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The influence of service and product quality towards customer satisfaction : A case study at Kentucky Fried Chicken Manado
By Visio P. M. Pilat 080613171
THESIS Sam Ratulangi University, Faculty of Ecomomics International Business Administration 2011
CHAPTER 1 INTRODUCTION
Research BackgroundMany researcher and academician has been known the importance of customers in business. According to Zairi (2000), Customers are the purpose of what we do and rather than them depending on us, we very much depend on them. The customer is not the source of a problem, we shouldnt perhaps make a wish that customers should go away because our future and our security will be put in jeopardy. Because of that statement, that is the reason why organization and company today are focusing on customer satisfaction. Customer satisfaction is the aim of a company to survive. Company should keep and maintain their customer satisfaction in order to keep them buy the companys product. Keeping previous customers in general, is more
profitable than changed new customer because the cost to get the new one can be 5 times more than the cost of keeping the previous ones (Kotler et al, 2000). That statement means that keeping the loyal customer is like keeping the existence of the company. To get the customer satisfaction, marketer should apply their marketing strategies.
There are so many fast food restaurant that we can find in Indonesia. The more player in one scope of business, the more the competition between the companies. Because of that, the company should make an effort to keep and improve their customers satisfaction in order to survive in that business.
Kotler (2000) defined satisfaction as: a persons feeling of pleasure or disappointment resulting from comparing a products perceived performance (or outcome) in relation to his or her expectation. Thats the task of company to make their customer satisfy with their product. Friendly employees, courteous employees, knowledgeable
employees, helpful employees, product quality, billing timeliness, competitive pricing, service quality, goods value, billing clarity, and quick service are the factors that affect customer satisfaction according to Hokanson (1995). This is shown on Figure 1 below.
Billing clarity Good value
Overall customer Satisfaction
Figure 1 Factors that Affect Customer Satisfaction
Kotler (2004) said that the customer satisfaction is the level of someone feeling to the services satisfaction after comparing the yield (output) and the expectation. The level of satisfaction is a function of differences between services quality feel and the expectation. If the services quality is under expectation, the customer will be disappointed. If it matched with the expectation, customer will be satisfied. Meanwhile, if it over the expectation, the customer will be very satisfied. In restaurant business, many kinds of menu offered with many kinds of design interior. Besides the menu and the place, the quality of human resources is a term of service and in processing is an important aspect. Most of restaurant owner are not focus on the importance of quality of foods and the service. But in some go public franchise restaurants, such as Kentucky Fried Chicken (KFC), Mc Donald and many others, the quality of food is standardized and always controlled, so the product has good quality. In that case, the service has an important role in selling the product. In Indonesia, there are many fast food restaurants that have many customers. One of the biggest fast food restaurants in Manado is KFC at Mega Mall. The main product of KFC is fried chicken. This restaurant is located at the centre of Manado city and integrated with Mega Mall shopping centre. KFC as a franchise has done many promotions trough television to keep their customer loyalty and their existence in the global competition. Services are done trough tangibility, reliability, responsiveness, assurance and empathy. Therefore, the researcher wants to know the effect of marketing mix (Product, Price, Place and promotion or 4P) and services of Kentucky Fried Chicken Restaurant to the customer satisfaction.
Nowadays, the change of customers lifestyle makes consumer of food to think critically. They want the good and perfect services. It because the value added of service in restaurant can increase the revenue (Sukarto, 2011). Walker and Lunberg (2005), said that the food quality is important for the customers especially when they choose a restaurant. The customers reason to go to the restaurant is hungry. But nowadays, customer also needs entertainment and looking for the restaurant that gives pleasure environment. Many food service providers have a perception that people only go to eating outlets for the food. There is an assumption that the primary reason people go to restaurants is for the meal. Therefore, as long as customers get the food they want, they are satisfied. However, this view may not hold true for those full service restaurant visitors whose main purpose is to transact business or to enjoy the company of cherished others (friends, family, spouse, etc.)
Service quality determines a customers satisfaction. However, the determinants of service quality are complicated with the dynamic business environment, Pun, K.F., and Ho, K.Y. ( 2001). Service quality is influence by expectation, process quality and output quality; in other words the standards of service is defined by customers who have experienced that service and used their experience and feelings to form a judgment. Chen, F.P., Chen, C.K.N., and Chen, K.S. (2001). According to Nicholls, J.A.F., Gilbert, G.R., and Roslow, S. (1998), Service satisfaction is a function of consumers experience and reaction to a providers behavior during the service encounter; it is a function of the service setting.
Research ProblemBased on the research background tha explained before on point 1.1, there are two problem that need to be researched, they are : 1. Does Service quality of KFC influence the customer satisfaction? 2. Does Product quality of KFC influene the customer satisfaction?
Research LimitationAs shown on Figure 1 above, there are many factors that affect the customer satisfaction of a product. Friendly employees, courteous employees, knowledgeable employees, helpful employees, product quality, billing
timeliness, competitive pricing, service quality, goods value, billing clarity, and quick service are the factors that affect customer satisfaction according to Hokanson (1995). In this case, researcher only use two factors that affect to customer satisfaction to be examined, there are product quality and service quality. Researcher is limiting the variables to examine into these two factors.
Research ObjectiveThe objective of this research is to examine the influence of service and product quality toward customer satisfaction; a study case at Kentucky Fried Chicken Manado.
Research UsefullnessThe usefullness of this research are this research could be used on science development in order to develop the study about marketing, as the
reference to KFC if they want to increase their customer satisfaction by improving service and product quality, as the reference to researcher if someday researcher want to run a business.
CHAPTER II LITERATURE REVIEW
Theoritical Background2.1.1 Marketing Management Marketing management as the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value. Kotler and Keller(2006). Marketing management not only talk about science, but also talk about the art of how a marketers will persuade the prospects to buy their product by using marketing strategy, such as improving the 4ps factors of marketing mix.
2.1.2 Marketing Strategy
Marketing strategy is a set of objectives, policies, and rules that guides
overtime the firms marketing effort-its level, mix, and allocation- partly independently and partly in response to changing environmental and competitive condition (Kotler, 1980). By using the marketing strategy,marketers could set the plan to attract prospect in order to influence them to buy the company products. One of the common strategy that used by marketers is the marketing mix.
2.1.3 Marketing Mix Marketing mix is one of the key concepts in modern marketing theory. Marketing mix is the set of controllable variables and their level that the firm
uses to influence the target market. McCarthy popularized a four-factor classification called the four Ps: product, place, promotion and price. Frey proposed that all marketing-decision variables could be divided into two factors: (1) the offering (product, packaging, brand, price, and service), and (2) methods and tools (distribution, channels, personal selling, advertising, sales promotion, and publicity) Kotler (1980).On marketing mix, there are product, place, promotion, and price that include on the 4ps tools that could be used by marketers. These tools are used to improve the customer satisfaction in order to survive on the business field.
Customer satisfaction is the level of someone feeling to the services satisfaction after comparing the yield (output) and the expectation. The level of satisfaction is a function of differences between services quality feel and the expectation. If the services quality is under expectation, the customer will be disappointed. If it matched with the expectation, customer will be