are a retailer which basically is a customer oriented, broad way to deal with
creating and actualizing an advertising system and marketing strategy. It gives rules which must
be followed by all retailers regardless of their size, channel plan and mode of selling.

Today’s retail environment is characterized by intensifying competition as a consequence of

new technologies. The disruptive change has come to the supermarket sector. Technological
innovations online and in-store, as well as shifting consumer expectations, are changing the way
retailers operate. The customers or consumers is the most important source of a business,
keeping up with the latest trends would help attract new customers. It is said that trends are very
important in achieving development, stability, and growth for every business. Entrepreneurs face
various challenges in pursuing growth and stability, which could lead to instability in its
structure, composition, and relationships.

Some of the trends nowadays is the ‘M’ Factor or mobile phones, customer will contact you
on social media, according to Thomas Husson, Vice President, and Principal Analyst at Forrester
Research, mobile is becoming not only the new digital hub, but also the bridge to the physical
world. That’s why mobile will affect more than just your digital operations - it will transform
your entire business. Also, Mobile apps are being used by retailers to educate consumers and
send them personalized in-store messages that would help them for a better experience. Machine
learning is another trend, it can change the whole customer experience according to Steve Jobs,
you’ve got to start with the customer experience and work back toward the technology-not the
other way around. Another trend is the digital marketing, with customers glued to internet-
enabled devices, digital marketing becomes more important than ever for retailers connecting
with shoppers. Whether it's digital coupons, virtual storytelling, emails, or increased ads,
companies are upping their digital marketing game.

One of the local trends is the online grocery retailing, grocery retailers tested consumers’
response to internet retailing by partnering established e-commerce platforms. The popularity of
online grocery retailing grew so rapidly that not only grocery retailers started to launch their own
e-commerce sites but third-party marketplaces such as Lazada and Shopee also introduced a
dedicated platform for online grocery sales. Delivery on demand is also a trend in some
supermarkets, Robinsons Supermarket is one of the early adopters of food delivery, and they
deliver the goods you bought to your doorsteps.

The poor-quality service of retail supermarket can cause customers dissatisfaction. The
customer service satisfaction depends on the quality of service customers receive and how they
meet their expectations. Some retail supermarket has an impolite employee who are lack of
understanding about customer quality service.

The purpose of this study is to determine whether the service quality of retail supermarkets
influence the customers’ decision making, know if service quality of retail supermarkets meet the
customers’ satisfaction, and help them provide a developing and improving service quality.

Service quality is one of the important factors in a retail store since service is one of the factor
that consumers consider in buying products or things that they use. The findings of the study will
help the retail stores or supermarkets in which they will be able to know how service quality is
important to a consumer to satisfy their needs and wants or their expectations. Also, to know on
how they can improve their service quality and how they will meet the expectation and
satisfaction of the customers. For the customers to assess or evaluate the best service that a retail
store or supermarket can give. The findings may also help the future entrepreneurs for a better
service quality that they can give in order to succeed in the business world. The result of the
study will be the basis for other researchers for their study about service quality.

Statement of the Problem

Specifically, the study seeks to answer the following questions

1. How may the profile of the respondents/customers be described in terms of:

1.1 Age;
1.2 Gender;
1.3 Educational attainment;
1.4 Monthly income; and
1.5 Occupation?
 2. How may the service quality of the supermarkets be measured in terms of:
2.1 Physical aspects;
2.2 Reliability;
2.3 Personal interaction; and
2.4 Policies?
3. Is there a significant difference between the expectation and perception scores of the
assessment done by the respondents on the service quality dimensions?
4. What are the problems encountered in the retail supermarkets in providing services to
satisfy their customers?
5. What management strategies must be established based on the results of the study?

Significance of the Study

The two core concepts of contemporary marketing and practice in service industries are
the service quality and customer satisfaction. As Shemwell et al. have observed, delivering high-
quality service that results in satisfied customers is the key to sustainable competitive advantage.
Overall, this study will have significance on the following:

Management. For the store management to assess the proper service quality and to bring up
customers satisfaction. For them to evaluate if the services that they provided are enough to
give the satisfaction and loyalty of their customers. The results of the study will be the basis
for the further enhancement of the services and improve their service strategies.

Customers. Through this study customers will be able to evaluate or assess the service
quality of the different retail store or supermarkets that is being assess in this study. They
will be able to know which supermarket store gives more customer’s satisfaction through the
service that was given to them or what is the best service a retail stores or supermarkets can
give to their customers. And for them to be able to learn the rights that they must have as a
consumer and the service that can satisfy their expectations.

Supermarkets or Retail Stores. Through this study the supermarket stores or retail stores
may be able to pinpoint or focus on what factor commonly affect the quality of service that is
 being provided in their firm that will help them to boost their sales and gain loyal customers.
And for them to be able to have a sustainable competitive advantage to their competitors.

Future Entrepreneur. Through this study they will be able to learn that service quality is
important to a business. They will have an idea on how they can give the best service for
their customer for them to be able to be profitable at the very beginning or for them to be
able to succeed with their business. And this can also help them to learn techniques or
strategies that they may use. This will also help them to come up with new ideas on how they
can improve their service quality and how they will meet the expectation and satisfaction of
their customers.

Other researchers. This will help them as a reference in their thesis or study which tackles
the service quality and consumer’s expectation or needs that a service quality can gratify.
This will help them for additional information that they may be useful for their study and
they will be able to learn to gain knowledge about service quality and customers’ satisfaction
or needs.

Scope and Delimitation of the Study

The focus of the study is to prove that through the service quality of retail supermarket, customer
can meet satisfaction and loyalty.

The researchers will conduct a survey in five (5) selected retail supermarket in Malolos, Bulacan,
namely Puregold, Robinsons Supermarket, South Supermarket, SaveMore Market, and Shop
Wise. The respondents of the study will compose of 25 males and 25 females for every retail
supermarket, for a total of 250 respondents who actively buy their groceries in a retail
supermarket.

The questionnaire will be divided into two parts, the first part is about the profile of the
respondents and second part will discuss the factors affecting the service quality of the retail
supermarkets in terms of Physical aspects, Reliability, Personal interaction and Policies.
 CHAPTER 2

THEORETRICAL FRAMEWORK

This chapter reviews literature and other studies relevant to the present study. It covers the
theories and studies postulated by various researchers in different fields and discipline. This will
also enrich the study and would serve as basis for the researcher’s approach to investigation. The
topics presented in this chapter are: Service quality and its dimensions, customers’ satisfaction
and expectation.

RELATED THEORIES

This part of the chapter outlines some relevant theories, literature, and studies that apply
to the present study. It serves as a medium to have a better understanding about service quality
both from the perspective of the customer and company.
The present study was conceptualize based on service quality and customers’ satisfaction or
customers’ expectation with the actual performance for a certain service.

Service Quality Theory. Service Quality is delivering of service and customer expectation in an
overall manner. As stated by Anantharaman (2002), through good service quality a service
conveyance organizations may secure successful competitive advantage above their competitors.
Apart from this Parasuraman et al., (1988) introduced the SERVQUAL model and its five (5)
dimensions—reliability, responsiveness, assurance, empathy, and tangibles. And stated that to
evaluate customer perceptions of service quality in service and retail businesses, a multi-item
scale or SERVQUAL was established. According to Bolton and Drew (1991); Babakus and
Boller (1982), SERVQUAL scale measures the customers’ expectation towards a service and it
has been applied in various service sectors. According to this theory, SERVQUAL model
measures the service quality of a supermarket. It is a model that can be used by different retail
services organization like supermarket wherein they will be able to measure how good or bad is
the services that they have been providing to their customers. Also this model will help them to
know if they have meet their customers’ satisfaction through the services that they have been
providing. Furthermore, this study was conceptualized with the Service Quality Theory in which
the study focuses on the service quality that the different retail supermarkets have been offering
to its customers.

Theory of Consumer Satisfaction . According to this theory, Confirmation and Disconfirmation

Paradigm is the technical based wherein the consumers compare their prior experiences of
performance to the actual performance. A number of studies have been conducted about
clarifying how customers' expectation and preconceptions of performance affects the succeeding
level of customer satisfaction and dissatisfaction with actual performance. This theory simply
means that to be able to succeed in meeting customers’ satisfaction, retail supermarkets should
be able to consider expectation and outcome performance since it is two important variable that
can influence the judgment of customers to a certain service. Thus, this theory is relevant to the
current study since it discusses or it has a concept of how a consumer may satisfy their needs and
wants. That consumers’ behavior in buying a service will have an influence with their
satisfaction. Moreover, this theory can help the study to assess whether a retail supermarket
meets the expectation of their customers or if they were able to satisfy them with the service
quality that they give to them. Also with this theory supermarket retailers will know on how they
will be able to meet the satisfaction of their customer.

Gaps Model. According to Aswad (2012), gaps model or also known as service quality model
established to distinguish problems in service quality, which explained quality service through
customer satisfaction. To discern problems and mistakes through acknowledging gaps in the
model and trying to prevent them is the idea of this model. A. Parasuraman, V. Zeithaml, and L.
Berry first posit the model in 1985, it was stated that when pursuing to meet customer
satisfaction the five major satisfaction gaps must be address by the organization as what the
model shows. First, Gap 1: Knowledge Gap problem will arise when the organization doesn’t
exactly know what their customer expect to them. Second, Gap 2: The Policy Gap wherein there
will be a problem if the organization will have a lack on improving service standards or lack of
customer service standard. Third, Gap 3: The Delivery Gap is the gap between the service
delivery policies and standards and the actual delivery of the service. The problem will arise with
this gap when a demand is not been supplied and when the employees or personnel doesn’t have
enough knowledge with what the customer asked for. Forth, Gap 4: The Communication Gap is
the gap between what was promised for the customer through advertising and what they actually
get or delivered. This gap will cause dissatisfaction to customer when they will not be able to
receive what was promised to them versus the actual service or product they get. Lastly, Gap 5:
The Customer Gap wherein it is the difference between customer expectations and customer
perceptions. A problem will arise when the customer misinterpret the service provided or the
service quality itself. This theory states that there are (5) five gaps that a retail supermarket must
consider in obtaining their service quality. Thus, the gaps that have mention should consider
since it will cause dissatisfaction to their customers. Furthermore, this theory is related to the
study since it tackles the gaps in service quality that a retail supermarket must consider.

The Extension of Gap Model. Aswad (2012), proposed that to distinguish the gaps between the
customer’s expectation and the services provided by distinct level of services as well as to depart
the gap and develop the customer services are the goal of the model. However, nowadays in a
higher market competition, customers expect high quality product along with high quality
services. Meeting customers’ expectations are hard to sustain in a competitive market since
producers don’t always provide a good quality customer services. Thus Aswad (2012) come up
to additional gaps and bridges with: Gap 6 which refers relationship between past experience and
customer needs. It was stated that a direct connection can be found in past experiences of the
customer and their basic need. Next is Gap 7 which is between word of mouth communication
and past experiences. This gaps explains that through customer past experiences they will be able
to know ne focus point to the services that was given, that through customer past experience they
will be able to gain new customers. And lastly Gap 8 which is between interaction among the
customer and word of mouth communications. This gap explains that the customers’ needs
should be narrow with the uncertain customers’ expectation. Moreover, this theory gives addition
to the past experiences of the customers that will also be an indicator for customers’ satisfaction
or dissatisfaction. Thus, this theory is related to the study since it gives emphasis on the past
experiences of the customers’ that a retail supermarket must consider in measuring their service
quality.

RELATED LITERATURE
 Service quality is defined as an area of study that has developed to define and describe how
services can be delivered in such a manner to satisfy the recipient (American Marketing
Association, 2012). The concept of Retail Service Quality is viewed as one of the most
interesting and most discussed concepts in the retail service marketing paradigm (Kajenthiran
2018). In the highly competitive business environment, the service quality has become a major
determinant for the supermarkets in order for them to create customer satisfaction which further
help them in gaining customers loyalty (Kobbekaduwa et al. 2019).

It also become a key to a sustainable competitive advantage for mainly service dominant
organizations as well as the grocery retail sector (Chanaka, Wijeratne, and Achchuthan 2014).
The aspects of service are the most desired by the consumers of an emerging market context,
they also concluded that the Physical Aspects and Personal Interaction, has a direct relationship
with Customer Satisfaction (Beneke, Hayworth, Hobson and Mia 2012). By addressing the
customers’ quality assessments for physical aspects, personal interactions, reliability and policies
dimensions in supermarkets they can analyze its impact for satisfaction and loyalty. Customer
satisfaction partially mediates the relationship between service quality and customer loyalty
(Amorim and Saghezchi 2014).

Supermarkets should target the customers marketing attention that may help them in their
services, satisfying their customers, and also retaining and attracting more long-term loyal
customers in the increasingly competitive supermarket sector (Slack and Singh 2020). It also
reveals that six dimension of service quality capture the content of quality in the Greek context.
That every service offered by a retail unit have a positive impact and it was significant for them
in building customer satisfaction (Karakitsiou, and Mavrommati 2018).

As a result, retail service quality has a positive correlation with customer satisfaction. It means
that, customer satisfaction in the retail supermarket is determined and influenced by the retail
service quality. Therefore, service quality is viewed as a strategic formula in the marketing
practices among the retail outlets to enhance their customer satisfaction in both developed and
developing countries (Chanaka, Wijeratne, and Achchuthan 2014).

RELATED STUDIES
Service Quality. Dr.Ackah and Agbiyo (2014) conducted the study to determine the relationship
between service quality and customer satisfaction on customer loyalty towards the services
provided by the All needs supermarket, at Takoradi.

Manavi and Malini (2017) conducted the study to show the impact of five retail service quality
dimensions on customers perception of service quality of supermarket which are the physical
aspects, reliability, personal interaction, problem solving and policy.

N. Sorna Kumari (2015) the purpose of their study is to determine the factors on the store loyalty
of retail supermarket stores such as the store image, store environment, store convenience, and
service quality.

Rashid and Rokade (2019) conducted the study to measure the dimensions of Retail Service
Quality that has an impact on customer satisfaction and customer loyalty in organized Food and
Grocery Retail shoppers of Bhopal City in Central India.

The related studies reviewed, revealed that the service quality of retail supermarket is important
to assessed the customers loyalty and expectation.

CONCEPTUAL FRAMEWORK
 Figure 1 illustrates the conceptualized model of the study. The Input-Process-Output will be used
in the study. The inputs are the demographic profile of customers and dimensions of service
quality in retail supermarket, the process will be customer survey, observation, service quality
and customer preference, evaluation and statistical treatment & interrelation, while the output of
the study is the evaluation of the service quality of retail supermarkets in the City of Malolos and
proposed management strategies to develop and improve the retail supermarket’s service quality.

INPUT
PROCESS OUTPUT
DEMOGRAPHIC PROFILE
OF CUSTOMERS
1. Age 1. Customer Survey 1. Evaluation of the
2. Gender 2. Observation service quality of
3. Service quality and retail supermarkets
3. Educational Attainment Customer Preference in the city of
4. Monthly Income 4. Evaluation Malolos.
5. Statistical Treatment & 2. Proposed
5. Occupation Interrelation Management
DIMENSIONS OF strategies
SERVICE QUALITY IN
RETAIL SUPERMARKET
1. Physical Appearance
2. Reliability
3. Personal Interaction
4. Policies

Figure 1. Conceptual Framework

ASSUMPTION

There is a significant influence between service quality and customer satisfaction.

DEFINITION OF VARIABLES:
Age - The length of time that a person has lived or a thing has existed.

Educational Attainment - The highest grade completed within the most advanced level
attended in the educational system of the country where the education was received.

Gender – Either of the two sexes (male and female), especially when considered with reference
to social and cultural differences rather than biological ones.

Monthly Income – The amount of money you earn in one month.

Occupation – A job or profession.

Personal Interaction – Relating to the private aspect of a person’s life.

Physical Aspect - Elements that are visible to the eye.

Policies – A course or principle of action adopted or proposed by an organization or individual

Reliability – Quality of being trustworthy or of performing consistently well.

Service quality – assessment of how well a delivered service conforms to the client’s
expectations.

Supermarket - A large self-service store selling foods and household goods.

Chapter 3

Methodology of the Study

 This chapter explains the research methodology apply in this study to test the hypothesis

formulated. Population, sample and the sampling approach was described. An overview of the

description of the relevant statistical techniques were used in the research for the collection and

analysis of data is also provided. The instruments used are described and their relevance were

discussed.

Methods and Techniques of the Study

This study utilize a Quantitative research

Population and Sample of the Study

Research Instruments
Data Collection Procedure

Data Processing and Statistical Treatment