prioritizing the factors of internal environment affecting ...

International Journal Of Marketing, Financial Services & Management Research ____________________ ISSN 2277-3622 IJMFSMR, Vol.3 (6), JUNE (2014) Online available at indianresearchjournals.com

PRIORITIZING THE FACTORS OF INTERNAL ENVIRONMENT AFFECTING ON CUSTOMER SATISFACTION IN FAMILY CHAIN RESTAURANTS (CASE STUDY: FAMILY-CHAIN RESTAURANTS OF NARENJESTAN) S. ZAHRA MIRANI*; BANAFSHEH M. FARAHANI** *MA STUDENT IN TOURISM MANAGEMENT, MAZIAR UNIVERSITY OF ROYAN, MAZANDARAN. **ASSISTANT PROFESSOR IN TOURISM MANAGEMENT, MAZIAR UNIVERSITY OF ROYAN, MAZANDARAN, IRAN.

ABSTRACT The main purpose of this research is to identify and prioritize the internal environment factors of physical evidence that determine the level of satisfaction experienced by customers when they visit a family-chain restaurant. Respondents in this research are 338 customers who dine-in at the family-chain restaurants. The reliability of the data collected by the questionnaires were analyzed using Cronbach's Alpha test and for prioritizing the factors of internal environment affecting customer satisfaction in family-chain restaurants of Narenjestan Friedman test was used. The findings indicated that from the customers' view, interior lighting had the most important effect on their satisfaction and then respectively Air quality/temperature, layout, interior design, equipment, music, scent, and interior signage were more important. Planners, managers can use the findings of the study in order to design and develop their respective family chain restaurants. By doing so, they can use physical evidences of the restaurants to get competitive advantages and more attract the customer and by satisfying them and making them happy, increase the word of mouth, quality of their restaurants, and generate a sense of loyalty in customers by bolding the role of the environment. KEY WORDS: Customer Satisfaction, Family-Chain Restaurants, Internal Environment, Physical Evidence.

1- Introduction The increased number of restaurant choices for consumers has fostered heightened competition among dining establishments. One approach to gaining a competitive edge is to understand and meet the tangible expectations of consumers. A report by the National Restaurant Association (2006) revealed that 54 percent of quick-service food operators were dedicating a higher portion of their budget to remodeling in order to attract customers, and were focusing on the tangible qualities of their restaurants, such as ambiance and interior design. In today‟s fast changing social and lifestyle trends, more and more families are dinning out due to time constraints. Parents work longer hours and they are no longer willing or able to spend a couple of hours in preparing dinner for the family after a long and tiring day of working at the working place. In 201


addition, some families spend their weekend catching up on news of other family members and/or having activities with them. The most suitable solution in getting a nutritious lunch or dinner plus family quality time would be to bring all family members to a suitable dining place. This choice would also take into consideration the price and choice of food. Consequently, not only would the price of the whole dining experience is within the family‟s budget but it will also satisfy the whole family‟s food or meal choice (Ryu & Han, 2009). Historically, restaurant referred only to places that provided tables where one sit down to eat the meal, typically served by a waiter. Following the rise of fast food and restaurants, a new term for the older "standard" restaurant was created, sit-down restaurant. Most commonly, "sit down restaurant" refers to a casual dining restaurant with table service, rather than a fast food restaurant, where one orders food at a counter. Sit-down restaurants are often further categorized as "family-style" or "formal". Where the term „restaurant‟ used to refer to a place where consumers sit down to eat a meal, nowadays there are several categories of restaurant. These categories depend on the service, quality, price and facilities provided by the restaurant themselves (Namkung & Jang, 2010). Where the term „restaurant‟ used to refer to a place where consumers sit down to eat a meal, nowadays there are several categories of restaurant. These categories depend on the service, quality, price and facilities provided by the restaurant themselves. Fast food restaurants emphasize on speed of service. Operations range from small-scale street vendors with carts to franchise business mega-corporations like McDonald's, Kentucky Fried Chicken and A&W. This category of dining place is also known as a QSR or Quick Serve Restaurant. Fast casual restaurants do not offer table service, but may offer non-disposable plates and cutlery. The quality of food and prices tend to be higher than those of a conventional fast food restaurant but may be lower than casual dining. A casual dining restaurant is a restaurant that serves moderately-priced food in a casual atmosphere. Except for buffet-style restaurants, casual dining restaurants typically provide table service. Casual dining comprises a market segment between fast food establishments and fine dining restaurants. An example of this category of restaurant is Rasamas. Family style restaurants are a type of casual dining restaurants where food is often served on platters and the diners serve themselves. An example of this kind of restaurant in Malaysia is Pizza Hut. A family chain restaurant is an example of a product that involves both tangible and intangible elements. It may also be considered as a balanced product because it includes the preparation and delivery of the meal to the customer‟s table. Thus, even though the main purpose of visiting a restaurant is to have a meal, the dining experience is really a combination of goods received which is the meal (taste, presentation, quantity, quality, price), the services provided by the staff (welcoming the customer, taking orders, preparing and delivering the food) and also the physical environment (location, parking, seating arrangement, lightings, background music, external and internal decoration). All three elements will therefore contribute significantly to the level of satisfaction experienced by the customer. Thus, the physical ambience, quality of food and satisfying level of service do affect the level of customer‟s satisfaction. This indicated that customers take into consideration several factors before making a decision to visit a family chain restaurant for their breakfast, lunch, snack or dinner experience (Namkung & Jang, 2007). Even though the food served at a certain family chain restaurant is of a high quality, customers take other factors like the restaurant‟s ambience, their experience with the services provided and of course the price of the food. This is because customers want value for their money and they often make their decision based on the value of the money that they pay plus the quality of the food, service, facilities and physical environment 202


that they will get from the restaurant. In addition, customers might look for a totally different dining experience than what they have at home so they might be more attracted to the restaurant‟s atmosphere rather than the food itself. Thus, it is hoped that decision makers in the food industry, especially to those that operate family-chain restaurants can make use of this information to further improve their services to their customers and gain competitive advantage. In addition, this will also lead to repeat patronage, brand loyalty and new customers (Aksoydan, 2007). This study, prioritized the factors of internal environment as one of the factors of physical evidence which affects on customer satisfaction in family-chain restaurants of Narenjestan, Mazandaran, Iran and with Friedman test the level of importance of each elements of internal environment on customers' satisfaction is found. 2- Theoretical foundation 2-1- Physical evidence Booms and Bitner (1981) define service escape as “the environment in which the service is assembled and in which seller and consumer interact, combined with tangible commodities that facilitate performance or communication of the service”. Servic escapes can help segment, position, and differentiate a company from its competitors (Bitner, 1992). Booms and Bitner (1981) propose an expanded marketing mix for services consisting of the four traditional elements (product, price, place, promotion) and three new elements which are physical evidence (the physical surroundings and all tangible cues), participants (all human actors in the service encounter including firm personnel) and other customers. Physical evidence is one of the elements in the service escape. According to Zeithaml, et al. (2006: 329), physical evidence refers to tangible cues included in quality service. Some services communicate heavily through physical evidence (e.g. hotels, restaurants, banks, retail stores and hospitals). These service escapes are more likely to influence behaviors and create an image than are less service oriented businesses. The physical setting can aid the accomplishment of both internal organizational goals and external marketing goals. The organization is the place where the service is produced. It cannot be hidden and may in fact have a strong impact on customers‟ perceptions of the service experience (Bitner, 1992). Because service is intangible, consumers often rely on and look for cues about firm‟s capabilities and quality to evaluate the service before purchase (Berry & Clark 1986; Shostack, 1977) and to assess their satisfaction. The physical evidence is rich in such cues (Rapport 1982) and may be very influential in communicating the firm‟s image and purpose to its customers (Bitner, 1992). Elements of physical evidence in servicescape are including exterior facility and interior facility. In the category of exterior facility, there is the architectural style of the building, the size of the building, the exterior color, the material of the exterior walls and other signs, the façade of the hotels and resorts, the parking lot, the space in front of the hotels and resorts, if possible a lawn covered with turf (Tam Pui Lam, 2005). An adequate management of the exterior components can lead to the achievement of a competition advantage, in the sense that customers attracted by the general atmosphere of a hotels and resorts would want to re-visit, a fact that would enhance loyalty and satisfaction towards the brand of the respective services company. Meanwhile the interior facility elements are numerous and refer to multiple aspects: the aspects of walls, the ceiling and floor, as the materials with which they are covered/ papered; the manner in which the hotels and resorts is enlightened, the sound background, locative elements, interior temperature, 203


possibilities to move inside (Namasivayam & Lin, 2008). These elements could help creating positive feelings towards the service company. General elements of physical evidence involve all aspects of the organizations physical facility and other tangible communication which is shown in table 1. More specific, service escapes involves the services providers' exterior and interior attributes, as well as other tangibles to be found within the physical facility (Zeithaml et.al, 2006: 317). Table1. Elements of Physical Evidence SERVICESCAPE Facility exterior Exterior design Signage Parking Landscape Surrounding environment Facility interior Interior design Equipment Signage Layout Air quality/ temperature Sound/ music/ scent/ lighting

OTHER TANGIBLES

Business cards Stationery Billing statements Reports Employee dress Uniform Brochures Web pages Virtual service escape

Source: From Zeithaml, Bitner and Gremler, 2012: 278

2-2- Customer satisfaction Many researches have been done on the topic of consumer satisfaction. Customer satisfaction is basically a customer‟s evaluation of a good or service in terms of whether it has met their needs and expectations (Lamb et al, 2011; Schiffman et al 2010; Levens, 2012; Kotler & Armstrong, 2012) or not. A customer will be dissatisfied if a product‟s performance is not up to their expectation. On the other hand, a customer will be satisfied if the product‟s performance meets their expectations. A customer will be very satisfied if the product‟s performance is beyond their expectations. A customer whose experience with a restaurant falls below expectation in either one or a few or all aspects of the service, food or ambience they got there will be dissatisfied. Customers who had a satisfying overall experience will be satisfied. Meanwhile for customers who experience below expectation services, food quality and unattractive ambience will be dissatisfied. Customer satisfaction cover a lot of elements whether it is satisfaction over the performance of a product, consumption of a product, a service rendered or an idea given. In addition to the experience of consuming or using the product, customers can also gain satisfaction from other factors like the service provided when they transact with the restaurant‟s 204


staff and also the amenities provided (Schiffman et al 2010). It is also a well established fact that satisfied customers led to long term business success in terms of customer loyalty, organizational profits and return patronage (Gilbert, 2006; Ruy & Han, 2009; Ladhari et al, 2008; Namkung & Jang, 2007; Singh, 2006; Kim et al, 2009). 3- Theoretical framework As shown in table1. According to Zeithaml et.al (2012: 278) elements of internal physical evidence are: interior design, equipment, signage, layout, air quality/temperature and sound/ music/ scent/ lighting. With this regard, this paper is to prioritize these elements, which affects on customers' satisfaction in family chain restaurants of Narenjestan. In order to do this the theoretical framework is shown in figure 1. Figure1. Theoretical Framework of the Study Physical Evidence

Internal Environment

External Environment

Interior design Equipment Signage Layout

Customer Satisfaction

Air quality/ temperature Sound/ music/ scent/ lighting

4- Family-chain restaurants of Narenjestan The beautiful Narenjestan of North firm (private joint stock) with the goal of working in the tourism industry, construction and operation of the hotel was established in 1997. Another set of projects that complement Narenjestan chain services to Iran's tourism industry are commissioning, development and exploitation of the Narenjestan restaurant chain. Now the 205


Narenjestan's fast foods that are a kind of family chain restaurants is exploited in four branches in Mazandaran province including: central branch (Tamyshan of Noor), branch of Narenjestan Hotel, trade and coastal fast food, branch of Haraz, branch of Motel Ghoo, Tehran branch and branch of Karaj (http://narenjestanco.com/node/53). 5- Research methodology Both primary and secondary data sources have been used for the research. The secondary sources were used to develop the understanding of the underlying factors that can effect on the customer satisfaction in family chain restaurants. Sources like papers and books were explored to collect the secondary data. Primary data was collected through administering a questionnaire-based survey. Self-administered questionnaire was used to collect the primary data based on the internal factors of physical evidence that presented by Zeithaml et.al (2012: 278). The first part of the questionnaire addressed the issues related to the demographic profile of the respondents with 4 items about age, gender, referral time to the restaurant, and way of familiarizing with the restaurant. For the age group of respondents, the customers are divided into 5 age groups comprising of below 20 years old, between 20-29 years of age, 30-39 years old, 40-49 years old, and over 50 years of age. For referral time customer answered in the range of first time, second time, third time, forth time and more than four times. About way of familiarizing with the restaurants respondents had 4 options that were included of by yourself, through family and friends, via the internet and etc. The second part of the questionnaire included 8 questions related to the specific variables, which have been used to identify the factors influencing the customer satisfaction in family chain restaurants of Narenjestan branches in Iran that were included of these variables: Interior Design, Equipment, Interior Signage, Layout, Air Quality/Temperature, Interior Lighting, Music, and Scent. A 5-point likert scale (1 for very bad to 5 for very good) was used to collect the customers‟ response regarding these 8 variables. The population of this study was all customers who used the services of family chain restaurants of Narenjestan. Total 338 customers of the family chain restaurants of Narenjestan were surveyed in this regard. 6- Findings The reliability of the 8 items for internal environment in the questionnaire was tested by Cronach's Alpha test from SPSS software and the result shows that items have a high level of reliability 0.793. The total number of respondents for this study was 338. All of the respondents answered the questionnaire and there was no missing value. From 338 respondents that answered the questionnaire, 44.97% were male and 55.03% were female. The variables must be correlated for the factor analysis to be appropriate (Malhotra, 2004). If the selected variables have poor correlations, then the resulting factors would not mean anything significant other than the reproduction of the original variables. From the correlation matrix (Table 2), it is found that significant correlations exist between several variabes.

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Table 2. Inter-Item Correlation Matrix Interior Interior Design Equipment Signage Interior Design 1.000 .499 .321 Equipment .499 1.000 .471 Interior .321 .471 1.000 Signage Layout .283 .354 .291 Air Quality/ .350 .306 .299 Temperature Interior .294 .342 .245 Lighting Music .407 .346 .418 Scent .301 .139 .258

Layout .283 .354 .291

Air Quality/ Interior Temperature Lighting .350 .294 .306 .342 .299 .245

Music .407 .346 .418

Scent .301 .139 .258

1.000 .309

.309 1.000

.460 .298

.369 .240

.294 .201

.460

.298

1.000

.337

.315

.369 .294

.240 .201

.337 .315

1.000 .318 .318 1.000

The next table has an important role in modifying the value of reliability. Because this table indicates the changes in the mean values and variances of customers satisfaction from the internal environment of family chain restaurants if each items be removed. But the results in the last column of the table shows the alpha value for all the items is high, so this means that the instrument and the 8 items are appropriate for evaluating the customer satisfaction from internal environment of these restaurants and there is no need to eliminate, reform or change any items (See Table 3). Table 3. Item-Total Statistics Scale Corrected Scale Mean if Variance if Item-Total Item Deleted Item Deleted Correlation Interior Design 27.59 11.341 .551 Equipment 27.69 11.228 .553 Interior Signage 27.82 11.177 .516 Layout 27.56 12.223 .520 Air Quality/ 27.53 12.309 .433 Temperature Interior Lighting 27.44 11.713 .495 Music 27.69 10.792 .543 Scent 27.75 12.389 .393

Squared Multiple Correlation .364 .407 .324 .313 .208

Cronbach's Alpha if Item Deleted .760 .760 .766 .768 .779

.301 .321 .209

.769 .762 .784

According to the results of values of descriptive statistics for total customer satisfaction from the internal environment of family chain restaurants of Narenjestan, it has found that the mean value of customer satisfaction from the internal environment of these restaurants was equal to 31.58, its variance was 14.773 and its standard deviation was 3.844. The number of items of this variable was 8.

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For Prioritizing the Factors of Internal Environment affecting on Customer Satisfaction in Family Chain Restaurants of Narenjestan, the Friedman test was used. According to this test the amount of Chi-square test was 92.387, which is significant in SEM (Standard Error of Measurment) of less than 0.01. It should be said that from the statistical view and with 0.99 present of confidence, the level of customer satisfaction from internal environment of family chain restaurants of Narenjestan with 8 items of internal environment has changed. The findings indicated that interior lighting with the mean rank of 5.15 had the most important effect on customer satisfaction. Air quality/temperature with the mean rank of 4.81, layout with the mean rank of 4.68, interior design with the mean rank of 4.56, equipment with the mean rank of 4.37, music with the mean rank of 4.28, scent with the rank of 4.10 and interior signage with the rank of 3.96 were more important (See Table 4). Table 4. Ranks of independent variables Mean Rank Interior Design 4.65 Equipment 4.37 Interior Signage 3.96 Layout 4.68 Air Quality/ Temperature 4.81 Interior Lighting 5.15 Music 4.28 Scent 4.10 7- Conclusion and recommendations Customers often rely on tangible cues, or physical evidence, to evaluate the service before purchase and to assess their satisfaction with the service during and after consumption. Physical evidence includes all aspects of the organization‟s physical facility (the servicescape) as well as other forms of tangible communication. Elements of the physical servicescape that affect customers include both exterior attributes (such as signage, parking, and the landscape) and interior attributes (such as design, layout, equipment, and decor). In this study the role of internal environment factors on customer satisfaction of family chain restaurants of Narenjestan in Iran had examined and the elements of internal environment had been prioritized with Friedman test and the results showed that interior lighting gained the highest level of importance for satisfaction of family chain restaurants of Narenjestan from customers' view and then respectively air quality/temperature, layout, interior design, equipment, music, scent, and interior signage were important from the customers' perspective. This statistics shows that interior lighting is very important for customers, so the restaurant managers should pay attention to this factor and can use the architectural techniques to make the high design and make the customers attracted and captivated by the environment of restaurant at the first glance. When distinguishing dining out too starkly from dining at a private home, we run the risk of overlooking that restaurants bring the diner into a modification of the domestic household. Because domestic households have traded excess production in the marketplace since ancient times, restaurants did 208


nothing new by charging for meals and at this stage the role of physical evidence can be prominent and visible. As marketers and corporate strategists pay more attention to customer experiences, they have recognized the impact of physical space and tangibles in creating those experiences. When customers have a good experience from a service product, they will be more satisfied. A high level of satisfaction will result in return visits to the restaurant and therefore generate a sense of loyalty for this category of restaurant in general and the restaurant‟s brand name in particular. Planners, managers and entrepreneurs can use the findings of the study in order to design and develop their respective family chain restaurants. By doing so, they can use physical evidences of the restaurants to get competitive advantages and use physical clues to more attract the customer and create an environment that customers have a good experience from their service and therefore create a good image of their service in the mind of customers. Also by satisfying the customers and making them happy, they can increase the word of mouth and quality of their restaurants and of course their market share that can increase their income. As in this research about way of familiarizing with the restaurants respondents had 4 options that were included of by yourself, through family and friends, via the internet and etc. It has seen that some of them chose internet, this shows that also the website of the restaurants can have positive effect on choosing restaurant or hotel collection and gaining the competitive advantage. As Bilgihan et.al (2011) in their paper with the title of Information technology applications and competitive advantage in hotel companies highlighted the role of IT in hotel companies and found that Investments into IT applications in hotel companies can lead to superior IT competencies and IT capabilities, which can subsequently result in lower cost, agility, innovation, added value for customers, and better customer service, this can also be use in restaurants and the restaurant managers can use this point to increase their competitive advantage and make better image in the mind of the customers in comparison to the other restaurants. The scope of the study might open up the avenues for further researches in this field of interest in several ways. The survey for the study was conducted only in family chain restaurants of Narenjestan in Iran. The results of the study could be different if the geographic locations were extended beyond family chain restaurants of Narenjestan in Iran. In that case, the resulting factors might be different or the number of underlying variables responsible for specific factor might be larger or smaller. Also because this research was done in Iran, maybe the cultural values and psychological understanding of Iranian people affected on their choice and if this research be done in other parts of the world the results maybe changed. 8- References Aksoydan, Emine. (2006), Hygiene factors influencing customer‟s choice of dining-out units: Findings from a study of university academic staff. Journal of Food Safety, 27 (2007) 300-316. Berry, Leonard L. and Terry Clark., (1986). "Four Ways to Make Services More Tangible", Business Horizons, (October- December), pp 53-4. Bilgihan, Anil. Okumus, Fevzi, Nusair, Khaldoon "Khal", Joon-Wuk Kwun, David. (2011). Information technology applications and competitive advantage in hotel companies, Journal of Hospitality and Tourism Technology, Vol.2 No. 2, pp. 139-154.

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