University of Greenwich (UOG)

Bachelor of Arts (Hons) Business Management (Top Up)

ASSIGNMENT / PROJECT COVER SHEET
(to be completed individually by student)

001079516
UOG ID Number

Course Specialization

Finance

BUSI 0011 – DISSERTATION

Subject Code/Name

Assignment Title

Lecturer/Supervisor MS NATALIYA KOZIY

Word count

CHAPTER 1: INTRODUCTION
1.1 Research background
Nowadays, along with the growing society, the needs of human life are also increasingly
advanced. The purchase of human consumption is also becoming more and more
common and gradually becoming normal things to do in life. Therefore, customers not
only want to use high quality products but also want to experience the best service.
When customers' shopping needs reach a limit, they demand to enjoy better service
quality is indispensable. Service quality plays an extremely important role in attracting
and retaining customers. It has a great impact on customer satisfaction and purchase
intent. Knowing that businesses and companies are always concerned about the quality
of their services. Companies regularly survey customer satisfaction to know consumers'
opinions and appreciation about their service and product quality (Frank and Enkawa,
2007). After that, businesses and companies will base on those surveys to improve their
service quality. According to Frank and Enkawa, (2007), upgrades are based on the
survey is seen as an improvement in the competitive position of enterprises and
companies, which can help them improve the quality of service to deliver give customers
better service quality. In the current global economy with the growth in the size of the service
sector, it is distributed according to regional, national and global. Turnover of enterprises
depends heavily on the quality of their services, play an important role in creating customer
satisfaction (Landrum, Prybutok, Zhang and Peak, 2009).
The competition is based on the prices of the products will be easier than the service
(Edvardsson, Johnson, Gustafsson and Strandvik, 2000). They also offer a measure for
companies that they should set up a system to ensure the service activities are aimed at
customer satisfaction. According to the current economic market, making customers satisfied is
the competition between businesses together and more satisfied customers, it will help the
economy grow (Anderson and Fornell, 2000). A point was made by Anderson and Fornell,
(2000) is that providers compete for buyers, but consumers do not struggle for the products.
Therefore, Anderson and Fornell, (2000) have divided customer satisfaction into three main
elements: perceived service quality, perceived value and customer satisfaction. The perceived
service quality has a direct impact on customer satisfaction positively. Thus, if the actual results
of consumers exceeded expectations, consumers will be deemed satisfied if no expectations
exceed result, consumers will be deemed dissatisfied (Szymanski and Henard, 2001). Dagger
and Sweeney, (2007) said that the service suppliers are more focused on the quality of services
because of the fierce competition in this area if they want to achieve a leading position in the
market. Matzler, Wurtele and Renzl, (2006) contended that assuming that perceived quality will
be more than observed costs, afterward client worth will be high; On the other way, then client
quality will be low. In short it is the price-quality ratio. For a high-value product, the satisfaction
will also be higher. For products without extra price arise or prices do not change unexpectedly,
this increases the trust of customers (Matzler Wurtele and Renzl, 2006). Therefore, estimation
about perceived quality is extremely critical. Takala, Bhufhai and Phusavat, (2006) clarified an
alternate essential element in regards fact that client satisfaction: this perceived value affects
not only direct but also indirect influence on customer satisfaction. According to Al-Hawari and
Ward (2006), customer satisfaction influenced greatly from the quality of the product but only in
some sectors.
1.2 Aims and Objectives
In response to the above problem, the researcher has decided to conduct the research on the
topic “Perceived service quality and its impact on customers’ purchasing intentions and
satisfaction in the context of retailing sector” as her project topic. Following, the objectives
which drive the researcher’s motivation are:
• To identify the influential factors affecting service quality
• To measure the impacts of those factors on customers’ purchasing intentions and
satisfaction in the context of retailing sector
• To identify the influences of customer satisfaction on profit and revenue in the
context of retailing sector
• To defined methods that help to determine levels of service quality
• To give some recommendations in order to improve service quality which have effects to
buying behavior of the customers.
Following the above research’s objectives, the research questions to be proposed are listed as
follows:
• What are the influential factors affecting service quality?
• Why do these factors of customer service quality affect to customers’ purchasing
intentions and satisfaction in the context of retailing sector?
• How are customer satisfaction affects the sales of retail businesses?
• What are the methods that help to perceive service quality effectively?
• What are some recommendations in order to improve service quality which have effects
to buying behavior of the customers?
1.3 Justifications of the study
The research project is to demonstrate the importance of service quality in the context of the
retail sector and it also shows that customer satisfaction greatly affects the sales of businesses.
In addition, this project will give some recommendations to improve service quality to enhance
customer satisfaction.

CHAPTER 2: LITERATURE REVIEW

• Service quality in retailing sector and its influential factors

For a long time, many researchers have tried to define and measure service quality. For
example, Lehtinen and Lehtinen (2012) suggested that service quality must be assessed on two
aspects including the service delivery process and the outcome of the service. Gronroos (2014)
also proposed two components of service quality, namely technical quality, which is what
customers receive; and functional quality, interpreting how services provided. According to
Zeithaml (2000), service quality is an assessment component of customer perceptions of
services. Customers are aware of the service through quality and how it satisfies the overall
experience of the customer. And so service quality is defined as customer perceptions of how a
service meets or exceeds customer expectations (Czepiel, 2011). In retail services, customer
perceptions of services accumulated over time and the relationship between customers and the
organization are continuous influence and interaction both past and present (Czepiel, 2011).
When customers rate retail services, they compare their perceptions of the service to what they
expect. Customers are satisfied when the service is received or exceeded their expectation.
They are not satisfied when they feel that the service is below their expectations (Levy & Weitz,
2015).
However, when it comes to service quality, we cannot fail to mention the great contribution of
Parasuraman (1988, 1991). Parasuraman et al. (1988) define service quality as “the degree of
difference between consumer expectations of services and their awareness of the outcome of
the service”. These authors have initiated and used qualitative and quantitative research to
develop and test the scale of components of service quality (called SERVQUAL). SERVQUAL is
adjusted and tested in many types of services. Finally, SERVQUAL includes 22 variables to
measure the five components of service quality, namely: reliability, responsiveness, assurance,
tangibles and empathy. Parasuraman (1991) confirm that SERVQUAL is a complete scale of
service quality, value and reliability, and can be applied to all types of services. However, each
service sector has its own specific characteristics. Many other researchers have also tested this
scale with various types of services as well as in many different countries. The results show that
the components of service quality are not consistent in each service industry and in different
markets.
In the context of retailing sector, retail services also have the following characteristics:
• Firstly, retail services combine both intangible and tangible properties. In terms of
intangibles, like general services, retail services can only be assessed by customers'
perceptions by thinking or senses. However, for customers to feel, these services are
expressed through supermarket activities or are based on a number of tangible factors
such as supermarket locations, equipment in supermarkets, marketing materials,
supermarket staff, documents, information, logos and prices they see. (Wilson et al.,
2018).
• Second, retail services always have the presence of customers in the service provision
stages. For conventional products, customers only assess the quality of products at the
last stage. However, unlike normal products, services are created and used at the same
time, so customers appear in part or in whole too service provision process of the
supermarket. Therefore, retailers are the direct and most frequent contact with the final
consumer, so they understand and understand the needs, tastes and shopping habits of
customers (Cheng, 2013). Therefore, retail business units are more able to adapt to the
needs of consumers and more active in sales activities than other types of
intermediaries.
 • Third, retail services are difficult to determine quality. With ordinary goods, the quality is
measured by specific parameters, with stability and regularity. For retail services, the
quality of the assessment depends greatly on factors such as the circumstances of the
service creation, the attitudes, moods of the service provider, and serving time, etc.
Therefore, to evaluate the retail service is extremely difficult.
• Fourth, the retail service is not archived. With ordinary goods, after the production
process or excess supply will be stored. However, with retail services, the service only
exists in the time provided to customers. Therefore, usually to assess the quality of retail
services, researchers and supermarket managers can use satisfaction criteria to capture
customer needs and psychology.
Dalholkar, Thorpe and Rentz (2016) adjusted the SERVQUAL scale and proposed a model of
five basic elements of retail service quality: Physical Aspects, Reliabillity, Personal interaction,
Problem solving and Policy. In which 3 components have 2 more small parts more like:
- Tangible elements refer to appearance and convenience,
- Trust includes commitment and policy implementation,
- Personal interactions include creating trust and courtesy / courtesy pinch.
In more details:
- Tangible element refers to appearance and display at supermarket.
- Reliability refers to the supermarket always keeping its promises and doing everything right.
- Personal interaction refers to supermarket staff being polite, helpful and making customers feel
confident.
- Solve problems that mention supermarket staff capable of handling the problems of return and
customer complaints.
- The policy refers to supermarket policies on goods quality, parking spots, service times and
credit cards.

Figure 2.1: Model of service quality assessment of RSQS

Source: Dalholkar et al (2016)

• Influential factors of service quality in retailing sectors

• External factors
• Economics and policies
Economic factors affecting the retail system such as the growth rate of the economy, the
situation of FDI attraction, etc. Because as the economy develops, the level of increase in the
amount of goods and services provided in the retail market increases. In addition, as the
economy grows, people's living standards are increasing day by day, which leads to higher
general requirements for the quality of goods and services.
State policy is a group of factors that determine the formation and operation of retail systems
and the quality of retail services. These policies, through documents, decisions, regulations,
determine how they operate, deploy, construction, goods in supermarkets or retail chains. The
State's policies also show the orientation and strategies for developing the retail market
according to each commodity group; audience group, etc. participate in the market (Al-Jazzazi &
Sultan, 2017). On the other hand, the State policies have a role in creating a competitive
environment between target groups participating in the retail market, ensuring benefits for retail
businesses to improve the quality of goods and services for customers. A suitable mechanism
will stimulate businesses to boost investment, improve and improve service quality
• Culture and behaviours
Residential is a factor that has an important impact on the retail system and is a driving force for
businesses to improve the quality of retail services. Purchasing power or taste of consumers will
shape the development of the retail system. Consumer requirements have a direct influence on
the quality of goods and services. However, due to consumer preferences, consumer style of
customers in each province in the country, each age has a big difference. Therefore, businesses
in general and supermarkets in particular must stand on the basis of needs and customer
preferences in each market to best meet their needs (Lee, Lee, & Yoo, 2014).
• Technologies
Factors of science and technology affect to improve the quality of services provided in
supermarkets. Specifically, science and technology make a very important contribution to
improving the quality of service facilities and policies, and the service provision policy at
supermarkets. This makes an important contribution to improving employee productivity and
service speed. On the other hand, the progress of science and technology, especially
information technology, has greatly contributed to improving the quality of information collection,
information management, market research, quality applications are increasingly better suited to
the needs of customers (Gruber, Fub, Voss, & Glaser-Zikuda, 2010).
• Internal factors
• Workforce
The human element group is the labor force in the enterprise, including all members of the
enterprise: leaders at all levels, executive staff. The quality of retail services depends greatly on
the organizational structure, professional qualifications, experience, professional ethics,
communication ability and cooperation spirit, etc. between members, departments in the
supermarket (Gatfield, 2010). Because in providing services, salesman, cashier, etc. As a direct
contact with customers, they require professional skills, especially communication skills,
behaviors, and appropriate attitudes to serve customers.
For managers: it is necessary to have a new awareness on improving service quality to have
the right policies and policies on service quality.
For employees: be aware that improving the quality of service is your responsibility. Therefore,
we must always be proactive in improving professional skills, improving skills, good service
attitude to customers.
• Management methods
This group includes the methods of governance, qualifications of management organizations
and service providers, and policies on service quality of companies. These regulations and
policies specify the standards, objectives or quality requirements that must be met in each
specific product or service (Clewes, 2013). This can be an important basis to test, evaluate,
maintain and ensure the quality of services in companies. Because if the managers are well
aware of the role of quality in maintaining the prestige and position in the market, they will have
the right business strategy and strategies to care about quality. From there, the administrators
will create a smooth coordination between the stages, the elements of the service delivery
process with the utmost aim to improve the quality of service. Supermarket managers' expertise,
management ability and experience will affect the development of supermarket service quality
improvement plans and the implementation of that plan to achieve customer satisfaction.
• Service quality and customers’ purchasing intentions and satisfaction in
the context of retailing sector
• Service quality and customer’s satisfaction in retailing sector
In general, the relationship between service quality and customer satisfaction has been the
subject of ongoing discussion by researchers over the past decades. Many studies on customer
satisfaction in service industries have been conducted, and some authors argue that there is a
mismatch between service quality and customer satisfaction, so these two concepts may be
used interchangeably. However, many studies show that service quality and customer
satisfaction are two distinct concepts. Parasuraman et al. (1988) argue that between service
quality and customer satisfaction exist some differences which are fundamentally a "cause and
effect" problem. Zeithaml and Bitner (2010) argue that customer satisfaction is affected by many
factors such as product quality, service quality, price, situational factors and personal factors.
Service quality and satisfaction, though two different concepts, are closely related in service
research (Parasuraman et al. 1988). Previous studies have shown that service quality is the
cause of satisfaction (Spreng & Taylor, 2016). The reason is that the quality of service is related
to the provision of services, and the satisfaction can only be assessed after using the service.
Customer satisfaction as a result, service quality as a cause, satisfaction with predictive and
expectation; Service quality is an ideal standard. Customer satisfaction is a general concept,
expressing their satisfaction when consuming a service, while service quality focuses only on
the specific components of the service (Zeithaml & Bitner, 2000) Although there is a relationship
between service quality and satisfaction, there is little research focusing on testing the level of
interpretation of service quality components for satisfaction, in particular for each specific
service sector (Levy & Weitz, 2009). Cronin and Taylor tested this relationship and concluded
that perceiving quality of service leads to customer satisfaction. Studies have concluded that
service quality is the premise of satisfaction (Schneider & White, 2014) and is the main factor
affecting satisfaction.
Udaya (2011) points to the impact of service quality on retail customer satisfaction and also
identifies important factors of service quality from the customer's point of view. Research shows
that retailers should focus more on the personal interaction and credibility of stores to enhance
their services. The study also points out that retail service quality factors will significantly impact
customer satisfaction such as store policies such as personal interaction, trust, tangible factors
and problem-solving solutions. Another study also showed that the positive relationship between
retail service quality and customer satisfaction is Kumar, Manjunath, and Kumar(2012). This
research indicates that Tangible, Personal Interaction and Problem Solving all impact customer
satisfaction.
At the same time, Uusitalo (2011) studied an overview of customer perceptions of the quality of
online retail services and their satisfaction. This study shows some important results about the
quality of online services. The study identifies six factors of the quality of online retail services
according to perceptions of online customers: reliable / quick responses, access, ease of use,
attention, security, information confidentiality and reputation. Of these six elements, three are
reliable / quick response, attention, and ease of use that significantly impact the perception of
the overall service quality of the customer and the satisfaction (Brooks, 2015). In addition,
access also has a significant impact on overall service quality, but does not impact customer
satisfaction. The research results also show a positive relationship between overall service
quality and satisfaction. Carmel and Weaven (2017) also explored the impact of online service
quality on customer satisfaction and the development of customer relationships.
• Service quality and customers’ purchasing intentions in retailing
sector
According to Cronin and Taylor (1992), service quality is a factor leading to the intention to
repeat customers' buying behavior. This suggests that when assessing the quality of customers
is high, their intention to behave more likely. Parasuraman et al. (1988) point to a positive and
meaningful relationship between service quality and the willingness to introduce an
organization. Anselmsson (2006) also found a positive link between perceived quality and
middle -ware intentions. Relevant constituents include intent to acquire, word of mouth, and
willingness to introduce. These studies have shown that quality is the main motivation for
customer loyalty and loyalty-related behaviors. In addition, studies have identified a positive
relationship between employees, quality of service, and loyalty-related behaviors. At the same
time, Wicks and Roethlein (2009) show that when customers are more satisfied with the quality
of services, they will tend to come back to buy more, even have good comments and referrals
encouraging other to shopping. Loyalty, therefore, is essential for an organization because
retaining old customers is more cost effective than finding new customers.
• Customer satisfaction and the sales of retail businesses
Satisfied customers now have many different definitions as well as many controversies about
this definition. According to Philip Kotler, "Satisfaction is a feeling of satisfaction or frustration of
a person by the result of comparing the actual received product (or result) in relation to their
expectations”. According to Hansemark and Albinsson (2004), “Customer satisfaction is an
overall attitude of a customer to a service provider, or an emotion that responds to the difference
between what the customer expects. predict what and what they will receive, in response to
certain needs, goals or desires”. Satisfaction is a state of psychological feeling after customers'
needs and expectations are satisfied. Customer satisfaction is formed on the basis of
experience, especially when accumulated when shopping and using products or services. After
trying to buy and use, customers will have a comparison between reality and expectations.
From there, they just give a rating of satisfaction or dissatisfaction.
When a business, especially in the retailing sector can achieve the highest level of customers
satisfaction, their sale revenues would be improved noticeably thanks to the four following
aspects.
Customer satisfaction helps building strong base of loyal customers. Loyalty helps businesses
retain customers, create close bonds and help businesses always operate stably even through
difficult times. Loyal customers will always be ready to accompany businesses in any
circumstance because their belief in the business is great (UYSAL & Mehmet, 2013).
Secondly, customer satisfaction also stimulating word-of-mouth marketing for retailers. Word of
mouth is considered to be the most effective way to advertise, especially through friends,
colleagues, daily relationships, etc. It is extremely natural for customers to be satisfied after
using the company's products and introducing them to people around them. This is a method of
marketing without losing money and achieving the fastest efficiency. From a loyal customer
base, the company easily has a large number of new customers. Loyal customers naturally
become brand ambassadors of the company.
Thirdly, customer satisfaction would increase purchase repetition rate among ages customers
for stronger revenues. Having turned a god into a loyal customer, retailers can be confident and
dominant with competitors in any product. Customers will continue to choose the products they
like and make it easy to use enterprise guest products. Carl Sewell, head of the Sewell
Automotive Group, a well-known car brand in the US, based on the basic philosophy of CSR to
build the business strategy of "Lifetime Customer". According to Carl Sewell, the intangible
value of a loyal customer and long-term commitment to the product or service of any business
can be calculated into money. Carl Sewell believes that a customer who buys a car permanently
attached to his car business is worth an average of $ 332,000 because loyal customers will be
willing to continue buying other product lines of company (Shanka, 2012).
Fourthly, customer satisfaction is effective in cost reduction for stronger revenue growth and
sustainability. Through many studies, it was concluded that the cost to attract new customers is
5-10 times larger than retaining old customers. The source of loyal customers helps businesses
save a great cost for marketing to build a new brand and build new sources of customers. Loyal
customers are also advertisers, introducing your business products to many other customers. A
study by Gartner Group suggests that 20% of customers can make 80% of the profits for
businesses, which is the loyal customer of the business.
• Conceptual framework
From the above literature review, the author develops a conceptual framework as below:
H1: There is a close relationship between external factors and service quality
H2: There is a close relationship between internal factors and service quality
H3: There is a close relationship between service quality and customer satisfaction and
purchase intention

External factors: economics, cultures and technologies

External factors: economics, cultures and technologies

Customer satisfaction and purchase intention

Customer satisfaction and purchase intention

Service quality
Service quality

Internal factors: workforce and management methods

Internal factors: workforce and management methods
References
Al-Jazzazi, A., & Sultan, P. (2017). Demographic differences in Jordanian bank service quality
perceptions. Int. J. Bank Mark, 35, pp. 275–297.
Anselmsson, J. (2006). Customer perceived service quality in the supermarket and the discount
store: Examination of a service quality measurement scale in a Swedish context. Lund Institute
of Economic Research, Working Paper Series.
Czepiel, J. A. (2011). Service encounters and service relationships: Implications for Research.
Journal of Business Research, 20(1), pp.13-21
Dabholkar, P. A., Thorpe, D. I. & Rentz, J. O. (2016), A measure of service quality for retail
stores: Scale development and validation. Journal of the Academy of Marketing Science, 24(1),
pp. 3-16
Hansemark O. C. & Albinsson M. (2004). Customer satisfaction and retention: the experiences
of individual employees. Managing Service Quality: An International Journal.
Kumar, A.G., Manjunath S.J., &Kumar, N.H. (2012). A study of retail service quality in organized
retailing. International Journal of Engineering and Management Sciences, 3(3), pp. 370-372.
Brooks, R. L. (2015). Measuring University Quality. Review of Higher Education, 29(1), pp.1-21
Cheng, B.-L (2013). Service quality and the mediating effect of corporate image on the
relationship between customer satisfaction and customer loyalty in the Malaysian hotel industry.
Gadjah Mada Int. J. Bus, 15, pp. 99–112
Clewes, D. (2013). A Student-centred Conceptual Model of Service Quality in Higher
Education. Quality in Higher Education, 9(1), pp. 69-85
Dalholkar, P.A., D.I. Thorpe, & J.O. Rentz. (2016). A Measure of Service Quality for Retail
Stores: Scale Development and Validation. Journal of Academy of Marketing Science, 24 (1).
Kumar A. G., Manjunath S. J. & Kumar N. H. (2012). A study of retail service quality in
organizedretailing. International Journal of Engineering and Management Sciences, 3(3), pp,
370-372.
Gatfield, T. (2010). A Scale for Measuring Student Perception of Quality: an Australian Asian
perspective. Journal of Marketing for Higher Education, 10, pp. 27-41
Gronroos, C. (2014). A Service Quality Model and Its Marketing Implications. European Journal
of Marketing, 18 (4), pp. 36-44.
Gruber, T., Fub, S., Voss, R., & Glaser-Zikuda, M. (2010). Examining student satisfaction with
higher education services using a new measurement tool. International Journal of Public Sector
Manage, 23(2), pp. 105-123.
Carmel, H., & Weaven, S. (2017). Can banks improve customer relationships with high quality
online services?. Managing Service Quality, 17(4), pp. 404- 27.
Jun, M., Yang, Z., & Kim, D.S. (2004). Customers' perceptions of online retailing service quality
and their satisfaction. International Journal of Quality & Reliability Management, 218, pp.
817-840.
Lee, H., Lee, Y., & Yoo, D. (2014). The determinants of perceived service quality and its
relationship with satisfaction. Journal of Services Marketing, 14(2/3), 217
Lehtinen, U & J. R. Lehtinen (2012). Service Quality: A Study of Quality Dimensions. Working
Paper. Service Management Institute, Helsinki, Finland.
Levy, M. & Weitz, B. (2015). Retailing Management, 7th edt. New York: McGraw-Hill Irwin.
Schneider, B. & White, S. (2014). Service quality – Research perspectives. SAGE Publications,
Thousand Oaks, USA
Udaya, B. N. (2011). Impact of Service Quality on Apparel Retail Customer Satisfaction - A
Study of Select Metropolitan City. Journal of Management Research, 3(2), E13
Parasuraman, A., L. L. Berry, & V. A. Zeithaml (1991). Refinement and Reassessment of the
SERVQUAL Scale. Journal of Retailing, 67 (4), pp. 420-450.
Parasuraman, A., V. A. Zeithaml, & L. L. Berry (1988). SERVQUAL: A Multiple-Item Scale for
Measuring Consumer Perceptions of Service Quality. Journal of Retailing, 64 (1), pp. 12-40.
Shanka, M. S. (2012). Measuring Service Quality in Ethiopian Airlines. Journal of Educational
and Social Research, 2 (9), pp.173–180.
Spreng, R.A., &Mackoy, R.D. (2016). An empirical examination of a model of perceived service
quality and satisfaction. Journal of Retailing, 722, pp. 201-14.
Uusitalo, O. (2011). Consumer perceptions of grocery retail formats and brands. International
Journal of Retail & Distribution Management, 29(5), pp. 214-225
Uysal, H.T., & Mehmet S. Y. (2013). Effect of Organizational Levels on Individual Service Quality
in Health Service: A Research on Doctors. İktisat İşletme ve Finans Dergisi, 28(329), pp.21-48.
Wicks, A. M. & Roethlein, C. J. (2009). A satisfaction-based definition of quality. Journal of
Business & Economic Studies, 15(1), pp. 82-97
Wilson, A., Zeithaml, V., Binter, M. & Gremler, D. (2018). Service Marketing: Integrating
Customer Focus across the Firm. London, The McGraw-Hill Companies.
Zeithaml, V.A., Parasuraman, A. and Malhotra, A. (2010). A conceptual framework for
understanding e-service quality: implications for future research and managerial practice.
Working paper, Report Number 00-115. Marketing Science Institute, Cambridge, MA.