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A Study on Service Quality and Customer Satisfaction of Supermarkets in Sri

Lanka

Article · December 2015

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Sri Lanka Journal of Marketing
Vol. 01, Issue 02 (July – December 2015):36-46
ISSN 1800-4989

A Study on Service Quality and Customer Satisfaction of Supermarkets in Sri

Lanka

R.A.S. Weerasiri1
Department of Marketing Management, University of Kelaniya, Kelaniya,Sri Lanka.

Abstract: Customer satisfaction is multifaceted phenomenon and it consists of different

dimensions and service quality is known as a predominant factor as the most studies revealed that
a close relationship between customer satisfaction and service quality exists. The supermarket
industry in Sri Lanka has shown explosive growth as favorable economic conditions. The present
study was conducted to examine the service quality of supermarkets in Sri Lanka and its impact
on customer satisfaction. Two hundred super supermarket customers from the Colombo district
were randomly selected for the survey. Service quality was estimated using five dimensions;
reliability, responsiveness, assurance, empathy and customer care. Regression analysis was
performed to analyze the relationship between service quality dimensions and customer
satisfaction. All the service quality dimensions were significant (p<0.05) in the regression analysis
proving that all service quality dimensions were significant predictors of customer satisfaction.
Moreover, the positive regression coefficient (R2= 0.748 and Adjusted R2= 0.724) stated that there
was a strong relationship between service quality and customer satisfaction. Overall, study finding
emphasized that, there is a positive relationship between service quality and customer satisfaction
of supermarkets in Sri Lanka.

Key words: Service quality, Customer satisfaction, Supermarkets

JEL Classification: I180, I380, I10

1
Corresponding author’s e-mail sudathweerasiri@hotmail.com

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

Introduction

As a critical measure of organizational performance, service quality remains specifically at the

forefront of both marketing literature generally, and services marketing literature (Jensen &
Markland, 1996). According to Cronin & Taylor (1992) and Taylor & Baker (1994) service
quality is commonly noted as a critical prerequisite for establishing and sustaining satisfying
relationships with valued customers. Service quality and customer satisfaction are inarguably
the two core concepts that are at the crux of the marketing theory and practice (Spreng &
Mackoy, 1996).

Customer service has become a distinct component of both product and service sectors and with
the developments in information technology many businesses find demanding and
knowledgeable customers. In an increasingly competitive environment, companies must be
customer oriented (Kotler, 1997). After all, the underpinning concept of marketing is that
identification and satisfaction of customer needs lead to improved customer retention (Day,
1994). The supermarket industry in Sri Lanka is set for explosive growth, given the western
lifestyles of Sri Lankans, where convenience is a key benefit sought. Cargills Food City, Keells
Super and Luagfs Sunup are some of the supermarket chains that have expanded operations. In
addition there are other operators such as Park n' Shop, Arpico Super Centres and Crystal
(Business & Finance, 2012). However, despite the growth potential, the Modern trade
Managers Survey report (2011) says that most supermarkets operate on thin margins and try to
sell higher volumes to cover operational costs while at the same time focusing on cost effective
strategies. Owing to the high competition in the industry; various promotions and loyalty
schemes, advertising has to be carried out on a regular basis to retain the respective clientele
keeping the switching cost of customers at a minimum (Business & Finance, 2012). There are
516 supermarkets being operated in the country which can be categorized as supermarkets,
hypermarkets and convenience stores. Cargills operates 177 supermarkets and the state owned
Sathosa which offers products at a subsidized rate operates a convenience store network of 250
stores. Keells has 48 supermarkets being converted to a hyper markets while Arpico operates
13 hyper markets (Business & Finance, 2012).

Modern trade sector rapidly increased with the favorable economic situation in the country
(Annual Report, 2011). According to the Modern trade Managers Survey report (2011),
number of customer complaints against supermarkets has been increased over the period of
time. One of the main objectives of the outlet managers of respective outlet was to solve
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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

customer related issues (Modern trade Managers Survey report, 2011). Following table depicts
that the average customer complaints per outlet in Western Province.

Table 1. Average customer complaints per outlet in Western Province (Per month)
Supermarket Number of outlets
A 167.30
B 214.44
C 121.60
D 93.10

Source: Modern trade Managers Survey report (2011)

Kampala (2009) stated that gaps in service quality and customer satisfaction in supermarkets
have led to persistent complaints such as lack of customer care and attitudes of service
providers towards customers whereas a service firm reputation depends entirely on the level of
service quality. However managers and scholars are indifferent on whether to measure the level
of service quality based on the level of management or customer’s perceptions of quality
(Spreng & Mackoy, 1996). Therefore, This study was carried out to check whether customers
engaged in the supermarket shopping are satisfied according to the service provided by the
respective supermarkets.

Key Objective

• To examine the service quality of supermarkets in Sri Lanka and its impact on customer
satisfaction

Specific Objectives
• To examine the level of service quality in supermarkets

• To identify the level of customer satisfaction in supermarkets

• To identify the relationship between service quality dimensions and customer

satisfaction in supermarkets
• To provide recommendations for supermarkets in order to increase the customer
satisfaction

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

Literature Review

Service Concept
A study carried out by Johns (1999) point out that the word ‘service’ has many meanings which
lead to some confusion in the way the concept is defined in management literature, service
could mean an industry, a performance, an output or offering or a process. He further argues
that services are mostly described as ‘intangible’ and their output viewed as an activity rather
than a tangible object which is not clear because some service outputs have some substantial
tangible components like physical facilities, equipment and personnel.

Service Marketing
Rushton & Carson, (1989) have offered insights on the theory, practice, and future of services
marketing. They focus on the intangibility of services and the need in marketing to improve
management of intangibles. Carson, (1991) examines customer needs and stresses the
importance of managing to fulfill needs. The construct of service quality as conceptualized in
the service marketing literature centers on perceived quality, defined as a consumer’s judgment
about an entity’s overall excellence or superiority (Zeithaml, 1988).

Service Quality
Satisfaction from service quality is usually evaluated in terms of technical quality and
functional quality (Gronroos, 1984). Usually, customers do not have much information
about the technical aspects of a service; therefore, functional quality becomes the major
factor from which to form perceptions of service quality (Donabedian, 1980). Service quality
may be defined as customer perception of how well a service meets or exceeds their
expectations. Service quality can be measured in terms of customer perception, customer
expectation, customer satisfaction, and customer attitude (Sachdev, S. B., and Verma, 2004).
Ekinci (2003) indicates that the evaluation of service quality leads to customer satisfaction.
Defining the concept of quality is the most important criteria in the economic development of
international companies, whereas under different circumstances it has prevented the emergence
of a universal definition (Reeves & Bednar, 1994).

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

Service Quality Dimensions

Service quality is known to be based on multiple dimensions (Gronroos, 1984). However, a
review of the service quality studies to date explicitly shows that European scholars have
exerted a great influence on the study of service quality dimensions. That is, the contemporary
discussions on the dimensions of service quality have been initiated by European scholars.
Lehtinen, J.R. and lehtinen, (1982) defined service quality in terms of physical quality,
interactive quality and corporate (image) quality. Physical quality relates to the tangible aspects
of the service.

Customer Satisfaction
According to Hansemark & Albinsson (2004) “satisfaction is an overall attitude towards a
product provider or an emotional reaction to the difference between what customers expect and
what they actually receive regarding the fulfillment of a need”. Kotler (2000), Hoyer &
MacInnis, (2001), also define satisfaction as a person’s feelings of pleasure, excitement, delight
or disappointment which results from comparing a products perceived performance to his or
her expectations. Satisfaction is a crucial issue for both customer and retail management. It is
an important concept within general retail marketing and consumer research. (Anselmsson,
2006). Customer satisfaction in a retail setting has been linked to a number of important
outcomes, including sales performance, customer retention and loyalty (Darian, Tucci, &
Wiman, 2001).

Dimensions of Customer Satisfaction

Satisfaction (Hokanson, 1995) is affected by many factors which include friendly employees,
courteous employees, knowledgeable employees, and helpful employees, accuracy of billing,
competitive pricing, service quality, good value and quick service. For purposes of this study,
the researcher concentrate on nine dimensions of customer satisfaction which are Location,
Additional Services, Product Quality, Service Quality, Facilities, Reliability, Process, Value
for Money, Staff and Personnel Service. Furthermore, the nine dimensions also consist of 21
elements which are used in the collection of data and analysis of results.

Relationship between Service Quality and Customer Satisfaction

Customer satisfaction should be seen as a Multi-dimensional construct just as service quality
and it can occur at multi levels in an organization and that should be operationalized along the

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

same factors on which service quality is operationalized. Parasuraman, A., Zeithaml, V. A., &
Berry, (1985) suggested that when perceived service quality is high, it will lead to an increase
in customer satisfaction. He supports the fact that service quality leads to customer satisfaction
and this is in line with (Saravanan & Rao, 2007).

Service Quality

• Reliability

• Responsiveness
Customer Satisfaction
• Empathy

• Customer care

• Assurance

Figure 1. Conceptual Framework

Research Hypothesis

There is a positive relationship between service quality and customer satisfaction of

supermarkets in Sri Lanka

Methodology

A self-administrated questionnaire was used in order to collect primary data to assess the
relationship between service quality and customer satisfaction in supermarkets. Customers at
the supermarkets for purchasing goods were considered as the population .Two hundred
customers from Colombo district such as 132 shoppers from Cargills, 32 from Keells Super,
18 from Arpico Super and 18 from Laugfs (Total number of outlets as at November 2013) were
selected on convenience basis. Following table describes the composition of the study sample.

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

Table 2. Composition of the study sample

Supermarket Name Number of outlets Number of Participants
Cargills Food City 197 132
Keels Super 45 32
Arpico Super 25 18
Laugfs 26 18
Total 293 200

Source: Source: Industry Reports (2011)

Frequency tables and graphs were used to show the customers’ responses. Code multiple
questions were used to identify responses from each respondent. Collected data were sorted,
edited and classified. Regression analysis was used in order to find out the relationship between
service quality and customer satisfaction.

Results and Discussion

Mean and standard deviation values for customers’ view on service quality dimensions
(Reliability, Responsiveness, Assurance, Empathy and Customer care) were measured using
the 5-point likert scale whereby the higher numbers indicate higher level of satisfaction.
Following table shows the average mean and standard deviations of the dimensions of the
service quality.

Table 3. Summary of Means and Standard Deviations of customers’ view on service

quality dimensions
Service Quality Dimensions Mean Standard Deviation

Reliability 3.599 0.691

Responsiveness 3.930 0.792
Assurance 3.788 0.842
Empathy 3.668 0.883
Customer Care 3.786 0.855

Source: Survey Data (2014)

On average, customers are satisfied with the level of services offered by supermarkets. As the
mean score & standard deviation for responsiveness of 3.930 and 0.792 respectively, customer
view deviated from satisfactory to agree. Assurance dimension results show that deviation from

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

the mean which is satisfactory to agree. The mean and standard deviation for empathy
dimension are 3.668 and 0.883 respectively. The standard deviation for empathy 0.883, means
that the views on empathy dimension of the customers are satisfactory to agreeable. Average
mean and standard deviation values for customer care dimension are 3.786 and 0.855
respectively. According to standard deviation the views on customer care dimension of the
customers are satisfactory to agree of the supermarkets in Sri Lanka. Following table illustrates
the general regression analysis of service quality dimensions.

Customer Satisfaction = 3.3006 + 2.040804 Reliable + 2.049213 Responsiveness

+2.03250 Assurance + 2.079641 Empathy +2.0016169 Customer care
Table 4. Regression analysis of service quality dimensions

Term Coef SE Coef T P

Constant 3.30062 0.261679 12.6132 0.000

Reliable 2.04080 0.147663 4.8561 0.013
Responsiveness 2.04921 0.235834 6.3734 0.011
Assurance 2.03251 0.226550 5.2245 0.002
Empathy 2.07964 0.231820 2.50280 0.013
Customer care 2.00162 0.132806 3.04930 0.041
Summary of Model
S = 0.294382 R-Sq = 74.89% R-Sq(adj) = 72.44%

Source: Survey Data (2014)

Regression analysis showed that all five service quality dimensions were significant predictors
of customer satisfaction: Reliability (p=0.013), responsiveness (p=0.011), assurance (p=0.002),
empathy (p=0.013) and customer care (p=0.041). These variables were part of a final five-
variable model. This regression model was significant at p<0:05 and had an adjusted R2 of
0.724 and R20.748. Overall service quality (p=0.038) was significant predictors of customer
satisfaction. This regression value was significant at p<0:005 and had an adjusted R20.806 and
R2 0.811. Satisfaction does not depend on service quality alone and higher levels of quality are
worthwhile to the extent that customers believe that value is being enhanced. The results also
provide a basis for understanding the role of supermarket service quality. Oliver (1997) argued
that, although an offering may not be high in terms of quality, the other variables contribute to
good levels of customer satisfaction. The findings substantiate the salience of customer
satisfaction in services marketing confirming that ensuring customer satisfaction should be as

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Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

much a concern in service marketing as obtaining positive service quality judgments.

Regression analysis of customer satisfaction and overall service quality were performed for the
female customers. Overall service quality (p= 0.0156) was significant predictors of customer
satisfaction of female customers. This regression value was significant at p<0:05 and had an
adjusted R2 of 0.8 and R2of 0.801. Regression analysis of customer satisfaction and education
level was also performed. Education level (p= 0.000) was significant predictors of customer
satisfaction. Both male and female customers showed strong positive R2 and adjusted R2 values
for service quality and customer satisfaction.

Conclusion and Recommendation

There was a strong positive relationship between service quality offered by supermarkets and
the customer satisfaction. Gender wise comparison further revealed that there was a positive
relationship between service quality and customer satisfaction for female customers than male
customers. Service quality dimensions were internally consistent and further describe the better
predictive ability in the regression analysis. There were other factors than service quality in
supermarket that could be affecting to customer satisfaction. Therefore emphasis should be put
on identifying other factors that may affect customer satisfaction in supermarkets.

These recommendations are based on the study findings and aim at establishing service quality
which will eventually lead to customer satisfaction. Therefore managers of supermarket should
pay attention to service quality and other factors which may lead to customer satisfaction.
Although some managers may believe that quality aspects of the exchange are beyond their
control, it’s evident that managers of services need to recognize and accept that service quality
will inevitably take place and that it has a significant effect on both the customers and workers’
perceptions of the service.

Areas for Future Research Work

Present study was carried out in the Colombo district, Sri Lanka due to time limitation etc…
Colombo district is the highest populated district and it is important to extend this study to
different districts around the country as it will give comprehensive picture on service quality
and customer satisfaction of the supermarket sector. Similar study could be conducted with a
larger sample size so that results could be generalized to a larger population.

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 Sri Lanka Journal of Marketing Vol. 01, Issue. 02 (July – December 2015)

• Future studies can be focused on supermarket employees’ intension on service quality

as well and it will give good information on employee perception on service quality.
• This study has mainly focused on highly established private sector supermarket chain
in Sri Lanka. Nowadays government established supermarkets are also becoming
popular. In future studies could be focused on whether there is difference in customer
satisfactions between government supermarket and private sector.
• There are factors other than service quality in supermarket that could be affecting to
customer satisfaction. Therefore future studies could be made on identifying other
factors that may affect customer satisfaction in supermarkets.
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