rough work dissertation

8/6/2019 Rough Work Dissertation

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Chapter 1: Introduction Research Background At present, various marketing tools

are being used by hospitality industry which is constantly augmenting with time.

One can notice a frantic contention among hotels for implementing new marketing

strategy where customer is the centre of attraction and imperative element for

growth prospect. Research according to Mangold et al. (1999) has established the

considerable effect of "word-of-mouth" (WOM) on customer23 purchasing

behaviour. On the other hand, Maxham (1999) declared the significance of

WOM in service industry as it aids vital information to the customers about a firm

that oftentimes helps them to decide in supporting or degrading the firm. Traditional

WOM communication is a primitive way of sharing thoughts, ideas and it has exist ed

ever since people began to exchange information. Change is constant and as the

time has changed, so has the nature of WOM. It has evolved from an insentient

process to something that modern advertiser try to influence and use for business

enhancement (Sernovitz, 2009) (1). Word-of-mouth as stated by Smith et al.

(2007) has become significant to businesses as traditional marketing methods

(television, radio, and direct mail etc.) are not as effective at reaching target

customers as they once were. That is why in recent years there has been an

increasing interest towards more cost effective, unconventional methods of

marketing i.e. WOM (Keller, 2007). Mangold et al. (1999)(PROPOSAL) proposed that

WOM is more dominant and significant in service industry than in the business

sector as customers11 have been perceived to rely on WOM to diminish the

level of perceived risk and uncertainty which are often associated with

service purchase decisions. As per Allsop et al. (2007) the increasing lack of

trust in marketing communication has left consumer to seek information from other

sources as a result word-of-mouth become most consistent source of information as

consumer gives more value to recommendations fro m friends. Marketer-initiated

communication appears to be declining as consumer driven suggestions and

recommendations of product increases the credibility of information and leaves more

impact on purchase decision of customers (Keller, 2007). The influenc e of WOM

marketing is nurturing and getting even stronger (Allsop et al., 2007). As per

authors (Keller, 2007) research demonstrates that WOM communication consistently

surpasses the image of product that was generated due to advertisements inmagazines, television commercials and radio, because personal recommendation

adds more value to the product thereby leaving much more impact on consumers.

Thomas (2004) contended that retaining old customers and acquiring new ones is

one of the primary goals of any co mpany, which easily can be achieved by

marketing communication tool i.e. 'WOM' because authors (Villamueva et al., 2008)

proposed that WOM communication can help to acquire new consumers. Today,

WOM is no longer restricted to face-to-face communication. As per Ecceleston and

Griseri (2008) online environment offers innumerable new opportunities for


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businesses to influence the consumers' behaviour and opinions towards product.

This relatively new phenomenon as stated by Keller (2007) is referred as online -

WOM (e-WOM) and it is a primary element of marketing practise due to great

internet usage. The increasing number of people using internet indicates a potential

market for companies to aim at (Pitta and Flower, 2005) and in conjunction with the

growth of social media, several companies are now focusing on this area (Computer

Economics Report, 2010). This represents that companies' interest in online WOM

marketing has increased and will keep on growing as internet matures. (word of

mouth in service industry has to be added) Hence, it is easy to comprehend that

WOM plays a noteworthy role in service industry and service purchasing behaviour

of customers. After seeing the significant impact of WOM in influencing consumer

behaviour, several hospitality businesses f or rapid business expansion are shifting

from traditional word of mouth to online word of mouth to cover large consumer

market. Although a great deal of work has been done on effectiveness of WOM in

popular literatures, however there has been a very limite d research carried out

contrasting traditional/offline-WOM and electronic/online-WOM (e-WOM). This study

is attempted to fill the research gap and is intended to do a comparison of offline -

WOM (traditional) with e- WOM (modern). It is going to evaluate the effectiveness if

offline-WOM is more effective than e-WOM in influencing consumer purchase

decision in service industry or vise-versa. The research is conducted on consumer

purchase behaviour to select a restaurant to dine out in people from Sheffield. Th is

study evaluates both market communication tool and examines the potency of

traditional word-of-mouth in comparison with contemporary word -of-mouth (e-

WOM) on consumer behaviour in hospitality business. It will conclude with which of

the marketing communication tools (offline-WOM or e-WOM) are more powerful in

influencing consumer buying behaviour for selection of a restaurant in Sheffield.

Research Aim To compare7 traditional word-of-mouth (offline) effectiveness

with electronic word-of-mouth (contemporary) on consumers behaviour to

choose a restaurant in Sheffield Research Objectives 20 This research

is intended to investigate the impact of'word-of-mouth' on consumer decision

making behaviour to choose restaurants in Sheffield primarily. 24 In order to

achieve the research aim, the study will also explore the most encouraging

factor (food quality, service quality, food price, restaurant atmosphere) that

influences customer purchasing behaviour to choose the restaurant. The findings can

aid restaurants in Sheffield to organise their market ing strategies in a better way to

target consumers based on their 19 demographic characteristics (18-24, 25-


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34, 35-44 and 45+) and refurbish it in22 such a way that it amalgamates

with the current consumer trend for their business growth and enhancement.

Henceforth, in pursuit of assessing the impact of word -of-mouth on consumer

buying behaviour we have set few objectives to accomplish to reach our goal: To

determine the most important factors (food qualit y, atmosphere, food price, service

quality) that influence the decision of consumers to choose a restaurant to dine out.

To explore different marketing approaches i.e. social medi a7 (electronic

word-of-mouth) word-of-mouth (recommendations) and advertisements

(television, newspaper, magazine) used by hospitality businesses to persuade

customers. To7 assess the impact of word of mouth (traditional)

and social media (contemporary) on purchasing decisions of customers based on

their demographic characteristics. Research Methodology In order to obtain reliable

and factual information about the study, the researcher chose to implement both

primary and secondary methods of data collection. The research of this dissertation

can be split into two parts and includes: The review of relevant literature in the

field of study. It's a form of secondary research to gain insights into different

aspects and knowledge around the to pic. It is comprised of findings from sources

like articles, books and previous studies surrounding the examined topic. In second

part, a primary research is undertaken and is based on data collected through

questionnaire and interviews. Organisation of study This dissertation is organised

around 5 chapters: Chapter 1: deals with research background,

introduced15 research aim and the objectives researcher has to accomplish

in order to reach aim accompanied with research methodology 15 and

organisation of study. Chapter 2: holds literature review around consumer

behaviour and marketing strategies in hospitality business es. It also provides

detailed discussion on word-of-mouth including social media. Finally it

compares7 traditional word-of-mouth with electronic word-of-

mouth. Chapter 3: introduces methodology employed for primary research and

includes questionnaire design, techniques and sampling method. Chapter 4: focuses


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on findings and outcomes from the data collected. 14 Chapter 5: is the final

chapter which comprehensive concludes the research and makes

recommendations, list down limitations and suggestion for 14 future research

work. Chapter 2: Literature ReviewIntroduction This chapter critically

analyse and evaluate consumer buying behaviour towards selection of restaurant. All

the major factors that affect consumer purchasing behaviour such as service quality,

food price, food quality and atmosphere will be focused initially. In addition differe nt

marketing strategies used by hospitality business to attract customers accompanied

with factors like word of mouth, social media and advertisements will be discussed

afterwards. The chapter can be divided into three sections. Firstly it will look upon

consumer behaviour towards food price, quality, atmosphere and brand. Secondly it

will discuss the implication of word of mouth, social media and advertisement in

influencing customers buying behaviour. And the last section will deal with

comparison of7 traditional word of mouth with electronic word-of-mouth in

influencing purchase behaviour of customers. Food Services Industry The food

service industry is comprised of attributes that distinguishes it 3 from other

areas of service sector such as financial and professional services (John,

1999)-John and Pine.3 It is closely connected with food choice and

quality, however at the same time it has closely been concerned to offer

rich meal experience to which many other factors like atmosphere,

customer services etc. contribute. The food service industry has become extremely

competitive because of the rising demand and increasing 1 number of

foodservice outlets to meet the demand. As the consumption of meals

outside the home continues to rise, the restaurant industry is stated to be among

the fastest growing industries in world. Kotler et al. (1998) proposed that with the

rising competitiveness in restaurant industry and similarity of services or products

offered by restaurants, it has become significantly important for restaurant


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operators to identify the factors that determine the basis upon which customers

choose between restaurants. Many Authors (Auty, 1992; Johns and Pine, 2002; W all

and Berry, 2007) constructed that restaurant consumers use different criteria such

as food quality, service quality, restaurant atmosphere, menu variety, dining

experience and value for money when making restaurant decisions. 1 Criteria

also vary according to the type of restaurant and dining occasion. According

to Zeithaml (1981) it is essential for service providers to understand consumers'

behaviour as how they choose or evaluate their offering s because service cannot be

evaluated like physical goods due to its 1 distinctive characteristics and high

in experience quality. Therefore, customers find service evaluation to be

more difficult than physical goods. Authors (Zeithaml, 1981; 1 Kotler et al.,

1998) suggest that the main characteristics thatdifferentiate service from

physical goods are: variability, intangibility, inseparability, lack of

ownership and perishability. Intangibility According to Zeithaml (1981) 1 the

intangible quality of services is that services constituteperformance and

they often cannot be felt, seen, tasted or touched like physical goods.

Rammaniya (1998) asserted that consumers used both tangible and

intangible factors when making restaurant choice decisions. The intangible factors as

stated by authors (Auty, 1992) primarily are 1 food quality, service quality

and value for money. The intangible attribute of1 services makes these

factors difficult to assess prior to the actual purchase. As a

result, restaurant patrons often rely on tangible clues such as

restaurant atmosphere, facilities andinfrastructure to stimulate


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and guide customers to form expectation about the restaurants (Wall and Berry,

2007). Variability Services as stated by Zeithaml and Bitner (2003) 1 are highly

variable as the performance of a given service maydiverge across service

providers, service employees,customers and service encounters. Burton

(1990) studied that1 heterogeneity of services makes

it complex for customers toform decision criteria towards one service

provider, or from one service provider to another. Restaurant operators

on the other hand commonly face challenges in maintaining consistent

performance levels of food quality and service quality, for example, a

restaurant waitress may have offered excellent service until the diners at

one table make a vicious complaint due to which waitress could feel

pressured and provide poor service performance thereafter (Kotler et

al., 1998) Inseparability Zeithaml and Briner (2003) confirm that 1 most

services are not produced and consumed until after they are traded. The

production and consumption of a service experience is generally a

simultaneous process. A restaurant service has high level contact

between consumers and service employees.Thus, the skills and

performance of restaurant staff are significant to diners' perception of


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restaurant experience. Perishability Services cannot be accumulated or stored.

Hoffman and Bateson (2001) proposed that service unlike1 physical

goods which can be stored and sold at later time, cease to exist if they

are not sold when they become available. For instance, ifa consumer fails

to turn1 up for a reserved table in the restaurant, it will cause the

restaurateur to turn down the chance to serve other diners if the

restaurant is full (Kotler et al., 1998). Service providers as suggested by

Hoffman and Bateson (2001)1 find it difficult to

balance between the demand and supply ofservice because ofunpredictable

nature of consumer behaviour. Restaurant attributes Restaurants can be

generally divided into two types: fast-service and full service restaurants (Kim and

Moon, 2009). Consumers hold dissimilar expectations and perceptions of their

diverse dining experiences in different types of restaurants and they may also have

dissimilar selection criteria for dining out based on restaurant type (Kim and Moon,

2009). Many authors emphasised upon restaurant selection criteria to be the prime

attributes that consumer use in deciding the restaurant to dine out. Customers apply

dissimilar criteria in assessing the attributes that affect their restaurant choice.

There is a wide range of literature with reference to selection of restaurants. For

example, Lewis (1981) regarded 21 food quality, price, menu variety,

atmosphere and convenience to be the prime factors which influence

consumer selection behaviour. Jang and Namkung (2009) advised product quality,

service quality and atmospherics as the chief restaurant attributes those affect

perceived quality of restaurant experience. In addition authors further suggest that

total dining experience in a restaurant is comprised of not only food itself, but also

the environment or atmosphere (physical aspects) and the service provided. In

previous studies (John and Pine, 2002; Lewis, 1981; Gregoire et al., 2005; Aunty,

2002; Pettijohn et al., 1997) variety of restaurant choice criteria were recognized,

however there has been a partial research on restaurant choice criteria 1 based


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on demographic characteristics ofconsumers. This studyin

order to achieve the aim of investigating the effectiveness of word of mouth, will

also scrutinize the restaurant choice criteria for different 18 age group (18-24,

25-34, 35-44, 45+) customers mainly focusing on most prominent key factors

which are common in most of the researches conduced such as food quality,

atmosphere, food price, and s ervice quality. Consumer Restaurant

Selection9 Behaviour The study of consumer behaviour as stated by John

and Pine (2002) 9 deals with all the ways people may act in their role

ascustomers; however in practise it tends to throw light upon behaviours

related to exploring, buying and using products and

services. Swarbrooke and Horner (2007) stated consumer behaviour is integral

to all marketing activities that are performed to develop the product and service

delivery. Schiffman et al. (2008: p3) describe 8 consumer behaviour as the

"behaviour that consumer display in searching for, purchasing, using,

evaluating and disposing ofproduct and services that they expect will

satisfy their needs". Further in context authors asserted that

it8 (consumer behaviour) primarily focuses on how individuals make

decisions to spend their available resources i.e. time, money and efforts.

Consumer behaviour is stated to be very complex and multifaceted subject area that

is difficult to understand because of complexity and diversity of why and how

consumers behave (Shiffman and Kanuk, 2004) -(restaurant loyalty program-wei

dissertation sample). Consumers are influenced by numerous factors related to

behaviour such as by social influences like family, social classes and refer ence


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group. Moreover consumer 3 may be treated as groups typically market

segments,recognized by geographic characteristics and presumed to have

common behaviour and attitude. Many authors (Aunty, 2002; Gregoire et al.,

2005; Clarke and Wood, 1998) have studied restaurant features, declaring principal

elements3 to be the choice and food quality, service, food price, atmosphere,

location and convenience. Literatures in hospitality management and consumer

behaviour have found that range of or variety of food offered (June and smith, 1987,

cited in Clarke and Wood, 1998) and intangible features other than service in

restaurant selection (Auty 1992; Lewis, 1981) are among the major elements of

customer choice for restaurant. Apart from above listed elements "friendliness ofstaff" also emerged out to be one of generic reasons to choose restaurants as

friendliness of staff initiate customer loyalty and repeat business (Clarke and Wood,

1998). On the other hands authors (Kim and Moon, 2009) stated consumer selection

criteria also rest upon type of restaurant as customers hold different perception and

expectation of their diverse dining experiences in a different restaurant type. Lewis

(1981) categorized three typical restaurant types to be family/popular, atmosphere

and gourmet restaurants and evaluated the principal restaurant choice attributes.

Food16 quality was found to be the most important factor in

stimulating intention to select any restaurant. Whilst the price was the second

imperative factor in family and atmosphere restaurants, menu variety appeared to

be significant in gourmet restaurant. At the same time, there are 3 some

authors who disagree about the relative importance of attributes such

as food quality and drink. JOHN PINE Pettijohn et al.

(1997) asserted quality, cleanliness and value to be the three

most significant attributes in the fast food restaurants, while atmosphere

and menu variety were moderately unimportant. These results indicated that

customers' selection criteria for dining out are assorted and immeasurable. Factors


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affecting consumers' behaviour to choose restaurant are not limited and cannot be

well defined. This study will now focus on most prominent key factors (food quality,

service quality, food price and atmosphere) which are common in most of the

researches to stimulate consumer purchase behaviour and selection criteria of

restaurants.1 Food Quality Food quality is considered to be the

mostsignificant attribute that influences restaurant decisions

innumerous studies on consumer restaurant selection behaviour (Sulek and

Hensley, 2004; Lewis, 1981; Aunty 1992). Food taste is considered to be 1 the

most vital element of food attributes in quite a fewrestaurant studies

(Josiam and Monteiro, 2004). The study conducted12 by Sukalakamala

and Boyce (2007) signified that customers of Thai restaurants regarded

authentic ingredients and unique tastes as the most imperative elements of

their authentic dining experience. 1 Kivela, Inbakaram and Reece

(2000) asserted menu variety as an important attribute of food quality in

determining customer satisfaction in theme restaurant. Auty (1992) in his

research concluded1 that food type and food quality are the most frequently

mentioned choice variable for dinning out in restaurants despite of the occasion.

The3 quality of the food and the variety or type of food was fundamental

determinants of restaurant choice and customer loyalty in the study conducted by

Clarke and Wood (1996). Taking all the factors into account, the researcheraccommodated "food quality" as one of the factors influencing restaurant decision

behaviour of consumers in Sheffield. Food Price Food price as stated by Parsa and

Njite (2004)4 is one of the important variables that influence

customerpurchase decision for dining out. 4 In restaurant context, price


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is considered to be one of the two most important pieces of

information customers obtain in selecting food item from restaurant

menus, the other being product

description. Authors (Kotler, Maken and Bowen, 1999: p401) contended that

among17 4-Ps of marketing mix (price, product, place and

promotion), 4 price is the only revenue generating element. While

calculatingthe 4 maximum utility of a product prior

to purchase decision, as perMonroe (1990), customers use product price

and nonmonetary sacrifices as the denominator and services and quality

ofthe goods as the numerator. Through this kind of evaluation of product,

customers effectively use monetary and nonmonetary aspects to reach assess

the4 final value of a product. Hence price plays a crucial role in

restaurant operation (Parsa and Njite, 2004). Hauser and Shugan (1983)

contended that6 if all the options in a choice set apparently have same

level of benefits, then customers select the lowest priced alternative. Further

in same context authors argue that 6 few purchase decisions are

simple as most choice options differ in terms of both price and perceived

benefits, in such scenario consumer6 may simply choose the alternative

that offers the highest level of perceived benefit. This indicates that price is

one of the major determinants of consumer purchase decision of restaurant; hence


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our research will also study the consumer behaviour of people in Sheffield towards

food price in restaurants.1 Service Quality Service quality is considered to be

a salient factor of restaurant selection in numerous studies. As per Tucci

and Talaga (2000) several 1 studies have presented inconsistent sets and

number of choice attributes of service quality in the restaurant such as

physical environment and service staff behaviour. Wall and Berry (2007) signified

service quality and 1 impressive employee behaviour could

help rise up customers'perception of dining experience. 2 Gourville and

Moon (2004) contended that in case of products, it is often not

the actual price ofthe products that determinethe consumer's perception of

price fairness, instead the price ofproducts in comparison to other stores. On

the other hand "service2 typically have a higher proportion of experience

and credence properties than products, making service performance

more difficult to evaluate than product performance" (Boulding et al.,

1993: p25) price over service.2 Because of intangibility of

services, customers seek tangible cues to form their expectations. Price as

stated by Toncar et al. (2010) 2 is one tangible

cue though which customers form expectations. As a result the elements

of marketing play a more significantrole in service because customers are

more sensitive to cues such as price. Parasuraman et al. (1985) formed a


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base model for service according to which service 2 quality is a function of

service expectations and service delivery i.e. consumers

make evaluation of service quality based on a comparison between their

expectations and perceived outcome. In case if the perceived outcome

meets or exceeds theirexpectation, customers think, they have

received high quality serviceand vice-versa in case if perceived expectations

are not met. In addition Boulding et al. (1993:p8) asserted that 2 "the higher

the service expectations in relation to actual performance, the greater

the degree of disconfirmation andlower the satisfaction" or perceived

service quality. This indicates that service evaluation is considerably based on

expectations consumers form towards product, which indicates that if expectations

are met then customers tend to have positive attitude towards service quality and

vice-versa in case expectations are not met. Hence it can be assumed that service

quality cannot be measured equally by different customers because of diverse

nature, attitude and expectations. Customers usually 1 expect restaurant

service employees to be courteous, attentive and posses a good

knowledge of menu in order to be able to provide good dining experience.

Taking all the standpoints made by numerous authors regarding service quality and

its impact on consumer behaviour into account, we have considered 'service quality'

to be one of the major determinants of consumer restaurant behaviour. Thus, this

study will also examine the impact of service quality on consumer preference for

restaurant selection in Sheffield . Restaurant Atmosphere According to Wall and

Berry (2007) marketing literature has aided evidences of physical environment

influencing consume behaviour. The 1 physical environment of restaurant

such as restaurant atmosphere, dcor, ambience, furniture and other


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facilities can have a great impact on dining experience (Sloan, 2004)

andbehaviour intention (Ryu andjang, 2007) of consumers. Jang and

Namkung (2009) contended three fa ctors i.e. product quality, service quality and

atmosphere as the key restaurant attributes that affect perceived quality of

restaurant experience. Authors further stated that the total dining experience in a

restaurant is not solely dependent on food itse lf, but also on restaurant atmosphere

(physical aspects) and the services offered. Thus restaurant atmosphere is also one

of the main determinant to impact customer restaurant decision to dine out, will be

examined in this study among rest of the factors ( food quality, food price and

service quality). The study will further look upon marketing strategies in hospitality

industry Marketing in Hospitality 5 Marketing is not a science and there is no

single definition todescribe marketing (Simkin, 2000). Many authors have

given different definitions and descriptions of10 marketing. "Marketing is the

management process responsible for identifying, anticipating and

satisfying customer requirements profitably" (the UK's Chartered

Institute of Marketing). 13 Kotler et al. (1999) defined marketing as

"managerial and social process wherein individuals and

groups attain what they desire or need through formulating and exchanging

products and values with others. Simkin (2000), stated that if the right

opportunities are followed, potential customer being appropriately probed (needs

and desires) with a marketing proposal its more likely going to give businesses a

competitive edge and subsequently will increase market shares value.

Henceforth5 profitability will support a viable future prospect for a

business. On the other hand,5 if a business develops a product or

service that fails to catercustomer needs and takes no accountability on

evolving marketing condition or competition, it will have an adverse affect on


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business growth and development (Simkin, 2000). Craven and Piercy (1998) said

that the5 definitions of marketing count for little unless businesses do not

develop a process and adhere to functioning procedures to actually "do"

marketing.

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