Customer Satisfaction of Fast Food Chains Essay

Therefore, this study suspects whether other important variables exist in fast food industry consumer behavior patterns to support this result. This study tries to combine variables that are related to fast food industry characteristics, such as consumption frequency, perceived price and convenience, to propose an integrated model of customer satisfaction and loyalty in the fast food industry, and apply relationship inertia as the mediator to discover the major factors that impact customer satisfaction and loyalty in the fast food industry. This study has collected 594 effective questionnaires and applied structural equation modeling (SEM) to verify the various path relations of the study model. The study result found that in addition to being positively impacted by customer satisfaction, customer loyalty will be impacted by customer relationship inertia more. In the relationship of customer satisfaction and customer loyalty, customer relationship inertia plays a key mediator. In addition, perceived price has a negative impact on customer satisfaction and relationship inertia. Convenience will enhance customer satisfaction. Consumption frequency will enhance customer relationship inertia. Finally, this study expects to provide the study result to the fast food industry as a reference for enhancing the customer loyalty strategy. Key words: Customer satisfaction, relationship inertia, customer loyalty, convenience, perceived price. INTRODUCTION The enhancement of national income and the change of consumption habits have resulted in the rapid growth of the market scale in the service industry. In 2008, the average ratio of the global service industry accounted for over 60% of the overall Gross National Product (GNP), the average ration for major developed countries reached over 70%, and at the same time Taiwan also reached 73. 2% (Central Intelligence Agency, 2009). Taking Taiwan as an example, the total turnover of food retail was NT$261. billion in 2001, NT$302. 7 billion in 2006, and NT$321. 7 billion in 2009 (Ministry of Economic Affairs, R. O. C. , 2010). This indicates that the business scale of food retail has the gradual growth trend every year in Taiwan, and its market competition will inevitably become more intense. The fast food industry is the representative food retailer type in various countries. The overall fast food market in the US is expected to grow in the coming years and will cross the US$17 0 billion mark by 2010 (RNCOS, 2009). Corresponding author. E-mail: m9019011@chu. edu. tw Tel: +886-2-28102292. Fax: +886-2-2810-6688. Cheng et al. 5119 The fast food industry in Asia’s major countries, such as China, Japan, Korea and Taiwan can also create a production value over US$1 billion every year (Report buyer, 2009). However, occasionally, there will be some negative food safety events, such as the frying oil containing arsenic, and the beef event (Taiwan news, 2010), which will impact the image and performance of the corporation. However, after the storm has passed, the sales performance of fast food industry can all rise rapidly. This result, in addition to the response management of when the industry has a great crisis, is also a worthy exploration issue of consumers’ purchasing behavior in the fast food industry. For the service industry, the cost of developing a new customer is at least 5 to 9 times the cost to maintain an old customer (Raphel and Raphel, 1995). How to enhance customer satisfaction and customer loyalty will be the important factor that impacts the operating performance of the food retailer. Past studies indicate that customer loyalty will be positively impacted by customer satisfaction (Fornell, 1992; Gwinner et al. , 1998; HennigThurau et al. , 2002; Terblanche, 2006; Hsu, 2008). However, Bruhn and Grund (2000) pointed out that the factors that impact customer loyalty may have some other important factors which are not included in the consideration. Some scholars found that when customers benefit from the past frequent consumption behavior, relationship inertia will be formed, and the past consumer behavior will be continued (Ouellette and Wood, 1998), then there will be no strong motivation to look for alternative plans (Colgate and Danaher, 2000), and the service provider can therefore maintain the current relationship with the customer (Gounaris and Stathakopoulos, 2004). In the study of Carrasco et al. (2005), it also verified that in the consumption of food and service, consumers have the inertia behavior. In addition, consumers will have the habitual repeated purchase behavior due to convenient purchase or other factors (Heiens and Pleshko, 1997). When competitors offer a lower price, it will enhance the possibility of the customer changing the purchase behavior (Wathne et al. , 2001), and also undermine the consumer’s consumption inertia for the original company. The study found that there are three issues existing in the studies of customer purchasing behavior in the fast food industry: (1) Why can consumers rapidly return in such a short period of time after a fast food industry negative news outbreak, or even not be impacted at all. Therefore, regarding the factors that impact customer loyalty in the fast food industry, in addition to customer satisfaction, are there any other important impact factors? (2) The fast food industry is different from the general food retailer. It has the characteristics of being rapid, convenient, and having a low price; however, the commonly seen customer satisfaction model (e. g. American Customer Satisfaction Index; European Customer Customer Satisfaction Index) cannot really present these characteristics. 3) Inertial behavior exists in the food purchasing behavior (Carrasco et al. , 2005). However, there have been no scholars who have applied it to explore the relation between customer satisfaction and loyalty in the fast food industry. It can be seen that there is an important study gap that exists in the exploration of customer satisfaction and loyalty in the fast food industry; therefore, it creates the motive for the study to explore this issue. The major study purpose of the study is to integrate the related variables of fast food industry characteristics, such as consumption frequency, perceived price and convenience, and propose a customer satisfaction and loyalty integrated model for the fast food industry, and apply relationship inertia as the mediator to find out the major factor that impacted the customer satisfaction and loyalty in fast food industry, with the expectation to provide it as a reference for the fast food industry in developing the improvement strategy of customer satisfaction and customer loyalty. LITERATURE REVIEW Customer satisfaction The primary task of a corporation is to create customer satisfaction. Profit is not the most important result; after all, it is only the feedback after satisfying the customer (Drucker, 1954). As long as the customer is satisfied, the corporation’s profit will relatively increase. Along with the more and more intense market competition and the rise of consumer awareness, customer satisfaction has a significant impact on corporate profits, and it can provide the future product or service quality of the corporation as a reference according the past consumption experience and assessment of customers. Therefore, customer satisfaction has become a recognized index which can be broadly applied in measuring customer consumption behavior. Customer satisfaction is regarded as customers can get more benefits than their cost (Liu and Yen, 2010). Different scholars’ definitions for customer satisfaction can be summarized as follows: Oliver (1981) thinks that customer satisfaction is the comments made by the surprising experience of product obtainment or consumption. Fornell (1992) pointed out that customer satisfaction is the overall measurement after a customer has purchased the product or used the service. It is the overall attitude created based on experience, which is the comparison of before (expectation) and after (feeling) the customer received the service (product). If the actual feeling after receiving the service exceeded the expectation before receiving the service, then the customer will be satisfied; if it is to the contrary, the customer will not be satisfied. 5120 Afr. J. Bus. Manage. In addition, Kotler (1997) thinks that customer satisfaction is a person’s happiness or disappointment, which is formed by comparing his/her perceived product performance (or result) and his/her product expectation. To be more specific, satisfaction is the function of perceived performance and expectation. Lin (2007) pointed out that good service quality will indeed satisfy the diversified demands of the customer, which means customer satisfaction is the overall assessment of products and services processed by customers according to the past experience. When the actual service result provided by the service provider is higher than the customer service expectation, then the customer will be very satisfied; if it is to the contrary, the customer will be very dissatisfied (Joewono and Kubota, 2007). In addition, Fornell et al. (1996) pointed out that the measurement of customer satisfaction can be divided into the overall satisfaction level of a customer on a corporation, the difference between expectation and actual feeling, and the difference between actual feeling and ideal perfect service (product). Combining all of the above-mentioned scholars’ dissertations, customer satisfaction is the result of comparing customer expectation and experience. Therefore, the study will refer to the perspective and measurement dimension of Fornell et al. (1996) as the basis for measuring food retailer satisfaction. Customer loyalty For the service industry, the cost of developing a new customer is at least 5 to 9 times the cost to maintain an old customer. If the customer loyalty can be increased 5% effectively, then 25-85% profit can be increased (Raphel and Raphel, 1995). Therefore, if the service industry wants to reduce the expenditures on money and time cost, it shall focus on maintaining customers, not obtaining new customers (Oliver, 1999). It will bring a long-term or short-term profit by maintaining a long-term relationship with the customer, because maintaining long-term relationship refers to keeping the customer and obtaining his/her loyalty (Ranaweera and Prabhu, 2003). It can be seen that the importance of customer loyalty establishment on the service industry operation cannot be understated. If the food service industry can keep the customer and make him/her a loyal customer, then it will also be able to bring long-term operating efficiency. Dick and Basu (1994) pointed out that customer loyalty can be divided into true loyalty, false loyalty, potential loyalty and no loyalty according to the strength level of the relationship between the personal attitude and repurchase behavior. Schneider and Bowen (1999) pointed out that customer loyalty refers to a customer’s possible repurchase behavior, and willingness to become a member of the service institution. Neal (1999) thinks that customer loyalty is the performance of a consumer still choosing the same product or service after comparing it with other competitor’s products with the premise that the competitive product can be easily purchased, and it will go through the four stages of perceived loyalty, emotional loyalty, intentional loyalty and action loyalty (Oliver, 1999). In the measurement of customer loyalty, Zeithaml et al. 1996) pointed out that the measurement items of customer loyalty in customer behavior intention include: repurchase after the price has increased (price tolerance), priority purchase and recommendation. Fornell et al. (1996) thinks that customer loyalty can be measured by the repurchase will and customer price tolerance. Gronholdt et al. (2000) pointed out that customer loy alty be constructed by the four measurement indexes of the repurchase will, the will of recommending the company or brand to others, price tolerance and cross-purchase will of the customer. Finally, the study mainly refers to the perspectives of Fornell et al. (1996) and Zeithaml et al. (1996) and the service characteristics of the food retailer to summarize the measurement method of customer loyalty in the behavior dimension of the four measurement indexes, which are repurchase will, recommending to others, price tolerance and priority repurchase. Relationship inertia Relationship inertia is a fixed consumption pattern. With all consumption, customers will purchase the same product because of habit, without the need to spend energy or time to think too much during the decision making process (Assael, 1998). The reason for this type of consumer purchasing the same brand or purchasing the same product repeatedly is that they feel comfortable due to not having to make new choices. When purchasing the same brand again, it can save time, and by being familiar with the brand, there will be no sense of difference, and also can reduce the perceived risk (Bloemer and Kasper, 1994). Dick and Basu (1994) pointed out that the false loyalty in customer loyalty has the characteristic of low preference attitude, and high repeat purchase rate, and inertia is a kind of false loyalty performance. In addition, Oliver (1999) pointed out that after the consumer decides to be on the relationship inertia track of action loyalty with a brand, then the previous assessment, trial and elimination in the consumption process can be removed, therefore, relationship inertia is the performance of action loyalty. Colgate and Danaher (2000) proposed that relationship inertia is the basis of human nature. When the customer is used to a specific thing, he/she will not have the motive that is too strong to look for alternatives plans, which means habit is an automatic behavioral tendency responding to a person’s past development (Limayem and Hirt, 2003). In other words, inertia is a specific future behavioral intension a person usually does and also Cheng et al. 5121 shows, which allows the current behavior to continue. Therefore people will continue and repeatedly do things in the way they are used to. Inertia is guided by rapid, easy, and the least attention grabbing perceived process, and can be a parallel processed with other activities, which does not have further thought or rational analysis on their behavior, and is just based on the habit (Ouellette and Wood, 1998; Gefen, 2003). After combining the aforementioned perspectives and the characteristics of food retail, the study defines the relationship inertia of the fast food industry customer as: customers often form a dependent and characteristic relationship with a specific food or service quality with their own habit factor. They will not have a motive that is too strong to look for alternative food service. Gremler (1995) defined relationship inertia as the inertial behavior during repeat purchase of consumers avoiding decision making and having high-repeatable visits. Therefore, â€Å"If there are no other reasons, the original store service will still be chosen†, â€Å"Unless I’m not satisfied, the original store service will still be chosen†, and â€Å"It is most unlikely for me to shop in the store† are used to measure relationship inertia. Carrasco et al. (2005) applied Panel data to view whether the customers’ consumption behavior has inertia, and found that indeed there is inertia behavior for consumers in the food and service consumption. From the abovementioned studies, the study refers to the perspectives of many scholars (Gremler, 1995; Gefen, 2003; Carrasco et al. , 2005) and combines them with the consumer characteristics of the fast food industry, and derived five items to measure the customer relationship inertia of the fast food industry. The items are respectively the fast food store visit inertia, familiarity, impression, will of continuous selection and will of enjoying to consume in this store. characteristics. It can be known from the abovementioned scholars’ perspectives that past frequency is often applied in measuring customer behavior intention, and to further understand consumer future behavior intention. With the frequency exploration of the abovementioned scholars, the study will apply the store consumption frequency at a specific time to measure the food consumption frequency. Perceived price Since the operating environment of the service industry changes rapidly, service industry suppliers often apply the method of reducing service quality to correspond to the dilemma of little profit, which therefore results in the lose-lose predicament of consumers and suppliers. From the consumer perspective, price is the amount which needs to be paid for the consumer to obtain the product (Hawkins et al. , 1983), or the price that the consumer must give up or sacrifice to obtain a product (Zeithaml, 1998).