Customer Satisfaction and Loyalty to British Supermarkets

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Customer Satisfaction and Loyalty to British Supermarkets
Ogenyi Omar a ; Sudaporn Sawmong b
a Department of Marketing & Tourism Management, Business School, University of Hertfordshire, UK b
Business School, Eastern Asia University, Pathumthani, Thailand Online Publication Date: 17 May 2007
To cite this Article Omar, Ogenyi and Sawmong, Sudaporn(2007)'Customer Satisfaction and Loyalty to British Supermarkets',Journal of Food Products Marketing,13:2,19 — 32
To link to this Article: DOI: 10.1300/J038v13n02_02
URL: /10.1300/J038v13n02_02
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Customer Satisfaction
and Loyalty to British Supermarkets
Ogenyi Omar
Sudaporn Sawmong
ABSTRACT.The UK food retailing structure is rapidly changing.Con-centration is increasing both through ownership and supermarket size, and retailers are responding to slow growth in the UK by improving cus-tomer services.Supermarkets are increasingly being branded in order to increase differentiation,consequently increasing customer loyalty.The purpose of this study is to empirically analyse the customer loyalty of British supermarkets.We adopted and used Oliver’s(1997)four-phase loyalty model(cognitive,affective,conative and action)to measure the loyalty of British consumers to the supermarkets they patronise.The find-ings show that different loyalty phases have different impacts on super-market patronage.We recommend that supermarkets should focus on customer loyalty in order to generate positive net operating profits.
doi:10.1300/J038v13n02_02[Article copies available for a fee from The Haworth Document Delivery Service:1-800-HAWORTH.E-mail address:<docdelivery@ >Website:<>©2007by The Haworth Press, Inc. All rights reserved.]
KEYWORDS.Store loyalty,supermarket shopping,food shoppers, British consumers
Ogenyi Omar is Reader in Marketing,Department of Marketing&Tourism Man-agement, Business School, University of Hertfordshire, UK.
Sudaporn Sawmong is Senior Lecturer,Business School,Eastern Asia University, Pathumthani, Thailand.
Address correspondence to:Ogenyi Omar,Department of Marketing&Tourism Management,Business School,University of Hertfordshire,Hatfield,Herts,UK AL10 9AB (E-mail: o.e.omar@).
Journal of Food Products Marketing, Vol. 13(2) 2007
Available online at
© 2007 by The Haworth Press, Inc. All rights reserved.
doi:10.1300/J038v13n02_0219
20JOURNAL OF FOOD PRODUCTS MARKETING
INTRODUCTION
In the UK grocery retailing,achieving a high level of customer satis-faction has become a crucial tool for many retailers.This is because of the links between customer satisfaction and retailer’s operating perfor-mance and customer loyalty.Customer loyalty is a highly prized mar-keting outcome,and it is associated with reduced costs(Omar,1999), since customer retention is normally a lower cost endeavour than customer development(East et al.,1995;Altan and Mustafa,2002).It is associated with higher margins because loyal customers normally have stronger perceptions of relative advantage toward the product,service, brand,or supplier than the less loyal customers(Jones and Sasser,1995; Hallowell,1996;Bellizzi and Bristol,2004).During the last decade, supermarkets have attempted to enhance store loyalty by developing incentive marketing strategies including the issuing of loyalty cards. Supermarkets in the UK normally work to create and maintain a desir-able level of loyalty towards their stores.A supermarket is defined as a retail outlet of between2,500and25,000sq.ft.,devoted to the sale of food plus associated non-food items,normally encompassing a consid-erable degree of self-selection and service where payment is normally accepted using a checkout operation(see also Baron et al.,1991).The focus of this study is an evaluation of customer loyalty to supermarket outlets in the UK.Also Oliver’s(1997)proposition has been used to define loyalty as“a biased behavioural response,expressed over time by the grocery shoppers with respect to individual supermarkets,and as a function of psychological process.”Thus,consistent repurchase by itself may not be a sufficient indicator of loyalty;and some form of psy-chological commitment on the part of the customer is a necessary ingre-dient of true supermarket loyalty (Barnes, 1997).
Building on previous customer loyalty studies(Oliver,1997,1999; Olsen and Johnson,2003;Gustafsson and Johnson,2004),the purpose of this study is to investigate the strength of customer loyalty to the UK supermarkets.Its objectives are to evaluate loyalty factors based on the theories of cognitive process;and review the concepts of store loyalty and satisfaction in the context of UK supermarket retailing.Finally,we study the moderating influence that the degree of elaboration might exert on the causal relationships between loyalty and satisfaction in the supermarket environment.
This research paper is organised in the following steps:we first iden-tified and reviewed the extant literature.This is followed by research design and methodology,measurement of variables and data analysis.
Ogenyi Omar and Sudaporn Sawmong21 Finally,the results are discussed and managerial implications are sug-gested.The findings of this paper provide evidence that is helpful to retail managers when making decisions with respect to how loyalty should be managed.
LITERATURE AND THEORETICAL REVIEW
The UK food retail sector has one of the highest concentration rates of activities in Europe and is usually characterized as being mature (Uncle and Hammond,1995).British food retailers appear to be at the forefront of distributive innovation in Europe(Bell et al.,1997);and their performance level and the penetration of own brands are among the highest in the continent (Flavian et al., 2002).
Loyalty to Grocery Stores
The beginning of a behavioural perspective on loyalty appeared in the1970s,after a period when the majority of researchers measured loyalty as a pattern of repeat purchasing (Oliver, 1997).
There is extensive empirical evidence that for frequently purchased products or services;buyers tend to have a portfolio of products or ser-vices from which a particular purchase is made(Uncle,1994;Sivadas and Baker-Prewitt,2000).However,customers do not tend to spread their grocery purchases evenly across products or among the supermar-kets(Koo,2003).In the long run,one product may be preferred and will be bought more than others.
As Omar(1999)wrote,loyalty to a grocery store develops from the supermarket’s service quality.In order to conduct subsequent literature reviews a figure identifying the key constructs included in our study is provided in Figure1.This figure presents supermarket loyalty as a con-sequence of direct and/or indirect relationships with image,perceived value,customer satisfaction,and service quality(see also Zeithaml, 1988;Woodruff,1997;Harris and Goode,2004).Our framework pres-ents associative connections that have been previously described as well established in the extant literature.We have additionally introduced and positioned supermarket image as pivotal to supermarket loyalty.
Customer Satisfaction and Customer Loyalty
Kotler(2000)defines customer satisfaction as“a person’s feeling of pleasure or disappointment from comparing a product’s perceived
performance (or outcome)in relation to his or her expectations.”More appropriately,Stank et al.(1997)defines satisfaction as “the customer’s after-purchase judgement or evaluation of a specific product or service.”Thus,satisfaction is regularly suggested as an outcome of relational strategies and a prerequisite for loyalty (Sullivan and Dennish,2002;Koo,2003).The view that customer satisfaction is the key to securing customer loyalty (Reichheld,1996)is,however,far from a fully robust philosophy.Satisfaction does not always result in loyalty (Jones and Sasser,1995;Omar,1999)and,it is equally apparent,dissatisfaction does not neces-sarily result in defection (Buttle, 1999; Child et al., 2002).The drivers of customer satisfaction include perceived supermarket image (Hackl and Westlund,2000;Sullivan and Dennish,2002)cus-tomer expectations,store offerings (merchandise,services,value for money,etc.),and shopper behaviour.Shopper behaviour is associated with personal shopping behaviour in the supermarket,and atmosphere of the supermarket environment (Omar et al., 2004).
Applying Oliver’s Loyalty Phases to Measuring Supermarket Loyalty
The knowledge that loyalty is a key marketing goal is so widely accepted that its value has been deemed to be “self-evident to every business”(Harris and Goode,2004).According to Oliver (1999)there
22JOURNAL OF FOOD PRODUCTS MARKETING
Perceived
Value
Loyalty to Supermarket
Service
Quality Customer
Satisfaction
IMAGE OF
SUPERMARKET FIGURE 1. A Conceptual Framework of Supermarket Loyalty
Ogenyi Omar and Sudaporn Sawmong23 are four loyalty phases including cognitive,affective,conative,and action loyalty.The average prices across all regions were(for the dry season)188.40to the Fisher/Dealer;275.20to the Dealer/Retailer;and 361.40to the Retailer/Consumer,while the average prices across all regions were(for the rainy season)265.20to the Fisher/Dealer;370.20 to the Dealer/Retailer;and531.60to the Retailer/Consumer.Prices varied from region to region with some variation.
Theoretically,consumers could become loyal in a cognitive sense first,then later in an affective sense,still later in a conative manner,and finally in a behavioural manner.These phases are briefly reviewed in the following sections.
Cognitive Loyalty
In the first loyalty phase,the brand attribute information available to the consumer indicates that one brand is preferable to its alternatives. This stage is referred to as cognitive loyalty(i.e.,loyalty based on brand belief only).According to Oliver(1997)cognition can be based on prior knowledge or on recent experience-based information.Loyalty at this phase is directed towards the brand because of this“information”(attribute performance levels).This consumer state,however,is of a shallow nature because if the transaction is routine,so that satisfaction is not processed,the depth of loyalty will not be deeper than a mere per-formance.If satisfaction is processed,it however becomes part of the consumer’s experience and begins to take on affective overtones. Affective Loyalty
At the second phase of loyalty development,attitude toward the brand is developed on the basis of cumulatively satisfying usage occa-sions.This reflects the pleasure dimension of the mit-ment at this phase is referred to as affective loyalty and is encoded in the consumer’s mind as cognition and affect(Oliver,1997).Whereas cog-nition is directly subject to counter-argument,affect is not as easily dis-lodged.The brand loyalty exhibited is directed at the degree of affect (liking)for the brand.Similar to cognitive loyalty,however,this form of loyalty remains subject to switching,so it would be desirable if con-sumers were loyal at a deeper level of commitment.
24JOURNAL OF FOOD PRODUCTS MARKETING
Conative Loyalty
The next phase of loyalty development is the conative(behavioural intention)stage,as influenced by repeated episodes of positive affect toward the brand.Conation,by definition,implies a brand-specific commitment to repurchase.Conative loyalty,then,is a loyalty state that contains what,at first,appears to be the deeply held commitment to buy noted in the loyalty definition.However,this commitment is to the intention to repurchase the brand and is more akin to motivation.In effect,the consumer desires to repurchase,but similar to any“good in-tention,” this desire may be an anticipated but unrealised action. Action Loyalty
Study of the mechanism by which intentions are converted to actions is referred to as“action control”(Oliver,1997).In the action control sequence,the motivated intention in the previous loyalty state is trans-formed into readiness to act.The action control paradigm proposes that this is accompanied by an additional desire to overcome obstacles that might prevent the act.Action is perceived as a necessary result of engaging both these states.If this engagement is repeated,action inertia may develop whereby a repurchase may take place.Thus,completing the preceding cognitive-affective-conative frameworks with action phase brings the attitude-based loyalty model to the behaviour of interest,the action state of inertial repurchase.
In summary,cognitive loyalty focuses on the brand’s performance aspects,affective loyalty is directed toward the brand’s likeableness, conative loyalty is experienced when the consumer focuses on wanting to repurchase the brand,and action loyalty is commitment to the action of repurchasing.
RESEARCH DESIGN AND METHODOLOGY
In order to measure the customers’level of loyalty to British super-markets,data were gathered using a structured postal questionnaire. Samples were drawn from five leading supermarkets with the largest market share,in the UK including Tesco,Sainsbury,Asda,Morrison’s, and Summerfield.All the five supermarkets operate stores in London(the geographical region of this study).Previously,permission was sought
Ogenyi Omar and Sudaporn Sawmong25 and gained from the store managers and the questionnaires were hand-delivered to the customers as they pass through the checkout.They were asked to return the completed questionnaire in a pre-addressed envelope to the respective supermarket reception during their next visit to the store.
A total of450questionnaires were given out and after a cut-off period of four weeks,the responses were collected from the various supermar-kets.Among the questionnaires distributed,274questionnaires were redeemed,resulting in61per cent response rate.By excluding problem-atic and unanswered questionnaires,250were put into the analysis, resulting in a valid response rate of around 50 per cent.
Since the questionnaires were returned anonymously to the reception, the hand delivery was not considered a problem or perceived to consti-tute a bias.By agreeing to take part in the study,both the respondents and the store managers were guaranteed anonymity and confidentiality in reporting the results.
Measurement
Loyalty was measured indirectly by means of an attitude scale, which,as Barnes(1997)points out,is the most commonly used system of measurement due to the difficulty involved in obtaining sequential information about purchase repetition.In order to do this we used a five-point,four-item Likert scale to assess the mean and standard deviation of customer loyalty to supermarkets.It generates average level of cus-tomer loyalty in terms of cognitive,affective,conative and action based on Oliver’s(1997)proposition.By following Oliver’s(1999)proposi-tion we measured the intention to continue the relationship and attitudes towards the present supermarket.
In order to evaluate customer satisfaction with supermarket’s service quality we followed Fornell(1992)and used a five-point,three-item Likert scale which measures general satisfaction with supermarket services,the degree to which the supermarket conforms to customers’expectations,and the gap which customers consider to exist between the supermarket they use;and what they regard as being the ideal super-market-shopping environment.We have used Fornell’s(1992)scale because it incorporates the three aspects of satisfaction most widely used in the literature.In this way,and in line with the basic components of satisfaction established by Giese and Cote(2000),the scale used complies with the following characteristics:the type of response is affective;the centre of interest is based on an evaluation of supermarket
26JOURNAL OF FOOD PRODUCTS MARKETING consumption experiences;and the moment of evaluation is after ex-tended shopping experience.
DATA ANALYSIS AND RESULTS
Descriptive statistics(mean,standard deviation,and standard scores) were used as tools for inferences.Standard deviation(SD)and standard scores(z-scores)were used to examine nominal scale variables relating to supermarket loyalty.Table1shows the four constructs of loyalty associated with supermarket-shopping behaviour and were assessed through the use of averages to identify those items that represent very important reasons for loyalty,moderately important,and not very important factor for supermarket loyalty.
From Table1,the cognitive loyalists with a mean score of4.03 are variety-seeking consumers and are influenced by price and sales promotion.With a z-score ofϪ0.47variety-seekers show weak loyalty to supermarkets.
In the affective stage with a mean score of3.30,consumers become specific to liking some aspects of the supermarket retailing.Cognitive induced dissatisfaction tends to decline and loyalty to the supermarket becomes stronger than in the cognitive shopper(z=0.18).Conative shopper is more committed to shopping and may visit the supermarket frequently.With a mean score of4.22,and z=Ϫ0.82,loyalty to an inten-tion(intention to repurchase)is more prone.In other words,the conative shopper will patronise a supermarket only if persuaded with marketing tools such as point-of-purchase promotions.Action loyalist with a mean of2.57(z=0.92)has a deep commitment to repurchase.At this phase
TABLE1.The Sequential Level of Supermarket Loyalty(Mean,SD and z-scores) Stage of Loyalty Mean SD z-scores Cognitive 4.03 1.086Ϫ0.47 Affective 3.30 1.1950.18 Conative 4.220.856Ϫ0.82
Action 2.57 1.0320.92
Total 3.52 1.042Ϫ0.19
Note: The level of the loyalty was measured by five-point Likert rating scale.
Ogenyi Omar and Sudaporn Sawmong27 consumers tend to be more supportive and prone to repurchase from the same supermarket with a low deviation score.In this regard,action loyal-ists are likely to be the most loyal shoppers in the supermarkets.
In order to evaluate the stability of supermarket loyalty under the four constructs of customer loyalty,responses to the structured question-naire were examined and the main scales under each loyalty construct were identified using the mean and standard deviations.The outcome of this examination is shown in Table2.Items in the cognitive loyalty study contained four scale items,16items for affective loyalty,and two items each for conative and action loyalty.
The results imply that different loyalty dimensions have different impact on supermarket patronage and under different marketing in-ducements.Those customers whose purchases and patronage are de-pendent on price and value for money(quality)are less likely to be loyal to one supermarket.Thus customers in the cognitive loyalty phase are less likely to be loyal customers to a particular supermarket.On the other hand the action loyalist is more likely to remain and continue to maintain their shopping habit with one supermarket.Since market leaders tend to have better customer services than market followers and market challengers,customers in the conative and action phases are more likely to shop,and remain faithful to market leaders.Customers in both cognitive and affective phases are more likely to shop around looking for better deals and ignore supermarkets loyalty schemes.
DISCUSSION OF THE FINDINGS
Most of the customer loyalty programmes that have currently been adopted by British supermarkets are aimed at motivating repeat pur-chases(Hart,1999).Thus,many British supermarkets invest significant amounts in lock-in policies in order to increase the costs of changes in suppliers and/or brands(Shapiro and Varian,1999).However,lock-in policies and loyalty promotions do not allow for the development of customer relationships.Our findings here therefore support the argu-ment put forward by Von Krogh et al.(2003)that lock-in policy is not a suitable promotional tool for increasing the business value deriving from stable and co-operative relationships.
There is an increasing need for British supermarkets to gain a better understanding of their customers’food shopping needs.Despite the re-cent increase in supermarkets’service provisions,meeting the shopping
needs and wants of British shoppers will determine the future customer loyalty to supermarkets.Supermarkets need to spend more time thinking about their custom-ers’shopping needs and wants and less time thinking about their own profit margins.In order to achieve this objective,supermarkets should develop improved proprietary means to speed-up checkout using inno-vative retail technology.This strategy should ensure competitive ad-
TABLE 2. Confirmatory Evaluation of Latent Constructs Constructs
Scales Mean score Standard deviation Average mean Cognitive loyalty If a supermarket provides a better price,I am going to buy from that supermarket
4.01 1.066 4.03
If a supermarket provides a better quality of service, I am going to buy from there
4.02 1.119When shopping at supermarket I weigh up the price and quality of each purchase before deciding 4.060.949Affective loyalty Supermarket has good parking facilities
3.33 1.218Good store atmospherics
3.82 1.028A good place to shop with children
4.08 1.118Offers a credit card service for payment
4.05 1.206Operates a suitable opening and closing hours
3.88 1.261Provides a good check-out system
3.40 1.087Provides better customer service
3.58 1.157Short time at check-out
3.50 1.113Convenient to move around with a trolley
3.53 1.061 3.30Good general store environment
3.74 1.069Supermarket is cleaner than competitors
3.61 1.067Store assistants are pleasant
2.78 1.201Product variety
2.86 1.451Stock good brand names
2.26 1.353Provides adequate cashier services
2.65 1.321Provides a personal selling services 2.14
1.288Conative loyalty I would recommend this supermarkets to friends 4.38
0.763I am likely to purchase at this supermarket again 2.25
1.032 4.22Action loyalty Frequency of purchase from favoured supermarket
2.57
1.032I plan to maintain my shopping habit
3.0500.748 2.81
vantage in the long run.Similarly,British supermarkets should find ways to give their customers something valuable and unique(i.e.,some-thing that cannot be easily copied by competitors).For example,work-ing with suppliers or research and development(R&D)providers such as the universities,to fund technology discovery leading to faster and more convenient shopping through exclusive rights may be a way to create and sustain competitive advantage over a long-term. Supermarket managers and store buyers need to spend more time on the shop floor talking with customers,listening to them in order to understand what pleases and what irritates them.The crucial question is “What does it take to make casual customers into loyal customers?”Although,just by asking this question is not enough,retailers must respond with the kind of price and quality or(cognitive loyalty)by offering products or services that customers really want.They must make customers’shopping experience pleasant which may subsequently lead to customer satisfaction(affective loyalty).They must provide the customers with good opportunities for purchasing and repurchase so that they could recommend the supermarket to other shoppers(conative loyalty).Finally supermarket managers must understand how to create or generate a good store atmosphere in order to enable the customers to maintain their frequency of shopping (action loyalty).
We believe that these strategic approaches will enable British super-markets to grow their business,irrespective of the location of the super-market.We also believe that British food shoppers will always do their shopping where they feel comfortable doing it.For these reasons any supermarket that perform or offer less would be risking failure in to-day’s intensely competitive UK food retail environment.
MANAGERIAL IMPLICATIONS
One of the managerial implications of this study is that British super-markets should examine the state of their relationships with their cus-tomers and then define the“relational”objectives.They should then design the most appropriate programmes for attaining them.It is clear that the customer loyalty goal should be directed at the most potential value customers.Potential value should not be defined solely in terms of the profit margins,but above all in terms of the growth opportunities that the relationship offers the supermarkets.
The main implications deriving from our study are that(i)there is a need for supermarkets to manage the different dimensions of customer
loyalty,without limiting this to motivating repurchase based on short-term economies;(ii)there is a need for supermarkets to adopt adequate customer satisfaction measurement systems that reflects the level of customer loyalty;(iii)there is a need for supermarkets to consider the intangible dimensions of the shopping processes;and(iv)there is a need for British supermarkets to consider the need to increase the effectiveness of support tools for the management of customer relationships. Finally,all of this is aimed at making investment in customer loyalty consistent with the prospects for both financial and intangible returns, and at increasing the supermarkets’commitment for integrating the entire customer focused activities.
RESEARCH LIMITATIONS
As is usually the case with many published marketing studies,the data set was generated from a single geographical location(London); and although British supermarket shopping is similar throughout Brit-ain,shoppers are individual in their shopping behaviour,this may limit generalisation of the results.The study relied on mail survey methodol-ogy,thus the low response rate must be recognised as a limiting factor. This study has used only one model out of very many others to assess the shopping loyalty of British supermarket shoppers.It may be inter-esting to combine two or three models in evaluating consumer loyalty to identify the most suitable one for evaluating the supermarket-shopping environment.Finally,despite these limitations,the findings from the study suggest useful directions for supermarket retailing in the future.
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