Research in Social and Administrative Pharmacy 19 (2023) 717–727

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Research in Social and Administrative Pharmacy

journal homepage: www.elsevier.com/locate/rsap

The role of perceived service quality and price competitiveness on

consumer patronage of and intentions towards community pharmacies
Stephen R. Carter *, Atef Mudarris Ahmed, Carl R. Schneider
School of Pharmacy, Faculty of Medicine and Health, Pharmacy and Bank Building (A15) Science Road, The University of Sydney, Sydney, NSW, 2006, Australia

A R T I C L E I N F O A B S T R A C T

Keywords: Background: When consumers choose a service provider, they trade-off their perceptions of service quality with
Service quality their perceptions of the cost of engaging with the service provider. For community pharmacy owners and
SERVQUAL managers, it is important to understand the relative impact on loyalty of providing the extra resources to improve
SERVPERF
service quality versus forsaking gross profit by discounting prices. The aim of this study was to explore the
Loyalty
Price
relative effects of consumers’ perceptions of service quality (pSQ) and price competitiveness (pPC) on patronage
Community pharmacy loyalty (patronage history of the rated pharmacy), patronage disloyalty (patronage history at other pharmacies)
and loyalty intentions.
Methods: This was a cross-sectional study conducted within Australia using an online survey administered to
members of a consumer marketing panel. Eligible participants were adults taking 2 or more prescription med­
icines and had attended a community pharmacy within the past 4 weeks. Participants were asked to rate the
pharmacy they had last visited, self-report patronage history of that and other pharmacies and report the brand
of pharmacy visited. Previously validated scales were used for consumers’ perceptions of service quality (pSQ)
and loyalty intentions. New scales were developed for pPC and self-reported patronage loyalty and disloyalty.
Confirmatory Factor Analysis (CFA) was used to validate the measurement model. Structural Equation Modelling
(SEM) with robust estimator (EQS) was used to test the relationships between the variables. Sensitivity analysis,
in the presence of covariates were performed with multivariate regression analysis with bootstrapping.
Results: Surveys were completed by 303 participants. Most consumers had visited the rated pharmacy more often
than once monthly and most had visited only 1 or 2 pharmacies in the past 12 months for prescription medicines.
Overall, participants rated pSQ, pPC highly and expressed high loyalty intentions. The SEM was a good fit for the
data. The model predicted 12%, 15% and 69% of the variation in patronage loyalty and patronage disloyalty and
loyalty intentions, respectively. The effect of pSQ on patronage was 0.38 (p < 0.05) for loyalty and − 0.38 (p <
0.05) on disloyalty whereas the effect of pPC was marginal. The total effect of pSQ and pPC on loyalty intentions
was 0.64 (<0.05) and 0.20 (p < 0.05) and in sensitivity analyses, no other covariate, including pharmacy brand
was significant.
Conclusion: In order to drive loyalty behavior and generate loyalty intentions, providing a high-quality service
appears to be far more effective than creating perceptions that the pharmacy has competitive prices. This finding
affords a motivation for both discount AND non-discount brand pharmacies to undertake the steps needed to
improve service quality.

1. Introduction dispensary activity, compounding and prescription output. Today, a

The evolution of the community pharmacy environment has placed
pharmacists in an ideal position to engage with consumers, encouraging
patient-centred care. The advent of cognitive professional services has
expanded the pharmacist’s role further than their ‘traditional’ re­
sponsibility as a medicine supplier,1,2 which is primarily centred on
range of health services offered by community pharmacies such as
asthma management support, diabetes risk assessments and medicines
review services have facilitated increased direct interaction with pa­
tients.3 Some pharmacies are now paying increased attention to
improving the range and quality of services they provide in order to
create a marketing advantage.1,4,5 Indeed, optimising service quality has

* Corresponding author.
E-mail address: stephen.carter@sydney.edu.au (S.R. Carter).

https://doi.org/10.1016/j.sapharm.2023.02.002
Received 29 November 2022; Received in revised form 6 February 2023; Accepted 6 February 2023
Available online 8 February 2023
1551-7411/Crown Copyright © 2023 Published by Elsevier Inc. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
S.R. Carter et al.
been used as a marketing tool by some pharmacy businesses and chains
to maintain competitive advantage in an environment of ever-increasing
competition and consumerism.6,7
Theory tells us that when consumers choose a service provider, they
trade-off their perceptions of service quality with their perceptions of
the cost of engaging with the service provider.8 The cost/quality
trade-off is thought to provide value for consumers which creates
satisfaction and which in turn drives their loyalty.9 Naturally, providing
high service levels requires a high level of investment in ongoing ex­
penses such as rental space (to allow for privacy), wages, training ex­
penses, and infrastructure investment. Therefore, understanding the
trade-off between price perception and service quality is important to
the viability of community pharmacy.
Government incentives across Australia, Canada, the UK and other
nations have encouraged pharmacies to adopt health services through
remuneration for the cognitive professional services (non-dispensing
services) they offer.3,10,11 It is important to highlight at this stage that in
Australia, a majority of non-dispensing services are provided free to the
consumer.12 While an emerging evidence base has explored consumers’
willingness to pay for non-dispensing services,13 the price of dispensed
and non-dispensed medicines is far more obvious to consumers and, at
least in Australia, product price perception has some role in driving
consumer loyalty behavior.14
There is little doubt that service quality is an essential determinant of
what the consumer values from their pharmacy experience.15 Con­
sumers’ ratings of service quality has been shown to influence consumer
behavior patterns in a wide range of settings including medical prac­
tices.16 Perceived service quality (pSQ) is theoretically and operation­
ally a multidimensional construct broadly comprising the dimensions of:
outcomes of service provision, quality of interactions with service pro­
vider, and environmental quality.17 A scale to measure (pSQ) in com­
munity pharmacy has recently been developed and refined, the pSQ
scale (pSQS).18–20 It is grounded in consumers’ perceptions derived
primarily through encounters related to health and medicine-related
services in a pharmacy environment.18–20 Items generated for the
measurement model were theoretically grounded in Donabedian’s
construct of service quality, covering patients perceptions of technical
quality and interpersonal quality of healthcare,21 as well as informed by
the broader literature of non-healthcare service industries including
Cronin and Taylors’ SERVPERF,22 an adaptation of SERVQUAL.23
SERVPERF comprises 5 dimensions: reliability, assurance, tangibles,
empathy and responsiveness. Following development and validation,
the pSQS is a 19-item multi-dimensional scale probing 6 dimensions of
consumers’ perceptions of: health and medicines advice provided
(HMA); relationship quality with staff (REL); technical quality of staff
(TQ); environmental quality (ENV); non-prescription service (NPS); and
perceived health outcomes from attending the pharmacy (HO).18,19
While it is understood that from the customer’s perspective, the costs
involved in cost/quality trade-offs in community pharmacy include the
effort involved in travelling to the pharmacy and the time taken to
provide services and transactions,24 it is the monetary costs of goods and
services which are the focus of this manuscript. Furthermore, it is known
that it is the perceived cost, rather than actual cost, that drives consumer
judgment and behavior.25 Indeed, capitalizing on price perceptions,
some pharmacies and pharmacy chains have established “discount”
business marketing models.6 Pharmacies using these marketing models
attract market share by placing emphasis on low product prices instead
of focussing on enhanced service levels.26 The price competition is
largely driven by a highly successful Major Leading Discount Brand
(MLDB)27 and other discount brands. Utilising a price-focussed mar­
keting strategy, these discount pharmacies cut the prices of
non-prescription medicines and very large ranges of health and beauty
products.28 In most high-income countries, a large portion of the price of
medicines is subsidized by third parties, which in Australia is the
Australian Government’s Pharmaceutical Benefits Scheme (PBS). While
third-party subsidies limit the scope for discounting of medicines, the
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Research in Social and Administrative Pharmacy 19 (2023) 717–727
discounters promote that they charge the lowest allowable co-payments
and offer reduced prices for non-PBS medicines creating a competitive
market.26 Pricing strategies such as this capitalizes on a kind of halo
effect, whereby heuristics operate to convince consumers that low prices
in one category indicate low prices everywhere and this is designed to
attract new customers to the brand and build loyalty.29 The impact of
pricing strategy on initial attraction to the pharmacy is outside the scope
of this study, rather the focus is on the effect of how price perceptions
influence loyalty after having experienced a pharmacy.
In the same vein as Blut, Teller (30) this study examines loyalty in­
fluences through separating loyalty behavior (patronage loyalty), from
intentional loyalty. Similar to Patterson and Holdford,31 patronage in
this context refers to rates of visitation to pharmacies while loyalty in­
tentions relates to their plans to visit the same pharmacy to engage in
health-related encounters, and which may include the use of services
and purchase of medicines and/or non-medicine products.
The following lists the hypotheses resulting from the discussion
above. The hypotheses are graphically outlined in Fig. 1 and summa­
rized in Table 1.
It has previously been shown that there is a high correlation between
pSQ and loyalty intentions, with α = 0.71 20 and 0.76.19 This previously
observed relationship forms the basis of the first hypothesis (H1).
H1. Consumers with perceptions that a pharmacy provides high ser­
vice quality (pSQ) will report higher loyalty intentions towards that
pharmacy.
It would be expected that perceptions of high service quality would
be predictive of not only intentions but actual historical patronage of the
pharmacy, particularly for consumers who use multiple medicines. In a
US study exploring consumers’ motivations for visiting pharmacies, the
motivation created by previously experiencing a quality service was the
only motivation from a list of competing motivations which was asso­
ciated with higher self-reported patronage of a pharmacy over the pre­
vious 12 months.32
H2. Consumers with perceptions that a pharmacy provides high ser­
vice quality (pSQ) will self-report having higher patronage history of
that pharmacy, defined as a higher frequency of visits to the pharmacy,
demonstrating patronage loyalty.
Being loyal implies that consumers use the pharmacy at the expense
of competitor pharmacies. If consumers’ perceptions that a pharmacy
provides high service quality drives repeat patronage, logically it could
be inferred that this would result in less patronage loss to other phar­
macies. In other words, good service quality should lead to less
patronage disloyalty.33 In this case, higher patronage disloyalty is
defined as a higher frequency and number of other pharmacies visited.
H3. Consumers’ perceptions that a pharmacy provides high service
quality (pSQ) will self-report having less patronage history of other
pharmacies, demonstrating less patronage disloyalty.
It is widely known that consumers form patronage habits that are not
necessarily influenced by service evaluations. In other words, regardless
of service quality or price perception, there is a tendency not to change
community pharmacies, which may be considered inertia or spurious
loyalty.34
H4. Consumers that self-report higher patronage loyalty to a pharmacy
will have higher loyalty intentions towards that pharmacy.
The corollary of H4 is that consumers who demonstrated disloyalty
to the rated pharmacy, through having visited a wider range of other
pharmacies more frequently, will (through habit) develop loyalty in­
tentions toward other pharmacies, and consequently have lower loyalty
intentions towards the rated pharmacy.
H5. Consumers with higher patronage disloyalty towards a pharmacy
will have lower loyalty intentions towards that pharmacy.
In the present study, a pharmacy’s perceived price competitiveness
(pPC) is a global assessment inclusive of prices of both medicines and
S.R. Carter et al. Research in Social and Administrative Pharmacy 19 (2023) 717–727

Fig. 1. Diagram of the hypothesised relationships between perceived service quality, perceived competitive price, self-reported history of patronage of pharmacies
and loyalty intentions.

H6. Consumers with perceptions that a pharmacy has competitive

Table 1
prices (pPC) will have higher loyalty intentions towards that pharmacy.
Summary of hypotheses.
Hypothesis High levels of independent Effect on dependent variable H7. Consumers’ perceptions that a pharmacy has competitive prices
label variable (pPC) will self-report having a higher patronage loyalty to that
H1 Perceptions of service quality Higher loyalty intentions
pharmacy.
towards that pharmacy
H8. Consumers’ perceptions that a pharmacy has competitive prices
H2 Perceptions of service quality Higher patronage loyalty (higher
frequency of visits to that
(pPC) will self-report having a lower patronage disloyalty.
pharmacy) The aim of the study was to develop and validate a model of the
H3 Perceptions of service quality Lower patronage disloyalty relationships between consumers’ pSQ, pPC, self-reported patronage
(lower frequency of visits to history and loyalty intentions towards the pharmacy that the consumer
fewer other pharmacies)
had most recently visited. The consumers of interest were those who use
H4 Patronage loyalty (frequency of Higher loyalty intentions
visits to that pharmacy) towards that pharmacy multiple medicines for chronic disease(s).
H5 Patronage disloyalty (frequency Lower loyalty intentions
of visits to a wider range of towards that pharmacy 2. Methods
other pharmacies)
H6 Perceptions of competitive Higher loyalty intentions
prices towards that pharmacy This was an Australian cross-sectional study conducted using an
H7 Perceptions of competitive Higher patronage loyalty (higher online survey that was carried out during December 2019. This study
prices frequency of visits to that was approved by University Sydney Human Research Ethics Committee
pharmacy) 2019/923. The study is reported in accordance with the transparent
H8 Perceptions of competitive Lower patronage disloyalty
prices (lower frequency of visits to
reporting of a multivariable prediction model for individual prognosis or
fewer other pharmacies) diagnosis (TRIPOD) statement.36

2.1. Sample
non-medicinal products i.e. a latent construct,35 that drives consumers’
loyalty behaviors. The assumption is that perceived price competitive­
Eligible participants were aged 18 years old or older and had pur­
ness (pPC) will act in the same direction as pSQ, in a trade-off to predict
chased prescription medicines to use for themselves for a chronic
increased pharmacy patronage history and loyalty intentions.24
medical condition from a community pharmacy within the past 4 weeks

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S.R. Carter et al.
and took more than one prescription medicine for chronic medical
conditions. The online survey was administered in English through The
Digital Edge (TDE) – a company which manages more than 100,000
panel members throughout Australia. TDE claims that their panel
members are representative of the Australian population. Panel mem­
bers were adults over the age of 18 who have previously agreed to be
invited to take part in online surveys and receive a small incentive by the
company to participate. TDE routinely ask their members “screening”
questions as requested by researchers. The first screening question for
this study was (yes/no): “Had you shopped in-person within the last 4
weeks from: “supermarket”, “petrol station”, “post office”, “pharmacy”
or none of the above”. If yes to “pharmacy”, the second screening
question was (yes/no): “Have you purchased from pharmacy within the
last 4 weeks: “perfumes”, “cosmetics”, “over-the-counter medicines” or
“prescription medicines”. If yes to “prescription medicines”, the third
screening question was: What is the number of prescription medicines
that you take for chronic medical conditions? (available options were
number of medicines 0,1,2,3,4,5,6, or 7 or more). If 2 or more, the
participants were invited to enter the study.
2.2. Instruments
In the first section of the survey, participants were asked to write the
name of the pharmacy where they most recently obtained prescription
medicines, exactly as written on the prescription label or repeat form,
including brand if that existed. Participants were then asked to complete
the survey in regard to that pharmacy, using the pSQS items, items for
perceived price competitiveness (pPC) and loyalty intentions.
2.3. Perceived service quality scale (pSQS)
Responses to these items available on a 7-point Likert-type scale from
strongly disagree (1) to strongly agree. (7) The option of responding
‘don’t know’ was additionally provided and these were converted to a
missing value. Missingness was reported and handled as recommended
by Mirzaei et al.,37 with the primary analysis utilising all available data
with a full information maximum likelihood method (see below). A
detailed description of the process of exploratory factor analysis
(EFA),19 confirmatory factor analysis (CFA),18 and temporal stability20
demonstrates the acceptable psychometric properties of the pSQS in­
strument. Literature explaining the structure of service quality models
has suggested that the dimensions be represented as reflective in nature,
whereas the structure of the dimensions may be reflective or forma­
tive.16,38 It has been demonstrated that pSQ is well described as a
bifactor model in which the dimensions of pSQ are reflective.20 This
implies that a person’s responses to each of the pSQS items on the survey
is strongly driven by an overall impression of service quality provided by
the pharmacy, with less influence ascribed to the individual
dimensions.20
2.4. Perceived price competitiveness
Consumers’ perceptions of price competitiveness (pPC) were
measured with a latent (reflective) scale consisting of 2 items: “The
prices for medicines in that pharmacy are competitive” (PC1) and “That
pharmacy offers prices that are competitive” (PC2).
The second section collected information about participant charac­
teristics including gender, age, highest education level, area of resi­
dence, distance from home to the pharmacy, and patronage of the rated
and other pharmacies.
2.5. Dependent variables: patronage loyalty, patronage disloyalty and
loyalty intentions
A single question was used to assess participants’ recent history of
using the rated pharmacy (patronage loyalty). Participants recorded the
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Research in Social and Administrative Pharmacy 19 (2023) 717–727
frequency of visiting the pharmacy that had been rated in the survey
within the past 12 months on a 6-point frequency scale ranging from
never to daily. The same question and response option was used to probe
the frequency of visits to other pharmacies within the past 12 months. A
second question asked participants to report the number of different
pharmacies visited within the past 12 months on a 5-point response scale
ranging from 1 to more than 4. A latent variable with these two items
named patronage disloyalty was created to measure participants’ ten­
dency to use other pharmacies. Loyalty intentions was measured with a
summative scale including 3 items: I intend to continue to come to this
pharmacy for my medicine related needs, I intend to continue to come to
this pharmacy for my medicine related needs, and I have no desire to
change pharmacies.
2.6. Covariates
Two covariates required data manipulation prior to further analyses.
The socioeconomic status (SES) was estimated for each participant using
a technique which eliminated the need for capture of sensitive identi­
fying information. The postcode location was used to estimate Socio-
Economic Index for Areas (SEIFA),39 which ranks the location using
the socio-economic factors such as income, education, occupation and
housing condition. A lower index indicates relative disadvantage, while
a higher index indicates relative advantage. The mean (SD) rank for the
Australian population is 1000 (100).39 Since previous research showed
significant differences between the pSQS scores provided by consumers
rating discount vs non-discounters,40 and because it was expected that
pPC would be different between these pharmacy types, a variable was
created for whether the rated pharmacy was MLDB vs non-MLDB
pharmacy. The recorded name of the pharmacy was inspected for
mention of the major leading discount brand MLDB. Those indicating a
mention of the MLDB were coded as that and all other were coded as
Non-MLDB.
2.7. Analysis
The data was analysed using IBM SPSS Statistics 26 and EQS 6.2
(Build 107, 2014). Given that the main construct of interest pSQ and
loyalty intentions were considered reflective, rather than composite
constructs, a decision was made to use covariance-based structural
equation modeling (CB-SEM) as opposed to partial least squares (PLS-
SEM).41 Furthermore, CB-SEM is appropriate when testing reasonably
well-established theoretical frameworks with sufficient sample sizes.41
CB-SEM (henceforth SEM) was carried out on the sample responses to
items from pSQS, pPC, Patronage loyalty and disloyalty and loyalty in­
tentions to verify the factor structure of the measurement model. For
modelling pSQ as a bifactor, the measurement model was created such
that the dimensions of pSQ were arranged orthogonally, along with an
additional “general” factor which “causes” each item, in addition to the
dimensions.42 For all CFA and SEM, Model parameters were estimated
using the full information maximum likelihood method with robust er­
rors (FIMLr) were employed as the raw data was found to have a high
degree of kurtosis (normalized estimate of multivariate kurtosis = 54)
and a small amount of missingness.37,43 Model fit was evaluated using
the fit indices recommended by Schreiber.44 Based on the size of kur­
tosis, the Yuan-Bentler scaled chi-square was calculated to quantify the
difference between the observed covariance matrix and the model
covariance matrix.45 Comparative fit index (CFI) was to compare the
chi-square value to a ‘null’ model with all variables uncorrelated.45 The
target cut-off value for CFI was ≥0.95.44,46 Absolute fit was evaluated
using the RMSEA which indicates the how well the model fits the
observed data.45 The target cut-off value for RMSEA was <0.06.44,46 A
structural equation model (SEM) was subsequently used to establish the
presence of and relative strengths of association between the variables as
specified according to Fig. 1.
Sample size was estimated using the methods of Keely and Lai.47
S.R. Carter et al. Research in Social and Administrative Pharmacy 19 (2023) 717–727

Prior to the study, the authors had data on file from another study in Table 2
which the population estimate for RMSEA was 0.044 (90% CI Participant demographic characteristics.
0.033–0.054) for pSQ.40 Given the extra model complexity, it was esti­ Variable Categories Major Leading All Other P value
mated that a population RMSEA of the full model may be 0.05. With df Discount Brand Brands
of the SEM to set to be very large, it was estimated that in order to obtain (n = 96) (n = 207)
a 95% CI of 0.05, 260 was the minimum sample size. A decision was
Gender
made to obtain 300 and then a post-hoc effect size was estimated using 49 (51.0) 107 (51.7) 0.916a
the method of Westland48 and it was estimated that for 300 participants, Female 47(49.0) 100 (48.3)
SEM could detect an effect size of 0.23, with 9 dimensions and 23 in­ Age group
dicators, with a power of 0.8 and p < 0.05. 18-29 2 (2.0) 10 (4.8) 0.029b
30-39 12 (12.6) 15 (7.2)
An additional sensitivity analysis was undertaken to ensure that any
40-49 13 (13.5) 23 (11.1)
effect of pSQ and pPC on loyalty intentions was replicable in the pres­ 50-59 22 (22.9) 42 (20.3)
ence of measured covariates: gender, age, education, socio-economic 60-69 35 (36.5) 58 (28.0)
status, frequency of medicine use, distance from pharmacy, pharmacy 70+ 12 (12.5) 59 (28.5)
type (MLDB vs non-MLDB). It was initially intended that a multiple in­ Highest level of education completed
No formal education 2 (2.1) 2 (1.0) 0.303b
dicator multiple cause model (MIMIC) SEM be used, however specifi­ Year 10 or 10 (10.4) 32 (15.5)
cation problems, evident in the lack of convergence, prevented this. equivalent
Therefore, multivariate regression analyses with bootstrapping were Year 12 or 16 (16.7) 38 (18.4)
employed with loyalty intentions as dependent variables. It has previ­ equivalent
Diploma/Vocational 33 (34.4) 67 (32.4)
ously been shown that pSQ is well-represented by a bifactor model,
University 33 (34.4) 62 (30.0)
therefore a summative score is a practical approach unlikely to have Prefer not to say 2 (2.1) 6 (2.9)
large error and non-significant bias.42 Summative scores were created
for pSQ, pPC, loyalty intentions, and patronage disloyalty while for
patronage loyalty, raw data was used. Variables were entered into the Number of medicines taken each day
2 49 (51.0) 58 (28.0)
equation in three blocks, pSQ and pPC were included in the first block,
3 22 (22.9) 37 (17.9)
patronage loyalty and disloyalty in the second block and participants’ 4 12 (12.5) 35 (16.9) <0.001
characteristics were included in the third block. 5 8 (8.3) 36 (17.4)
More than 5 5 (5.2) 41 (19.8)
3. Results Distance to rated pharmacy
Prefer not to say 2 (2.1) 6 (2.9)
0 m–499 m 8 (8.3) 31 (15.0) 0.021b
Surveys were completed by 303 participants and the descriptive 500 m–1.9 km 27 (28.1) 68 (32.9)
statistics of the sample are presented in Table 2. There was an approx­ 2 km–4.9 km 36 (37.5) 73 (35.3)
imately equal representation of males and females. A majority of par­ More than 5 km 25 (26.0) 35 (16.9)
Frequency of visits to pharmacy rated
ticipants were 50 years or older and were relatively highly educated
At least once every 0 (0.0) 3 (1.4) 0.4912
with Year 12 or equivalent or higher. The most common recorded day
number of medicines taken each day was 2. Participants lived relatively At least once 12 (12.5) 37 (17.9)
close by the pharmacy with approximately half living within 2 km away. every week
There were with 96 participants who rated MLDB and 207 rated non- At least once 80 (83.3) 151 (72.9)
every month
MLDB pharmacies. When comparing characteristics of participants rat­
At least once 3 (3.1) 14 (6.8)
ing MLDB vs non-MLDB pharmacies, there was no difference in gender every year
or level of education, however participants from the MLDB group were Less often than 0 (0.0) 2 (1.0)
younger (p = 0.029), took fewer medicines daily (p < 0.001) and once a year
travelled further to the rated pharmacy (p = 0.021). Never 1 (1.0) 0 (0.0)
Frequency of pharmacy visits to other pharmacies
At least once every 0 (0.0) 3 (1.4) 0.3502
3.1. Patronage loyalty and disloyalty day
At least once 1 (1.0) 5 (2.4)
The most common response for the frequency of visits to the rated every week
At least once 14 (14.6) 39 (18.8)
pharmacy was at least once per month and to other pharmacies was at
every month
least once a year. There was no difference between MLDB and non- At least once 44 (45.8) 58 (28.0)
MLDB groups for either of these. The most common response for the every year
number of different pharmacies visited during the previous 12 months Less often than 23 (24.0) 52 (25.1)
once a year
was 2 for those rating MLDB pharmacy and 1 for those rating a non-
Never 14 (14.6) 50 (24.2)
MLDB pharmacy and this difference was significant (p = 0.026). The Number of pharmacies from which prescribed medicines were obtained from within
internal consistency of the disloyalty scale was acceptable (α = 0.69). the last 12 months
1 32 (33.3) 106 (51.2) 0.026b
3.2. Service quality, price competitiveness and loyalty intention measures 2 47 (49.0) 65 (31.4)
3 14 (14.6) 27 (13.0)
4 2 (2.1) 4 (1.9)
There was a very low level of missingness, ranging from 0% for each More than 4 1 (1.0) 5 (2.4)
of the Loyalty items to 3.3% for one of the NPS items. The mean, stan­ a
Chi-square test.
dard deviation, median, interquartile range and number of responses for b
Mann-Whitney U test.
each service quality measure is presented in Table 3. Responses to most
of the pSQ, pPC and loyalty intention items were generally high for both
MLDB group. A majority of items from the pSQ were rated significantly
pharmacy types, with the median scores ranging from 2.0 (disagree) to
lower in MLDB pharmacies whereas pPC items were rated significantly
7.0 (strongly agree). The internal consistency of pSQ, pPC and loyalty
higher. One of three loyalty intention measures was rated lower in
intentions scale were acceptable (α = 0.94, 0.91 and 0.85, respectively).
MLDB pharmacies (p < 0.001), whereas there was no significant
The lowest median scores were for the Relationship Quality items in the

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Table 3 3.3. Summary of SEM

Descriptive statistics of perceived low prices, perceived service quality scale and
loyalty intentions. The variable pSQ had a strong effect on loyalty intentions and
Dimension Major Leading Discount Brand All Other Brands P valuea patronage history in this model. The direct effect of pSQ on loyalty in­
(n = 96) (n = 207)
tentions (H1) was strongly positive (β = 0.41, p < 0.05), the path from
pSQ to patronage loyalty (H2) was moderately positive (β = 0.38, p <
Item label
0.05) and the path from pSQ to patronage disloyalty (H3) was strongly
Health & medicines advice (HMA) negative (β = - 0.40, p < 0.05). The direct plus indirect effect of pSQ on
HMA1 6.0 (5.0–7.0) 6.0 (6.0–7.0) 0.102 intentions was very strong (β = 0.64, p < 0.05).
HMA2 6.0 (5.0–7.0) 6.0 (6.0–7.0) 0.005
HMA3 6.0 (5.0–7.0) 7.0 (6.0–7.0) <0.001
The variable pPC had less overall effect compared with pSQ. The
Technical quality (TQ) direct effect of pPC on loyalty intentions (H6) was moderately positive
TQ1 6.0 (6.0–6.0) 6.0 (6.0–7.0) <0.001 (β = 0.24, p < 0.05), the path from pPC to patronage loyalty (H7) was
TQ2 6.0 (6.0–7.0) 7.0 (6.0–7.0) <0.001 weakly negative (β = − 0.19, p < 0.05) and the path from pPC to
TQ3 6.0 (5.0–7.0) 7.0 (6.0–7.0)
patronage disloyalty (H8) was not significant. The direct plus indirect
<0.001
TQ4 6.0 (5.0–6.0) 6.0 (5.0–7.0) 0.952
Relationship quality (REL) effect of pPC on intentions was moderate (β = 0.20, p < 0.05).
REL1 4.0 (3.0–6.0) 6.0 (5.0–7.0) <0.001 Previous patronage history was a good predictor of loyalty in­
REL2 3.0 (2.0–5.0) 5.0 (3.75–6.0) <0.001 tentions. The path from patronage loyalty to loyalty intentions (H4) was
REL3 4.0 (2.0–6.0) 6.0 (4.0–7.0) <0.001 moderate (β = 0.23, p < 0.05) and from patronage disloyalty to loyalty
Environmental quality (ENV)
ENV1 5.0 (4.0–6.0) 6.0 (5.0–7.0) <0.001
intentions (H5) was moderately negative (β = − 0.35, p < 0.05).
ENV2 5.0 (4.0–6.0) 6.0 (5.0–7.0) <0.001 A summary of the multivariate regression analyses of pSQ, pPC,
ENV3 6.0 (5.0–6.0) 6.0 (5.0–6.0) 0.041 patronage loyalty and patronage disloyalty on loyalty intentions, in the
Non-prescription service (NPS) presence of covariates is presented in Table 4. In the first step of the
NPS1 6.0 (5.0–6.0) 6.0 (5.0–7.0) 0.006
model, pSQ and pPC alone explained 53% of the variation in loyalty
NPS2 6.0 (5.0–6.0) 6.0 (5.0–6.0) 0.001
NPS 3 6.0 (5.0–6.0) 6.0 (5.0–7.0) <0.001 intentions. The % variance explained increased to 61% in the second
Health outcomes (HO) step (with the inclusion of the patronage variables) which only
HO1 5.0 (4.0–6.0) 5.0 (4.0–6.0) 0.062 marginally increased in step 3 (with all the covariates). The final model
HO2 5.0 (4.0–6.0) 5.0 (4.0–6.0) 0.128 predicted 63% of the variation in loyalty intentions. The estimate (un­
HO3 4.0 (4.0–6.0) 5.0 (4.0–6.0) 0.009
standardized effect with 95% bootstrap confidence intervals) of the ef­
Price Competitiveness (PC) fect on loyalty intentions of pSQ and pPC were 0.552 (0.437, 0.662) and
PC1 6.0 (6.0–7.0) 6.0 (5.0–7.0) 0.002
0.232 (0.129, 0.346), respectively. The effect of patronage loyalty and
PC2 7.0 (6.0–7.0) 6.0 (5.0–6.0) <0.001
patronage disloyalty on loyalty intentions were 0.308 (0.040, 0.534)
Loyalty Intentions (LI)
and − 0.340 (− 0.454, − 0.234) respectively. No other measured covari­
LI1 6.0 (5.0–7.0) 6.0 (5.0–7.0) 0.244
LI2 6.0 (6.0–7.0) 7.0 (6.0–7.0) 0.249
ate: gender, age, education, socio-economic status, frequency of medi­
LI3 6.0 (6.0–7.0) 7.0 (6.0–7.0) <0.001 cine use, distance from pharmacy, pharmacy type (MLDB vs non-MLDB)
a was significantly predictive of loyalty intentions.
Mann-Whitney U test.

4. Discussion
difference in the other measures.
SEM including the latent measures, pSQ, pPC, patronage loyalty,
This study conducted among Australians who were regular users of
patronage disloyalty and loyalty intentions.
prescription medicines, captured participants’ perceptions of the phar­
The suitability to perform CFA and then SEM was first deduced from
macy that they had most recently visited, along with their self-reports of
the absence of multicollinearity in the data. Analysis of the item corre­
patronage of that pharmacy (patronage loyalty) and other pharmacies
lation matrix showed no relationships >0.90, therefore multicollinearity
visited (patronage disloyalty). Survey items also included consumers’
was not viewed as problematic.44 The goodness of fit indices show that
pSQ and pPC, along with loyalty intentions towards that pharmacy.
the CFA model was not an ideal fit to the collected data as the CFI had
While there is naturally some variation in all these variables, a clear
not achieved target; Yuan-Bentler scaled χ2 = 592, df = 298, CFI = 0.92,
majority recorded very high loyalty intentions towards the pharmacy
RMSEA = 0.055 (90% confidence interval = 0.048, 0.062). A range of
they rated, and this is also consistent with previous studies.18–20 While
modifications to the model were attempted based on the Lagrange
most consumers self-reported a high level of patronage loyalty, in that
Multiplier Test for adding parameters. The most common type of
they visited the rated pharmacy at least once a month, patronage
modification suggested were correlated residuals between items within
disloyalty was also present. More than half reported that they visited at
each of the dimensions of pSQ. None of the suggested modifications
least one other pharmacy more often than once each year and around
changed the model fit substantively. An inspection for ways to improve
20% at least monthly or more often. Participants tended to rate the pSQ
model parsimony was investigated, in particular looking for lack of
items very highly, indicating generally high regard for service quality in
discriminant validity between factors. The highest correlation between
Australian community pharmacies and this is consistent with previous
factors was 0.72, p < 0.001 and thus lack of discriminant validity be­
studies.18–20,40 Participants also rated pPC items very highly, indicating
tween factors was rejected49 and no model further changes to the model
that Australian pharmacies were considered price competitive for
were attempted. The conclusion was that since the RMSEA was <0.6, the
medicines and other products.
model was accepted as reasonable to consider. The goodness of fit sta­
The main highlight of this study was that perceptions of service
tistics for the SEM including patronage loyalty and patronage disloyalty
quality were more strongly associated with both behavioral loyalty
indicated that the model was a good fit for the data. The proportion of
(patronage) and intentional loyalty than perceptions of price competi­
standardized residuals greater than |0.1| was 10% and reasonably
tiveness. The combination of pSQ, pPC and patronage (loyalty and
symmetrical; Yuan-Bentler scaled χ2 = 574, df = 298, CFI = 0.92,
disloyalty) predicted 69% of the variation in loyalty intentions in the
RMSEA = 0.054 (90% confidence interval = 0.046, 0.060). The model
SEM. Thus, the results of this study support Zeithaml’s contention that
predicted 12%, 15% and 69% of the variation in patronage loyalty and
consumers trade-off their perceptions of cost with perceptions of service
patronage disloyalty and loyalty intentions, respectively. The final
quality to select service providers.8 In terms of behavioral loyalty, pSQS
model is fully presented in Fig. 2 and summarized for clarity in Fig. 3.
was clearly associated with both higher patronage of the rated pharmacy

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S.R. Carter et al.
Fig. 2. Structural equation model. In the diagram, the effect of perceived service quality is specified to occur through the “general factor” of the bifactor model.
Perceived Price Competitiveness = “PriceCompFactor”. Patronage of the rated pharmacy (loyalty) = “patronage”. Patronage of other pharmacies (disloyalty) =
“PatronageOther”. Loyalty intentions towards the rated pharmacy = F11.
(β = 0.38, p < 0.05) and reduced patronage of other pharmacies
(disloyalty) (β = − 0.40, p < 0.05), while pPC was a poor predictor of
both. In terms of generating loyalty intentions, the combined direct and
indirect effects of pSQ on intentions were more than three times greater
than pPC (β = 0.64 vs 0.20) in the multivariate model. It is important to
note that in the multivariate model no covariates were independent
predictors of loyalty intentions. Accordingly, although price competi­
tiveness is helpful in generating customer loyalty, pharmacy managers
should prioritise the management of perceived service quality, irre­
spective of considerations of location and consumer mix due to age or
socioeconomic status. It is apparent that customer loyalty may ensure
the economic survival of most businesses, through repeated patronage
and more frequent purchases. This is particularly relevant to pharmacy
businesses that cater for clients with on-going healthcare requirements,
such as those with chronic diseases.
While increasing loyalty has benefits to the pharmacy business, there
is evidence to show that a consumer’s choice to use a single pharmacy
can produce health benefits, including a reduction in the use of hospital
services and the number of adverse drug events, possibly due to
centralized record keeping.50 Providing high quality service allows for
stronger therapeutic relationships by leveraging patient trust,10 and is
associated with, for example, increasing consumers’ willingness to have
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Research in Social and Administrative Pharmacy 19 (2023) 717–727
their children receive HPV vaccinations.7 Our previous research has
demonstrated that high pSQ was associated with higher medication
adherence.40
4.1. Creating perceptions of high service quality
The very large effect-size of pSQ on consumers’ loyalty intentions in
this study can be used to inform the development of evidenced-based
marketing strategies.6,51 When doing so it will be useful to consider
how consumers’ perceptions of quality service relates to the seven ele­
ments (7Ps) of marketing mix: product, price, place, promotion, people,
process, and physical evidence.52 Planning for high service quality in
community pharmacy means enabling pharmacy staff (including
non-pharmacist staff) to be accessible and available to consumers. It
requires technically competent staff to provide consumers with advice
about their prescription and non-prescription medicines and actively
help consumers to select non-prescription medicines, all within the
confines of a comfortable and easy-to navigate environment.18–20,40
Clearly, this aligns with what consumers have been telling researchers
they want from a pharmacy.51,53 Recently, consumers have also
mentioned that pharmacies should maintain good hygiene practices.54
Empowering pharmacy staff to provide good service quality
S.R. Carter et al.
Fig. 3. Summary of Structural equation model. The numbers are standardized beta weights (*, p < 0.05).
facilitates the development of trusting relationships, built on the
premise that the consumer’s health is paramount.18–20,40 It is
well-known however, that some consumers are somewhat fearful and
can be reluctant to use prescription medicines and non-prescription
medicines or use them in ways that differ from the directions pro­
vided.55 Such fear of non-prescription medicines has been associated
with poor communication between customer and staff.56 Empowering
staff to engage with consumers about potentially emotionally charged
topics requires specific training and support in the workplace. Staff need
to have adequate and up-to-date therapeutic knowledge, regulatory
awareness and communication skills when supplying non-prescriptions
medicines to manage, with a view to driving loyalty. In a recent scoping
review on the topic of training, it was concluded that there is an
imperative for “more in-depth study and professional training in
behavioral, communication, educational, and sociological methodolo­
gies and techniques in pharmaceutical counseling practices.57 The au­
thors suggested that community pharmacies needs “re-professionalism”,
as professionalism had been undermined by mercantilism of the sector
and growing consumerism.57 Managers aiming to improve service
quality may be interested in the growing trend to use the simulated
patient method. This involves sending a trained actor, who is indistin­
guishable from a regular consumer, into a healthcare setting with a
standardised and scripted request.58 Direct observation of behaviour can
be consequently be used to change practice behaviour through coaching
and feedback.59
White and Klinner inform us that in order to deliver high service
quality, pharmacy staff desire specific and regular performance feed­
back.60 They feel the need to be actively involved in internal quality
control programs; and to understand the management’s goals and staff
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Research in Social and Administrative Pharmacy 19 (2023) 717–727
reward systems. Good management structures will enable staff to ensure
that the pharmacy stocks high quality products, displayed to align with
the marketing strategy while maintaining a tidy and easily navigable
store environment. They will need to ensure that sales are processed
efficiently to allow for a focus on good interpersonal skills.60 An initial
step in a quality improvement program could be to obtain baseline
perceptions of pharmacy customers for measurable goal-setting. The
short-form version of the pSQS is suitable for that purpose.20
4.2. Pricing cannot be ignored
Perceptions of price competitiveness appears to have some, albeit
smaller role in influencing loyalty intentions. The small direct plus in­
direct effect of pPC on intentions in the SEM (β = 0.20) was broadly
consistent with the effect size seen in the multivariate regression (β =
0.25). Somewhat surprisingly, there was a slight negative association
between pPC and patronage loyalty. This seems counterintuitive but
could indicate that customers with perceptions that a pharmacy has
competitive prices visit that pharmacy less often for rational reasons.
One of the marketing tactics of price promotion is to “bundle” goods in
larger pack sizes, the purchase of which may result in less need to re-visit
the store. It was expected the MLDB would have created the impression
that their pharmacies had low prices and indeed, that was borne out
(Table 3). On the other hand, consistent with a previous study, patrons
of MLDB pharmacies rated pSQ lower than customers of other phar­
macies.40 Given the strong effect of pSQ on loyalty intentions, this in­
dicates significant potential for the MLDB to build loyalty through
improvements in creating perceptions that they deliver high quality
service. In Australia, community pharmacies that are not part of the
S.R. Carter et al. Research in Social and Administrative Pharmacy 19 (2023) 717–727

Table 4
Summary of multivariate regression with bootstrapping for the effect of perceived service quality perceived low prices and patronage and on loyalty intentions (N =
303).
Model Variables Unstandardized Coefficients Bootstrap 95% Confidence Standardized Coefficients Significance
Intervals

Category of variables B (SE) Lower Upper Beta P

1 Constant 0.928 (0.410) 0.074 1.646 0.002

Psychosocial variables Perceived service quality 0.679 (0.077) 0.542 0.822 0.599 0.000
Perceived price competitiveness 0.230 (0.047) 0.131 0.346 0.250 0.000

Adjusted R squared 0.525

2 Constant 1.139 (0.515) 0.144 2.155 0.001

Psychosocial variables Perceived service quality 0.519 (0.057) 0.420 0.619 0.458 0.000
Perceived price competitiveness 0.250 (0.043) 0.155 0.354 0.271 0.000
Patronage Rated Pharmacy 0.350 (0.128) 0.096 0.569 0.188 0.000
Other Pharmacies − 0.313 (0.048) − 0.424 − 0.210 − 0.265 0.000

Adjusted R squared 0.612

3 Constant 1.190 (0.757) − 0.177 2.827 0.094

Psychosocial variables Perceived service quality 0.552 (0.066) 0.437 0.662 0.487 0.000
Perceived price competitiveness 0.232 (0.045) 0.129 0.346 0.252 0.000
Patronage Rated Pharmacy 0.308 (0.129) 0.040 0.534 0.165 0.000
Other Pharmacies − 0.340 (0.052) − 0.454 − 0.234 − 0.288 0.000
Covariates Gender (Male vs Female) − 0.079 (0.083) − 0.260 0.098 − 0.038 0.318
Increasing age − 0.006 (0.003) − 0.012 0.002 − 0.074 0.085
Increasing education attained 0.016 (0.002) − 0.058 0.103 0.017 0.664
Increasing socio-economic status 0.000 (0.001) − 0.001 0.001 0.021 0.584
Increasing frequency of medicine use 0.038 (0.036) − 0.033 0.113 0.054 0.211
Increasing distance from pharmacy − 0.042 (0.044) − 0.124 0.053 − 0.038 0.323
Pharmacy type rated (MLDB vs non-MLDB) 0.148 (0.106) − 0.059 0.330 0.066 0.123

Adjusted R squared 0.623

1 MLDB (major leading discount brand).

major discount brands have been reminded that lowering prices to
compete with the discounters can have devastating effects on the prof­
itability and viability of the business.61 Noting that the present study
shows that price perception is not to be ignored, one pricing strategy
that may be useful is known-value-item (KVI) pricing of commonly
purchased benchmark brand lines.61 Since these products are regularly
purchased, KVI can reduce the number of times that they need to visit
other pharmacies.61 Nevertheless, if price-focused strategy is to be used,
it is worthwhile to undertake a thorough investigation of the range of
various retail pricing strategies, which evolve over time.62
4.3. Habits: the importance of generating behavioral loyalty
As expected, recent patronage behavior (loyalty and disloyalty) were
good predictors of loyalty intentions. That is, the more often a partici­
pant had visited the rated pharmacy and the less they had patronized
other pharmacies, the more loyal they intended to be towards the rated
pharmacy. The effect of patronage behavior on loyalty intentions is
exemplified in the multivariate regression (Table 4) by the 8% increase
in proportion of variance explained when measures of patronage
behavior were added to their measures of pSQ and pPC. This habitual or
spurious loyalty refers to the tendency to not change pharmacies
regardless of perceptions of service quality or price competitiveness.34
The message for pharmacy managers is that marketing strategies centred
on providing excellent service should be implemented to reduce the
reason for their customers to be potentially exposed to superior service
quality in other pharmacies.
While the combined effects of pSQ, pPC and patronage were good
predictors of loyalty intentions (69% explained), the combined effects of
pSQS and pPC on patronage were relatively low, being 12% and 15%
explained for loyalty and disloyalty, respectively. This is consistent with
a more general trend that psychosocial and other measures are better
predictors of intentions than behavior. For example, a meta-analysis of
350 samples of 239,000 shoppers from 41 countries exploring factors
predicting 61.1% and 10.4% of variation in patronage intention and
behavior, respectively.30
4.4. Strengths & limitations
A strength of this study was that the data was collected online and
anonymously and therefore there is an absence of social desirability bias
created by the participant answering questions in front of the
researcher.63 However, a potential limitation is participants satisficing
towards survey items, meaning that they responded in a way which
reduced cognitive burden. This is known to manifest as acquiescence, or
agreement response tendency,64 and could explain the high skew and
kurtosis of the data. One potential control for acquiescence is to create a
balanced response set of positively and negatively worded items. How­
ever, the positive wording of items throughout the service quality survey
was made as a deliberate choice by previous researchers based on the
knowledge that negative wording can distort factor analysis through the
emergence of artificial factors.65 It is also acknowledged that the
self-reports of patronage history depends on memory recall and this is
also subject to recall bias.
Of course, the robustness of the findings of any study depends on the
representativeness of the sample. While the TDE company claims that
their 100 panel members are representative of the Australian popula­
tion, it should be noted that the panel members have motivation and
sufficient literacy to complete surveys on-line. While the link between
pSQ and loyalty has been previously demonstrated using paper-based
methods collected in-store,19 use of this sample presents a limitation
and future studies should aim to validate the findings, among wider
populations. It should be noted that the multivariate regression analyses
included the covariates as predictors of loyalty intentions in the final
block. Covariates were not included in multivariate analysis of pSQ, pPC
or patronage and this could be considered a limitation.
It could be argued that another limitation of the present study is that
it did not include satisfaction as a dependent or independent variable.
Rather, it focussed only on pSQ and price perceptions influencing loyalty
behavior. It is important to point out that theoretically, pSQ influences

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S.R. Carter et al.
satisfaction which in turn influences loyalty intentions.22 The enduring
effect of satisfaction on behavioral and intentional loyalty,30 was borne
out by study. However, in community pharmacy research there is an
operational issue is that constrains proper delineation of these three
constructs. As highlighted by Brady & Cronin,17 there is a lack of
discriminant validity between measures of pSQ and customer satisfac­
tion. It is known that pSQ and satisfaction and service are multidimen­
sional constructs,66 which overlap both conceptually and
operationally.67 This is exemplified in MacKeigan and Larson’s
conceptualization of satisfaction with community pharmacy which was
operationalized as direct evaluations of various dimensions of service
provision, not satisfaction itself.68 This study demonstrated the
competing effects of pSQ and pPC on behavioral and intentional loyalty.
This research was funded by Sydney Pharmacy School and did not
otherwise receive any specific grant from funding agencies in the public,
commercial, or not-for-profit sectors.
5. Conclusion
Creating perceptions that a pharmacy provides a high-quality service
appears to be far more effective than creating perceptions that the
pharmacy has competitive prices, when considering how best to drive
loyalty behavior and generate loyalty intentions. This statement stands,
regardless of patient demographic, socioeconomic status, the distance
between the pharmacy and the consumer’s home and apparently,
whether the pharmacy sets out to discount prices. This finding affords a
motivation for both discount AND non-discount brand pharmacies to
undertake the steps needed to improve service quality,60 in order to
drive loyalty.
CRediT roles
Dr. Stephen R Carter: Conceptualization; Data curation; Investiga­
tion; Formal analysis; Methodology; Supervision; Validation; Roles/
Writing - original draft; Writing - review & editing; Funding acquisition,
Atef Mudarris Ahmed: Investigation; Project administration; Writing -
review & editing., Dr. Carl R Schneider: Conceptualization; Methodol­
ogy; Writing - review & editing; Funding acquisition.
We declare no conflicts of interest.
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