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How to cite this thesis
Surname, Initial(s). (2012) Title of the thesis or dissertation. PhD. (Chemistry)/ M.Sc. (Physics)/ M.A. (Philosophy)/M.Com. (Finance) etc. [Unpublished]: University of Johannesburg. Retrieved from: https://ujdigispace.uj.ac.za (Accessed: Date). A multidimensional customer value model for the high fashion retail industry
Elmarie Strydom
201048840
Thesis submitted in fulfilment of the requirements for the degree
PhD in Marketing Management in the Faculty of Management
at the University of Johannesburg
Johannesburg Supervisor: Prof Daniel J Petzer
Co-supervisor: Prof Christine F De Meyer
October 2014
1 ACKNOWLEDGEMENTS
I would like to extend my sincere gratitude to every individual who has made the completion of this study possible. A very special thank you is extended to:
My Heavenly Father from whom I constantly draw strength and wisdom. His nature of grace and hope gave me the courage to persevere in times when everything seemed too much to bear.
My amazing husband, Gerhard, who has been my constant companion throughout my academic journey. Thank you “my lief” for all the cups of coffee and cooked meals. Thank you for your understanding and support especially when I wanted to give up. You are my one true inspiration!
My Mom and Dad. Thank you for all your prayers and encouragement. You were the first influence in my life that introduced me to academic studies and your unwavering support has carried me all my life.
My supervisors and mentors, Prof Danie Petzer and Prof Christine De Meyer, who never stopped guiding me with both academic and emotional support. Thank you for your incredible patience and leadership. Thank you, Prof Petzer for believing in my study from the start. Your professionalism and knowledge amazes me still. Thank you for the numerous telephone calls just to encourage me. Your encouragement made me believe in myself and was crucial to my success. Thank you, Prof De Meyer for your assistance and perseverance. Thank you for being so meticulous and dedicated throughout my study and for believing in me and in my ability.
Elsabeth Marnitz for your hard work with the language editing and for always being willing to assist. Your expertise contributed to the success of my study.
The third year and honours students from the Department of Marketing of the University of Johannesburg for assisting with the distribution of the questionnaires. Without you this study would not have been possible.
STATKON, for conducting all the statistical analysis. Thank you Dr Jurgen Becker for your assistance and patience.
i Acknowledgements
Petro Beukes who assisted me with the final formatting of my completed document. Your friendliness and kindness was overwhelming. Thank you!
To every single one of my fabulous friends and family who stood by me even when I was not always available. Your friendship is very precious to me.
ii
ABSTRACT
As more retailers gain access to similar technologies, information and processes, it is becoming increasingly difficult to establish a sustainable competitive advantage in the marketplace, ensure customer satisfaction and encourage repurchase intention. This is especially true for high fashion retailers, since their higher margin customers have greater expectations to receive value from these high fashion retailers. To succeed in a highly competitive marketplace, high fashion retailers must become adept not just at providing quality products, but also at providing value to their customers. Only those businesses that truly offer the value that customers want and expect, remain competitive in the long term and are able to increase customer satisfaction levels. Higher levels of customer satisfaction leads to improved repurchase intention. It is therefore important for high fashion retailers to ensure that they offer value to their customers. Despite research undertaken in customer value, much debate still exists as to what contributes to customer value and what the relevant customer value dimensions are.
Customer value is of managerial interest to high fashion retailers, as these retailers need to identify the dimensions they should focus on to increase the value they are delivering to their customers in order to obtain or retain a sustainable competitive advantage. Customer value leads to customer satisfaction and customer satisfaction in turn is a strong indicator of repurchase intention. This study therefore focuses on uncovering the concept of customer value, with specific emphasis on determining the underlying customer value dimensions from the perspective of the customer shopping at high fashion retail stores. The aim of this study is to propose a multidimensional model of customer value for high fashion retailers, including the interrelationship between customer value, customer satisfaction and repurchase intention.
In order to test the theoretical model of customer value, customer satisfaction and repurchase intention an empirical investigation was undertaken. The research design in this study consisted of two phases. Qualitative, exploratory research was utilised as part of the initial phase of the research. The primary research design utilised is a descriptive design using quantitative methods to collect primary data. A variation of the interviewer administered mall-intercept survey was used. A structured questionnaire was designed iii Abstract and distributed to achieve the empirical objectives of the study. For the purpose of this study, a non-probability multistage sampling approach was used for the primary, descriptive research design. In order to select shopping centres containing high fashion retailers in Gauteng, South Africa, judgmental sampling was the chosen sampling technique. For the second stage, the convenience sampling technique was chosen to select customers of high fashion retailers. Of the selected 700 high fashion customers who have purchased clothing and/or accessories from a high fashion retailer most recently in the last year, 620 were included for analysis.
Initially descriptive statistics were used to analyse data. The descriptive statistics were followed by an exploratory factor analysis (EFA) conducted to identify the underlying factor structure of customer value. This was followed by a confirmatory factor analysis (CFA) conducted for each of the three constructs of the study. Structural equation modelling (SEM) was utilised to determine and measure the interrelationships between the three constructs of the study, namely customer value, customer satisfaction and repurchase intention.
Eleven customer value dimensions were identified from the literature and the exploratory research phase. The results indicate that all eleven of the customer value dimensions are evaluated favourably by high fashion customers. Five customer value dimensions namely sacrifice value, service value, store value, experience value and status value realised statistically significant paths to customer satisfaction. Only sacrifice value realised a statistically significant path to repurchase intention. The results furthermore reveal that customer satisfaction has a significant and positive influence on repurchase intention with a large direct effect.
The main recommendations of the study indicates that high fashion retailers need to focus on sacrifice value, service value, store value, experience value and status value in order to increase their customers’ satisfaction levels. High fashion retailers also need to focus on sacrifice value if they want to increase repurchase intention. Furthermore, higher levels of customer satisfaction will improve the repurchase intention of high fashion customers.
iv
TABLE OF CONTENTS
ACKNOWLEDGEMENTS ...... i
ABSTRACT ………………………………………………………………………....iii
CHAPTER 1: INTRODUCTION AND ORIENTATION ...... 1
1.1 INTRODUCTION ...... 1
1.2 BACKGROUND OF THE STUDY ...... 2
1.2.1 Overview of the fashion and high fashion retail industry ...... 2
1.2.2 Customer value ...... 4
1.2.2.1 Customer value within the marketing context ...... 5
1.2.2.2 Conceptualising customer value ...... 5
1.2.2.3 Customer value characteristics ...... 7
1.2.2.4 Customer value perspectives and customer value dimensions ...... 7
1.2.3 Customer satisfaction and repurchase intention ...... 9
1.2.4 Interrelationship between customer value, customer satisfaction and repurchase intention ...... 10
1.3 PROBLEM STATEMENT ...... 12
1.4 RESEARCH OBJECTIVES ...... 14
1.4.1 Primary objective ...... 14
1.4.2 Secondary objectives ...... 14
1.5 RESEARCH METHODOLOGY ...... 15
1.5.1 Research design...... 15
v Table of contents
1.5.1.1 Exploratory research design ...... 15
1.5.1.2 Descriptive research design ...... 15
1.5.1.3 Measurement issues and scales ...... 16
1.5.1.4 The sampling procedure ...... 17
1.5.1.5 Data collection ...... 18
1.5.1.6 Data analysis ...... 18
1.6 CHAPTER OUTLINE ...... 20
1.7 CONCLUSION ...... 21
CHAPTER 2: AN OVERVIEW OF THE FASHION AND HIGH FASHION RETAIL INDUSTRY ...... 23
2.1 INTRODUCTION ...... 23
2.2 THE NATURE OF THE GLOBAL RETAIL INDUSTRY ...... 24
2.2.1 Defining the retail industry and retailing ...... 24
2.2.2 An overview of the global retail industry ...... 25
2.2.3 Major developments in the global retail industry ...... 26
2.2.3.1 Change in buying habits of post-recession customers ...... 26
2.2.3.2 Multichannel retailing – bricks, clicks and catalogues...... 27
2.2.3.3 Increased reliance on the Internet for sales ...... 28
2.2.3.4 Social media takes retailers to social networks ...... 29
2.2.3.5 Retailers are looking for quick growth through globalisation ...... 29
2.2.4 Future outlook of the global retail industry ...... 30
2.3 THE FASHION RETAIL INDUSTRY ...... 31 vi Table of contents
2.3.1 Defining the fashion retail industry ...... 31
2.3.2 An overview of the global fashion retail industry ...... 32
2.3.3 The global high fashion retail industry ...... 33
2.3.3.1 Defining high fashion ...... 33
2.3.3.2 Types of high fashion markets within the industry ...... 34
2.3.3.3 The high fashion industry profile ...... 37
2.3.4 Developments in the high fashion retail industry ...... 40
2.4 THE NATURE OF THE SOUTH AFRICAN RETAIL INDUSTRY...... 41
2.4.1 An overview of the retail industry in South Africa ...... 41
2.4.2 Major developments in the retail industry in South Africa ...... 42
2.4.3 Future outlook of the retail industry in South Africa ...... 45
2.4.4 Retail landscape of South Africa ...... 46
2.4.5 An overview of the South African fashion retail industry ...... 48
2.5 HIGH FASHION RETAIL INDUSTRY IN SOUTH AFRICA ...... 49
2.6 CONCLUSION ...... 51
CHAPTER 3: CUSTOMER VALUE ...... 53
3.1 INTRODUCTION ...... 53
3.2 CUSTOMER VALUE WITHIN THE MARKETING CONTEXT ...... 53
3.2.1 The evolution of marketing practices ...... 54
3.2.2 The marketing concept ...... 56
3.3 CONCEPTUALISING CUSTOMER VALUE ...... 58
vii Table of contents
3.3.1 Definitions of customer value ...... 59
3.3.2 The benefit (get) and sacrifice (give) conceptualisation of customer value ...... 63
3.3.2.1 Perceived benefits ...... 64
3.3.2.2 Perceived sacrifices ...... 65
3.4 THE CHARACTERISTICS OF CUSTOMER VALUE ...... 67
3.4.1 Customer value is interactive ...... 67
3.4.2 Customer value is relativistic ...... 68
3.4.3 Customer value is preferential ...... 69
3.4.4 Customer value is an experience ...... 70
3.5 CUSTOMER VALUE PERSPECTIVES, KEY FEATURES AND DIMENSIONS ...... 71
3.6 CONCLUSION ...... 78
CHAPTER 4: CUSTOMER VALUE DIMENSIONS, CUSTOMER SATISFACTION AND REPURCHASE INTENTION ...... 79
4.1 INTRODUCTION ...... 79
4.2 CUSTOMER VALUE DIMENSIONS IN THE HIGH FASHION RETAIL INDUSTRY ...... 79
4.3 CUSTOMER SATISFACTION AND REPURCHASE INTENTION ...... 87
4.3.1 Customer satisfaction ...... 87
4.3.2 Repurchase intention ...... 89
4.4 THE INTERRELATIONSHIP BETWEEN CUSTOMER VALUE, CUSTOMER SATISFACTION AND REPURCHASE INTENTION ...... 91
viii Table of contents
4.4.1 Customer value and customer satisfaction ...... 91
4.4.2 Customer value and repurchase intention ...... 93
4.4.3 Customer satisfaction and repurchase intention ...... 94
4.5 PROPOSED THEORETICAL MODEL ...... 96
4.6 CONCLUSION ...... 97
CHAPTER 5: RESEARCH METHODOLOGY ...... 99
5.1 INTRODUCTION ...... 99
5.2 MARKETING RESEARCH DEFINED ...... 99
5.3 THE MARKETING RESEARCH PROCESS ...... 100
5.3.1 Phase I: Determine the research problem ...... 101
5.3.1.1 Step 1: Identify and clarify management’s information needs ...... 101
5.3.1.2 Step 2: Define the research problem ...... 102
5.3.1.3 Step 3: Confirm research objectives ...... 103
5.3.2 Phase II: Select the appropriate research design ...... 105
5.3.2.1 Step 4: Determine the research design ...... 105
5.3.2.2 Step 5: Develop the sampling design and sample size ...... 107
5.3.2.3 Step 6: Assess measurement issues and scales ...... 113
5.3.2.4 Step 7: Pretest the questionnaire ...... 125
5.3.3 Phase III: Execute the research design ...... 126
5.3.3.1 Step 8: Collect and prepare data ...... 126
5.3.3.2 Step 9: Analyse data ...... 130
ix Table of contents
5.3.3.3 Step 10: Transform data structures into information ...... 139
5.3.4 Phase IV: Communicate the research results ...... 140
5.3.4.1 Step 11: Prepare and present final report ...... 140
5.4 CONCLUSION ...... 141
CHAPTER 6: INTERPRETATION OF RESULTS ...... 142
6.1 INTRODUCTION ...... 142
6.2 SAMPLE REALISATION RATE...... 142
6.3 DEMOGRAPHIC PROFILE OF RESPONDENTS...... 143
6.4 PURCHASING HABITS OF RESPONDENTS ...... 147
6.5 CUSTOMER VALUE ...... 148
6.5.1 Descriptive results ...... 149
6.5.2 Exploratory Factor Analysis (EFA)...... 154
6.5.3 Confirmatory Factor Analysis (CFA) ...... 160
6.5.4 Reliability of customer value factors ...... 166
6.5.5 Overall mean scores for customer value factors ...... 167
6.6 CUSTOMER SATISFACTION ...... 168
6.6.1 Descriptive results ...... 169
6.6.2 Confirmatory Factor Analysis (CFA) ...... 170
6.6.3 Reliability of customer satisfaction...... 171
6.6.4 Overall mean score for customer satisfaction ...... 172
6.7 REPURCHASE INTENTION ...... 172
x Table of contents
6.7.1 Descriptive results ...... 173
6.7.2 Confirmatory Factor Analysis (CFA) ...... 174
6.7.3 Reliability of repurchase intention ...... 175
6.7.4 Overall mean score for factor ...... 175
6.8 TESTING THE THEORETICAL MODEL ...... 176
6.8.1 The measurement model ...... 177
6.8.2 The structural model ...... 178
6.9 SUMMARY OF FINDINGS ...... 182
6.9.1 Main findings pertaining to the descriptive results ...... 182
6.9.1.1 Customer value ...... 182
6.9.1.2 Customer satisfaction ...... 183
6.9.1.3 Repurchase intention ...... 184
6.9.2 Main findings pertaining to the hypotheses testing ...... 185
6.10 CONCLUSION ...... 185
CHAPTER 7: OVERVIEW, CONCLUSIONS AND RECOMMENDATIONS ...... 187
7.1 INTRODUCTION ...... 187
7.2 OVERVIEW OF THE STUDY ...... 187
7.3 RESEARCH METHODOLOGY OVERVIEW ...... 188
7.4 CONCLUSIONS AND RECOMMENDATIONS FOR SECONDARY OBJECTIVES ...... 189
7.4.1 Secondary objective 1 ...... 189
7.4.2 Secondary objective 2 ...... 193 xi Table of contents
7.4.2.1 Customer value ...... 193
7.4.2.2 Customer satisfaction ...... 197
7.4.2.3 Repurchase intention ...... 199
7.4.3 Secondary objective 3 ...... 200
7.4.4 Secondary objective 4 ...... 202
7.4.4.1 Customer value dimensions ...... 202
7.4.4.2 Customer satisfaction ...... 203
7.4.4.3 Repurchase intention ...... 204
7.4.5 Secondary objective 5 ...... 205
7.4.6 Secondary objective 6 ...... 206
7.4.7 Secondary objective 7 ...... 208
7.4.8 Secondary objective 8 ...... 209
7.5 LINKING THE OBJECTIVES, ALTERNATIVE HYPOTHESES, QUESTIONS IN THE QUESTIONNAIRE, THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ...... 211
7.6 LIMITATIONS OF THE STUDY ...... 213
7.6.1 Limitations of the literature review ...... 213
7.6.2 Limitations of the empirical research ...... 213
7.7 RECOMMENDATIONS FOR FUTURE RESEARCH ...... 214
7.8 CONCLUSION ...... 215
REFERENCE LIST ...... 216
APPENDIX A: FINAL QUESTIONNAIRE USED IN THE STUDY ...... 240
xii Table of contents
APPENDIX B: FOCUS GROUP DISCUSSION GUIDE ...... 249
APPENDIX C: CONSENT FORM FOR FOCUS GROUPS ...... 250
APPENDIX D: STATISTICAL ANALYSIS DECLARATION ...... 252
APPENDIX E: LANGUAGE EDITING DECLARATION ...... 253
APPENDIX F: TECHNICAL EDITING DECLARATION ...... 254
xiii
List of Tables
Table 2.1: The fashion retail industry ...... 32
Table 2.2: Growth drivers in emerging fashion markets ...... 37
Table 3.1: Definitions of customer value ...... 59
Table 3.2: Customer value perspectives, key features and dimensions ...... 72
Table 4.1: Customer value dimensions considered relevant to the high fashion retail industry ...... 80
Table 5.1: Sampling designs ...... 109
Table 5.2: Sampling plan of the study ...... 113
Table 5.3: Format of structured questions ...... 114
Table 5.4: Scales of measurement ...... 116
Table 5.5: Question formats and scales ...... 117
Table 5.6: Statements used in final questionnaire...... 118
Table 5.7: Survey methods ...... 127
Table 5.8: Relationship between research objectives, alternative hypotheses and questionnaire ...... 140
Table 6.1: Demographic profile of respondents...... 143
Table 6.2: High fashion retailers and shopping centres purchased from ...... 147
Table 6.3: Descriptive results for customer value statements ...... 149
Table 6.4: KMO and Bartlett’s test results for EFA ...... 155
Table 6.5: Total Variance explained results ...... 155
Table 6.6: Rotated Factor Matrix for the EFA including all the statements ...... 156 xiv List of tables
Table 6.7: Fit indices for CFA models of customer value ...... 161
Table 6.8: Final set of factors and corresponding statements after CFA ...... 162
Table 6.9: Cronbach’s alpha coefficients for the eleven customer value factors ...... 166
Table 6.10: Overall mean scores for the eleven customer value factors ...... 167
Table 6.11: Customer satisfaction statements ...... 169
Table 6.12: Fit indices for CFA model for customer satisfaction ...... 170
Table 6.13: The corresponding statements for customer satisfaction after CFA .. 171
Table 6.14 Cronbach’s alpha coefficient for customer satisfaction...... 171
Table 6.15: Overall mean score for customer satisfaction ...... 172
Table 6.16 Repurchase intention statements ...... 173
Table 6.17: Fit indices for CFA model for repurchase intention ...... 174
Table 6.18: Final set of repurchase intention statements after CFA ...... 175
Table 6.19: Cronbach’s alpha coefficient for repurchase intention ...... 175
Table 6.20: Overall mean score for repurchase intention ...... 176
Table 6.21: Fit indices for the measurement model ...... 178
Table 6.22: Statistical significant paths for the structural model ...... 179
xv List of figures
List of Figures
Figure 1.1: Theoretical model ...... 12
Figure 2.1: Operating margins of top 10 high fashion brands ...... 39
Figure 4.1: Customer value and customer satisfaction ...... 92
Figure 4.2: Customer value and repurchase intention ...... 94
Figure 4.3: Customer satisfaction and repurchase intention ...... 95
Figure 4.4: Proposed multidimensional model of customer value in the high fashion retail industry ...... 97
Figure 5.1: Phases and steps in the marketing research process ...... 100
Figure 5.2: Sampling process ...... 112
Figure 6.1: Theoretical model ...... 177
Figure 6.2: The structural model...... 181
Figure 7.1: The structural model...... 211
Figure 7.2: Summary of the primary and secondary objectives, questions in the questionnaire, alternative hypotheses, findings, conclusions and recommendations ...... 212
xvi
CHAPTER 1: INTRODUCTION AND ORIENTATION
1.1 INTRODUCTION
The fashion retail industry was the second largest contributor of retail income in South Africa for the year 2012 with many retailers competing for a share of the market (Statistics South Africa, 2013:2). The industry is characterised by a number of highly competitive players providing similar products and services, especially in the high fashion retail industry. Retail customers therefore, have more alternatives to choose from and are better informed about alternatives available in the marketplace than ever before (Levy & Weitz, 2009:413).
As more retailers gain access to similar technologies, information and processes, it is becoming increasingly difficult to establish a sustainable competitive advantage in the marketplace, ensure customer satisfaction and encourage repurchase intention. This is especially true for high fashion retailers, since their higher margin customers have greater expectations to receive value from these high fashion retailers (Edward & Sahadev, 2011:328; Sweeney & Soutar, 2001:206). To succeed in this competitive marketplace, retailers must become adept not just at providing quality products, but also at providing value to their customers (Chang & Dibb, 2012:252; Dixon, Pickard & Robson, 2002:5; Chen & Yang, 2000:671). Only those businesses that truly offer the value customers want and expect, remain competitive in the long term and are able to increase customer satisfaction levels. Higher customer satisfaction leads to improved repurchase intention. It is therefore important for high fashion retailers to ensure that they offer value to their customers (Edward & Sahadev, 2011:328; Johnson & Gustafsson, 2000:5).
There is a great deal of debate as to what contributes to customer value and what the customer value dimensions are (Helkkula, Kelleher & Pihlström, 2012:59; Li & Petrick, 2010:205; Wachter, 2000:122). Customer value can be defined as the overall assessment of the utility of a product based on perceptions of what is received and what is given (Zeithaml, 1988:4). This study therefore focuses on uncovering the concept of
1 Chapter 1: Introduction and orientation customer value, with specific emphasis on determining the underlying customer value dimensions from the perspective of the customer shopping at high fashion retail stores.
Customer value provides high fashion retailers with a possible differentiation strategy. High fashion retailers who utilise the provision of customer value effectively can attract proportionally more customers with need satisfying offerings than a competitor who does not pay attention to customer value (Grewal & Levy, 2010:14). Customer value is of managerial interest to high fashion retailers, as these retailers need to identify the dimensions they should focus on to increase the value they are delivering to their customers and obtain or retain a sustainable competitive advantage (Bains, Fill & Page, 2011:468; West, Ford & Ibrahim, 2010:498).
The aim of this study is to propose a multidimensional model of customer value for high fashion retailers including the interrelationship between customer value, customer satisfaction and repurchase intention.
The following sections of this chapter provide initial insight into the fashion and high fashion retail industry and the main constructs of the study, namely customer value, customer satisfaction and repurchase intention. The problem statement and specific research objectives are also presented. Subsequent sections address the research methodology proposed for the study, and conclude with the chapter outline of the study.
1.2 BACKGROUND OF THE STUDY
1.2.1 Overview of the fashion and high fashion retail industry
The fashion retail industry, of which high fashion retailing is a component, plays an important role in the South African economy. The textile, clothing, footwear and leather goods retail industry is the second largest contributor to retail income in South Africa, contributing 21% per cent of the total income in the retail industry during 2012. The men’s and women’s clothing sector contributes the highest sales of all the commodities in the textile, clothing, footwear and leather goods retail industry (Statistics South Africa, 2013:2).
2 Chapter 1: Introduction and orientation
The high fashion retail industry is unpredictable and competitive in nature (Grannis, 2012; IMAP, 2010:5). The products sold in the industry are mainly determined by designers, subcultures and creative industries (Datamonitor, 2010:14). High fashion retailers are defined as those who sell exclusively branded clothing, footwear or accessories. They also sell products at significantly higher prices and make it available at their own identifiable retail store area in an upper class shopping mall (Moore & Doherty, 2007:76). Types of high fashion markets within the industry are identified as markets in mainly developed countries and developing countries. The developed countries are seen as home to the traditional high fashion markets, and developing countries as home to the emerging high fashion markets (Grail, 2009). The high fashion retail industry can be divided into two main merchandise categories, namely haute couture and ready-to-wear (Cho & Lee, 2005:18; Bridson & Evans, 2004:404).
There are several developments within the high fashion retail industry globally. These are increased focus on men’s clothing, decreased sales of affordable luxury items, and a shift towards an increased demand of genuine luxury products; as well as new markets for customers of high fashion are emerging worldwide (Datamonitor, 2011a; Rantisi, 2011:259). High fashion retailers are consistently recognised as the most successful of retailers in the fashion industry across all countries (Moore, Doherty & Doyle, 2010:139). This success is contributed to the fact that their store operations are typically small, which means that the capital and management costs are less compared to other retail sectors (Moore et al., 2010:139; Tynan, McKechnie & Chhuon, 2009:1).
Because of the unique nature of high fashion retailers, they are faced with a challenge of continuing to provide sufficient customer value to compensate for their high prices, especially in the current difficult economic environment. There is also the growing intensity in high fashion retail competition due to the emergence and growth in emerging markets (Levy & Weitz, 2009:133; Sweeney & Soutar, 2001:206). The increased competition between different high fashion retailers for the share of wallet of customers, is forcing these retailers to provide products and services that present value to their customers (Kurtz, 2012:437; Cottet, Litchtlé & Plichon, 2006:220; Wachter, 2000:121).
3 Chapter 1: Introduction and orientation
The inclusion of South Africa in 2010 into the BRICS markets opened new opportunities for luxury brands and specifically high fashion brands. South Africa is seen as the gateway to Africa, where there is potential for sales growth in the high fashion market (Luxurysociety, 2011). One of the major drawbacks in the South African high fashion retail industry is that across all sectors, from designer jewellery through to high fashion, the high price for local design is not in line with the quality offered. This phenomenon opens up the high fashion retail industry for international brands such as Chanel, Gucci and Tommy Hilfiger, just to mention a few, to enter with high prices and high quality (Shukla, 2010a; Grail, 2009). However, to sustain long-term demand, a greater emphasis on customer value is important if high fashion brands intend to have a strong presence (Luxurysociety, 2011). Sales in South Africa are influenced by the knock-on effect of the developed markets slowdown. Retailers are feeling the pinch and retail costs per square metre are high relative to the sales volume return (Luxurysociety, 2011).
In conclusion, since the growing intensity of retail competition is forcing high fashion retailers to provide value to their customers, it has become increasingly vital for them to be able to determine what customer value is, as well as which dimensions of customer value are important to their customers. If they know what these dimensions are, they will be able to deliver value to their customers in both a competitive and profitable manner. This leads to the discussion of customer value in the following section.
1.2.2 Customer value
This section takes a closer look at customer value within a marketing context. It continues by conceptualising customer value, as well as providing an overview of the customer value characteristics. It also provides a discussion on the customer value perspectives and possible dimensions of customer value. This section is concluded with a discussion on the interrelationship between the key constructs of the study.
4 Chapter 1: Introduction and orientation
1.2.2.1 Customer value within the marketing context
Customer value makes its appearance in several different contexts. Customer value can be viewed within a pure accounting context, strategic management context and from a marketing context. This study focuses on customer value within the marketing context where value is studied from the customer’s perspective.
The marketing concept is implemented by businesses that follow a customer orientation as philosophy, and is based on businesses aiming to achieve their goals through meeting and exceeding customer needs better than their competitors. It is professed that only those businesses that actively apply the marketing concept as part of the customer orientation are able to deliver superior customer value to their customers (Chahal & Kumari, 2012:168; Helkkula et al., 2012:59).
1.2.2.2 Conceptualising customer value
Customer value is important to businesses, as it is a source of competitive advantage and the importance of superior customer value is recognised in most business strategy models. It also influences the degree of satisfaction/dissatisfaction experienced by customers (Helkkula et al., 2012:59; Rintamäki, Kanto, Kuusela & Spence, 2006:6). Customer value is an abstract concept that is context specific (Nsairi, 2012:679; Patterson & Spreng, 1997:416).
A clear understanding of the concept of customer value becomes fundamental for the success of value-based strategies (Khalifa, 2004:645). Literature shows that customer satisfaction, repurchase intention and profits are strongly linked to the value created for customers. Customers are satisfied with a business as long as it offers them superior customer value compared to its competitors (Hume & Mort, 2010:174; Reichheld, Markey & Hopton, 2000:136). Given the importance of customer value to businesses, several definitions have emerged in literature.
Holbrook (1999:27) defines customer value as the interaction between a customer and a product. The author also states that customer value is subjective because it involves comparisons among objects, it varies between people, and it is specific to the situation
5 Chapter 1: Introduction and orientation
(Nsairi, 2012:679; Patterson & Spreng, 1997:416). According to the definition of Zeithaml (1988) cited by Ravald and Grönroos (1996:22), customer value is an individual’s overall assessment of the benefit of an offering based on a perception of what is received and what is sacrificed. This assessment is a comparison of a product or service’s “get” and “give” components (Sweeney & Soutar, 2001:204). It is evident from the literature that the greater the difference between benefits and costs, the higher the value perceived by customers (Harmon & Griffiths, 2008:260).
Many authors have acknowledged that it is difficult to define customer value because of its ambiguity and the fact that it is a dynamic concept that evolves over time (Sparks, Butcher & Bradley, 2008:99; Khalifa, 2004:647; Woodruff, 1997:143). The general agreement in literature is that customer value should be determined by customer perceptions, and not by the business’s assumptions and intentions (Khalifa, 2004:647; Woodruff, 1997:143). Over time, the concept of customer value has developed through research from a simplistic ratio of quality and price approach (Gale, 1994:xiv) to a rich description of perceived benefits and sacrifices/costs (Li & Petrick, 2010:202; Rintamäki et al., 2006:9).
For the purpose of this study, customer value refers to a customer’s overall assessment of a product and/or service provided by a business based on their perception of the benefits the customer receives, relative to the sacrifice the customer has to exert to obtain these benefits (Sparks et al., 2008:99; Rintamäki et al., 2006:8; Petrick, 2002:128; Sweeney & Soutar, 2001:204; Zeithaml, 1988:5; Ravald & Grönroos, 1996:21).
From the above definition, it is evident that the “benefit (get)/sacrifice (give)” conceptualisation is central to customer value (Chang & Dibb, 2012:258; Boksberger & Melsen, 2011:231; Kerin, Hartley & Rudelius, 2011:10; Li & Petrick, 2010:205). It is agreed by various authors that there are different types of perceived benefits that a customer could receive, as well as different kinds of perceived sacrifices/costs customers could incur in obtaining customer value (Harmon & Griffiths, 2008:260). The perceived benefits include functional benefits, social benefits, service benefits,
6 Chapter 1: Introduction and orientation experiential benefits, image, economic benefits and relational benefits. The perceived sacrifices include monetary costs, time costs, energy costs, psychological costs, risks and inconvenience (Boksberger & Melsen, 2011:231; Kerin et al., 2011:10).
1.2.2.3 Customer value characteristics
Within the context of the various definitions of customer value, it is also important to gain an understanding of the characteristics of customer value. Customer value is an interactive, relativistic, preference experience. The characteristics of customer value are not mutually exclusive, but are interconnected and overlapping. Combined they form the essence of the nature of customer value (Chen & Hu, 2010:536; Holbrook, 1999:5).
The characteristics of customer value reiterate that there must be interaction between a customer and a product and/or service for any assessment of customer value; different products and/or services are compared differently, comparisons differ from person to person, as well as from one context to another; there is an emotional aspect to customer value that influences customers’ assessment of the value they receive from a product and/or service; and customer value is associated with an experience with a particular product and/or service (Mayr & Zins, 2012:357; Chen & Hu, 2010:536).
1.2.2.4 Customer value perspectives and customer value dimensions
Based on the definitions of customer value, the benefit/sacrifice conceptualisation, and the characteristics of customer value, customer value is viewed as a multidimensional concept from which several customer value perspectives have emerged. The different perspectives are in essence an attempt by various authors to clarify this complex and dynamic concept in order to determine what really constitutes customer value (Sparks et al., 2008:99; Jensen & Hansen, 2007:603; Cottet et al., 2006:221). Through the different perspectives, authors have identified a variety of different customer value dimensions (Khalifa, 2004:648).
As evident from the customer value perspectives, authors indicate that customer value dimensions change based on the perspective or the context investigated (Buchanan- Oliver, Brodie & Huang, 2008:5; Cottet et al., 2006:221). The perspectives of customer
7 Chapter 1: Introduction and orientation value highlight various dimensions of customer value, identified by various authors in different studies, depicting different products/services consumed in different consumption situations/experiences. These dimensions require further investigation to gain understanding as to which dimensions will be relevant for high fashion retailers with their unique products/services and unique shopping situation.
No assumptions should be made by high fashion retailers on what dimensions constitute customer value for their customers. It is important for high fashion retailers to identify which customer value dimensions are important to their customers, how important these dimensions are, and how these dimensions generate and accumulate value in a high fashion retail context. From all the customer value dimensions uncovered in the literature, several of these have been considered relevant to the high fashion retail industry during the exploratory phase of the study (section 5.3.2.1). The customer value dimensions include, merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value and status value. Other customer value dimensions also became evident from the focus group discussions conducted during the exploratory phase of this study, namely expressive value and relationship value.
Merchandise value (also referred to as functional value, utilitarian value, functional value - performance/quality -, acquisition value, utilitarian value, excellence) is defined as a customer’s overall judgement of a retailer’s merchandise, based on the perceived overall quality compared to the price of the merchandise (Chaudhuri & Ligas, 2009:407). Sacrifice value (which also refers to transactional value, perceived relative price and functional value - price/value for money, monetary price) is described as the money customers have to give up in order to attain a product/service (Agarwal & Teas, 2004:244). Social value is the perceived benefit customers gain when the acquisition and use of a product/service strengthen or support their association with certain groups/peers (Gounaris, Tzempelikos & Chatzipanagiotou, 2007:66). Reputational value which also refers to esteem and reputation is defined as the prestige or status of a product/service based on the image of the retailer (Brengman & Willems, 2009:348). Service value (wich also refers to encounter-specific functional value, encounter-specific
8 Chapter 1: Introduction and orientation technical value, service excellence, technical value, service quality) is associated with an individual customer’s assessment of properties by the service encounter relative to expectations (Jensen & Hansen, 2007:606). Technology value (which also refers to temporal value, spatial value) is the overall assessment of the benefits gained through the use of technology (Pura, 2005:211). Store value (which also refers to efficiency, behavioural price, time and effort spent, hedonic value) is described as the assessment of the benefits experienced when a customer engages with activities within a retail store (Diep & Sweeney, 2008:401). Experience value (which also refers to emotional value, play, playfulness, emotional response, hedonic (affective) value) is the emotional response or joy received when a particular product and/or service is purchased (Petrick, 2004:402; 2002:123). Status value is described as the impression given to others, communicating a sense of achievement and pride, as well as increasing a sense of self- worth (Sparks et al., 2008:103). Expressive value comprises the benefits gained from satisfying desires for the expression of customers’ self-image or personality (Ko & Sung, 2007:119). Finally, relationship value is defined as the value of having a relationship, or the value of the commitment of both parties (Ravald & Grönroos, 1996:23).
1.2.3 Customer satisfaction and repurchase intention
Customer satisfaction is defined as the customer’s post-purchase assessment as well as emotional response to the overall product and/or service experience (Patterson & Spreng, 1997:418). It is a customer’s response after an evaluation of prior expectations and actual performance of a product and/or service (Lee, Kim, Ko & Sagas, 2011:243). Customer expectations are formed based on their continued interaction with a business’ products and/or service (Kursunluoglo, 2014:529; Gilbert & Veloutsou, 2006:298).
One of the key business objectives should be to satisfy customers (Kitapci, Dortyol, Yaman & Gulmez, 2013:243). It is more profitable for businesses to retain existing customers over replacing the ones they lost, emphasising the importance of customer value for business success (Ryu, Lee & Kim, 2012:206; Naik, Gantasala & Prabhakar, 2010:242). Satisfied customers are likely to commit to a business, seek out the business in future, and will be willing to pay a premium price to transact with the
9 Chapter 1: Introduction and orientation business. Customer satisfaction is considered to be one of the main contributors to repurchase intention (Kitapci et al., 2013:244).
Repurchase intention attempts to assess a customer’s intention to purchase a product and/or service in future as well as the possibility to at least recommend that product and/or service. It is a commonly used measure to anticipate response behaviour in terms of tendency to continue, increase, or decrease the amount of product and/or service purchased from a particular retailer (Ferrand, Robinson & Valette-Florence, 2010:86).
It is evident from the literature that repurchase intention includes an attitudinal component that reflects predictable consumer behaviour in the immediate future. A positive attitude towards a particular product and/or service is a good predictor of repurchase intention (Saha & Theingri, 2009:355). The customer’s attitude is established over time (Hume & Mort, 2010:174). Therefore a customer’s repurchase intention often depends on a general assessment of the product and/or service, based on multiple encounters with the product and/or service (Tsai, Tsai & Chang, 2010:732; Hellier, Geursen, Carr & Rickard, 2003:1763).
1.2.4 Interrelationship between customer value, customer satisfaction and repurchase intention
Since businesses, of which high fashion retailers are no exception, are facing more demanding customers, increasing global competition and worldwide economic recession, it has become increasingly important for them to gain a sustainable competitive advantage. Authors have discovered a link between providing superiour customer value, customer satisfaction and repurchase intentions (Cottet et al., 2006:220; Gallarza & Saura, 2006:439; Sweeney & Soutar, 2001:206; Sweeney, Soutar & Johnson, 1999:82).
Studies indicate that customer value is an immediate antecedent to customer satisfaction (Ekinci, Dawes & Massey, 2008:43). According to Ekinci et al. (2008:44), customer value directly and positively influences customer satisfaction. The higher the
10 Chapter 1: Introduction and orientation customer value provided, the higher the customer satisfaction levels experienced by customers (Malik, 2012:69; Jobber, 2010:14; Cannon, Perreault & McCarthy, 2008:7). Customer value has (1) a positive influence on repurchase intention when the customer does not have preconceived perceptions of customer value, (2) there is a direct positive correlation between customer value and repurchase intention, and (3) customer value is also mediated through customer satisfaction in influencing repurchase intention (Saha & Theingri, 2009:354; Patterson & Spreng, 1997:429). Customer satisfaction has a direct and positive relationship to repurchase intention and in most instances, the primary path to repurchase intention is through customer satisfaction (Hume & Mort, 2010:174; Hu, Kandampully & Juwaheer, 2009:121). It is evident from the literature that customer satisfaction is the strongest indicator and more indicative of actual repurchase behaviour (Ryu et al., 2012:208).
The following alternative hypotheses have thus been formulated for the study:
H1: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels.
H2: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention.
H3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers.
The theoretical model presented in Figure 1.1 proposes a positive relationship between customer value and customer satisfaction; customer value and repurchase intention, and customer satisfaction and repurchase intention (Erragcha & Gharbi, 2012:260; Hume & Mort, 2010:176; Hu et al., 2009:120; Lin, Sher & Shih, 2005:332).
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Figure 1.1: Theoretical model
Source: Author’s own construct (Following Figures and Tables without a source are assumed to be the author’s own construct)
1.3 PROBLEM STATEMENT
It is evident from literature that there is high growth in the luxury fashion industry compared to other retail markets (Tynan et al., 2009:1). However, the economic recession is negatively impacting on the purchasing power of the high fashion retailer’s customer (Levy & Weitz, 2009:133; Sweeney & Soutar, 2001:206). The high fashion retail sector is a major contributor to the South African economy but experiences high levels of competition (Statistics South Africa, 2010:20). Due to the highly competitive nature, high fashion retailers need to understand the underlying customer value dimensions and consider these dimensions in their marketing strategies, as providing customers with value is necessary for the high fashion retailer to gain a competitive advantage and even profitability (Tynan et al., 2009:1; Rintamäki et al., 2006:20).
High fashion retailers should understand that customers differ in what they perceive as value within different product categories and shopping experiences (Chahal & Kumari,
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2012:168; Wachter, 2000:122). It therefore stands to reason that high fashion retailers need to determine how their customers perceive value. The unique nature of high fashion retailers compared to general clothing retailers underlies the fact that high fashion retail customers have different expectations, and might view customer value dimensions differently as opposed to other clothing retailers (Edward & Sahadev, 2011:328; Wachter, 2000:121). It has therefore become important to determine all possible dimensions that could constitute value to a high fashion retailer’s customers which could influence the high fashion retailers’ success.
Apart from realising that their customer expectations are different and that customers view customer value differently, high fashion retailers should be aware that high levels of customer value lead to high levels of customer satisfaction and that there is a visible link to repurchase intention which could lead to increased profits for high fashion retailers (Malik, 2012:69; Sparks et al., 2008:105; Harris & Goode, 2004:150). Authors have identified a link between providing superior customer value, customer satisfaction and repurchase intentions (Malik, 2012:69; Cottet et al., 2006:220; Gallarza & Saura, 2006:439) which emphasises the necessity for further research on customer value.
Based upon the background of the study, the literature review and the above discussion, the following problem statement is formulated for this study:
It is important for high fashion retailers, as for any other business, to focus on providing value to their customers so as to increase customer satisfaction and repurchase intentions in order to contribute to future profitability. To provide value, high fashion retailers must be aware of what underlies customer value in the high fashion retail industry. There is, however, limited published research pertaining to the multidimensionality of customer value in general, with no specific research suggesting a comprehensive multidimensional customer value model for the high fashion industry specifically. Developing such a model will aid in determining all the possible customer value dimensions in this industry, and will place the high fashion retailer in a better position to provide customer value that will consequently lead to customer satisfaction and repurchase intention.
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1.4 RESEARCH OBJECTIVES
In order to address the problem at hand the following research objectives have been formulated for this study:
1.4.1 Primary objective
The primary objective of the study is to propose a multidimensional model of customer value in the high fashion retail industry.
1.4.2 Secondary objectives
The secondary objectives formulated to achieve the primary objective of the study include:
to report on the state of affairs in the fashion retail industry with specific reference to high fashion retailing;
to provide a theoretical overview of customer value, customer satisfaction and repurchase intention within the marketing context;
to uncover customer value dimensions proposed in the literature;
to empirically investigate customer value dimensions as well as customer satisfaction and repurchase intention in a high fashion retail setting;
to determine the influence of customer value dimensions on customer satisfaction in the high fashion retail industry;
to investigate whether customer value influences repurchase intention in the high fashion retail industry;
to determine whether customer satisfaction influences repurchase intention in the high fashion retail industry; and
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to develop a multidimensional model of customer value in the high fashion retail industry.
1.5 RESEARCH METHODOLOGY
This section provides a brief explanation of the research methodology followed in this study. The research methodology specifically covers the research designs employed (section 5.3.2.1), the sampling design followed (section 5.3.2.2), measurement and scales implemented (section 5.3.2.3), the data collection method used (section 5.3.3.1), and the data analysis procedures applied (section 5.3.3.2). These aspects are discussed in detail in Chapter 5.
1.5.1 Research design
Two research designs were followed – the empirical research took place in two phases. Qualitative, exploratory research was utilised as part of the initial phase of the research. The primary research design utilised is a descriptive design utilising quantitative methods to collect primary data.
1.5.1.1 Exploratory research design
In the qualitative, exploratory research design of the study, focus groups were used to investigate the extent to which customer value dimensions identified in the literature are applicable to the high fashion retailers, due to the myriad of possible customer value dimensions identified in literature. The focus groups were furthermore probed to determine whether there are any other unidentified customer value dimensions relevant to high fashion retailers, as well as to determine the specific statements that describe the customer value dimensions for high fashion retailers.
1.5.1.2 Descriptive research design
In terms of the descriptive research design, this study made use of a variation of the interviewer administered mall-intercept survey since the respondents were interviewed on their way to and from the shopping centres. This is a suitable survey method for this
15 Chapter 1: Introduction and orientation study as the target population was customers of high fashion retailers in Gauteng. The high fashion retailers were located in the shopping centres and therefore their customers were found in close proximity to the shopping centres (Feinberg, Kinnear & Taylor, 2013:236).
1.5.1.3 Measurement issues and scales
Since a descriptive research was followed as the primary research design utilising quantitative methods, a structured questionnaire was subsequently designed to achieve the empirical objectives of the study. Structured questions are closed-ended questions that provide a pre-specified structured response format and were used in this study (Malhotra, Birks & Wills, 2012:465). Sections A, B, C and D of the questionnaire employed different questions and the constructs of the study were measured using unlabelled seven-point Likert-type scale questions.
The questionnaire fielded in this study commences with a preamble. The preamble communicates the required time to complete the questionnaire and specifies that all responses will be anonymous and voluntary (Churchill, Brown & Suter, 2010:309). The questionnaire continues with a screening question in order to ensure respondents are high fashion customers (Appendix A). The questionnaire is furthermore divided into four sections namely:
Section A consists of 75 statements measuring customer value offered by high fashion retailers developed from extant literature.
Section B includes 5 statements measuring customer satisfaction from an existing scale adapted from Edward and Sahadev (2011) and Hume and Mort (2010).
Section C includes 5 statements measuring repurchase intention from an existing scale adapted from Hume and Mort (2010) and Cronin et al. (2000).
Section D gathers information regarding the demographic profile of respondents.
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The questionnaire was pre-tested before distributed to the sample. Based on the feedback received, no changes were necessary and the questionnaire was fielded.
1.5.1.4 The sampling procedure
Sample selection involves the procedure of selecting an identified group of sampling elements from a defined target population (Shiu, Hair, Bush & Ortinau, 2009:64). Several steps in the sampling procedure were followed in this study (Shiu et al., 2009:296).
Define the target population
For the purpose of this study, the target population included all customers of high fashion retailers in Gauteng, South Africa. The sampling units are shopping centres in Gauteng housing the highest concentration of high fashion retailers. The sampling elements are customers of high fashion retailers selected at each one of seven shopping centres selected, to complete the questionnaire.
Identify the sampling frame
For the purpose of this study, the author used the Mallguide (2012) as sampling frame to obtain a list of all shopping centres located in Gauteng, South Africa (sampling units). The Mallguide (2012) was utilised because it is a free online registry containing a comprehensive database of shopping malls in South Africa, and is easily accessible.
Select appropriate sampling method
For the purpose of this study, a non-probability multistage sampling approach was used for the primary, descriptive research design. In order to select shopping centres containing high fashion retailers in Gauteng, South Africa, judgmental sampling was the chosen sampling technique. In judgmental sampling, an experienced individual selects the sample based on his or her judgement about some appropriate characteristics required of the sample element (Zikmund & Babin, 2010:424).
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For the second stage, the convenience sampling technique was chosen to select customers of high fashion retailers (sampling elements). Convenience sampling occurs when sampling units are selected based on availability (Feinberg et al., 2013:61). This sampling approach was the most appropriate because a sampling frame of high fashion shoppers could not be obtained.
Determine suitable sample size
For the purpose of the study, 700 (100 respondents per shopping centre) high fashion customers who had purchased clothing and/or accessories from a high fashion retailer in the last year, were selected as the number of respondents to take part in the study. The size of the sample (700 high fashion customers) is large enough to ensure accurate findings (Malhotra et al., 2012:499; Shiu et al., 2009:473).
1.5.1.5 Data collection
For the purpose of this study, the fieldworkers were third year and honours students from the Department of Marketing of the University of Johannesburg. They have had exposure to a course in marketing research methodology both in undergraduate as well as during the honours degree. In this study, 30 fieldworkers were selected to administer and complete the questionnaires from customers shopping at high fashion retailers in Gauteng, South Africa. Fieldworkers interviewed customers of high fashion retailers outside the seven shopping centres selected as sampling units where high fashion retailers are located in Gauteng, South Africa, based on convenience. Customers were intercepted on their way to or from the shopping centres (the researcher did not obtain permission to interview shoppers inside the shopping centres). Fieldworkers approached customers at different times of the day and different days of the week in order to make the sample more representative of the target population concerned (Feinberg et al., 2013:238).
1.5.1.6 Data analysis
Data was checked for accuracy, completeness and validity (Maholtra, 2010:454). Data was entered by STATKON, the Statistical Consultation Service of the University of
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Johannesburg, into a statistical computer programme called SPSS (Statistical Package for the Social Sciences) version 20 in order to proceed with data cleaning and analysis. For the purpose of this study, only responses of respondents who had answered a particular question were captured, and once the data had been edited, coded, transcribed and cleaned, data analysis could commence. The study follows a specific data analysis strategy also conducted by STATKON.
The author reports on the demographic profile of the respondents by using frequencies and percentages. This is followed by the reporting of the purchasing habits of the respondents, also utilising frequencies and percentages.
Descriptive statistics calculated for this study are presented, including the count, mean, standard deviation and top-box and low-box scores (Shiu et al., 2009:529-534; Eiselen, Uys & Potgieter, 2007:44, 50; Malhotra, 2007:460-461). The descriptive results are presented for each statement measuring the constructs of the study, namely customer value, customer satisfaction and repurchase intention in order to establish respondents’ level of agreement with the individual statements.
The descriptive statistics are followed by an exploratory factor analysis (EFA) conducted for the customer value construct using SPSS. An EFA assists in identifying the underlying factor structure of a construct. This was followed by a confirmatory factor analysis (CFA) conducted for each of the three constructs of the study. The MPlus statistical programme was used to conduct the CFA analyses. By performing a CFA, the factor structure of a set of observed variables is verified (Zikmund & Babin, 2010b:625; Ary, Jacobs, Razavieh & Sorensen, 2006:393).
The reliability of scales used to measure all three of the constructs of the study was also assessed by means of the Cronbach’s alpha coefficient. Reliability analysis aids the author in determining how well the responses for each statement in a factor relates to that of the other statements and to the scale as a whole for each of the three constructs of the study. This was followed by the calculation of the overall mean scores for the valid and reliable factors for each of the three constructs.
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The last step in the data analysis strategy involved testing the theoretical model of the study by employing Structural Equation Modeling (SEM) which examines a series of dependence relationships simultaneously, thus the structure of interrelationships among a diverse set of variables (the main constructs of the study) can be examined (Pallant, 2010:105; Shiu et al., 2009:649-650). MPlus software was also used to conduct the SEM.
1.6 CHAPTER OUTLINE
This thesis comprises of seven chapters to support the primary objective of proposing a multidimensional model of customer value in the high fashion retail industry.
Chapter 1 comprises of the Introduction and Orientation. The chapter commences with a description of the background to the study, as well as the problem statement. This is followed by the research objectives, the proposed theoretical model for the study and the hypotheses formulated for the study. The chapter concludes with a discussion of the research methodology applied.
Chapter 2 provides An Overview of the Fashion and High Fashion Retail Industry in order to understand the landscape within which high fashion retailers operate. The chapter provides a discussion of the global retail industry, the fashion retail industry, the South African retail industry, as well as high fashion retailing in South Africa. The discussion focuses on an overview of each of the concepts, the major developments, and finally the future outlook is addressed.
Chapter 3 focuses on Customer Value, with the aim of gaining a proper understanding of the multidimensionality of the construct and the role it plays within a marketing context. Customer value is conceptualised by examining the various definitions of customer value as well as the benefit (get) and sacrifice (give) conceptualisation.The nature of customer value is addressed with a specific focus on its interactive, relativistic, preferential and experiential nature. The chapter concludes by examining various customer value perspectives with the aim of identifying customer value dimensions that could assist businesses in delivering superior customer value for improved profits.
20 Chapter 1: Introduction and orientation
Chapter 4 comprises of Customer Value Dimensions, Customer Satisfaction and Repurchase Intention. The chapter examines the eleven possible customer value dimensions in high fashion retailing with specific focus on their definitions, a brief overview of each dimension, as well as the key descriptors. The next section in this chapter discusses customer satisfaction and repurchase intention, as customer value has a positive influence on repurchase intention. The chapter continues by examining the interrelationships between customer value, customer satisfaction and repurchase intention. These interrelationships are used in the development of the proposed theoretical model. The chapter concludes with an explanation of the proposed theoretical model.
Chapter 5 explains the Research Methodology utilised in this study. This chapter commences with a brief discussion on marketing research as concept. The chapter provides a discussion of the steps of the marketing research process with a specific focus on the application of the steps in the study. The main research design used, namely quantitative descriptive research, is explained. The type of information required, the measurement and scaling procedures, the questionnaire design and pretesting, the sampling design and the data analysis process are also addressed.
Chapter 6 presents the Interpretation of Results obtained from the data analysis conducted. The hypotheses and their relative findings are also revealed. The theoretical model is tested by employing SEM.
An Overview, Conclusions and Recommendations are presented in Chapter 7. Limitations as well as recommendations for future research are also discussed in Chapter 7.
1.7 CONCLUSION
This chapter provides an introduction and orientation to the study at hand. The background and the problem statement illustrate that within the highly competitive high fashion retail industry with increased pressure brought about by the economic downturn, it has become important for high fashion retailers to determine what constitute customer
21 Chapter 1: Introduction and orientation value for customers of high fashion retailers (Sparks et al., 2008:99; Jensen & Hansen, 2007:603). Levy and Weitz (2009:228) as well as Diep and Sweeney (2008:400) suggest that high fashion retailers must understand which customer value dimensions are important to high fashion retailers’ customers. It is furthermore beneficial for high fashion retailers to understand which customer value dimensions their customers value, as customer value positively influences customer satisfaction and repurchase intention (Kitapci et al., 2013:244; Tsai et al., 2010:732).
The chapter continues with the primary objective and secondary objectives formulated to address the problem at hand. A theoretical model is proposed to enable high fashion retailers to determine the customer value dimensions that constitute customer value for their customers, as well as predicting the influence of customer value on customer satisfaction and repurchase intention, and the influence of customer satisfaction on repurchase intention.
The chapter concludes with a description of the research methodology followed for the study. Finally, the chapter outline is presented to guide the reader as to the chapters to follow. The next chapter provides an overview of the fashion and high fashion retail industry with specific focus on the South African context.
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CHAPTER 2: AN OVERVIEW OF THE FASHION AND HIGH FASHION RETAIL INDUSTRY
2.1 INTRODUCTION
The fashion retail industry is unpredictable and competitive in nature (Grannis, 2012; IMAP, 2010:5). This industry is very fragmented with customers with very specific needs (Datamonitor, 2010:14). The global fashion retail industry has shown a modest growth rate in the last few years and this trend is predicted to continue in the following years (Datamonitor, 2010:9; IMAP, 2010:10).
The high fashion retail industry however is projected to have a strong growth of 65 per cent between 2010 and 2015. The majority of its growth is expected to come from emerging economies of which South Africa is one (Datamonitor, 2011a). The spread of global spend on high fashion is 22 per cent from the United States (US), 36.1 per cent from the United Kingdom (UK), 26.8 per cent from Asia Pacific, 9.5 per cent from Japan and 5.1 per cent from the Middle East (Datamonitor, 2011b:12). High fashion retailing in South Africa is tasting new opportunities with its inclusion to be part of the BRIC (Brazil, Russia, India, China) countries (Luxurysociety, 2011). Although the high fashion retail industry is least affected by the economic downturn, the recession has changed the industry dynamics, as well as the nature of customers and their shopping habits (IMAP, 2010:3).
This chapter takes a closer look at the nature, performance and future of the fashion retail industry, with specific reference to the high fashion retail industry. It starts with a discussion on the nature of the global retail industry, then the fashion retail industry. It proceeds with a discussion on the nature of the South African retail industry and concludes with a specific focus on the high fashion retail industry in South Africa.
23 Chapter 2: An overview of the fashion and high fashion retail industry
2.2 THE NATURE OF THE GLOBAL RETAIL INDUSTRY
2.2.1 Defining the retail industry and retailing
From a global perspective, the retail industry is comprised of individuals and businesses engaged in the sales of finished products to end-use customers (Hult, Pride & Ferrell, 2012:443; Kurtz, 2012:437; Levy & Weitz, 2009:23). Retailing is the final step in the distribution of merchandise, connecting the bulk producers of commodities to the final customers (IMAP, 2010:11; Levy & Weitz, 2009:23). Retailing aims to sell products and services in small manageable quantities to families, individuals and/or households either locally or through the export of their retailing activities (Kurtz, 2012:437). Retailing covers diverse products such as food, apparel, consumer goods, financial services and leisure, amongst others, of which the focus of this study will be on apparel (Bains et al., 2011:464; IMAP, 2010:11; Levy & Weitz, 2009:25). Traditionally, the retail landscape was dominated by smaller family-owned and regionally targeted stores. This market has been taken over by multinational conglomerates such as Wal-Mart and Sears, signalling the age of retail globalisation. These multinationals have set up distribution chains, inventory management systems, financing pacts and wide-scale marketing plans (IMAP, 2010:11).
The retail industry is furthermore classified by ownership, strategy and whether they have a traditional or non-traditional format (Hult et al., 2012:440; Levy & Weitz, 2009:13). Classification by ownership includes independent retailers, chains, franchises and cooperatives (Bains et al., 2011: 459; Levy & Weitz, 2009:28). Classification by the types of strategies that retailers employ to sell products and services, includes department stores, discount houses, speciality stores and supermarkets (Bains et al., 2011: 459; Levy & Weitz, 2009:28). Retailers who employ store-based retail strategies are seen as traditional retailers. Non-traditional retailers offer products and services in many different venues and utilising numerous strategies to reach their customers. Examples include direct selling, vending machines and e-tailing (Hult et al., 2012:440; Levy & Weitz, 2009:29). The focus of this study is mainly on traditional retailers, but as
24 Chapter 2: An overview of the fashion and high fashion retail industry many retailers are now utilising both an e-tailing and traditional store-based approach to selling, the influence of e-tailing cannot be completely ignored (IMAP, 2010:11).
2.2.2 An overview of the global retail industry
The retail industry is one of the major contributors to the global economy (Farfan, 2010). Global retail sales were $13.9 trillion USD in 2011, which represents 1.409 million transactions. The US market was the biggest contributor with over two thirds of the sales (Deloitte Touche Tohmatsu, 2011a). Sales of the global retail industry have doubled since 2003, which indicates that there is an overall year-on-year growth within the industry (Farfan, 2010; IMAP, 2010:12). The world's largest developing markets are the BRIC nations of Brazil, Russia, India, and China and show no signs of slowing down (ATKearney, 2011; IMAP, 2010:13). There are several smaller, untapped markets providing profit opportunities for regional and specialty retailers. According to ATKearney (2011), these are Georgia, Oman, Azerbaijan, and Mongolia that are becoming attractive destinations for global retailers, particularly specialty and luxury players. These markets are attractive to retailers targeting wealth and seeking to be first movers in fast-growing markets (ATKearney, 2011). Brazil holds the top position leading the way for Latin America (ATKeraney, 2011, Deloitte Touche Tohmatsu, 2011b). The top four retailers in the world remained the same with US-based Wal-Mart, France- based Carrefour, UK-based Tesco, and Germany-based Metro Group seeing their revenues in developing countries grow 2.5 times faster than revenues in their home markets (ATKearney, 2011; IMAP, 2010:12).
Profitability of the global retail industry was negatively affected by the economic recession. Profit margins fell to 2.4 per cent from 4.1 per cent in 2010 (ATKearney, 2011; IMAP, 2010:12). Almost every retail category and geographical area were affected, except for Africa and the Middle East. In these areas retailers saw an increase in profitability (IMAP, 2010:12). In major markets such as the US and UK, retail sales continued to decline. Emerging markets such as China and India were expected to show strong growth of up to 7.4 per cent (Farfan, 2010; IMAP, 2010:8, 12). Asia was
25 Chapter 2: An overview of the fashion and high fashion retail industry expected to represent the highest growth possibilities for retailers and consumer- product companies well into the future (ATKearney, 2011; IMAP, 2010:12).
As illustrated, retailing is an extremely competitive environment and the failure rate of retail businesses is relatively high. This is due to the emergence of new competitors, formats and technologies, as well as shifts in customer needs (Levy & Weitz, 2009:133; Sweeney & Soutar, 2001:206). For the majority of retailers price is the most important arena of competition. Other factors such as location, selection and display of merchandise, attractiveness of the store, and reputation also play a role in retail strategy development. Here retailers aim to create a sustainable competitive advantage for themselves (Bains et al., 2011:468; IMAP, 2010:11; Levy & Weitz, 2009:25).
The dynamic and competitive nature of the retail industry has created different business models and a wide range of new formats. This includes vending machines, online retailing, direct-mail marketing, and traditional formats such as discount houses, speciality stores, departmental stores, supermarkets and consumer cooperatives, as discussed previously (Grannis, 2012; ATKearney, 2011; IMAP, 2010:11). This has led to the emergence of multichannel retailing, which refers to the concept of selling goods through multiple channels rather than just one, such as traditional stores (Grannis, 2012; Reynolds, 2009). This evolution in retail formats emphasises the importance for traditional retailers, with specific focus on high fashion retailers, not to ignore the possibility of adapting their current format to adhere to the changing buying behaviour of their customers. The next section explores the recent developments in the global retail industry.
2.2.3 Major developments in the global retail industry
There have been several developments in the retail industry across the globe. A short discussion of each major development follows.
2.2.3.1 Change in buying habits of post-recession customers
Post-recession is the period just after a recession, and impacts a country’s economic well-being. Such a period is characterised by certain recovery processes (Fourie,
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2009:234). Since the recession in 2009, customers have changed their buying habits. Customers are making informed decisions and they expect from retailers to provide enhanced shopping facilities and accurate information (IMAP, 2010:5; Anand & Nambiar, 2009:1). Customers collect information about product features, prices, warranties, availability, and the environmental impact on the Internet before purchasing. In order to increase sales, remain competitive and enhance customer satisfaction, retailers as well as high fashion retailers, must pursue innovative techniques including revamping stores, establishing new retail formats and adopting online and social media strategies (Hamill, 2012; IMAP, 2010:5, Burt, 2009). Retailers are also becoming technologically sophisticated. They are exploring and implementing emerging technologies such as radio frequency identification (RFID) and virtual shopping. It has become essential for retailers, with specific reference to high fashion retailers, to get a better perspective of shoppers’ behaviour (IMAP, 2010:5; Burt, 2009).
2.2.3.2 Multichannel retailing – bricks, clicks and catalogues
Customers’ changing buying habits have opened new retail format possibilities to retailers (IMAP, 2010:5; Anand & Nambiar, 2009:1; Reynolds, 2009). Retailers have started adopting multichannel strategies. Along with traditional retail stores, retailers are establishing online stores, catalogues, mobile stores and convenience stores to gain competitive advantage and increase their customer base. As demand is slowing, retailers have to compete even harder against their competitors to achieve acceptable levels of growth (IMAP, 2010:5; Reynolds, 2009). Multichannel retailing is also driven by customer tendencies to mix channels during purchasing (IMAP, 2010:5; Anand & Nambiar, 2009:2). From a South African perspective, examples of this is PicknPay having a retail store, as well as an online shopping option for their customers, as well as Woolworths Food opening stores within Engen 24/7 Quick Shops and One Stops to improve their convenience for customers. Therefore retailers, including high fashion retailers, who do not create a shopping experience that is not fragmented and allows customers to research and shop across all channels, will fall behind in this competitive environment (IMAP, 2010:5; Reynolds, 2009).
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2.2.3.3 Increased reliance on the Internet for sales
The Internet will influence more than half of the total retail sales by 2014 in the US alone (IMAP, 2010:6). Online product search is driving online sales and traditional store sales. In 2009, traditional store sales of $917 billion USD were influenced by online research (Chaffey, 2010; IMAP, 2010:6; Smith, 2010). Customers are using online channels to compare products and find bargains. Customers do online research and mix the online and offline channels during their multichannel purchasing decision (Chaffey, 2010; IMAP, 2010:6; Ranchhod, 2004:262). It is predicted that online and Internet-influenced offline retail sales will grow at 9 per cent over the next five years. Retailers not using online channels to promote offline sales, might miss opportunities created by the multichannel scenario (Grannis, 2012; IMAP, 2010:6; Smith, 2010).
The e-commerce industry has matured in the developed world. The majority of businesses in developed countries have online retail stores. Customers are demanding a more comprehensive look at online retail offerings with cost benefit in comparison with competitors (Hamill, 2012; IMAP, 2010:6). The Internet has eliminated many of the traditional geographical barriers businesses have used to deter competitors. Businesses can market their products and services anywhere in the world. Retailers, including high fashion retailers, are adding international or cross-border options to their offerings, such as translated sites to attract international buyers. This increases retailers’ chances to broaden their customer base (IMAP, 2010:6; Anand & Nambiar, 2009:2). More customers are buying cross-border for various reasons, such as price, quality and unique product selection through international sites, to name a few (IMAP, 2010:6). As retailers in developed countries are finding it difficult to increase sales, there is a market awaiting them in developing countries (IMAP, 2010:6; Ranchhod, 2004:262). Traditional retailers are increasingly using a web presence to encourage shoppers from developing countries such as South Africa to purchase their products. High fashion retailers are also utilising this strategy. Those who are not, will find themselves losing competitive advantage (Anand & Nambiar, 2009:3).
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2.2.3.4 Social media takes retailers to social networks
The rapid adoption and evolution of social media networking sites such as Facebook and Twitter are increasingly influencing customers’ purchasing behaviour (IMAP, 2010:7; Sedley, 2010; Smith, 2010; Katsioloudes, Grant & McKechnie, 2007:57). This is equally true for retailers (Burt, 2009; Reynolds, 2009). Globally, unique visitors to social networking sites have increased by 27 per cent. The average time spent on social media sites has shown a year-on-year increase of 82 per cent. A total of 19 per cent of Europeans with Internet access read customer reviews and ratings at least monthly. A further 46 per cent of European Internet users acknowledge that customer ratings and reviews influence their purchase decision regarding a product or service (IMAP, 2010:7). It is therefore important for retailers to develop social media marketing strategies. Most retailers remained cautious about social media with most strategies in the testing phase. With the recovery of the economy and the increase in advertising budgets, more investment has been made in social media (Sedley, 2010; Smith, 2010). Retailers are starting to use social media as core advertising tool, and shopping sites have increasingly used social media to promote products and services. Facebook and Twitter sites have been improved and blogs have been added or improved (IMAP, 2010:7, Sedley, 2010).
2.2.3.5 Retailers are looking for quick growth through globalisation
As discussed previously (ATKearney, 2011; IMAP, 2010:12), developed markets are recession-weary and this has caused slow growth and erratic shopping patterns from customers. This made retailers consider international expansion (Farfan, 2010; IMAP, 2010:8). Retailers realised that core markets such as the US and Europe are not the source of income they once were. While Europe faced another period of economic turmoil, developing countries are growing with customer confidence improving and spending increasing (Grannis, 2012; ATKearney, 2011). Therefore, relying on developing countries has become mandatory for survival. This is also a reality for retailers. The BRICS regions remain the highest priority for retail expansion with 80 per cent of retailers citing one of these markets as part of their expansion plans for
29 Chapter 2: An overview of the fashion and high fashion retail industry international growth (ATKearney, 2011; IMAP, 2010:8). This development is also occurring in high fashion retailing, where international high fashion retailers are expanding into emerging markets, of which South Africa is part (Nguyen, 2011; Cho & Lee, 2005:18). 92 per cent of retailers from emerging markets are also expanding beyond their local markets. These emerging market retailers use their own insight into local business and culture to expand regionally. This development is changing the global retail landscape (Grannis, 2012; IMAP, 2010:8). Retailers need to use channels in line with customers’ mindsets with clear segmentation and localisation. Retailers will need to combine global market knowledge and sourcing with local market delivery and know-how.
2.2.4 Future outlook of the global retail industry
Retail sales showed signs of recovery in 2011, coinciding with the recovery of the economic recession. However, as stated previously, developed countries, such as the US and UK faced years of economic turmoil (ATKearney, 2011, Farfan, 2010; IMAP, 2010:10). Western Europe will remain depressed, hindered by markets such as Ireland, Spain and the UK. These markets continue to face problems such as high government borrowing, household debt and unemployment (ATKearney, 2011; Farfan, 2010; IMAP, 2010:10). North America is expected to show a slight improvement, but growth will be mired by claims of increasing unemployment. Multistore chains in developed countries continue to respond to the low retail consumption, because of the recession, with store closings. Despite this, global retail sales were 5.8 per cent and expected to rise by 7.4 per cent, mainly due to growth in developing countries like China, India and Brazil (ATKearney, 2011; Deloitte Touche Tohmatsu, 2011b; IMAP, 2012:10). South Africa as a developing country has also shown an increase in retail sales in 2011, 2012 and 2013, which makes it an attractive market for international retailers, as well as international high fashion retailers (Datamonitor, 2011a; Euromonitor, 2012; Statistics South Africa, 2013:7). This is discussed in more detail in the next section.
To survive in these challenging times, retailers must increasingly seek to enhance their multichannel retailing capabilities, as customers are purchasing more and more through
30 Chapter 2: An overview of the fashion and high fashion retail industry multichannels (IMAP, 2010:10; Reynolds, 2009). The best performers in the retail industry will be those who optimally combine their brick-and-mortar experience with the electronic retailing experience, keeping in mind the interest of the customer. Given the pessimism prevailing in the retail segment, non-store and online sales will likely remain strong as buyers will continue to buy online to obtain lower prices (IMAP, 2010:10). It is expected that online sales will be shipped directly from the manufacturer to the customer on a just-in-time basis (Reynolds, 2009).
Internet retailing through mobile devices offers great opportunities for growth, as growth in traditional online retail matures (IMAP, 2010:10). This can be primarily attributed to the expected global growth in mobile Internet usage. The Internet continues to break down barriers to create a level playing field for companies, countries and individuals around the world (Grannis, 2012; ATKearney, 2011; IMAP, 2010:10).
Although this study focuses on traditional high fashion retailers and not online retailers, all retailers must focus on the needs of their customers. If traditional retailers’ customers are increasingly making use of web-based technologies to shop (evident from previous discussion), these retailers will have to provide these technologies together with the traditional store to their customers. The same applies to traditional high fashion retailers. Based on the previous discussion, the next section concentrates on the global fashion industry.
2.3 THE FASHION RETAIL INDUSTRY
2.3.1 Defining the fashion retail industry
The fashion retail industry encompasses the apparel, accessories and luxury goods market (Statistics South Africa, 2013:8; Datamonitor, 2010:7). The apparel, accessories and luxury goods market consists of men’s, women’s, and children’s clothing, jewellery, watches and leather goods. The leather goods sector consists of handbags, wallets and baggage (Statistics South Africa, 2013:9; Datamonitor, 2010:7). The fashion retail industry is divided into five merchandise categories, namely haute couture, luxury, affordable luxury, mainstream and discount (Rantisi, 2011:260; Bridson & Evans,
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2004:404). Table 2.1 summarises these five different categories. These concepts are discussed in more detail later in this chapter.
Table 2.1: The fashion retail industry
The Fashion Retail Industry
Merchandise Definition categories
Haute Couture The most expensive and exclusive segment. Made up of a handful of companies which produce custom-made items for the world’s wealthiest individuals.
Luxury A step down from haute couture in quality and price, but still serves a wealthy target market.
Affordable luxury Targets “aspirational” customers. Those who are not wealthy enough to afford luxury brands but will accept lower-priced alternatives.
Mainstream The goal of mainstream brands is mass appeal. They sacrifice an air of exclusivity for popularity.
Discount They cater to low income customers. They sacrifice quality for a low price offering. Source: Rantisi (2011:261); Bridson & Evans (2004:404)
2.3.2 An overview of the global fashion retail industry
The fashion retail industry is unpredictable and competitive in nature (Grannis, 2012; IMAP, 2010:5). Products are determined by designers, subcultures and creative industries (Datamonitor, 2010:14). Key suppliers in this industry are clothing manufacturers and wholesalers, with retailers able to buy from both. Industry trends include shorter cycles, price deflation, offshore sourcing, diversifying to survive, and following demographics. This industry is very fragmented with customers with very specific needs (Datamonitor, 2010:14). Therefore, delivering value to its fragmented customers is increasingly important (Wiedemann, Hennings & Siebels, 2009:627). The financial performance of the global fashion retail industry is reliant on customer support.
The global fashion retail industry has shown a modest growth rate and this trend is predicted to continue in the following years. The global fashion retail industry had total
32 Chapter 2: An overview of the fashion and high fashion retail industry revenues of $1439 billion in 2010. This is a compound annual growth rate (CAGR) of 2.7 per cent. The Asia-Pacific market (seen as an emerging country) grew with CAGR of 4 per cent with a revenue of $393 billion (Datamonitor, 2010:9; IMAP, 2010:10). The womenswear segment was the most lucrative, with total revenues of $603 billion. This is 41.9 per cent of the overall market value. The menswear segment contributed 25.7 per cent of the overall market value (Datamonitor, 2010:9). The global fashion retail industry is predicted to accelerate with a CAGR of 3.3 per cent for the five year period of 2010- 2015. The Asia-Pacific market will grow with 4.7 per cent, over the same period, to reach revenues of $494 billion in 2015 (Datamonitor, 2010:9; IMAP, 2010:10). Europe accounts for 33.8 per cent, US 33.7 per cent and Asia-Pacific for 27.3 per cent of the global apparel, accessories and luxury goods market (Datamonitor, 2010:12; IMAP, 2010:10).
2.3.3 The global high fashion retail industry
2.3.3.1 Defining high fashion
As mentioned previously, fashion or apparel retailers can be defined as retail businesses that sell clothing, footwear and accessories to customers for their personal use. Marber, Wellen, Yoon and Torres (2008:218) state that designer and high fashion retailers are seen as similar. Moore and Doherty (2007:76) define high fashion retailers as businesses that distribute clothing, accessories and other lifestyle products which are:
exclusively designed and/or manufactured by/or for the retailer;
exclusively branded with a recognised logo or some other identifying device;
perceived to be of a superior design, quality and craftsmanship;
priced significantly higher than the market norm; and
sold within prestigious retail settings.
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For the purpose of this study, high fashion retailers are defined as those who sell exclusively branded clothing, footwear or accessories. They also sell it at significantly higher prices and make it available at their own identifiable retail store area (such as Gucci) in an upper class shopping mall (such as Melrose Arch).
2.3.3.2 Types of high fashion markets within the industry
High fashion markets are classified by the number and size of high fashion shows hosted every year in specific countries. These markets are identified as markets in mainly developed countries and developing countries. The developed countries are seen as home of the traditional high fashion markets and developing countries as home to the emerging high fashion markets (Grail, 2009).
Traditional high fashion markets
Traditional high fashion markets are global fashion hubs, such as the UK, France, Italy, Japan and the US and are found in developed countries. These markets are known for hosting large fashion events that are internationally renowned (Datamonitor, 2011a; Nguyen, 2011; Grail, 2009). France is viewed as one of the oldest fashion markets in the world. France has historically been considered one of the largest and most important fashion centres in the world and the Paris Fashion Week dates back to the early 1970s (Grail, 2009). The Paris Fashion Week includes haute couture, ready-to- wear and men’s fashion. In total, it includes thirty shows of haute couture, thirty shows of men’s fashion and over one hundred shows of women’s ready-to-wear. Milan Fashion Week and London Fashion Week are also recognised as the next best fashion event for all operating in the high fashion industry (Grail, 2009; Fernie, Moore & Lawrie, 1998:366).
Private financiers support the high fashion industry in the United States by promoting emerging designers and hosting regional fashion shows (Datamonitor, 2011a; Grail, 2009). The number of fashion events held in the US is significantly higher than in any other country. Unlike the other developed countries, most of the large fashion events in
34 Chapter 2: An overview of the fashion and high fashion retail industry the US were only launched in the last years of the first decade of the 21st century (Datamonitor, 2011a; Nguyen, 2011; Grail, 2009).
The fashion industry in Japan is mainly driven by the demand from its affluent population and youth culture. Japan is one of the largest markets for foreign luxury fashion goods. The country is trying to push domestic brands and fashion houses with the launch of the “Tokyo Girls Collection”, targeting women in their late teens and twenties (Grail, 2009).
Emerging high fashion markets
Emerging high fashion markets are situated in developing countries. These high fashion markets such as UAE, India and South Africa experienced significant increases in the number of fashion events. Other markets such as Brazil, Singapore and Russia are also classified as emerging high fashion markets because these markets have displayed unique growth patterns in recent years (Nguyen, 2011; Grail, 2009).
o UAE - The UAE experienced a significant increase in the number of fashion events held in the country. Due to the support from government as well as domestic and international enterprises, Dubai is emerging as a fashion hub in the region (Grail, 2009).
o Singapore - The development of the fashion industry in Singapore is strongly supported by the government. The industry has also benefitted from their fashion designers’ focus on building international recognition. The number of small fashion events in the country has increased significantly in the last few years (Shukla, 2010a; Grail, 2009).
o India - The Indian high fashion industry has grown by 178 per cent to reach $189 million (Shukla, 2010a; Grail, 2009). The growth in the Indian fashion industry is highlighted by the increase in the number of large fashion events (from one in 2004 to five in 2008). Industry growth in India is mainly driven by domestic designers increasingly being exposed to international forums. Growth is further supported by the offering of focussed business education courses for emerging
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fashion designers, as well as the establishment of industry associations (Shukla, 2010a; Grail, 2009).
o Russia - Russia is among the countries with the highest number of large fashion events. These fashion events are hosted in Russia by fashion businesses and industry associations (Shukla, 2010a; Grail, 2009). Russia’s apparel market, with an annual growth rate of 25 per cent is considered as one of the fastest growing markets in the world. The year-on-year growth rate for the accessories market is 35 per cent (Datamonitor, 2011a; ATKearney, 2011. Moscow is recognised as the high fashion capital for Middle and Eastern Europe and has the third largest concentration of billionaires in the world, after the US and Germany (Shukla, 2010a; Grail, 2009).
o Brazil - The high fashion industry in Brazil is driven by the demand for apparel. It is the fifth largest apparel market in the world. Domestic brands currently control 60 per cent of the market. Fashion trends in Brazil are dominated by domestic celebrities and 81 per cent of Brazilian customers prefer domestic brands over international brands (Shukla, 2010a; Grail, 2009).
o South Africa - High fashion is a $4.3 billion industry in South Africa. The industry is fragmented across a number of competing fashion weeks each year. Johannesburg is fast emerging as the fashion capital of Africa (Shukla, 2010a; Grail, 2009). These facts are part of the reasons why international high fashion retailers from developed countries are increasingly viewing South Africa as one of the attractive markets in developing countries (Grannis, 2012; ATKearney, 2011). This makes South Africa a very competitive market for high fashion retailers, which requires them to increasingly deliver value to their customers (Dixon et al., 2002:5; Kotler & Armstrong, 2001:667; Chen & Yang, 2000:671). Therefore, the focus of this study is to determine what constitutes value to high fashion retailers.
There are specific drivers that have an influence on the level of growth which an identified market will enable. These drivers are levels of government support,
36 Chapter 2: An overview of the fashion and high fashion retail industry international recognition of local designers, awareness of international fashion brands, support from business and associations, and lastly a demand for fashion apparel (Grail, 2009). The following Table 2.2 highlights which growth drivers are evident in a number of emerging markets.
Table 2.2: Growth drivers in emerging fashion markets
Emerging Fashion Markets Growth Drivers South UAE Singapore India Russia Brazil Africa
Government support High High High Low Medium High
Recognition of local Medium Medium Medium Medium Medium Medium designers
Awareness of international fashion High High High High High High brands
Support from corporations and Medium High Medium High Medium Medium associations
Demand for fashion Medium High Medium Medium High High apparel Source: Grail (2009)
2.3.3.3 The high fashion industry profile
The high fashion industry can be divided into two main merchandise categories, namely haute couture and ready-to-wear (Rantisi, 2011:262; Cho & Lee, 2005:18; Bridson & Evans, 2004:404).
Haute Couture
Haute couture consists of customised clothing constructed using expensive materials attracting the world's wealthiest customers. Couture pieces are priced within a range from $25,000 to millions of dollars. The market is relatively small but it has been expanding due to the explosion of new wealth in emerging markets such as India, China and the Middle East (Datamonitor, 2011a; Rantisi, 2011:261). Some couture houses are
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Giorgio Armani Privé (segment of Giorgio Armani), Christian Dior, Chanel, Givenchy. All couture houses produce ready-to-wear as well as couture pieces. Despite its high prices, haute couture is much less profitable than mass-produced ready-to-wear collections. However, haute couture serves to preserve a high-fashion, luxurious image of the brand which fuels sales of its other collections, namely ready-to-wear, accessories and cosmetics (Datamonitor, 2011a; Rantisi, 2011:262).
Ready-to-wear
Ready-to-wear is the overarching term that includes all clothing and accessories that are not custom-made. The ready-to-wear segment is divided into different levels according to price, exclusivity, and quality of garments. This is consequently discussed in more detail:
o Luxury - Luxury goods represent a large category and include all clothing, shoes and accessories from designer names such as Dolce & Gabbana, Prada and Gucci. Luxury goods are generally regarded by customers to be of high quality with a high price tag to match (Nguyen, 2011; Rantisi, 2011:263; Shukla, 2010a).
o Exclusivity - There are no clear-cut criteria for a brand to be classified as "luxury," however, one important factor is the concept of exclusivity. A person who can afford anything does not want to own something anyone can buy. They want something special and unique. As a brand becomes more popular, it is not regarded as highly by the wealthy customers any more. Many luxury companies walk a fine line between increasing market share and maintaining the elite image that is so important to rich customers with a lot of money to spend. Exclusivity is linked to luxury, quality and a high price (Nguyen, 2011; Rantisi, 2011:263; Fernie et al., 1998:369).
o Affordable luxury - Affordable luxury is a merchandise category that focuses on providing high-end merchandise at a lower price in order to attract middle-class customers. Coach (COH) takes advantage of the idea of affordable luxury, selling bags that cost $138 and $1900 side-by-side. Tiffany (TIF) has entered the
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affordable luxury market by offering a relatively inexpensive collection featuring $200 silver earrings alongside $50 000 brooches. Chanel offers lower-priced items such as sunglasses and cosmetics. These inexpensive items allow access to a brand and a lifestyle that middle-class customers aspire to, but cannot afford. Figure 2.1 illustrates the top ten high fashion brands globally based on sales.
Fears of recession, in addition to rising credit card debt and fuel prices, have hit middle- class customers hard. While the wealthy continue shopping as much as ever, these "aspirational" shoppers, people who form the backbone of the affordable luxury market have begun to cut back on non-essential goods such as clothing and accessories, leading to decreased sales (Rantisi, 2011:262; Shukla, 2010a).
Figure 2.1: Operating margins of top 10 high fashion brands
Hermes Gucci LVMH Prada Burberry Richmont Average Polo Ralph Lauren Giorgio Armani Bulgari Christian Dior
0 5 10 15 20 25 30
Source: Datamonitor (2011a)
At the highest levels, the high fashion industry is relatively insulated from economic changes. For example, recessionary fears in the United States have done nothing to harm haute couture, which is actually seeing an increase in customers in a time when
39 Chapter 2: An overview of the fashion and high fashion retail industry so many other companies are fighting decreasing sales. The luxury market is doing well compared to mainstream, where its customers have less financial security and thus are not spending as much money on clothes and accessories as they used to (Rantisi, 2011:263).
2.3.4 Developments in the high fashion retail industry
There are several developments within the high fashion retail industry globally. These developments are discussed next.
Increasing focus on men
Fashion, and specifically high fashion, is traditionally seen as exclusively belonging to women. However, men’s lifestyles have changed and they have begun to pay more attention to their appearance (Datamonitor, 2011a; Rantisi, 2011:264; Grail, 2009). The high fashion industry has responded by focusing more on catering to male customers. For example, J. Crew Group (JCG) and Hermès both opened men’s-only stores in New York City. Although women still do make the majority of clothing purchases, companies are beginning to take advantage of the male demographic and appeal to them in order to increase sales (Datamonitor, 2011a).
Less affordable luxury, more "genuine luxury"
The affordable luxury market, especially in the United States, is facing a problem due to the poor state of the US economy (Rantisi, 2011:262). The middle-class "aspirational" shoppers who are integral to this segment's success are not indulging as much as they used to. In addition, there has been an increase in high net-worth individuals in the United States and Europe. In the US alone the number of high net-worth households increased fivefold from 1996 to 2006, to $1.14 million (Grail, 2009). These individuals are able to afford whatever luxury brand they want. These trends lead to decreased sales of affordable luxury and increased sales and demand of genuine luxury products (Datamonitor, 2011a).
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New markets for customers of high fashion are emerging worldwide
The new affluent markets in China and Russia are demanding high fashion in apparel (Grail, 2009). In China the economy has grown more than 10 per cent annually, and by the end of 2006 the country had 345 000 US dollar millionaires, 33 per cent of whom were women (Datamonitor, 2011a). Chinese citizens are becoming increasingly fixated on luxury fashion as they are viewed as a status symbol (Rantisi, 2011:265). China, Russia and the Middle East present large, wealthy markets for luxury fashion companies (Grail, 2009).
The following section takes a closer look at the South African high fashion retail industry since this study is conducted in South Africa. First a discussion of the broader South African retail industry is presented, before the discussion specifically focuses on the high fashion retail industry.
2.4 THE NATURE OF THE SOUTH AFRICAN RETAIL INDUSTRY
2.4.1 An overview of the retail industry in South Africa
Total retail income in South Africa was R640 331 million in 2013. Retail trade sales rose by 1.0 per cent. The three top contributors were retailers in household furniture, appliances and equipment (35 per cent), retailers in textile, clothing, footwear and leather goods (21 per cent) and general dealers (8 per cent) (Statistics South Africa, 2013:2). Overall retail sales in South Africa have thus increased in the midst of slower economic growth.
The impact of the recession is visible and the economies of countries are slow to recover. As with many customers globally, South Africans are also experiencing the effects of the recession and are curbing their spending, concentrating on “essential” grocery items, hence neglecting “non-essential” non-grocery items (Euromonitor, 2012:1; Statistics South Africa, 2013:10).
Most store-based retailers are expected to set up online stores over the forecast period as Internet retailing continues to grow. This development is expected to reduce the
41 Chapter 2: An overview of the fashion and high fashion retail industry sales growth rate for store-based retailing as more customers are expected to eventually engage in online shopping. This growth is due to the fact that the Internet is becoming affordable in South Africa (Euromonitor, 2012:3; Sedley, 2010; Smith, 2010). This study’s focus is on traditional high fashion retailers, however as stated previously, traditional retailers cannot ignore developments within the retail industry if they want to continue creating a competitive advantage (Grewal & Levy, 2010:14; Wachter, 2000:122).
Developments in the global retail industry were discussed earlier in this chapter, but the following section focuses specifically on the major developments in the South African retail industry.
2.4.2 Major developments in the retail industry in South Africa
The following discussion takes a closer look at some of the major developments in the retail industry in South Africa.
Customer spending decrease
The cost of living for South Africans has increased substantially (Euromonitor, 2012:3; Datamonitor, 2011a). The overall effect for retailers has been reduced spending power amongst customers. This has led to a reduction in sales volumes for various retailers, resulting in reduced profitability (Euromonitor, 2012:3; Datamonitor, 2011a). Some manufacturers have lowered the quantities in brand packaging instead of raising product prices, and this has helped in ensuring that the sales volumes do no drastically fall within the retail market as a whole. This has been mainly prevalent in packaged food. Categories such as clothing and footwear have managed to enjoy an increase in sales volumes but at the same time the growth was slightly suppressed. This is due to the fact most of them have been selling their products at discount prices in order to retain customers (Euromonitor, 2012:3; Datamonitor, 2011a).
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Internet retailing increases as the number of online shoppers increases
The number of internet users in South Africa has risen sharply in 2012. It is estimated that almost four million people in South Africa actively use the Internet on a regular basis, and the number is expected to continually grow as the Internet accessibility levels continue going up (Euromonitor, 2012:3; Datamonitor, 2011a). The use of the Internet is slowly becoming cheaper as Internet service providers are competing to gain loyalty and a huge customer base. This has led to an increase in the growth in Internet retailing countrywide (Euromonitor, 2012:3; Datamonitor, 2011a). The increase in Internet accessibility in South Africa has led to many retailers beginning to establish online stores in a bid to discourage in-store purchases as they incur high labour costs for retailers. Customers use the Internet to compare products as well as for purchases. The majority of online stores in South Africa sell cosmetics and electronic products. This has led to continued growth in categories such as beauty and personal care and online sales of computer products are growing. Online shops are manifesting into the grocery channel in retailing as well (Euromonitor, 2012:4; Datamonitor, 2011a).
Service and product quality to improve because of the Consumer Protection Act
With the introduction of the revised Consumer Protection Act in March 2011, retailers’ customers now have more power in relation to contracts and services provided to them. Retailers across all categories should comply with the provisions of the revised Act or they risk being fined up to 10% of their annual revenue or up to R1 million (whichever is higher) if found guilty of violations (Euromonitor, 2012:4; Datamonitor, 2011a). This has led to an improvement in terms of the quality of products sold across all retail categories. With the revised act, customers have a right to return defective products (like electronics and appliances) within six months from the date of purchase. Such a practice has allowed retailers to put pressure on their suppliers to ensure they supply products of acceptable and uncompromised quality all the time. Consumer confidence has been boosted (Euromonitor, 2012:4; Datamonitor, 2011a).
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Walmart’s entry into South Africa could open the door for other international players
One of America’s biggest retailers, Walmart, entered into the South African retail industry in June 2011 after acquiring a 51% stake in South Africa’s Massmart holdings. This development has caused other retailers from all over the world to express interest to enter the South African market (Euromonitor, 2012:6; Datamonitor, 2011a). Local retailers and suppliers have expressed concern that they may lose business to Massmart due to its ability to source products at lower prices through their global supply chain. Local retailers are those that started their operations in South Africa such as Checkers and PicknPay. Channels such as Internet retailing are expected to grow, as all local retailers are now seeking survival options as the competition intensifies. Internet retailing would help most retailers make savings in labour costs as well as advertising costs if customers respond positively to the growth in online stores (Euromonitor, 2012:6; Datamonitor, 2011a).
More retailers in South Africa use social media as a marketing tool
During 2011 and 2012 retailers have experienced reduced profitability levels. The solution has been to identify ways to reduce operational costs. One way was to cut down on advertising spend (Euromonitor, 2012:6; Sedley, 2010; Smith, 2010; Katsioloudes et al., 2007:57). Social media has proved to be the best solution to cut costs on advertising, as it is a cheaper way to advertise when contrasted with common advertising media such as television and print. Retailers are using social websites such as Facebook and Twitter to market their products as well as inform customers of any promotions. Customers are able to actively interact with retailers through the social media (Euromonitor, 2012:6; Sedley, 2010; Smith, 2010; Katsioloudes et al., 2007:57). This has allowed retailers to improve the quality of service they provide to customers. Retailers have confirmed that their sales value and volumes have been influenced by marketing products through social media. Some retailers are also using the social media as a platform to benchmark to their competitors (Euromonitor, 2012:6).
44 Chapter 2: An overview of the fashion and high fashion retail industry
2.4.3 Future outlook of the retail industry in South Africa
As indicated earlier in the chapter, the cost of living is expected to continue to increase in South Africa. This is partially due to the fact that utility costs such as electricity will continue to rise for the next two years. Competition in the retail industry will therefore intensify as customer loyalty is the key factor to survival in the retail market (Euromonitor, 2012:2; Grewal & Levy, 2010:14). Retailers are expected to encourage customer loyalty and repurchase intentions. Retailers in South Africa, including high fashion retailers, therefore have to ensure that they provide value to their customers in order to create an environment favourable to loyalty (Grewal & Levy, 2010:14; Johnson & Gustafsson, 2000:3). The following two trends are evident in the South African retailing:
o The number of Internet users in South Africa is expected to grow sharply because the cost of access to the Internet is going down as Internet service providers compete for customers (Euromonitor, 2012:4). The Internet retail channel grew at 40 per cent in 2011. More online stores are expected to be opened across all retail sectors as the number of Internet users continues to grow. This is expected to help boost the sales value of the retail market (Euromonitor, 2012:4). This is in line with what is happening in the global retail market.
o Social media is expected to become the major advertising platform for retailers as Internet accessibility levels increase in South Africa. The use of social sites is currently still most common amongst the young to middle-aged population, however is expected to continuously spread to all age groups (Euromonitor, 2012:6; Datamonitor, 2011b:23). Small retailers are also expected to adopt social media to advertise due to its affordability. This is expected to help them compete with big retailers across all retail categories. The use of conventional advertising media such as television and radio is however expected to remain popular, since it provides greater coverage even to people who cannot access the Internet (Euromonitor, 2012:6; Datamonitor, 2011b:25). These future happenings in
45 Chapter 2: An overview of the fashion and high fashion retail industry
South Africa are important for retailers and high fashion retailers to be aware of in order to ensure that they stay abreast with what their customers expect from them in order to provide value. This will be explained in more detail in the next chapter.
2.4.4 Retail landscape of South Africa
In South Africa, city centres and high street shopping attracts a mix of retail outlets. Outlets tend to be smaller as space is limited. Supermarkets tend to be located within shopping centres or on large standalone sites, often in suburban areas (Euromonitor, 2012:19; Datamonitor, 2011a). Due to their large size, as well as their target market, hypermarkets and discounters tend to be located towards the outskirts of a city. Non- grocery retailers are situated both within shopping centres and on standalone sites in busy suburban hubs (Euromonitor, 2012:19; Datamonitor, 2011a). Luxury retailers are usually found in shopping centres in more affluent suburbs. Others would be in boutique outlets surrounding these upmarket shopping centres, as well as in hotel foyers. Retail outlets targeting the lower Living Standards Measure (LSM) groups are usually found in the Central Business District and along main roads close to transport services such as railway stations and taxi ranks (Euromonitor, 2012:19; Datamonitor, 2011a). There are specific aspects to the South African retail landscape that require further scrutiny. These aspects are discussed in more detail next.
Informal retailing
Informal retailing is customary in South Africa. Traditionally, informal retailing was a stall or stand on a street corner where a trader sold directly to customers (Euromonitor, 2012:18; Datamonitor, 2011b:30). There have been changes within informal retailing. Informal trading is being “formalised” to some extent as traders learn what support is available to them. Traders receive information on how to register their businesses and how and where to receive financial help (Euromonitor, 2012:18).
Informal retailing is continually growing as it becomes a more established form of business in South Africa. Stalls are becoming increasingly common place and street
46 Chapter 2: An overview of the fashion and high fashion retail industry sellers are growing in number. Informal street stalls are furthermore a threat to small corner cafés and convenience stores, as they sell cheap confectionery products as well as savoury snacks. Low unit prices, as well as a high number of customers may detract from sales through formal outlets (Euromonitor, 2012:18; Datamonitor, 2011a).
Spazas comprise another form of informal trading in South Africa. They tend to be extensions to the retailer’s own house. Spazas are often unregulated trading outlets (Euromonitor, 2012:18). There are many spazas in shack or township areas and fewer in more formal residential areas.
Spaza shop owners purchase goods from wholesalers rather than supermarkets due to their lower unit prices (Euromonitor, 2012:18; Datamonitor, 2011a). The kinds of products they sell are either sold in bulk (cheaper products) or in small quantities if the products have a higher unit price. Products range from single cigarettes to 1.5 or 2-litre bottles of soft drinks, crisps, single sweets, eggs, washing powder, soap, sanitary towels, hair relaxants, body moisturisers, basic headache pills and small containers of branded mayonnaise and peanut butter (Euromonitor, 2012:19; Datamonitor, 2011a). This is similar to supermarkets, but offered at lower prices. They are also conveniently situated next to people’s homes. Spazas therefore compete for the same customers as local supermarkets.
Cash-and-carry
A cash-and-carry retailer is defined as bulk or large-quantity retail/wholesale stores offering discounted goods with little or no services or packaging. They do not allow any credit terms to their customers (Doyle, 2011:71). They contribute to a significant proportion of South Africa’s retail environment. Historically, they provide goods to mass market customers who were price sensitive due to economic constraints. They were also a link in the supply chain to small informal retailers/spazas and hawkers. The latter would purchase from these outlets and then sell on to final customers, usually in townships or poorer urban areas (Euromonitor, 2012:19; Datamonitor, 2011a).
47 Chapter 2: An overview of the fashion and high fashion retail industry
With the expansion of the large formal retailers into townships and smaller towns, cash- and-carry sales have been affected. Customers have a little more cash and would prefer to shop in a more upmarket environment, and this is also having an effect on smaller spazas and hawkers (Euromonitor, 2012:19; Datamonitor, 2011a). These outlets are now competing directly with established grocery stores. Looking forward, besides the current economic boom in South Africa, a fair proportion of the population remains poor, and there will always be gaps for small businesses. The polarised economy of the past is starting to disappear as the middle-income segment grows. However, cash-and-carry will survive to support consumers who remain in the lower income segment (Euromonitor, 2012:19; Datamonitor, 2011a).
Foreign direct investment in retail
The South African government welcomes international retailers to do business in the country and they expect international businesses to provide employment to South Africans as well as to comply with the laws, rules and regulations (Euromonitor, 2012:17; Datamonitor, 2011a). Due to apartheid, there are a few imbalances within the South Africa economy which leave the black majority at a disadvantage in actively participating in the economy. To address this matter, the government has passed the broad-based Black Economic Empowerment (BBBEE) Act which calls for any business operating within the country to include black people in its structure and ownership (Euromonitor, 2012:17; Datamonitor, 2011a). International retailers however find it very difficult to enter the South African market due to the fact that the current players are very strong and have a good understanding of the unique mindsets of customers in the country. There are opportunities in niche areas, like cosmetics and clothing, where international brands are entering the market (Euromonitor, 2012:17; Datamonitor, 2011a). This is especially true for high fashion retailers such as Gucci, Christian Dior and Prada.
2.4.5 An overview of the South African fashion retail industry
Sales grew by 5 per cent in 2011 to reach R82.8 billion in the South African fashion industry. Retail outlets increased by 3 per cent as apparel maintained steady growth.
48 Chapter 2: An overview of the fashion and high fashion retail industry
Pepkor Holdings Ltd remained the leading apparel specialist retailer in South Africa with a share of 12 per cent. A constant value CAGR of 3 per cent is predicted (Euromonitor, 2012:8; Datamonitor, 2011b:15). Business conditions improved, resulting in steady sales for apparel retailers. The growth in sales was stimulated by an improvement in current low employment levels at the beginning of the year (Euromonitor, 2012:8; Datamonitor, 2011a). The retail outlet numbers grew by 3 per cent; a growth which was a percentage point higher than in 2010. This is due to the fact that most retailers opened more new stores in 2011, with the aim to expand their geographical coverage countrywide (Euromonitor, 2012:8).
In terms of competition, the retailers within this channel are divided in terms of their target market. Stores such as Truworths, Foschini, Markham and Woolworths target the high income groups of society and they tend to be high priced compared to stores such as Pep Stores, Ackermans and Mr Price, which target the low income consumer groups across all age ranges (Euromonitor, 2012:9; Datamonitor, 2011a). As a result of the above trends, Pep Stores leads this category as it appeals to the low income groups of society which are the majority of the South African population, and it has become a household name which requires minimum marketing to lure customers (Euromonitor, 2012:9; Datamonitor, 2011a). Leading supermarket retailer PicknPay is increasing its clothing offering, and while it previously designated a small area of the supermarket to clothing, it is increasingly focussing on opening separate clothing stores. These retailers present a threat to apparel retailers such as Woolworths and Edgars (Euromonitor, 2012:9).
2.5 HIGH FASHION RETAIL INDUSTRY IN SOUTH AFRICA
The inclusion of South Africa in 2010 into the BRIC markets opened new opportunities for luxury brands and specifically high fashion brands. South Africa is seen as the gateway for Africa, where there is potential for sales growth in the high fashion market (Luxurysociety, 2011). In comparison with markets like China or India, the numbers in South Africa are still relatively modest, but there are opportunities for high fashion brands to expand their markets even further into the relatively untapped African
49 Chapter 2: An overview of the fashion and high fashion retail industry continent (Luxurysociety, 2011). The dominant sectors have included furniture, high fashion and footwear (Luxurysociety, 2011).
One of the major drawbacks in the South African high fashion industry is that across all sectors, from designer jewellery through to high fashion, the price for local design is not in line with quality. Inflated prices are driven by excessive free media exposure given more to locally designed products. This builds credibility for local high fashion brands but gives an inflated sense of demand that causes many local brands to struggle when they try to enter international markets and their product quality is not in line with the market (Luxurysociety, 2011). This phenomena also opens the high fashion market for international brands to enter with high prices and high quality (Shukla, 2010a; Grail, 2009).
The high fashion retail industry in South Africa consist of international high fashion brands such as Chanel, Gucci, Tommy Hilfiger, just to mention a few, as well as local designers. South African design still offers the allure of being uniquely South African, however to sustain long-term demand, a greater emphasis on quality is important if high fashion brands intend to have a strong international presence (Luxurysociety, 2011).
The retail price for not just local products but also the majority of international high fashion products, is considerably higher than in Europe. Along with inflated rental prices in key cities, many of these high fashion brands are managed by local distributers, who are a few key franchise owners driving up product prices (Luxurysociety, 2011).
Sales in South Africa are influenced by the knock-on effect of the developed markets slowdown. Retailers are feeling the pinch and retail costs per square metre are high relative to the sales volume return (Luxurysociety, 2011). The South African high fashion industry is fragmented and no specific sales figures are available, since each high fashion retailer keeps its sales figures to themselves. As discussed previously, the South African high fashion industry is growing and many international high fashion brands have already expanded into the market. Many opportunities for growth do exist and a future in high fashion retailing in South Africa is possible (Grail, 2009). One such growth opportunity is Generation Y. This market may not have high disposable income
50 Chapter 2: An overview of the fashion and high fashion retail industry but are very brand conscious with high spending patterns on high fashion brands (Fernandes, 2009:80).
Since the high fashion industry in South Africa is so fragmented and since retailers are facing the impact of the economic recession, the market is very competitive. Because of this unique nature of high fashion retailing, retailers are faced with the challenge of providing customer value to compensate for their high prices. There is also the growing intensity in high fashion retail competition in South Africa due to the increase in international brands because South Africa is an emerging country (Grail, 2009; Levy & Weitz, 2009:133; Sweeney & Soutar, 2001:206). The increased competition between different high fashion retailers for the share of wallet of customers, is forcing high fashion retailers to provide products and services that present value to their customers (Cottet et al., 2006:220; Wachter, 2000:121).
2.6 CONCLUSION
Fashion retailing in South Africa is the second largest contributor to retail income in South Africa, contributing 21 per cent of the total income in the retail industry. The global market for luxury fashion brands has grown rapidly over the last two decades. According to Tynan et al. (2009:1), the estimated worth of the global luxury fashion market is $263 billion, which represents an increase of 31 per cent. A further 71 per cent growth is predicted untill 2015, fuelled by high demand from developing economies.
The major developments in the global retail industry are mainly growth in electronic retailing, social media and expansion into emerging economies such as South Africa. These developments must be taken into consideration by high fashion retailers globally as well as in South Africa. High fashion retailers in South Africa, whether they are international high fashion brands or local designers, must move with the needs of their customers in order to gain competitive advantage.
The growing intensity of retail competition is forcing high fashion retailers to provide value to their customers. It has therefore become increasingly vital for them to be able
51 Chapter 2: An overview of the fashion and high fashion retail industry to determine what dimensions of customer value are important to their customers. If they know what these dimensions are, they will be able to deliver value to their customers in both a competitive and profitable manner. This leads to the discussion of customer value for high fashion retailers in South Africa with which they will therefore need to provide their customers.
52
CHAPTER 3: CUSTOMER VALUE
3.1 INTRODUCTION
As indicated in Chapter 2, the high fashion retail industry in South Africa is highly competitive and therefore high fashion retailers need to provide superior customer value as a source of competitive advantage in order to survive and prosper. It is thus important for high fashion retailers to have a clear understanding of the concept of customer value.
This chapter commences with a discussion of customer value within the marketing context. The chapter continues by providing a discussion on the concept of customer value. An overview is provided of the various definitions of customer value in literature with the aim to provide a definition of customer value for this study, and the chapter also provides insights into the benefit-sacrifice concept evident in customer value definitions. The chapter continues furthermore by elaborating on the characteristics of customer value before it concludes with insight into the different customer value perspectives with the aim of identifying the various customer value dimensions. These customer value perspectives provide insight into the various customer value dimensions as proposed and empirically tested by different authors. The customer value dimensions receive closer scrutiny in Chapter 4.
3.2 CUSTOMER VALUE WITHIN THE MARKETING CONTEXT
Value is a concept that has been studied within various contexts. Within economics, value is associated with utility or desirability (Ramsay, 2005:550; Ekelund & Hebért, 1997:35), while social sciences view value in terms of human value and within industrial settings, value refers to processes that focus on maintaining standards while reducing costs (Patterson & Spreng, 1997:416). In marketing, however, value is typically studied from a customer’s perspective from where the commonly used term customer value originates (Lamb, Hair & McDaniel, 2013:17; Ramsay, 2005:551; Huber, Herrmann & Morgan, 2001:41; Monroe, 1991:38).
53 Chapter 3: Customer value
It is also important to highlight that different authors use the terms consumer value, customer value, perceived value and perceived customer value interchangeably (Chahal & Kumari, 2012:168; Li & Petrick, 2010:205; Näslund, Olsson & Karlsson, 2006:302; Petrick, 2002:120). Furthermore, according to Jensen and Hansen (2007:604), Gallarza and Saura (2006:439) and Oliver (1997:480) consumer value, customer value and perceived value are synonyms. Therefore, for the purpose of this study the term customer value is used with the understanding that it refers to the value as perceived by the customer.
To gain a better understanding of where customer value positions itself within a contemporary marketing context, a discussion on the evolution of marketing practices is necessary. The following section provides brief insights of how marketing practices have changed over time, resulting in the emergence of contemporary marketing.
3.2.1 The evolution of marketing practices
The changes in marketing practices throughout the years are characterised by movement through various orientations namely, the production orientation, sales orientation, customer orientation and societal orientation (Fahy & Jobber, 2012:8; Jobber, 2010:3).
Initially marketing practices were characterised by a strong focus on the production of a few specific products (Jobber, 2010:4). Within this orientation, business decisions focused on the development of technology and distribution efficiencies. Customers and their needs were not a priority for the decision-makers (Cannon et al., 2008:16). During the production orientation, businesses focused on increased production capabilities which was common when demand exceeded supply (Fahy & Jobber, 2012:10; Palmer, 2009:27; Berndt, Grove & Jooste, 2006:8). Businesses found themselves with large quantities of products, which gave rise to the challenge of overcoming competitive pressures and gaining customers (Jobber, 2010:4; Jobber & Fahy, 2009:36). These conditions led businesses to enter the sales orientation.
54 Chapter 3: Customer value
With the sales orientation, marketing practices focused on increasing sales to counter intense competition. Businesses focused on convincing customers to purchase from the large quantities of products already produced (Fahy & Jobber, 2012:11; Jobber, 2010:5). The emphasis was on short-term sales rather than long-term profits. This marketing practice was common when supply exceeded demand and selling unwanted products became a challenge. No efforts were made to establish long-term relationships with customers and little attention was given to customer needs. Therefore, it became necessary to make the customer the focus of businesses’ activities, known as customer orientation (Fahy & Jobber, 2012:11; Perreault, Cannon & McCarthy, 2012:17).
Customer orientation is a management philosophy where the customer is central to businesses’ operations. The processes within the business are designed around the needs of the customer (Lamb et al., 2013:20; Doyle, 2011:126). A customer orientation has become evident in the marketing practices of many businesses and assists in gaining a competitive advantage. There is an increased recognition that it is inevitable for a business to understand and adhere to the needs of its customers (Perreault et al., 2012:18). Contemporary marketing practices seek to anticipate as well as identify consumer needs, and then build resources to meet these needs. Businesses started to move away from the economic model of marketing based on the production and sales orientation (Vargo & Lusch, 2004:5). The focus within the customer orientation is relational exchanges where the customer co-creates value with the business (Fahy & Jobber, 2012:12). As a further evolution, businesses realised that customers function and exist within larger societies, and therefore societal marketing developed (Doyle, 2011:132).
Societal marketing refers to marketing’s direct effect on people, both as customers and as members of society. It takes into account customers’ and society’s larger interests (Perreault et al., 2012:20). The aim of societal marketing is to consider the long-term needs of society, such as the preservation of the environment, in order to satisfy businesses’ long-term profit objectives. Another aspect of societal marketing is providing support to communities and society as a whole through charitable activities (Fahy & Jobber, 2012:15). This marketing orientation enables businesses to be more
55 Chapter 3: Customer value accountable not only on financial matters, but also environmental and social issues (Jobber, 2010:195). There is a growing demand from customers that businesses should focus more on societal marketing. This increased focus will improve the perception of customer value provided by businesses as well as assist them in implementing the marketing concept (Doyle, 2011:133; Palmer, 2009:30).
3.2.2 The marketing concept
The marketing concept is implemented by businesses that follow a customer orientation and societal orientation as philosophy, and is based on businesses aiming to achieve their goals through meeting and exceeding customer needs better than their competitors. Kotler, Armstrong and Tait (2010:30) and other authors such as Dibb, Simkin, Pride and Ferrell (2012), Fahy and Jobber (2012), Jobber (2010), Cannon et al. (2008) and Berndt et al. (2006) add that businesses which adopt the marketing concept, view customer satisfaction as the key to profitability. Customer satisfaction can furthermore only be achieved through delivering superior customer value. The delivery of customer value and customer satisfaction is possible because the needs of the customer is understood and catered for (Chang & Dibb, 2012:254; Jobber, 2010:15). Several elements are core to the marketing concept, including:
Needs, wants and demands -As the main focus of the marketing concept is to satisfy the needs of their customers better than their competitors (Perreault et al., 2012:18; Kotler et al., 2010:30), it is important for businesses to be familiar with and understand their customers’ needs, wants and demands (Chang & Dibb, 2012:255; Jobber, 2010:5; Kotler & Armstrong, 2006:14). A need is the basic state of deprivation. Wants are needs that are shaped by society and the customer’s personality and demand is when buying power and willingness to buy are added (Kotler & Armstrong, 2006:14). This focus on customer needs enables businesses to determine the changing needs of their customers which provide potential market opportunities. Businesses are then able to adapt their products and/or services to address the demands of current and potential markets (Jobber, 2010:6).
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Products and services - Customers acquire products and/or services in an attempt to satisfy their needs (Kotler & Keller, 2009:52; Kotler & Armstrong, 2006:15). Products and/or services are tools to solve a customer’s problems. Products and/or services are viewed as commodities, and customers are increasingly more aware of experiences as part of a business’s complete market offering (Chen & Hu, 2010:536; Kotler & Keller, 2009:52; Kotler & Armstrong, 2006:15). A business’s products and/or services should continuously serve the customer’s needs better than their competitors in order to ensure that the customers’ needs are met and satisfied (Kazakeviciute & Banyte, 2012:533; Perreault et al., 2012:18; Kotler & Armstrong, 2006:15).
Markets - The concepts of exchange and relationships cannot be concluded without introducing the concept ’market’ to the discussion (Jobber, 2010:7). A market refers to a group of actual and potential customers of a specific product and/or service (Perreault et al., 2012:18; Kotler & Keller, 2009:54). This group of customers has a defined location, identifiable lifestyle and required income to acquire products and/or services (Doyle, 2011:230). The customers who constitute a market typically share similar needs and attempt to satisfy these needs by engaging in exchanges and relationships with businesses (Chang & Dibb, 2012:254; Jobber, 2010:7; Kotler & Keller, 2009:54).
Exchange transactions and relationships - The assessment of customer value and customer satisfaction is achieved through the acquisition, consumption and disposal of products and/or services by customers (Chen & Hu, 2010:536; Kotler & Keller, 2009:53). Customers engage in a transaction with a business in order to satisfy a need or solve a problem. Businesses endeavour to extend the interaction between them and the customer to more than one transaction (Perreault et al., 2012:18; Jobber, 2010:7) and they attempt to build long-term relationships with their customers (Kazakeviciute & Banyte, 2012:535). This is achieved by continuously providing high quality products and/or services that satisfy the needs of their customers through superior customer value (Kazakeviciute & Banyte, 2012:535; Kotler & Keller, 2009:54).
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Customer value, customer satisfaction and quality - Customer value (section 3.4.1) is achieved by a customer through the acquisition, consumption and disposal of a business’s products and/or services (Perreault et al., 2012:18; He & Li, 2011:80; Lee et al., 2011:54). Customer satisfaction refers to a situation when a product and/or service’s performance meets or exceeds customers’ expectations. If businesses offer customers’ value based on their needs, it will be easier to meet or exceed customers’ expectations. Customer value positively influences customer satisfaction (Raza, Siddiquei, Awan & Bukhari, 2012:789; Kotler & Keller, 2009:52), and the provision of customer value starts with understanding customer needs and ends with customer satisfaction (Malik, 2012:69; Perreault et al., 2012:18; Kotler & Keller, 2009:53).
Customer value is therefore imbedded in the marketing concept (Chang & Dibb, 2012:253; Jobber, 2010:8). It is important to highlight that although this discussion presents a chronological evolution of marketing practices through the four different orientations, all the orientations are still commonplace in businesses (Lamb et al., 2013:21; Jobber, 2010:11). It is professed that only those businesses which actively apply the marketing concept as part of the customer and societal orientation, are able to deliver superior customer value to their customers (Chahal & Kumari, 2012:168; Helkkula et al., 2012:59; Trasorras, Weinstein & Abratt, 2009:616; Slater & Narver, 1998:23). It has therefore become critical that the marketing practices of a business should focus on the creation and exchange of customer value between the business and its customer (Kotler et al. 2010:16; Gallarza & Saura, 2006:438).
3.3 CONCEPTUALISING CUSTOMER VALUE
The function and significance of customer value is the concern of both businesses and customers (Perreault et al., 2012:18; Jobber 2010:7; Gallarza & Saura, 2006:438). Customer value is important to businesses, as it is a source of competitive advantage. It also influences the degree of satisfaction/dissatisfaction experienced by customers (Helkkula et al., 2012:59; Rintamäki et al., 2006:6; Khalifa, 2004:645). Customer value
58 Chapter 3: Customer value is relevant from a customer perspective, since it is fundamental to all successful exchange transactions (Helkkula et al., 2012:59; Patterson & Spreng, 1997:414).
3.3.1 Definitions of customer value
Customer value is an abstract concept that is context specific (Nsairi, 2012:679; Al- Sabbahy, Ekinci & Riley, 2004a:427; Patterson & Spreng, 1997:416). Some authors classify it as a fluid concept with ambiguous interpretations (Jensen, 1996; Zeithaml & Bitner, 1996). Literature offers various definitions of customer value (Woodall, 2003: 21; Sweeney & Soutar, 2001:205; Woodruff, 1997:143; Gale, 1994:53; Anderson, Jain & Chingagunta, 1993:5; Monroe, 1991:233; Zeithaml, 1988:17), but they all exhibit several differences and similarities.
In order to gain insight and understand these differences and similarities, an overview of the various definitions of customer value is provided. The discussion of definitions of customer value follows a chronological approach, presenting different definitions as they emerged in literature. The abundance of definitions of customer value is, however, not surprising due to the importance of customer value to businesses (Hu et al., 2009:114; Gallarza & Saura, 2006:438; Al-Sabbahy, Ekinci & Riley, 2004b:229). Table 3.1 provides on overview of the various definitions of customer value.
Table 3.1: Definitions of customer value
Author Definition
Sheth (1983), Customer value is the assessment of independent consumption values that Sheth, Newman & drive consumer behaviour and customer choice is a result of these values Gross (1991)
Customer value is the overall assessment of the utility of a product based on perceptions of what is received and what is given. It is a hierarchical model of Zeithaml (1988) consumer perceptions of price, quality and value. (Most accepted definition of customer value)
59 Chapter 3: Customer value
Author Definition
Customer value represents the customer’s perceptions of a trade-off between Monroe (1991) the quality of benefits they perceive in a product relative to the sacrifice they perceive by paying a price
Customer value is the unique combination of benefits received such as quality, Kerin et al. (2011) convenience, on-time delivery, before- and after sale service at a specific price
Babin, Darden & Griffen (1994), Kerin, Customer value represents the pleasurable end itself instrumentally provided by Jain & Howard the shopping experience (1992)
Customer value is market perceived quality adjusted to the relative price of your Gale (1994) product. Quality includes non-price attributes. Quality, price and value are relative
Customer value is defined as the trade-off between price (monetary sacrifice) Dodds (1996) and quality, as well as how friends, families and peers perceive customers
Customer value is a customer’s perceived preference for and evaluation of those product attributes, attribute performances and consequences arising from Woodruff (1997) use which facilitate/block achieving the customer’s goals and purposes in use situations
Cronin, Brady, Customer value is either a multiplicative or additive function of benefits and Brand, Hightower & sacrifices Shemwell (1997)
Holbrook (1994), Customer value is an interactive relativistic preference experience Holbrook (1999)
Customer value is the utility combination of price and non-price benefits offered. Walters (1999) Customer value is relative and can only be determined when a target group compares similar products/services
McDougall & Customer value is the results or benefits customers receive in relation to total Levesque (2000) costs
Customer value is a consequence of subjective evaluation which in turn results Huber, Herrmann & from the summing of the various elements contributing to the perceived Henneberg (2007) fulfilment of the value, benefit, attribute and perceived costs
Customer value is the personal perception of advantage arising out of a Woodall (2003) customer’s association with an organisation’s offering
Customer value is the perceived outcome of the trade-off of benefit and sacrifice Heinonen (2006) of technical, functional, temporal and spatial dimensions within an e-service context
60 Chapter 3: Customer value
Author Definition
Customer value is a customer’s individual evaluation of the benefits to be gained Doyle (2011) from purchasing a product or service Source: Adapted from Snoj, Karda and Mumel (2004:157), Näslund et al. (1996:303), Rintamäki et al. (1996:10)
From Table 3.1 it is evident that there is a lack of agreement as to what customer value is. Based upon Table 3.1 several differences between the customer value definitions are evident:
Customer value differs in terms of its fundamental meaning - The main difference is visible in the way definitions are formulated. Terminology such as utility, worth, benefits and quality is used to describe customer value without clear definitions of each concept (Chen & Hu, 2010:537; Parasuraman & Grewal, 2000:170; Gardial, Clemons, Woodruff, Schumann & Burns, 1994:551).
Customer value differs in terms of circumstances – Different customers view customer value differently within the different consumption circumstances (in other words what they buy), such as when buying different product and/or service categories (Lee, Yoon & Lee, 2007:205; Parasuraman & Grewal, 2000:170; Gardial et al., 1994:551).
Customer value has different meanings at different times - Customers evaluate customer value differently at the time of purchase (in other words when they buy) than they would during or after consumption (Edward & Sahadev, 2011:328; Parasuraman & Grewal, 2000:170). Customers imagine what value they want (desired value) and they evaluate the feelings about the actual value experience (received value) of using a product/service (Bick, Brown & Abratt, 2004:301; Woodruff, 1997:141).
Despite the differing views on what customer value is, there are also similarities as is evident in Table 3.1:
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Customer value is perceived once the product and/or service is being consumed – Customer value can only be assessed once a customer has interacted with a particular product and/or service (Chen & Hu, 2010:536; Dumond, 2000:1062; Woodruff, 1997:141; Zeithaml, 1988:13).
Customer value is subjectively perceived by customers, rather than objectively determined by sellers – Customers are personally involved in assessing customer value as perceived by them based on their subjective interaction with a particular product and/or service. Businesses should therefore investigate customer value from the customer’s perspective, and not from the business’s perspective (Sigala, 2010:425; Zeithaml, 1988:13).
Customer value is a trade-off between benefits and sacrifices - What a customer receives (quality, benefits, worth, utility) and what is given up to acquire and consume a product and/or service (price, non-monetary sacrifice), is the basis on which the level of customer value is established (Gounaris et al., 2007:66; Gallarza & Saura, 2006:439; Rintamäki et al., 2006:9).
Multiple perceived costs and benefits contribute to customer value - A complete investigation of customer value includes considering the different perceived benefits and sacrifices in order to gain a better understanding of customer value (Boksberger & Melsen, 2011:231; Kerin et al., 2011:10; Sánchez, Callarisa, Rodriguez & Moliner, 2006:395; Day, 1999:55).
Over time, the concept of customer value has developed through research from a simplistic ratio of quality and price approach (Gale, 1994:xiv), to a rich description of perceived benefits and sacrifices/costs (Li & Petrick, 2010:202; Rintamäki et al., 2006:9). Customer value varies between customers and shopping contexts because it involves customers portraying different preferences among products and/or services. Customer value therefore refers to a customer’s judgement of different products and/or services within specific shopping situations (Ryu et al., 2012:205; Gallarza & Saura, 2006:439; Rintamäki et al., 2006:9). Customer value thus varies depending on the types
62 Chapter 3: Customer value of products and/or services, as well as personal characteristics of customers (Lee et al., 2007:205; Zeithaml, 1988:14).
In view of the various definitions of customer value presented and the discussion thus far, customer value is defined as follows for the purpose of the study:
Customer value refers to a customer’s overall assessment of a product and/or service provided by a business based on their perception of the benefits the customer receives, relative to the sacrifice the customer has to exert to obtain these benefits (Sparks et al., 2008:99; Rintamäki et al., 2006:8; Petrick, 2002:128; Sweeney & Soutar, 2001:204; Zeithaml, 1998:5; Ravald & Grönroos, 1996:21).
From the above definition, it is evident that the “benefit (get)/sacrifice (give)” conceptualisations are central to customer value (Chang & Dibb, 2012:258; Boksberger & Melson, 2011:231; Kerin et al., 2011:10; Li & Petrick, 2010:205) and are the focus of the next section.
3.3.2 The benefit (get) and sacrifice (give) conceptualisation of customer value
As is apparent from the majority of definitions of customer value presented in section 3.3.1, benefit and sacrifice/cost components are inherent to customer value (Chang & Dibb, 2012:258; Boksberger & Melson, 2011:231; Kerin et al., 2011:10; Li & Petrick, 2010:205). According to Jensen and Hansen (2007:606), the benefit/sacrifice concept is multidimensional connecting trade-offs of give (sacrifice) and get (benefit) where customers contribute to the value in the consumption experience. The benefit/sacrifice concept is expressed through an equation where customer value equals perceived benefits obtained less than the perceived sacrifice incurred. Therefore, the greater the positive difference between benefits and sacrifice, the higher the customer value perceived by customers (Chang & Dibb, 2012:259; Perreault, Cannon & McCarthy, 2012:8; Berndt et al., 2006:3). It is agreed by various authors that there are different types of perceived benefits that a customer could receive, as well as different kinds of perceived sacrifice/cost customers could incur in obtaining customer value (Harmon & Griffiths, 2008:260).
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3.3.2.1 Perceived benefits
Perceived benefits are the positive consequences customers expect to receive through the acquisition and consumption of a particular product and/or service (Kerin et al., 2011:10; Harmon & Griffiths, 2008:260). The following perceived benefits are identified:
Functional benefits - These perceived benefits are associated with a product and/or service’s usefulness and include aspects such as performance, reliability and flexibility of a product and/or service (Li & Petrick, 2010:205; Kotler & Armstrong, 2004:28; Solomon & Stuart, 2003:16).
Social benefits - Customers perceive that the purchase and/or use of a particular product and/or service will provide them with benefits such as compliments and acceptance from family, friends, peers and acquaintances (Berndt et al., 2006:3; Sánchez et al., 2006:395; Kotler & Armstrong, 2004:28).
Service benefits - When functional benefits of products are perceived to be equal, customers typically compare and value the services that accompany a particular product such as after-sales service, delivery service, technical support and online service. These services are frequently seen as important differentiators during the purchasing decision-making process (Berndt et al., 2006:3; Kotler & Armstrong, 2004:28; Peter & Donnely, 2001:32).
Experiential benefits - These benefits are closely associated with the shopping experience. It is the sensory excitement that customers perceive to gain from the purchase and use of a product and/or service. These perceived benefits provide pleasure and enjoyment to customers during the shopping experience and are associated with feelings of joy, excitement, exhilaration and adventure (Berndt et al., 2006:3; Sánchez et al., 2006:395; Solomon & Stuart, 2003:16).
Image benefits - These perceived benefits are linked to the brand or the image of a business. They provide perceived status to the customer buying and/or using the
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product and/or service and are associated with the brand name, logo as well as a prestigious location (Berndt et al., 2006:3; Solomon & Stuart, 2003:16).
Economic benefits - These perceived benefits refer to the monetary savings (lower price) a customer receives when purchasing a product and/or service (Sánchez et al., 2006:395). Economic benefits are associated with aspects such as discounts, price-cuts and special offers (Boksberger & Melsen, 2011:231; Kerin et al., 2011:10).
Relational benefits – These perceived benefits are when customers view businesses as a valuable source through tending to customer expectations and needs. Customers value a relationship with a particular business as it establishes mutual trust. Relational benefits enhance loyalty that leads to customer retention. Relationships are established through authentic continual engagement with customers and include aspects such as face-to-face contact, telephonic contact and engagement through social media (Chang & Dibb, 2012:260; Sánchez et al., 2006:395).
3.3.2.2 Perceived sacrifices
Perceived sacrifices are the negative consequences customers perceive they have to offer in order for them to acquire and/or consume a product and/or service (Boksberger & Melsen, 2011:231; Kerin et al., 2011:10; Harmon & Griffiths, 2008:260; Woodruff & Gardial, 1996:139). The following perceived sacrifices are identified:
Monetary costs - These perceived costs are mainly associated with the price customers have to pay. Monetary costs may also include costs relating to ownership, the use of the product and/or service, as well as the maintenance of the product and/or service (Boksberger & Melsen, 2011:231; Kerin et al., 2011:10; Berndt et al., 2006:3).
Time costs – These perceived costs are associated with the amount of time spent obtaining a particular product and/or service. Products and/or services that save customers time are perceived to add value to their shopping experience. Because of the increase in the complexity of customers’ lifestyles, time has become a very
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valuable commodity. Customers are willing to pay a higher price for products and/or services that will provide them with more time to spend on activities with family and friends (Kerin et al., 2011:10; Berndt et al., 2006:3; Woodruff & Gardial, 1996:139).
Energy costs – These perceived costs are associated with products and/or services supplying convenience to customers. In the increasingly busy lifestyles of customers, convenience is becoming very important. Any purchases or interactions with products and/or services that require less energy and involvement from the customer, contribute to customer value and these include aspects such as websites satisfying customer’s information needs, online shopping and one-stop shopping (Chang & Dibb, 2012:260; Kerin et al., 2011:10; Powers & Barrows, 2006:650).
Psychological costs – These perceived costs occur when customers experience psychological risk when they have to make an important purchase decision. The risk refers to a situation when an important product and/or service does not perform the way customers expected it to perform and cause customers mental stress. Customers will attempt to reduce the psychological cost by buying a well known brand or supporting reputable organisations even at a higher price (Berndt et al., 2006:3; Kotler & Armstrong, 2004:28; Solomon & Stuart, 2003:16; Peter & Donnely, 2001:32).
Risk - This is the subjective expectation of encountering a loss (Sweeney et al., 1999:81). The higher the probability of a loss when acquiring and/or consuming a product and/or service, the higher the perception of risk (Boksberger & Melsen, 2011:231; Chang & Chen, 2008:823).
Inconvenience - This refers to a situation when customers experience problems or difficulty while locating, buying and/or consuming a product and/or service. Inconvenience is associated with difficulty in locating products and/or services, long queues and inefficient processes (Chang & Dibb, 2012:260; Powers & Barrows, 2006:650; Sánchez et al., 2006:396).
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3.4 THE CHARACTERISTICS OF CUSTOMER VALUE
Within the context of the various definitions of customer value, it is also important to gain an understanding of the nature of customer value. The nature of customer value is described in terms of its characteristics, including that it is an interactive, relativistic, preference experience. These characteristics of customer value are not mutually exclusive but are interconnected and overlapping. Combined they form the essence of the nature of customer value (Chen & Hu, 2010:536; Holbrook, 1999:5; Anderson & Narus, 1998:54).
3.4.1 Customer value is interactive
The interactive nature of customer value implies that there is some alliance between a subject (customer) and an object (product and/or service). This alliance influences the objective or subjective side of the interaction (Holbrook, 1999:5).
If this interaction is viewed on a continuum as on the one side being completely subjective, then customer value relies entirely on the nature of the subjective experience (Chen & Hu, 2010:537; Rintamäki et al., 2006:9; Holbrook, 1999:5). In the marketing discipline this viewpoint relates back to a customer orientation (Perreault et al., 2011:18; Holbrook, 1999:5). According to Levitt (1980:84), it can be assumed that a product and/or service only holds value if it delights the customer. Therefore the customer is the final judge of customer value (Holbrook, 1999:5; Gale, 1994:71). For a fashion retailer this would imply that customers only derive value from the shopping experience provided by the retailer (Michon, Yu, Smith & Chebat, 2007:491).
At the opposite end of the continuum, the interaction could be viewed as completely objective (Mayr & Zins, 2012:357; Holbrook, 1999:5). This views customer value as dependend on the object (product) itself. Customer value is then present in the product whether anyone acknowledges it or not (Kainth & Verma, 2011:286; Holbrook, 1999:5; Frondizi, 1971:20). Within the marketing context, this objectivist viewpoint refers to the production orientation (Holbrook, 1999:5). Advocates of the production orientation believe that through the use of scares resources, skills and/or manufacturing
67 Chapter 3: Customer value efficiencies, customer value can be created within specific products (Fahy & Jobber, 2012:10; Cannon et al., 2008:16; Berndt et al., 2006:8; Holbrook, 1999:6).
A more intermediate position on the continuum is one where customer value suggests an interaction between some subject (customer) and an object (product and/or service) (Holbrook, 1999:6; Woodruff & Gardial, 1996:54; Frondizi, 1971:26). This interactionist stance proposes that customer value is reliant on the characteristics of some object (product and/or service), but cannot occur without the involvement of some subject (customer) who recognises and appreciates these characteristics (Chen & Hu, 2010:537; Holbrook, 1999:6; Pepper, 1958:402). The interactionist perspective relates back to what has been stated by Vargo and Lusch (2008:8), namely that businesses cannot create customer value for their customers through their products and/or services alone, but that customer value is co-created by the involvement of customers as well.
3.4.2 Customer value is relativistic
The relativistic nature of customer value refers to three distinctive characteristics, namely:
customer value is comparative (preferences among products and/or services);
customer value is personal (differs across people); and
customer value is situational (specific to the context) (Landroguez, Castro & Cepeda-Carrión, 2013:235).
Customer value is comparative in that different products and/or services are compared by the same customer (Sparks et al., 2008:99; Rintamäki et al., 2006:9; Holbrook, 1999:6). This is called intrapersonal comparisons. True value judgements involve one given customer who has relative preferences among products and/or services, rather than different customers comparing value judgements of other customers (Kainth & Verma, 2011:286; Holbrook, 1999:6; Petit, 1983:32). Customer value is therefore assessed and expressed by customers relevant to competitors (Holbrook, 1999:6).
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The relativistic nature of customer value is also personal. Customer value is relative to the individual customer (Holbrook, 1999:7). This means that customers will differ in terms of what they view as value. This is relevant to businesses as it can be used segmenting a market based upon value perceptions in order to increase customer satisfaction (Mayr & Zins, 2012:357; Holbrook, 1999:7).
The relativistic nature of customer value is lastly situational. The judgement of customer value is influenced by the context within which the judgement is made (Holbrook, 1999:7). The standards on which the judgement is based change from one set of circumstances, time frame or location to the next. This is significant to businesses, since this characteristic indicates that customer value could differ from moment to moment and place to place (Kainth & Verma, 2011:285; Holbrook, 1999:7; Woodruff & Gardial, 1996:59).
3.4.3 Customer value is preferential
The preferential nature of customer value is the most fundamental aspect of customer value (Chen & Hu, 2010:536). Customer value has an affective component (Mayr & Zins, 2012:357; Holbrook, 1999:8), which implies that customer value involves a preference judgement. This preference judgement made by a subject (customer) could be that the object (product and/or service) is pleasing/displeasing, good/bad, or favourable/unfavourable. Customer value determined through the preference assessment is the outcome of an evaluative judgement (Rintamäki et al., 2006:9; Zeithaml, Parasuraman & Berry, 1990:141). This evaluative judgement is a summary valuation made by customers. This characteristic of customer value reiterates that customer value has an emotional influence exerted by customers when judgements on products and/or services are made. The preferential nature of customer value highlights that customers are essential in the study and understanding of customer value (Rintamäki et al., 2006:9).
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3.4.4 Customer value is an experience
The last aspect of the nature of customer value lies in the fact that customer value is derived from experiencing the object (product and/or service). This aspect of customer value suggests that customer value is not just gained through the acquisition or possession of an object (product), but also through the consumption and experience thereof (Chen & Hu, 2010:536; Puccinelli, Goodstein, Grewal, Price, Raghubir & Stewart, 2009:17; Holbrook, 1999:9; Woodruff & Gardial, 1996:55; Holbrook & Hirschman, 1982:53). Holbrook (1999:9) argues that this experience nature of customer value proposes that all products deliver various services in order to create need- satisfying experiences. This phenomenon places the role of experience at the centre of the creation of customer value (Landroguez et al., 2013:236; Holbrook, 1999:9).
The characteristics of customer value confirm the difference and similarities of customer value as highlighted in section 3.3.1. Customer value can only be assessed when a customer interacts with a product and/or service. The differences that the characteristics of customer value confirm, are that customer value has different meanings to different customers in terms of time and context. In summary, the characteristics of customer value reiterate that:
there must be interaction between a customer and a product and/or service for any assessment of customer value;
different products and/or services are compared differently, comparisons differ from person to person, as well as from one context to another;
there is an emotional aspect to customer value that influences customers’ assessment of the value they receive from a product and/or service; and
customer value is associated with an experience with a particular product and/or service (Mayr & Zins, 2012:357; Chen & Hu, 2010:536).
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3.5 CUSTOMER VALUE PERSPECTIVES, KEY FEATURES AND DIMENSIONS
Based on the definitions of customer value, the benefit/sacrifice conceptualisation as well as the characteristics of customer value, customer value is viewed as a multi- dimensional concept from which several customer value perspectives have emerged. The different perspectives are in essence an attempt by various authors to clarify this complex and dynamic concept in order to determine what really constitutes customer value (Sparks et al., 2008:99; Jensen & Hansen, 2007:603; Cottet et al., 2006:221). These perspectives of customer value have been investigated by a variety of authors in different situations and contexts within a variety of industries (Sparks et al., 2008:99; Jensen & Hansen, 2007:603; Cottet et al., 2006:221; Lin et al., 2005:320).
Table 3.2 presents perspectives on customer value by different authors. It provides a description of the key features of the particular customer value perspective and the proposed customer value dimensions are identified. The identified customer value dimensions are discussed in more detail in Chapter 4.
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Table 3.2: Customer value perspectives, key features and dimensions
Customer value Perspective Key feature Author dimension
Customer value is always based on the evaluation of some concept Functional value (product and/or service experience) by some subject (usually the customer) Social value Customer value guides customers choice to buy, to choose between two products and select one brand or Chahal & Kumari another Emotional value (2012); Chang & Dibb (2012); Hagtveded & Customer value makes differential Sheth et al.’s Patrick (2009); Ko & contributions in any given choice customer Sung (2007); Lee et al. situation Epistemic value value (2007); Gallarza & perspective Customer choice is a function Saura (2006); (1991) associated with multiple customer Sweeney & Sautar value dimensions (2001); Babin et al. (1994); Sheth et al. Customer value dimensions are (1991) independent and contribute ‘incrementally’ to customer choice Conditional value Consumers are willing to accept less of one dimension in order to obtain more of another Customer value consists of five dimensions
Customer value is measured within Efficiency the consumption experience (convenience) Customer value is associated with a means-end relationship Excellence (quality) A product and/or service is valued for the function it performs to achieve a Status (success) specific end goal within the Chahal & Kumari consumption experience and for what (2012); Nsairi (2012); Holbrook’s it is (extrinsic / intrinsic) Esteem (reputation) Boksberger & Melsen customer (2011); Chen & Hu Customer value can be assessed for value (2010); Sparks et al. what it can do for the customer as Play (fun) perspective (2008); Gallarza & individual as well as how others (1999) Saura (2006); (family, community, Deity) react to it Aesthetics (beauty) Holbrook (1999); (self-orientated / other-oriented) Zeithaml (1988) Customer value can also be assessed by what the customer can Ethics (morality) do to or with a product and/or service as well as what the product and/or service does to the customer Spirituality (faith) Customer value also involves the customer to respond by admiring or
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Customer value Perspective Key feature Author dimension appreciating the product and/or service (active/reactive) Customer value consists of eight dimensions
Customer value is assessed based on customers expecting to gain certain benefits when buying and/or Acquisition value consuming a product and/or service Acquisition for a specified price (subjective versus measure of utility) Chahal & Kumari transactional (2012); Ekinci et al. value Customer value is also assessed (2008); Gallarza & customer based on customers’ internal Saura (2006); Petrick value reference price compared with the & Backman (2002); perspective actual price Grewal, Monroe & (1998) Customers derive satisfaction when Transactional value Krishnan (1998) they received a fair price (objective and monetary measure of utility) Customer value consists of two dimensions
Customer perceptions of a specific Encounter specific service encounter was collected at functional value the point-of-purchase of department stores Encounter specific The service encounter at the point-of- technical value purchase shaped the customer’s perception of customer value Perceived product Sweeney et Erragcha & Gharbi regarding the specific service quality al.’s (2012); Malik (2012); customer encounter Perceived relative Mayr & Zins (2012); value Customer value can be assessed by price Raza et al. (2012); He perspective the role that perceived risk plays & Li (2011); Chang & (1999) during the service encounter Chen (2008); Sweeney et al. (1999) Perceived risk plays an important role in the product and/or service quality/value for money relationship Perceived which forms part of the perception of performance/fi- customer value received nancial risk Customer value consists of five dimensions
Mathwick, Specifically studies the self-oriented Customer return on Chahal & Kumari Malhotra and subset of Holbrook’s customer value investment (CROI) (2012); Nsairi (2012); Ridgon’s domain, namely what a product Mathwick et al. (2001); customer and/or service can do for a customer Service excellence Holbrook (1999) value
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Customer value Perspective Key feature Author dimension perspective The self-oriented subset is expressed (2001) in terms of experiential value Aesthetic response The purpose is to develop an experiential value scale to assess the retail shopping experience beyond the traditional assessments that mainly focussed on price and quality
Customer value assessment is Playfulness expanded to include the experience of the customer associated with a retail shopping experience Customer value consists of four dimensions
Development is based on Sheth et al.’s (1991) customer value Emotional value perspective The purpose is to develop a multi- item scale named customer Social value perceived value scale (PERVAL) The scale can be used to assess Chang & Dibb (2012); customers’ perceptions of the value Functional value Raza et al. (2012); Sweeney and of durable goods at brand level (price/value for Chen & Hu (2010); Soutar’s money) Boksberger & Melson The scale is developed to determine customer (2011); Cheng, Wang, what consumption values drive value Lin & Vivek (2009); purchase attitude and behaviour in a perspective Lee et al. (2007); retail purchase situation (2001) Sanchez et al. (2006); It was applied to the pre-purchase Sweeney & Soutar and post-purchase situation (2001); Sheth et al. (1991) Recent arguments state that the Functional value measurement developed through this (performance/quality) perspective needs to be broadened to include all aspects of the purchase experience Customer value consists of four dimensions
It is based on Sweeney and Soutar’s Behavioural price Petrick’s (2001) perceived value scale Brengman & Willems customer (PERVAL) Monetary price (2009); Lee et al. value The purpose is to develop a multi- (2007); Petrick (2004); perspective dimensional scale for the Petrick (2002); (2002) Emotional response measurement of customer value of a Sweeney & Soutar service (2001) Quality The author believes that the leisure
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Customer value Perspective Key feature Author dimension and tourism providers could benefit from refined measures of the customer value, since it has been found to be an important indicator of repurchase intentions The author argues that some customer value perspectives contributes to the understanding of customer value, however they do not provide a way to measure customer value. Customer value is commonly measured by using a unidimensional measure The author argues that such a unidimensional measurement assumes that customers have a Reputation shared meaning of value A unidimensional measurement provides no specific direction on how customer value can be improved Therefore a multidimensional measure for customer value is developed The focus is mainly on the post- purchase evaluation of a service Criticism against this perspective is that it lacked aspects of the complete service experience Customer value consists of five dimensions
Shopping involves experiential as Utilitarian (functional) well as instrumental outcomes value Shopping provides customer value instrumentally by assessing it as the Kazakeviciute & utility derived from shopping Banyte (2012); Nsairi Babin et al.’s (2012); Chitturi, Shopping also provides customer customer Raghunathan & value experientially by assessing it value Mahajan (2008); Fiore as being an pleasurable end in itself perspective Hedonic (affective) & Kim (2007); Michon (2005; 1994) The purpose is to develop a personal value et al. (2007); Babin et shopping value scale including the al. (2005); Babin et al. “dark side” and “fun side” of shopping (1994) Therefore customer value has a functional side as well as an emotional element
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Customer value Perspective Key feature Author dimension Customer value can be delivered by ensuring that a product and/or service performs its function well Customer value is furthermore increased when customers appreciate products and/or services for the feelings they evoke within customers Customer value is described as how meaningful the customer sees an investment in resources in a particular retailer Customer value consists of two dimensions
The customer value construct was broadened by investigating customer Technical value value within technology-based self- services The author argued that time and location (enabled by technology) are Functional value explicit to customer value The value value of time and place is Heinonen’s contrasted with traditional value of time perspectives on customer value Temporal value and place based on quality and price Kainth & Verma (2011); Lee et al. customer The growth of technology as well as (2007); Heinonen value the growth in customer interaction (2006); Pura (2005); perspective with technology in delivering value to Heinonen (2004) (2004) customers, is considered Customer value is associated with various locations and time frames of interaction between a business and its customers Spatial value Customer value is enhanced when customers perceive service delivery to be flexible Customer value consists of four dimensions
Gallarza and This perspective is based on Efficiency Chahal & Kumari Saura’s Holbrook’s customer value (2012); Nsairi (2012); customer perspective Service quality value Kerin et al. (2011); Holbrook’s customer value Cheng et al. (2009); perspective Social value (2006) perspective was found lacking Gallarza & Saura because it did not include any (2006) negative conceptualisations of Play
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Customer value Perspective Key feature Author dimension customer value Aesthetics It specifically included the negative conceptualisation of time and energy spend as part of customer value The authors also viewed quality as an integral part of customer value Therefore the negative aspects were Time and effort defined as negative relationships spend between two constructs, such as quality and perceived risk Customer value consists of six dimensions
It is based on Babin et al.’s (2005) perspective The perspective specifically Utilitarian value investigated the shopping experience provided by retailers and how it contributes to customer value The perspective identified a need to understand the drivers of total customer value Hedonic value The authors responded to the need Kazakeviciute & for an expanded yet still Banyte (2012); Nsairi parsimonious definition of customer (2012); Chitturi et al. Rintamäki et value (2008); Fiore & Kim al. (2006) The principal contribution of this (2007); Lee et al. perspectives is the tripartite (2007); Michon et al. conceptualisation of customer value (2007); Rintamäki et al. (2006) The perspective wanted to investigate whether “softer” aspects of shopping could represent possible differentiating factors in highly Social value competitive retail markets It was uncovered that customer value goes beyond product purchase to cover the whole shopping experience Customer value consists of three dimensions
Table 3.2 indicates that not one single specific perspective of customer value captures all the different dimensions that customer value could possibly entail. This study therefore considers different perspectives of customer value, the benefit-sacrifice
77 Chapter 3: Customer value conceptualisation (discussed in section 3.3.3), as well as other studies to inform the possible customer value dimensions that could underlie customer value for high fashion retailers. These possible customer value dimensions underlying customer value for high fashion retailers are discussed in more detail in Chapter 4.
3.6 CONCLUSION
Customer value plays an important role in the marketing context (Kotler et al., 2010:30; West et al., 2010:498; Berndt et al., 2006:3). To gain a better understanding of this important role, a discussion on the evolution of marketing orientations was provided. The concept of customer value was further explored by providing insights into various definitions of customer value. The discussion of definitions of customer value followed a chronological approach presenting different definitions as they emerged in literature over time. Understanding the concept of customer value has evolved from a simple ratio of quality and price (Gale, 1994:xiv), to a description of perceived benefits and sacrifices/costs (Rintamäki et al., 2006:9). The concept of customer value furthermore emerged as a multidimensional and complex concept that is context specific (Gallarza & Saura, 2006:438).
Within the context of the various definitions of customer value it was also important to gain an understanding of the nature of customer value. The nature of customer value was described in terms of its characteristics (Chen & Hu, 2010:536). The chapter concludes with a discussion of customer value perspectives. The discussion provided insight in to the key features of the customer value perspectives and the subsequent customer value dimensions were identified.
Chapter 4 focuses on highlighting the customer value dimensions identified in Table 3.2 specific to high fashion retailers. Chapter 4 also provides insights into customer value frameworks in order to develop the theoretical model that is empirically tested in the study.
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CHAPTER 4: CUSTOMER VALUE DIMENSIONS, CUSTOMER SATISFACTION AND REPURCHASE INTENTION
4.1 INTRODUCTION
The main focus of this chapter is to expand on customer value, as uncovered in Chapter 3, by exploring the possible dimensions that constitute customer value for high fashion retailers. These dimensions form the basis for the development of the proposed theoretical model for the study also presented in this chapter.
Once the possible dimensions that underlie customer value for high fashion retailers have been presented, the chapter continues to address the interrelationship between customer value, customer satisfaction and repurchase intention as set out in the research objectives of the study and presented in the theoretical model of the study (section 1.4 and figure 4.1). The interrelationships between these constructs are context specific (Lin et al., 2005:333) and therefore this study explores the dynamics of these relationships, specifically within the high fashion retailing context.
4.2 CUSTOMER VALUE DIMENSIONS IN THE HIGH FASHION RETAIL INDUSTRY
From all the customer value dimensions uncovered in the literature (section 3.5 and Table 3.2), several of these have been considered relevant to the high fashion retail industry during the exploratory phase of the study. The customer value dimensions include, merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value and status value. Other customer value dimensions also appeared from the focus group discussions conducted during the exploratory phase of this study, namely expressive value and relationship value (section 5.3.2.1). In summary, the author ultimately identified eleven dimensions that could possibly underlie customer value in the high fashion retail industry; nine dimensions were drawn from the literature and two dimensions were presented during the exploratory research phase of this study.
79 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention
Table 4.1 presents each of these dimensions as they are labelled in this particular study, as well as any other labels with which these dimensions are labelled by other authors. Table 4.1 also provides the definition of each customer value dimension, as well as a brief overview of what the dimension entails. The Table furthermore presents the various key descriptors of each dimension within a high fashion retail context and it references contributing authors.
Table 4.1: Customer value dimensions considered relevant to the high fashion retail industry
Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context
Chang & Dibb (2012); Chaudhuri & Ligas (2009); It incorporates key aspects Tynan et al. associated with functional (2009); Diep & Is defined as a High quality value Sweeney customer’s Free of defects (2008); Sparks overall It is one of the important retail et al. (2008); Merchandise judgement of a mix attributes Stylish Gounaris et al. value (also retailer’s It describes the utility and Design is in (2007); Ko & referred to as merchandise physical attributes of a line with latest Sung (2007); functional value based on the product specifically within a fashion trends Lee et al. (performance/qu perceived retail context (2007); Cottet ality), acquisition overall quality High quality et al. (2006); value, utilitarian compared to the Customers have very specific finishing Rintamäki et value, price of the expectations regarding Comfortable to al. (2006); Lin excellence) merchandise merchandise value wear et al. (2005); (Chaudhuri & It is associated with the Baker, Ligas, Variety to benefits when wearing Parasuraman, 2009:407) choose from merchandise of a retailer Grewal & Voss offers a customer (2002); Sweeney & Soutar (2001); Sweeney et al. (1999)
Sacrifice value It is part of the give-get Mayr & Zins Is defined as the Paying a high (also refers to (benefit/cost) (2012); money price is worth it transactional conceptualisation of customer Sabiote, Frias customers have value, perceived value Value for & Castañeda, to give up in relative price, money (2012); Tam order to attain a It is viewed as the negative functional value (2012); product/service consequence of interaction Not too (price/value for Boksberger & (Agarwal & with a product and/or service expensive money, Melsen
80 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention
Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context monetary price)) Teas, 2004:244) It is directly associated with Acceptable (2011); Kerin the price of a product and/or price et al. (2011); service Tynan et al. Not a waste of (2009); Diep & It enhances the feelings of money Sweeney greater potential loss (2008); Marber It is an indicator of prestige et al. (2008); and high quality Sparks et al. (2008); Ko & It positively influence Sung (2007); customer satisfaction Wiedemann, Hennings & Siebels (2007); Heinonen (2006); Rintamäki et al. (2006); Agarwal & Teas (2001); Sweeney et al. (1999)
It enhances the customer’s Enhances social self-concept since status with customers have a need to friends belong and be accepted by Improves the others way customers Raza et al., Is described as It is also associated with self- are perceived (2012); Kainth the perceived esteem enhancement by others & Verma benefit It occurs when symbols from Assists in being (2011); Tynan customers gain a retailer contribute to more accepted et al. (2009); when the customers’ association with by friends Ko & Sung acquisition and groups or peers (2007); De use of a Creates good Barnier, Social value product/service It is the consequence of what impression on Rodina & strengthen or a product and/or service others Valette- support their communicates to others Leads to social Florence association with It enhances a customer’s approval (2006); certain need to control how he/she is Rintamäki et groups/peers Enhances seen by others and how al. (2006); (Gounaris et al., positive social he/she wants to see Wang, Lo, Chi 2007:66) image him/herself & Yang (2004) Assists in Shopping at a particular having lots in retailer and/or wearing the common with retailer’s merchandise assist other customers to assign meaning customers to others as well as assign
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Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context social identity to themselves It assists customers to gain self-fulfilment and group membership Luxury goods are consumed for social recognition and positive impressions It is viewed as an important dimension in explaining why customers acquire luxury goods
Exclusivity Prestige Brengman & It is associated with the Willems Carry the latest Is defined as the retailer as being well known (2009); Marber fashion trends prestige or and well respected et al. (2008); status of a Moore & Reputational Known for product/service It is perceived by the Doherty value (also luxury based on the customer (2007); refers to image of the Well known Heinonen esteem, It is strongly related to brand retailer among those (2006); Lin et reputation) and store identity (Brengman & who purchase al. (2005); Willemse, It is one of the major decision- high fashion Petrick (2004); making criteria for luxury 2009:348) Known as one Petrick (2003); goods customers of the top high Sweeney & fashion Soutar (2001) retailers
It is linked to beliefs prior to Welcoming the customer’s experience staff and is strengthened during Friendly staff Is associated the experience Erragcha & Service value with an Knowledgable Gharbi (2012); (also refers to Customers look for evidence individual staff He & Li encounter of service value durimg customer’s (2011); Tynan specific interaction with a retailer’s Good advice is assessment of et al. (2009); functional value, product provided properties by Jensen & encounter the service It is important at the time of Receiving Hansen specific encounter the encounter but also in the prompt service (2007); Cottet technical value, relative to longterm et al. (2006); service Provide expectations Gallarza & excellence, High importance is placed on personal (Jensen & Saura (2006); technical value, service value when buying attention Hansen, Lin et al. service quality) luxury goods 2007:606) Retailer is (2005) It positively influences adequately customer satisfaction and staffed repurchase intention Reasonable
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Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context waiting time at pay point
Kainth & Verma (2011); Sigala (2010); Cheng et al. It has a direct influence on the Provided with (2009); Grewal customer value creation online et al. (2009); process purchase Kim, Ma & It enhances the customer’s options Park (2009); Verhoef, experience through the Store offers Lemon, provision of different service debit/credit Is defined as the Parasuraman, times and locations card facilities overall Roggeveen, Technology assessment of It enables service delivery at Website is Tsiros & value (also the benefits the customer’s choice of time efficient Schlesinger refers to gained through and location (2009); Chang Website makes temporal value, the use of & Chen It extends service delivery to online spatial value) technology (2008); José- customers when and where transactions (Pura, Cabezudo, they need it easy 2005:211) Gutiérrez- It is used to supplement the Retailer uses Cillán & staff component in the store technology to Gutiérrez- It is also linked with keep Arranz (2008); enhancing customers’ customers Rosenbaum experience, social and store informed of (2008); Cottet value latest offering et al. (2006); Gallarza & Saura (2006); Lin et al. (2005)
Kazakeviciute It is more influential than the All & Banyte retailer’s merchandise itself merchandise is (2012); Is described as available in It leads to a favourable Brengman & the assessment store customer view of the retailer’s Willems of the benefits Store value store Easy to find (2009); experienced (also refers to needed Chaudhuri & when a It enhances customer value efficiency, merchandise Ligas (2009); customer when customers have a behavioural Foscht, engages with positive experience inside the Pleasant store price, time and Maloles, activities within store atmosphere effort spent, Schloffer, a retail store hedonic value) It can be used as a source of Stylish window Swoboda & (Diep & differentiation in a highly displays Chia (2009); Sweeney, competitive retail environment Levy & Weitz 2008:401) Pleasant (2009); Diep & It includes both utilitarian and lighting Sweeney hedonic components Pleasant store (2008); Marber et al. (2008);
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Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context It facilitates convenience fragrance Ko & Sung (2007); Cottet A sophisticated store Attractive store et al. (2006); experience enhances store layout Kaltcheva & value within the luxury goods Stylish Weitz (2006) context dressing rooms All points of contact within the Located store should capitalise on the conveniently exclusivity of the brand It positively influences customer satisfaction and repurchase intention
Is associated with an experiential dimension to shopping Is subjective and personal and Feelings of joy The outcomes are fun, caused by Boksberger & enjoyment, fantasy fulfilment shopping at a Melsen and escapism retailer (2011); Yang Is associated with emotions Wearing & He (2011); experienced before, during retailer’s Hagtveded & and after shopping merchandise Patrick (2009); Is defined as the brings joy Puccinelli et Experience Positive and negative emotional al. (2009); value (also emotions are part of the Shopping at response or joy Tynan et al. refers to experience of a retailer’s retailer evokes received when a (2009); Diep & emotional value, product and/or service a sense of particular Sweeney play, adventure product and/or Positive emotions related to (2008); Vargo playfulness, service is the shopping experience Looking at & Lush (2008); emotional purchased impact customer value merchandise of Huber et al. response, (Petrick positively retailer creates (2007); hedonic 2004:402; a sense of joy Jensen & (affective) value) It expands the assessment of 2002:123) Hansen customer value beyond the Feelings of (2007); Cottet mere acquisition of a product excitement et al. (2006); and/or service going to a retailer’s store Jones & It is associated with the softer Reynolds aspects of the shopping Feelings of (2006); Lin et experience excitement al. (2005) walking into a It is highly important as it retailer’s store represents possible differentiation for retailers It is associated with the emotional response to both the store and merchandise of
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Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context a retailer It makes customers’ shopping experience more experiential and exciting It is identified as one of the dimensions associated with luxury goods Customers describe luxury goods in terms of experiential language
It is self-oriented
It is actively pursued by People notice customers that the Customers seeking status are customer buys highly concerned with the from a retailer impressions they give to Retailer is others about themselves associated with It is associated with the the social class benefit a customer receives the customer Eastman & Liu when the symbolic features of belongs to (2012); Shukla (2010); Tynan a retailer, store and/or product Communication et al. (2009); Is described as is assigned to that customer of achievement O’Cass & the impression through It provides symbolic features Choy (2008); given to others, supporting used by customers to Phau & Leng communicating retailer reinforce their status and (2008); a sense of success Buying from Truong, achievement Status value retailer causes Simmons, and pride, as It is associated with expensive others to think McColl & well as products and/or services more of Kitchen increasing a It provides customers seeking customer (2008); sense of self- status with products and/or Wiedemann et worth (Sparks et Buying from services that provide them al. (2007); al., 2008:103) retailer makes with a superior rank they Cottet et al. customer desire (2006); appear Rintamäki et It is derived from the evidence financially al. (2006) of wealth provided by successful products and/or services Store is located It affords the customer with to enhance power as a result of the sense of status respect and envy of others Visibility of It is associated with retailer’s brand conspicuous consumption and label It satisfies a customer’s material needs as well as
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Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context building his/her social presence It is associated with symbols of prestige and success It affords customers the opportunity to purchases luxury goods for their capacity to act as a status or success symbol
Assists in It provides customers with expressing symbols of personal identity identity to It satisfies customers’ desire others Moore et al. (2010); Shukla to be perceived as different Retailer fits the (2010); Tynan from the masses because of type of person Is defined as et al. (2009); the uniqueness of luxury the customer is benefits gained goods Marber et al. from satisfying Retailer allows (2008); desires for the It is associated with being customer to O’Cass & Expressive expression of viewed as an unique associate with Choy (2008); value customers’ self- individual specific people Phau & Leng image or The unique nature of luxury and groups (2008); Jevons personality (Ko (2007); Ko & goods assists in creating Assists in & Sung, Sung (2007); expressive value distinguishing 2007:119) Wiedemann et oneself It is used by customers to al. (2007); integrate symbolic meaning Retailer’s Bhat & Reddy into their own identity merchandise is (1998) It assist customers in consistent with distinguishing themselves customer’s style
It include some form of Relationships Dorai & relational or connectedness are long-term Varshney between the retailer and a (2012); Relationships customer Veloutsou & Is defined as the are valuable value of having It is specifically associated Tsiotsou a relationship or with the relational aspect of Relationships (2010); the value of the the interaction between are comfortable Chaudhuri & Relationship commitment of retailer and customer Ligas (2009); value Relationships both parties Finne & It is further associated with a are happy (Ravald & Grönroos close/intimate relationship Grönroos, Relationships (2009); Foscht between the retailer and 1996:23) are positive et al. (2009); customers Tynan et al. The retailer (2009); It causes customers to shift builds personal Veloutsou & the focus from the individual relationships product and/or service to Moutinho
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Key Customer descriptor in a value Definition Brief overview Author high fashion dimension retail context evaluating the relationship as (2009); a whole Harmon & Griffiths (2008) It is one of the major themes in studies conducted on luxury goods context
The eleven customer value dimensions considered possibly relevant to the high fashion retail industry as presented in Table 4.1, are all subsequently included in the theoretical model of the study (section 4.5 and Figure 4.4).
4.3 CUSTOMER SATISFACTION AND REPURCHASE INTENTION
In order to develop an improved understanding of the role customer value plays in the high fashion retail industry, it is not only important to gain understanding of the concept itself, but also how customer value relates to customer satisfaction and subsequently drive repurchase behaviour. Businesses that deliver superior customer value influence the level of customer satisfaction and therefore affect the repurchase intention of their customers (Foscht et al., 2009:68; Gounaris et al., 2007:65; Cronin et al., 2000:195). Therefore, the interrelationships between these concepts have practical significance for businesses (Naik et al., 2010:240; Cronin et al., 1997:386). Customer satisfaction and repurchase intention are subsequently discussed.
4.3.1 Customer satisfaction
Customer satisfaction is defined as the customer’s post-purchase assessment as well as emotional response to the overall product and/or service experience (Tasheen Arshi & Al Lawati Jassim, 2013:11; Patterson & Spreng, 1997:418). It is a customer’s response after an evaluation of prior expectations and actual performance of a product and/or service. These expectations correspond to predictions of what will happen in the future (Lee et al., 2011:243). Therefore, customer satisfaction or dissatisfaction is a result of the experience of the customer with the product and/or service and the comparison with these expectations (Lee et al., 2011:243). Customer expectations are
87 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention formed based on their continued interaction with a business. These interactions lead to the formulation of general expectations regarding a particular business’s product and/or service. These general expectations are then used to gauge the performance of a particular business’s product and/or service (Kursunluoglo, 2014:529; Gilbert & Veloutsou, 2006:298).
Customer satisfaction contains a cognitive as well as an affective or emotional response to a business’s product and/or service. The assessment is based on the demand for and availability of alternative products and/or services. A customer makes comparisons between a business’s products and/or services and that of its competitors based on information obtained through the media as well as from peers (Tasheen Arshi & Al Lawati Jassim, 2013:12; Naik et al., 2010:243). This entails the more cognitive response of customer satisfaction. The customer’s experience with the product and/or service captures the affective or emotional response. The more the customer’s expectations are met during the evaluation process, the more satisfied the customer will feel with the business’s product and/or service (Malik, 2012:69; Edward & Sahadev, 2011:243).
Customer satisfaction can be measured by the Expectancy Disconfirmation Theory. According to the theory, customer satisfaction is measured when performance levels after using the product and/or service are compared with the expectation levels before using the product and/or service (Lee et al., 2011:243). If the comparison is worse that expected, negative confirmation (dissatisfaction) occurs. If the comparison is better than expected, positive confirmation (satisfaction) occurs and if the comparison is as expected, then confirmation (satisfaction) occurs (Kursunluoglo, 2014:530; Gilbert & Veloutsou, 2006:299). According to Kursunluoglo (2014:531), the antecedents of customer satisfaction are perceived quality, customer value and customer expectations and the consequences of customer satisfaction/dissatisfaction are customer loyalty (satisfaction) and customer complaints (dissatisfaction).
One of the key business objectives should be to satisfy customers (Kitapci et al., 2013:243). It is more profitable for businesses to retain existing customers over replacing the ones they lost, emphasising the importance of customer value for
88 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention business success (Ryu et al., 2012:206; Naik et al., 2010:242). Satisfied customers are likely to commit to a business and have better interactions with the business. Dissatisfied customers complain more and spend less. Satisfied customers will seek out the business in future and will be willing to pay a premium price to transact with the business. Customer satisfaction is considered to be one of the main contributors to repurchase intention (Kitapci et al., 2013:244; Faryabi, Kaviani & Yarebdoost, 2012:77).
The measurement of customer satisfaction is deemed important to businesses that would like to maintain and improve customer satisfaction levels, as this is associated with business success and improved profits. Understanding the expectations and desires of a customer provides the foundation of how to best serve him/her. There is a variety of expectations that are important to a customer and it is the responsibility of every business to know these expectations and desires in order to improve customer satisfaction (Jobber, 2010:809; Naik et al., 2010:243). For the purpose of this study, the overall customer satisfaction of high fashion retail customers is measured. The key aspects that form part of customer satisfaction for this study are positive feelings about a business, as well as contentment with the way a customer is treated by a particular business (Ryu et al., 2012:208; Edward & Sahadev, 2011:337; Hume & Mort, 2010:175; Naik et al., 2010:247).
4.3.2 Repurchase intention
Repurchase intention is the willingness of customers to keep a sustainable relationship with a business (Gounaris et al., 2007:70). The concept of repurchase intention is discussed by various authors using different terms such as willingness-to-buy, behavioural intentions, purchase intentions, buying intentions and repurchase intention (Ferrand et al., 2010; Hume & Mort, 2010; Saha & Theingri, 2009; Ekinci et al., 2008). These terms are used interchangeably and all refer to a customer’s judgement or assessment to purchase a business’s product and/or service again. These terms entail a future activity with regard to a business’s product and/or service (Hume & Mort, 2010:174). These terms indicate that a customer is probably going to use the product and/or service, or the likelihood exists that he/she might recommend the product and/or
89 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention service (He, Chan & Tse, 2008:555; Cronin et al., 1997:389). Thus it is a predictor of subsequent purchases and is commonly used to measure response behaviour that the customer will purchase the product and/or service (Ferrand et al., 2010:85; Hume & Mort, 2010:174; Saha & Theingri, 2009:354; Ekinci et al., 2008:43). For the purpose of this study, the term repurchase intention is used.
According to Gounaris et al. (2007:70), repurchase intention is an indicator of a customer’s willingness to continue with a relationship with a particular business in the future. Ekinci et al. (2008:44) state that repurchase intention is an outcome of customer satisfaction. Repurchase intention attempts to assess a customer’s intention to purchase a product and/or service in future, as well as the possibility to at least recommend that product and/or service. It is a commonly used measure to anticipate response behaviour in terms of tendency to continue, increase, or decrease the amount of product and/or service purchased from a particular retailer (Ferrand et al., 2010:86; He et al., 2008:950).
It is evident from the literature that repurchase intention includes an attitudinal component that reflects predictable consumer behaviour in the immediate future. A positive attitude towards a particular product and/or service is a good predictor of repurchase intention (Saha & Theingri, 2009:355). The customer’s attitude is established over time, but also strongly influenced by aspects such as family, friends, social class, information received, experience with the product and/or service, and the customer’s personality (Hume & Mort, 2010:174). Therefore a customer’s repurchase intention often depends on a general assessment of the product and/or service, based on multiple encounters with the product and/or service (Gounaris et al., 2007:65).
As competition and the cost of attracting new customers increase, businesses are focussing more on protecting their existing customers. The main focus for businesses is on encouraging their existing customers to repurchase their products and/or services, rather than acquiring new customers and increasing market share (Kitapci et al., 2013:241). Therefore, customer repurchase intention is one of the main factors contributing to the success of a business (Hume & Mort, 2010:174). It is important for
90 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention businesses to understand what the aspects are that will improve a customer’s repurchase intention. Literature hasyielded several antecedents that influence a customer’s intent to revisit or repurchase, some of which are customer value and customer satisfaction (Saha & Theingri, 2009:355). The following section discusses the interrelationship between customer value, customer satisfaction and repurchase intention.
4.4 THE INTERRELATIONSHIP BETWEEN CUSTOMER VALUE, CUSTOMER SATISFACTION AND REPURCHASE INTENTION
The following discussion takes a closer look at the interrelationship between the three constructs of the study. For each pair of constructs, the theoretical model for the study is graphically depicted and the hypothesised relationship between the pair of constructs is highlighted. The relevant literature supporting the hypothesised relationship between the pair of constructs is furthermore presented before a hypothesis is formulated with specific reference to high fashion retail customers.
4.4.1 Customer value and customer satisfaction
According to Patterson and Spreng (1997:421), customer value can be established when there is interaction between a customer and a product and/or service. Studies indicate that customer value is an immediate antecedent to customer satisfaction (Tsai et al., 2010:729; Ekinci et al., 2008:43). According to Ekinci et al. (2008:44), customer value directly positively influences customer satisfaction.
Lin et al. (2005) developed two models where in one model, customer value, is viewed as a multidimensional construct, and in the second model, customer value is unidimensional. In both models customer value leads to customer satisfaction. In the unidimensional model customer value has a stronger influence on customer satisfaction, and has an indirect effect on repurchase intention mediated through customer satisfaction. The study concludes that the interrelationships between customer value and customer satisfaction are closely linked to the context and the conceptualisation methods utilised by the research (Faryabi et al., 2012:12; Tsai et al.,
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2010:730; Lin et al., 2005:333). The role and influence of customer value on customer satisfaction should therefore be investigated based on the context and conceptualisation of a particular study. Several customer value dimensions (Table 4.1) including service value, sacrifice value and store value, have also been proven to exert a positive influence on customer value (Erragcha & Gharbi, 2012:260; Boksberger & Melsen, 2011:231; Brengman & Willems, 2009:348).
Figure 4.1 depicts the proposed theoretical model of the study and highlights the hypothesised relationship between customer value and customer satisfaction.
Figure 4.1: Customer value and customer satisfaction
In essence, in marketing literature there is general consensus that customer value has an impact on the customer satisfaction levels of customers (Williams & Naumann, 2011:21; Foscht et al., 2009:68). The higher the customer value provided, the higher the customer satisfaction levels experienced by customers (Malik, 2012:69; Jobber, 2010:14; Cannon et al., 2008:7).
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Considering the literature reviewed on the relationship between customer value and customer satisfaction, the following alternative hypothesis is formulated:
H1: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels.
4.4.2 Customer value and repurchase intention
It is evident from literature that (1) customer value has a positive influence on repurchase intention when the customer does not have preconceived perceptions of customer value; (2) there is a direct positive correlation between customer value and repurchase intention; and (3) customer value is also mediated through customer satisfaction in influencing repurchase intention (Saha & Theingri, 2009:354; Patterson & Spreng, 1997:429). The literature also states that (1) the relationship between customer value and repurchase intention is statistically significant; (2) customer value also has an indirect influence on repurchase intention mediated through customer satisfaction (Hume & Mort, 2010:176; Olaru, Purchase & Peterson, 2008:558). Therefore, a positive interrelationship exists between customer value and repurchase intention.
It is furthermore evident from literature that significant pathways strongly support the fact that customer value plays a mediating role in repurchase intention (Hume & Mort, 2010:176; Hu et al., 2009:121). Several customer value dimensions (Table 4.1), including service value and store value, have been proven to exert a positive influence on customer value (Erragcha & Gharbi, 2012:260; Chaudhuri & Ligas, 2009:407).
Figure 4.2 depicts the proposed theoretical model of the study and highlights the hypothesised relationship between customer value and repurchase intention.
Considering the literature reviewed on the relationship between customer value and repurchase intention, the following alternative hypothesis is formulated:
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Figure 4.2: Customer value and repurchase intention
H2: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intentions.
4.4.3 Customer satisfaction and repurchase intention
Customers have a variety of products and/or services to choose from and therefore it is important for a business to retain customers. Satisfied customers are more inclined to continue to buy from a business in future, as well as pay a premium price for the business’s products and/or services (Ryu et al., 2012:208; He et al., 2008:951).
Positive repurchase intentions are critical to businesses, as these intentions cause customers to say positive things about the business, recommend the organisation to others, remain loyal and spend more money (Choy, Lam & Lee, 2012:13; Ferrand et al., 2010:85). Therefore, customer satisfaction has a direct and positive relationship to repurchase intention and in most instances, the primary path to repurchase intention is through customer satisfaction (Hume & Mort, 2010:174; Hu et al., 2009:121). It is evident from the literature that customer satisfaction is the strongest indicator and more
94 Chapter 4: Customer value dimensions, customer satisfaction and repurchase intention indicative of actual repurchase behaviour. Therefore, the higher customers’ satisfaction levels with a particular product and/or service the more likely their repurchase intention (Ryu et al., 2012:208).
Figure 4.3 depicts the proposed theoretical model of the study and highlights the hypothesised relationship between customer satisfaction and repurchase intention.
Figure 4.3: Customer satisfaction and repurchase intention
Considering the literature reviewed on the relationship between customer satisfaction and repurchase intention, the following alternative hypothesis is formulated:
H3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intentions of these customers.
Drawing on the discussion of customer value, its dimensions and the interrelationship between customer value, customer satisfaction and repurchase intention, the following section focuses on the proposed theoretical model of customer value, specifically for high fashion retailers.
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4.5 PROPOSED THEORETICAL MODEL
The proposed theoretical model for this study includes the three main constructs, namely, customer value (sections 3.3, 3.4, 3.5 and 4.2), customer satisfaction (section 4.3.1) and repurchase intention (section 4.3.2). The interrelationships between the three constructs (section 4.4) are portrayed in the proposed theoretical model.
Based on the discussion of customer value (sections 3.5 and 4.2) the construct is depicted as multidimensional. Portraying customer value as a single unidimensional does not take the complex nature of customer value into consideration (Whittaker, Ledden & Kalafatis, 2007:348; Lin et al., 2005:319). A more comprehensive measure of customer value is needed to understand how customers perceive customer value of different products and/or services (Boksberger & Melsen, 2011: 233; Yang & He, 2011:6738), and in these instance high fashion retailers should consider a variety of possible customer value dimensions.
Based on the discussion in section 4.2, eleven possible customer value dimensions for high fashion retailers are proposed based on the literature review (section 3.5 and Table 3.2) and empirically tested in this study. These dimensions form part of the customer value construct of this study as depicted in Figure 4.4.
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Figure 4.4: Proposed multidimensional model of customer value in the high fashion retail industry
4.6 CONCLUSION
This chapter provides insight into the possible dimensions that underlie customer value for high fashion retailers. Eleven customer value dimensions are proposed, including merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experiential value, status value, expressive value and relationship value. Insight is also given into the other two constructs of the study namely customer satisfaction and repurchase intention.
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The chapter concludes with a discussion of the interrelationship between the key constructs of the study (customer value, customer satisfaction and repurchase intention) that play a major role in customer decision-making (Jobber, 2010:111; Kotler et al., 2010:162). Consequently, a proposed theoretical model concludes the chapter.Chapter five discusses the research methodology followed to empirically test the proposed theoretical model within a high fashion retail industry.
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CHAPTER 5: RESEARCH METHODOLOGY
5.1 INTRODUCTION
In order for businesses to create and deliver superior customer value and satisfaction on a continuous basis, reliable and timeous information is required (Malhotra et al., 2012:3; Kotler & Armstrong, 2006:130). Marketers view information not just as a critical part of decision-making, but also as a strategic asset and marketing tool (McDaniel, Lamb & Hair, 2013:56; Jobber, 2010:217; Kotler & Armstrong, 2006:130). One method utilised by businesses to gather information is through marketing research (Malhotra et al., 2012:8; Jobber, 2010:246).
This chapter discusses the steps followed in the marketing research process as identified in Shiu et al. (2009:54) for this particular study. The chapter starts with defining marketing research followed by a discussion of the eleven steps in the research process adopted for this study (Shiu et al., 2009:54). The research process is divided into four phases with various steps under each phase namely determining the research problem, selecting a research design, executing the research design, and communicating the findings of the research. The concept of marketing research is defined in the following section.
5.2 MARKETING RESEARCH DEFINED
Marketing research is defined as the gathering, storing and interpretation of data on a specific business situation or problem in a systematic manner (Feinberg et al., 2013:6; Malhotra et al., 2012:7). Marketing research can also be described as the link between the business and its customers through the provision of information (Malhotra et al., 2012:7; Churchill et al., 2010:5). This information equips the business with the necessary know-how to exploit opportunities. Marketing research furthermore specifies the method required to gather and analyse the information, as well as how the findings will be communicated (Malhotra et al., 2012:7; Malhotra, 2010:43; Shiu et al., 2009:6). Marketing research’s focus on customers allows the business to examine the marketing
99 Chapter 5: Research methodology environment, trends, and competitors in order to better respond to customer needs (Malhotra et al., 2012:8; Burns & Bush, 2010:25).
5.3 THE MARKETING RESEARCH PROCESS
Marketing research is ideally conducted by following a specific scientific process. This process is viewed as a formalised scientific set of procedures that are logical, systematic, reliable, valid and impersonal (Shiu et al., 2009:50). There are various authors in marketing research literature who describe the marketing research process (Feinberg et al., 2013:29; Malhotra et al., 2012:9; Churchill et al., 2010:37). This study followed the marketing research process suggested by Shiu et al. (2009:54). According to these authors, the marketing research process consists of four interrelated phases and 11 steps as indicated in Figure 5.1.
Figure 5.1: Phases and steps in the marketing research process
Phase I: Determine the Research Problem
Step 1 Identify and clarify management’s information needs
Step 2 Define the research problem
Step 3 Confirm research objectives
Phase II: Select the Appropriate Research Design
Step 4 Determine the research design
Step 5 Develop the sampling design and sample size
Step 6 Assess measurement issues and scales
Step 7 Pretest the questionnaire
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Phase III: Execute the Research Design
Step 8 Collect and prepare data
Step 9 Analyse data
Step 10 Transform data structures into information
Phase IV: Communicate the Research Results
Step 11 Prepare and present final report
Adapted from Shiu et al. (2009:54)
The following sections provide insight into how the phases and steps illustrated in Figure 5.1 were executed in this study.
5.3.1 Phase I: Determine the research problem
In order to determine the research problem, specific activities need to be executed. These activities include identifying and clarifying management’s information needs, defining the research problem, and finally confirming the research objectives (Shiu et al., 2009:54).
5.3.1.1 Step 1: Identify and clarify management’s information needs
Before a research problem can be defined, it needs to be understood and investigated (Shiu et al., 2009:54). The first step in the first phase is to determine whether a research problem can be solved through conducting secondary research in the form of a literature review (Burns & Bush, 2010:30; Churchill et al., 2010:35). Through a literature review (Chapters 2, 3 and 4), this study investigated the nature of the research problem. A literature review assists the author to narrow down the research problem and identify the specific constructs that are relevant to the research problem. A literature review also determines the relationships between the various constructs (Aaker, Kumar, Day & Leane, 2011: 42; Churchill et al., 2010:37; Shiu et al., 2009:58).
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In this study, previous chapters (Chapters 3 and 4) identified and discussed the definitions, nature, perspectives, and dimensions of customer value, as well as the interrelationships between customer value, customer satisfaction and repurchase intention. All these aspects should be investigated within the high fashion retail industry in South Africa. More insights and understanding is needed in order to provide answers to the problems encountered by high fashion retailers. The following management information needs were identified for this study, namely:
insight into the South African fashion and high fashion retail industry;
understanding customer value, customer satisfaction and repurchase intention constructs;
exploring customer value dimensions in the high fashion retail industry;
uncovering customer satisfaction and repurchase intention in the high fashion retail industry; and
determining the interrelationship between customer value, customer satisfaction and repurchase intention in the high fashion retail industry.
5.3.1.2 Step 2: Define the research problem
The second step of the first phase in the research process is to redefine the research problem in scientific terms (Churchill et al., 2010:58; Shiu et al., 2009:58). The way in which the research problem is defined impacts the rest of the steps in the research process (Shiu et al., 2009:59). Defining the research problem assists the author in determining how the problem can be solved (Malhotra et al., 2012:59; Shiu et al., 2009:59). Defining the research problem provides the author with guidance on how to proceed with the research process (Malhotra et al., 2012:59).
The following problem statement has been formulated for this study (section 1.3):
It is important for high fashion retailers, as for any other business, to focus on providing value to their customers so as to increase customer satisfaction and repurchase
102 Chapter 5: Research methodology intention in order to contribute to future profitability. To provide value, high fashion retailers must be aware of what underlies customer value in the high fashion retail industry. There is, however, limited published research pertaining to the multidimensionality of customer value in general, with no specific research suggesting a comprehensive multidimensional customer value model for the high fashion industry specifically. Developing such a model will aid in determining all the possible customer value dimensions in this industry, and will place the high fashion retailer in a better position to provide customer value that will consequently lead to customer satisfaction, repurchase and higher profit.
5.3.1.3 Step 3: Confirm research objectives
The following step in the research process is to confirm the research objectives. Research objectives are based on the definition of the research problem identified for the study as indicated in section 5.3.1.2. Research objectives can be defined as the goals of the research. Research objectives provide the measurable aspects of a research project (Aaker et al., 2011:22; Zikmund & Babin, 2007:59).
The primary research objective for this study, as indicated in section 1.4.1, was to propose a multidimensional model of customer value in the high fashion retail industry.
The following secondary research objectives (section 1.4.2) were identified for this study, namely:
to report on the state of affairs in the fashion retail industry with specific reference to high fashion retailing;
to provide a theoretical overview of customer value, customer satisfaction and repurchase intention within the marketing context;
to uncover customer value dimensions proposed in the literature;
to empirically investigate customer value dimensions as well as customer satisfaction and repurchase intention in a high fashion retail setting;
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to determine the influence of customer value dimensions on customer satisfaction in the high fashion retail industry;
to investigate whether customer value influences repurchase intention in the high fashion retail industry;
to determine whether customer satisfaction influences repurchase intention in the high fashion retail industry; and
to develop a multidimensional model of customer value in the high fashion retail industry.
In addition to the stated research objectives, authors formulate specific hypotheses. Hypotheses are unproven statements about a phenomenon that the author would like to investigate (Malhotra et al., 2012:65). Hypotheses are developed when the author formalises a statement to test a relationship between two variables (Shiu et al., 2009:333). Hypotheses are statements that can be tested empirically. Not all research objectives need to be developed into hypotheses, since there may not be preconceived statements of relationships (Malhotra et al., 2012:66). The following alternative hypotheses have been formulated for the study based upon the literature review undertaken (section 4.4.1, 4.4.2 and 4.4.3):
H1: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels.
H2: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention.
H3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers.
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5.3.2 Phase II: Select the appropriate research design
The following phase of the research process focuses on determining the most appropriate research design to solve the research problem, achieve the objectives of the study, and to test the hypotheses formulated. This phase consists of four steps that are subsequently discussed in more detail.
5.3.2.1 Step 4: Determine the research design
The research design is the framework or blueprint used by the author to solve the research problem. The research design highlights the specific procedures that must be followed in order to implement the practical aspects of the approach (Malhotra et al., 2012:77; Wiid & Diggines, 2009:67). There are three broad types of research designs, namely exploratory, causal and descriptive designs (Aaker et al., 2011:44; Churchill et al., 2010:79).
Exploratory research design
Exploratory research is a research design that aims to gain a deeper understanding and insight into a vague problem statement (Churchill et al., 2010:79; Creswell, 2009:37). Exploratory research mainly utilises an unstructured more informal format when collecting secondary or primary data. This type of research makes use of qualitative research methods such as focus groups, in-depth interviews and observation (Shiu et al., 2009:205; Zhang & Wildemuth, 2009:137).
In this study, a qualitative, exploratory research design was utilised as part of the initial phase of the research.
Focus groups consist of a small group of people, normally between eight to twelve participants, who gather informally to engage in an interactive and spontaneous discussion on the topic under investigation (Feinberg et al., 2013:220; Saldaña, 2009:58; Krefting, 1991:216). A moderator who encourages all participants’ involvement and contributions facilitates the interactive discussion and typically follows a predetermined focus group agenda. Focus groups are used to gain more understanding
105 Chapter 5: Research methodology in the defining or redefining of marketing problems; to identify hidden information; to provide a better understanding of results from other quantitative studies; or to determine customers’ perceptions and attitudes regarding products, services and practices (Feinberg et al., 2013:220; Creswell, 2009:57). The major advantage of focus groups is the generation of new insights within a relatively short timeframe. The biggest disadvantage is that the unstructured nature of focus groups makes the analysis of the data difficult. A further disadvantage is that focus group results are not representative of the general population and can therefore not be projected (Harrison & Reilly, 2011:9; Malhotra, 2010:181).
In this study, three focus groups were used to investigate the extent to which customer value dimensions identified in the literature are applicable to the high fashion retailers. The focus groups were furthermore probed to determine whether there are any other unidentified customer value dimensions relevant to high fashion retailers, as well as to determine the specific statements that describe the customer value dimensions for high fashion retailers. The focus groups consisted of between six and eight participants selected using snowball sampling (section 5.3.2.2 and Table 5.1). The participants were selected to reflect the characteristics of the target population. They were all customers of high fashion retailers from different ethnic, age, education and income groups. They also included members of both genders (Shiu et al., 2009:181).
The focus group discussions were held during September 2011 and May 2012. The researcher acted as moderator and each discussion was audio-recorded (Creswell, 2009:57). The insights gathered through the focus group discussion were used in the development of the proposed customer value model for high fashion retailers (section 4.5) as well as the questionnaire for the study (section 5.3.2.3).
Descriptive research design
A descriptive research design follows a scientific approach to solving the research problem. Quantitative research utilises research methods to solve research objectives through empirical testing in order to provide numerical measurements and analyses (Zikmund & Babin, 2007:130). Quantitative methods and procedures are utilised for
106 Chapter 5: Research methodology data collection and analysis to produce data structures that describe the characteristics of a selected target market (Shiu et al., 2009:62). The purpose of quantitative research is to accurately predict relationships, validate existing relationships, and test specified hypotheses (Malhotra, 2010:172). A descriptive research design focuses on determining the frequency of a specific occurrence or whether relationships exist between two variables. This type of research is guided by research questions or objectives and hypotheses (Churchill et al., 2010:79).
The primary research design utilised in this study is a descriptive research design utilising quantitative methods to collect primary data.
Causal research design
Causal research is a design that gathers data and develops data structures in order to determine whether cause-and-effect relationships exist between specific variables (Feinberg et al., 2013:57). A causal research design enables the author to gain the highest level of understanding about selected variables. This research design is the most complex design and requires a lot of time and money (Zikmund & Babin, 2010:112; Shiu et al., 2009:63). A causal research design requires a structured approach that limits systematic error and enhances reliability. This research design utilises quantitative methods such as experimentation (Feinberg et al., 2013:61; Churchill et al., 2010:79) and was not used in this study.
5.3.2.2 Step 5: Develop the sampling design and sample size
Step 5 of the research process determines the sampling procedure to be followed for the research study (Shiu et al., 2009:63). Sampling is the selection of a relatively small number of units from a larger defined group. The information gathered is expected to provide accurate judgements regarding the larger group (Shiu et al., 2009:449). Sampling is used when it is impossible to gather information from every member of the larger defined group, known as a census (Churchill et al., 2010:296).
There are specific steps in the sampling procedure to be followed by the author and according to Shiu et al. (2009:485), these steps include:
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Define the target population
The target population is a specified group of units that must be investigated in order to answer the research objectives of a research study. A clearly defined target population ensures that the correct sample is selected for data collection purposes (Shiu et al., 2009:450).
In this study, the target population included all customers of high fashion retailers in Gauteng, South Africa. The sampling units were shopping centres in Gauteng, housing the highest concentration of high fashion retailers (Figure 5.2; select sample units and elements). The sampling elements included customers of high fashion retailers selected at each one of seven shopping centres selected, to complete the questionnaire.
Identify the sampling frame
As soon as the author has a clear understanding of who the target population is, a list is compiled of all possible qualified sampling units (Shiu et al., 2009:451). This is called a sampling frame and is available from various databases such as names of account holders at banks, publishers and retailers. Sampling units could be individuals, geographic areas, and institutions (Churchill et al., 2010:296).
Sampling frames are not always easily accessible and always up to date or complete. This leads to sampling frame error which causes that the findings are not representative of the defined target population (Malhotra et al., 2007:501). The author needs to be aware of these possible errors and ensure that the sampling frame is adjusted to accommodate these inconsistencies (Shiu et al., 2009:236).
In this study, the author used the Mallguide (2012) as sampling frame to obtain a list of all shopping centres located in Gauteng, South Africa. The Mallguide (2012) was utilised because it is a free online registry containing a comprehensive database of all shopping centres in South Africa, as well as Gauteng, that is easily accessible. The Mallguide (2012) provided a complete description of all the retailers in each shopping centre, and therefore the author could identify the centres situated in Gauteng with the highest concentration of high fashion retailers occur.
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Select the appropriate sampling method
Sample selection involves the process of selecting an identified group of sampling elements from a defined target population (Shiu et al., 2009:64). There are two broad sampling designs used by authors, namely probability and non-probability sampling, each constituting a variety of sampling techniques (Zikmund & Babin, 2010:269).
Probability sampling takes place when each sampling unit in the target population has a known chance of being selected to form part of the sample (Shiu et al., 2009:470). Members of the sample are selected using specific rules to ensure that sampling units are selected in an unbiased manner and that the target population is represented (Malhotra et al., 2012:501). The results gathered using probability sampling could be generalised to the target population within a specified margin of error (Shiu et al., 2009:470).
Non-probability sampling is a sampling technique where the probability of the sampling units being chosen, is unknown (Shiu et al., 2009:470). The author uses some form of intuition or judgement to select the sampling units (Malhotra et al., 2012:501). This sampling technique requires the author to strictly control the execution of the sampling process. The degree of control influences how representative the sample is of the target population. Since the probability of selection is unknown, the findings cannot be generalised to the target population and therefore the sample error cannot be determined (Shiu et al., 2009:470). Table 5.1 indicates the sampling designs with their associated sampling techniques and the advantages and disadvantages they offer the author.
Table 5.1: Sampling designs
Sampling Sampling Description Advantages Disadvantages design technique
Each sampling unit has a Difficulty in known and equal chance of Simple Easy to execute obtaining accurate Probability being chosen to form part of random sample frame sampling the sample and current, Results can be sampling complete sample frame is generalised All sampling units required must be identified
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Sampling Sampling Description Advantages Disadvantages design technique
Sampling is done by identifying a random starting Hidden patterns in Systematic Requires shorter time point and then selecting data could result in random and effort every nth element in sample not being sampling succession from the Lower cost representative sampling frame
Involves dividing the target Strata strengthens population into separate Stratified representativeness Same as groups or strata. Samples random systematic random are then selected from each Opportunity to make sampling sampling stratum by using simple comparisons between random sampling strata
Sampling units are divided Cost effective Selected cluster into mutually exclusive might not be subpopulations. Sampling Easy to implement Probability Cluster representative of units are then selected from sampling sampling Less reliant on lists of population one of the clusters and the individual sampling findings are generalised to Likely to yield units the general population inaccurate results
Cost effective Allows for Sampling units are selected Not as time consuming selection bias based on availability. The Convenience selection of the sampling Units are accessible, Results are not sampling units is decided by the and willing to representative of interviewer cooperate the target population
Researcher uses his/her judgement when selecting Inexpensive sampling units. The Results are not Judgmental sampling units are selected Fast representative of sampling based on their population Convenient Non- appropriateness for the probability target population of interest sampling Sampling units are selected Ensures that until a predetermined appropriate subgroups Results are not Quota number of units are part of are included in study representative of sampling the sample based on population prescribed characteristics Reduces selection such as age or gender bias
Initial sampling units are Allows for randomly selected. The Can identify members selection bias Snowball following sampling units are of uniquely defined sampling chosen based on referrals Results are not target populations provided by the initial representative of sampling units population
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Adapted from: Malhotra et al. (2012:503); Shiu et al. (2009:471).
In this study, for the primary, descriptive research design, a multistage sampling approach was used. In order to select shopping centres containing high fashion retailers in Gauteng, South Africa, judgmental sampling was the chosen sampling technique. The author used her judgement to select seven shopping centres containing high fashion retailers in Gauteng, South Africa (sampling units) (Figure 5.2) from the Mallguide (2012). Gauteng Province was selected because the highest concentration of shopping centres housing high fashion retailers are situated in this province (Mallguide, 2012). Gauteng Province is also the biggest contributor to the South African gross domestic product (GDP), with the most diverse population (Gauteng Provincial Government, 2012; Statistics South Africa, 2013).
For the second stage, the convenience sampling technique was chosen to select customers of high fashion retailers (sampling elements). This sampling approach was the most appropriate because a sampling frame of high fashion shoppers could not be obtained. According to Malhotra et al. (2012:504), care should be taken when using convenience sampling in descriptive research, but in large surveys it could be justified and applied effectively.
Determine a suitable sample size
Sample size is the number of sampling elements selected for a research study. The appropriate sample size is dependent on various factors and the size of the sample is important to ensure accurate findings (Malhotra et al., 2012:499). For a non-probability sample, as is the case in this study, sample size is determined subjectively through using the author’s judgement based on intuition, experience, previous studies and the number of resources available to the author (Shiu et al., 2009:462).
Based on similar studies, the author’s judgement, as well as the requirements of using particular statistical analysis techniques such as exploratory factor analysis, confirmatory factor analysis and structural equation modelling (section 5.3.3.2), 700 (100 respondents per shopping centre) high fashion customers who had purchased
111 Chapter 5: Research methodology clothing and/or accessories from a high fashion retailer in the last year, were selected as the number of respondents to take part in the study. Figure 5.2 is a grammatical presentation of the sampling process followed in the study.
Figure 5.2: Sampling process
Select the sampling units and elements
Once the sampling plan of the study had been formalised, the author was able to proceed with the selection of the sampling units and sampling elements. It is evident from Figure 5.2 that seven shopping centres containing high fashion retailers were selected as sampling units, as well as the 700 customers of high fashion retailers as sampling elements.
Table 5.2 provides an overview of the sampling plan for this study.
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Table 5.2: Sampling plan of the study
Sampling plan
Target population Customers shopping at high fashion retailers in Gauteng, South Africa.
Sampling units Shopping centres containing high fashion retailers in Gauteng, South Africa.
Customers of high fashion retailers in the selected shopping centres in Sampling elements Gauteng, South Africa.
Mallguide, 2012 containing 200 shopping centres located in Gauteng, South Sampling frame Africa.
Sample size 700 respondents (100 each at the seven selected shopping centres).
Stage 1(non-probability): Seven shopping centres containing high Judgmental sampling fashion retailers in Gauteng, South Africa Sampling technique Stage 2 (non-probability): 700 customers of high fashion retailers in Convenience sampling Gauteng, South Africa
5.3.2.3 Step 6: Assess measurement issues and scales
Quantitative research provides information through a structured, formalised and predetermined questionnaire. The success of quantitative research lies in the accurate design and administering of the questionnaire (Malhotra et al., 2012:187). Since a descriptive research design was followed utilising quantitative methods, a structured questionnaire was subsequently designed to achieve the empirical objectives of the study.
According to Shiu et al. (2009:329), a structured questionnaire is a framework of specific scales and questions constructed in order to gather primary data. Several aspects are furthermore considered with regard to the design of the questionnaire.
Question structure
Questions can be unstructured or structured. Unstructured questions are known as open-ended questions and respondents provide answers in their own words (Hair, Black, Babin, Anderson & Tatham, 2007:236). Unstructured questions allow respondents to freely describe their feelings and attitudes. These questions are
113 Chapter 5: Research methodology generally used as the first question on a specific topic, or as the final question in a questionnaire. This allows participants to express important aspects not covered in the questionnaire (Malhotra et al., 2012:464).
Structured questions are closed-ended questions that provide a prespecified structured response format (Malhotra et al., 2012:465). Table 5.3 depicts the various structured question formats available to authors.
In this study, for the primary, descriptive research design, mostly structured or closed- ended questions were included in the questionnaire, with the exception of two open- ended questions. The closed-ended questions included dichotomous, multichotomous as well as multi-item scales, more specifically Likert-type scale questions. As indicated in Table 5.3 Likert-type scale questions require the participants to indicate their level of agreement or disagreement with statements regarding a specified object (Malhotra et al., 2012:424). In this study unlabelled seven-point Likert-type scale questions were used. This means that each scale item has seven response categories ranging from “strongly disagree” (1) to “strongly agree” (7).
Likert-type scale questions are easy to construct and dispense. Respondents easily understand them and they are therefore suitable for all types of surveys. The major disadvantage of Likert-type scale questions is that they are time consuming, since respondents need to carefully read each statement before providing a response (Malhotra et al., 2012:425).
Table 5.3: Format of structured questions
Format Description Different types Description
Dichotomous Provide the respondents with only two Provide the respondents questions response alternatives Multiple- with a choice of answers choice from which one or more Respondents can choose one or more questions alternatives can be Multichotomous alternatives from several choices that selected questions most closely reflect their answer on a subject
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Format Description Different types Description
Scale that asks respondents the degree to which they agree or disagree with Likert-type scale provided statements. Can be labelled or unlabelled
Semantic Bipolar scale that measures differential scale respondents’ feelings about a topic
Behaviour Scale that measures respondents’ intention scale likelihood to purchase in future
Provide respondents Comparative Scale that requires respondents to judge scaled responses, for rating scale one object against another example 1 to 7. This Multi-item allows the researcher to Non-comparative Scale that requires a judgement without scales measure the intensity of rating scale referring to another object respondents’ attitudes or perceptions Performance Evaluative scale where respondents rating scale express a post-decision judgement
Rank-order Respondents place their own rating scale preferences in a rank order
Paired- Respondents select pre-determined comparison paired objects/attributes scale
Respondents distribute points to a Constant sums maximum of 100 among attributes based scale on the magnitude each attribute imposes on the respondent Adapted from Malhotra et al. (2012:466); Churchill et al. (2010:296) and Shiu et al. (2009:340)
In this study, dichotomous and multichotomous questions were also used. As indicated in Table 5.3, in dichotomous and multichotomous questions respondents choose their answers from a predetermined number of responses (either two or multiple responses). These types of questions do not allow respondents to elaborate on their true position (Churchill et al., 2010:297). Table 5.5 illustrates the different question formats utilised in the questionnaire.
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Scales of measurement
Measurement is defined as the way numbers are assigned to objects in order to represent quantities of attributes (Churchill et al., 2010:245). The types of measure used determine the kinds of statistical analyses possible with the collected data. Ensuring the relevant scales of measurement are used when designing questions is very important to minimise measurement errors (Feinberg et al., 2013:47). Scale measurement errors are errors that occur when the author designs inappropriate questions, incorrect scale attributes, or scale descriptors that collect incorrect information from respondents (Feinberg et al., 2013:48; Malhotra, 2010:118; Shiu et al., 2009:233). These errors in scale development can lead to lack of precision in measurement as well as ambiguity of scale questions. This bias can have a negative impact on the reliability and validity of the research findings (Shiu et al., 2009:233).
There are four scales of measurement that can be used as measurement, namely nominal, ordinal, interval and ratio scales (Churchill et al., 2010:246). Table 5.4 presents the various levels of scales.
Table 5.4: Scales of measurement
Scale of Description Example measurement
Numbers assigned to objects as labels for the purpose of Gender, marital Nominal identification. Allows the researcher to categorise individuals status into groups or classes that are mutually exclusive
Assigns numbers to objects on the basis of some order. Ordinal Assists a researcher to determine whether an object has more Preference ranking or less of a characteristic in comparison to another object
Assigns the relative size of the difference between characteristics of objects. Allows for the comparison between Interval Attitude measures the sizes of differences between objects. The zero point is not fixed, but assigned subjectively
Has all the features of nominal, ordinal and interval scales as well as an absolute zero point. It is the highest scale of Ratio measurement to be used by researchers. The scales can Sales, market share identify, rank and compare intervals or differences. Interval scales can also determine ratios of scale values Adapted from Malhotra et al. (2012:412) and Churchill et al. (2010:247)
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In this study, the questionnaire consists of nominal, ordinal and interval scale questions. Table 5.5 illustrates the different question formats and scales utilised in the questionnaire.
Table 5.5: Question formats and scales
Closed/Open- Scale of Section Nature Format ended measurement
Screening Respondent’s eligibility to Closed-ended Multichotomous Nominal question participate
Customer value (75 Unlabelled Likert- A Closed-ended Interval statements) type scale
Customer satisfaction (5 Unlabelled Likert- B Closed-ended Interval statements) type scale
Repurchase intention (5 Unlabelled Likert- C Closed-ended Interval statements) type scale
Question 1: Gender Closed-ended Dichotomous Nominal
Question 2: Age group Closed-ended Multichotomous Ordinal
Question 3: Racial Closed-ended Multichotomous Nominal classification
Question 4: Marital status Closed-ended Multichotomous Nominal
Question 5: Language Closed-ended Multichotomous Nominal preference D Question 6: Highest Closed-ended Multichotomous Nominal completed level of education
Question 7: Main employment Closed-ended Multichotomous Nominal status
Question 8: Total household Closed-ended Multichotomous Ordinal income per month after tax
Question 9: Shopping centre Open-ended - Nominal
Statements identified in the literature review as well as the focus group discussions were adapted, adjusting the statement for the high fashion retail context, and used to measure the three constructs of this study. Statements in questionnaires used in other related studies guided the author in the design of the multi-item scales measuring the
117 Chapter 5: Research methodology constructs of the study (section 4.2, Table 4.1). Section A (customer value dimensions), Section B (customer satisfaction) and Section C (repurchase intention) consist of multi- item scaled questions:
Section A consists of 75 statements measuring customer value offered by high fashion retailers. The statements were adapted for the high fashion retail context from the work of various authors, as well as the focus group discussions focusing on merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, expressive value, status value and relationship value (Appendix A, Table 5.6 and section 4.2).
Section B includes five statements measuring customer satisfaction (Table 5.6). The statements were adapted for the high fashion retail context from the work of various authors (Appendix A and Table 5.7).
Section C includes five statements measuring repurchase intention (Table 5.6) adapted for the high fashion retail context from the work of various authors (Appendix A and Table 5.7).
Table 5.6 indicates the statements used to measure the customer value, customer satisfaction and repurchase intention constructs in the final questionnaire (Appendix A). The Table also represents the specific statements measuring the possible eleven dimensions constituting the customer value construct, as well as the authors from whom all the statements measuring the three constructs of this study were adapted.
Table 5.6: Statements used in final questionnaire
Construct Dimension Statement Author
Chang and Dibb (2012); Diep and Sweeney (2008); Lin et al. In general, the merchandise from this (2005); Baker et al. (2002); retailer is of high quality Customer Merchandise Sweeney and Soutar (2001); value value Sweeney et al. (1999)
The retailer provides merchandise that Diep and Sweeney (2008); is free of defects Sparks et al., (2008); Wang et al. (2004); Petrick (2002);
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Construct Dimension Statement Author
Sweeney and Soutar (2001)
Tynan et al. (2009); Diep and The merchandise from this retailer is Sweeney (2008); Sparks et al. stylish (2008); Sweeney and Soutar (2001)
Tynan et al. (2009); Diep and The design of the merchandise is in line Sweeney (2008:400); Ko and with the latest fashion trends Sung (2007)
The finishing on the merchandise is of Tynan et al. (2009); Ko and high quality Sung (2007)
Chang and Dibb (2012); The merchandise is comfortable to wear Grewal et al. (2009); Verhoef et al. (2009); Cottet et al. (2006)
Chang and Dibb (2012); This retailer offers a variety of Grewal et al. (2009); Verhoef et merchandise to choose from al. (2009); Cottet et al. (2006)
Paying a high price to own merchandise Tynan et al. (2009); Vigneron from this retailer is worth it and Johnson (2004)
Considering the price of merchandise at Heinonen (2006); Sweeney and this retailer, I would say the prices Soutar (2001); Swait and represent value for money Sweeney (2000)
Heinonen (2006); Sparks et al., The retailer’s merchandise is not too Sacrifice (2008); Agarwal and Teas expensive value (2001); Sweeney et al. (1999).
The merchandise from this retailer is Diep and Sweeney (2008); acceptable for the price I pay Sweeney et al. (1999)
Heinonen (2006); Swait and I do not waste money when buying Sweeney (2000); Teas and merchandise from this retailer Agarwal (2000); Sweeney et al. (1999)
Tynan et al. (2009); Ko and Buying from this retailer enhances my Sung (2007); Rintamäki et al. status with my friends (2006)
Customer Wearing merchandise from this retailer Social value Rintamäki et al. (2006); Petrick value improves the way I am perceived by (2002); Sweeney et al. (1999) others
Wearing merchandise from this retailer Ko and Sung (2007); Sweeney helps me be more accepted by my and Soutar (2001)
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Construct Dimension Statement Author
friends
Wearing merchandise from this retailer Ko and Sung (2007); Petrick makes a good impression on other (2002); Sweeney et al. (2001) people
Wearing merchandise from this retailer Rintamäki et al. (2006); leads to social approval Sweeney and Soutar (2001)
Merchandise from this retailer has a Rintamäki et al. (2006); positive social image Sweeney and Soutar (2001)
I have a lot in common with other Ko and Sung (2007); Sweeney customers shopping at this retailer and Soutar (2001)
I like to buy from this retailer because Brengman and Willems (2009); the brand provides exclusivity Petrick (2002)
I try to keep my wardrobe up to date Brengman and Willems (2009); with merchandise from this retailer Petrick (2002)
This retailer is known for carrying the Brengman and Willems (2009); latest fashion trends Petrick (2002)
Reputational Brengman and Willems (2009); This retailer is known for luxury value Petrick (2002)
Brengman and Willems (2009); This retailer is viewed as prestigious Petrick (2002)
The retailer is well known among those Brengman and Willems (2009); who purchase high/luxury fashion Lin et al. (2005); Petrick (2002)
This retailer is known as one of the top Brengman and Willems (2009); high fashion retailers Lin et al. (2005); Petrick (2002)
Jensen and Hansen (2007); The staff of this retailer is always Cottet et al. (2006); Gallarza welcoming and Saura (2006); Cronin et al. (2000)
Service Tynan et al. (2009); Gallarza I always receive good advice from the value and Saura (2006); Cronin et al. staff of this retailer (2000)
Gallarza and Saura (2006); The staff of this retailer is friendly Cronin et al. (2000); Sweeney et al. (1999)
Customer Service The staff of this retailer gives me Gallarza and Saura (2006); value value prompt service Cronin et al. (2000); Sweeney
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Construct Dimension Statement Author
et al. (1999)
The staff of this retailer gives me Gallarza and Saura (2006); personal attention Cronin et al. (2000)
Tynan et al. (2009); Cottet et al. The staff of this retailer has the (2006); Gallarza and Saura knowledge to answer my questions (2006); Cronin et al. (2000)
Cottet et al. (2006); Gallarza The staff of this retailer knows what and Saura (2006); Cronin et al. they are talking about (2000)
Gallarza and Saura (2006); The retailer is adequately staffed Cronin et al. (2000); Sweeney et al. (1999)
The waiting time at the pay point is Cottet et al. (2006); Gallarza reasonable and Saura (2006)
This retailer provides good online Heinonen (2006); Heinonen purchase options (2004)
It is easy to complete an online Chang and Chen (2008); Lin et transaction on the retailer’s website al. (2005)
This retailer has an efficient website Chang and Chen (2008); Lin et Technology facility al. (2005) value This retailer has all the credit/debit card Heinonen (2006); Heinonen facilities in store you need (2004)
Chang and Chen (2008); This retailer keeps me informed of their Heinonen (2006); Lin et al. latest offerings via sms/email (2005)
All the merchandise I expect to buy is Diep and Sweeney (2008); available in store Cottet et al. (2006)
Diep and Sweeney (2008); I find the merchandise I needed easily Cottet et al. (2006)
The atmosphere inside the store is Diep and Sweeney (2008); Store value pleasant Cottet et al. (2006)
The window displays of the store are Diep and Sweeney (2008); stylish Cottet et al. (2006)
The lighting inside the store creates the Diep and Sweeney (2008); proper mood Cottet et al. (2006)
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Construct Dimension Statement Author
The store has stylish dressing rooms Diep and Sweeney (2008)
The store layout is attractive Diep and Sweeney (2008)
Diep and Sweeney (2008); The store smells pleasant Cottet et al. (2006)
Brengman and Willems (2009); The store is conveniently located Diep and Sweeney (2008)
Diep and Sweeney (2008); Cottet et al. (2006); Lin et al. I enjoy shopping at this retailer (2005); Sweeney and Soutar (2001)
Diep and Sweeney (2008); This retailer’s merchandise brings me Cottet et al. (2006); Lin et al. joy to wear (2005); Sweeney and Soutar (2001)
Diep and Sweeney (2008); While shopping at this retailer I feel a Cottet et al. (2006); Lin et al. sense of adventure (2005); Sweeney and Soutar (2001) Experience value Diep and Sweeney (2008); I feel a sense of joy to look at the Cottet et al. (2006); Lin et al. merchandise (2005); Sweeney and Soutar (2001)
Diep and Sweeney (2008); I feel excited about going to the Cottet et al. (2006); Lin et al. retailer’s store (2005); Sweeney and Soutar (2001)
Diep and Sweeney (2008); I feel excited about walking into this Cottet et al. (2006); Lin et al. retailer’s store (2005); Sweeney and Soutar (2001)
I feel good about myself when I buy Tynan et al. (2009); Ko and from this retailer Sung (2007)
I choose this retailer to express my Tynan et al. (2009); Wiedman Expressive identity to others et al. (2007) value This retailer fits the type of person I am Wiedemann et al. (2007)
Buying from this retailer says something Wiedemann et al. (2007) about me as a person
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Construct Dimension Statement Author
Buying from this retailer allows me to Wiedemann et al. (2007); associate with specific people and Vigneron and Johnson (1999) groups
Buying from this retailer distinguishes Wiedemann et al. (2007); me from others Vigneron and Johnson (1999)
I find merchandise at this retailer that is Tynan et al. (2009); consistent with my style Wiedemann et al. (2007)
Tynan et al. (2009:2); Cottet et Other people notice that I buy clothing al. (2006); Rintamäki et al. from this retailer (2006)
This retailer is associated with the Cottet et al. (2006); Rintamäki social class I belong to et al. (2006)
I communicate my achievements Tynan et al. (2009); Sparks et through supporting this retailer al. (2008)
Status value Buying from this retailer causes others Cottet et al. (2006); Rintamäki to think more of me et al. (2006)
Buying from this retailer makes me look Tynan et al. (2009); Sparks et financially successful al. (2008)
This retailer’s brand label is visible on Tynan et al. (2009); Sparks et the merchandise al. (2008)
Cottet et al. (2006); Rintamäki Customer This retailer is suitably located value et al. (2006)
I have a comfortable relationship with Ravald and Grönroos (1996) this retailer
I have a positive relationship with this Ravald and Grönroos (1996) retailer
I have a happy relationship with this Ravald and Grönroos (1996) retailer Relationship A relationship with this retailer is value Ravald and Grönroos (1996) valuable to me
This retailer builds a personal Ravald and Grönroos (1996) relationship with me
I have a long-term relationship with this retailer Ravald and Grönroos (1996)
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Construct Dimension Statement Author
My feelings about this retailer are very Edward and Sahadev (2011); positive Hume and Mort (2010)
I feel good about shopping at this Edward and Sahadev (2011); retailer Hume and Mort (2010)
I feel satisfied that what I get from Edward and Sahadev (2011); Customer shopping at this retailer is the best that Hume and Mort (2010) satisfaction can be achieved
I am content with the way in which this Edward and Sahadev (2011); retailer has taken care of me Hume and Mort (2010)
The extent to which shopping at this Edward and Sahadev (2011); retailer has produced the best possible Hume and Mort (2010) outcome is satisfying
I would select the same retailer for Hume and Mort (2010); Cronin another high/luxury fashion purchase et al. (2000)
I consider this retailer to be my first Hume and Mort (2010); Cronin choice et al. (2000)
I intend to purchase from this retailer Hume and Mort (2010); Cronin Repurchase again et al. (2000) intention I would continue to support this retailer Hume and Mort (2010); Cronin even if the prices are higher than those et al. (2000) of its competitors
I consider doing more business with this Hume and Mort (2010); Cronin retailer in future et al. (2000) Adapted from Chang and Dibb (2012); Edward and Sahadev (2011); Hume and Mort (2010); Brengman and Willems (2009); Grewal et al. (2009); Tynan et al. (2009); Verhoef et al. (2009); Chang and Chen (2008); Diep and Sweeney (2008); Sparks et al. (2008); Ko and Sung (2007); Wiedemann et al. (2007); Cottet et al. (2006); Gallarza and Saura (2006); Heinonen (2006); Rintamäki et al. (2006); Lin et al. (2005); Heinonen (2004); Vigneron and Johnson (2004); Wang et al. (2004); Baker et al. (2002); Petrick (2002); Agarwal and Teas (2001); Sweeney and Soutar (2001); Cronin et al. (2000); Swait and Sweeney (2000); Sweeney et al. (1999); Ravald and Grönroos (1996)
Questionnaire layout
After the development of the questions to be included in a questionnaire, it is important to determine the sequence of questions and layout of the questionnaire. According to Malhotra et al. (2012:474), the format and positioning of questions have a significant
124 Chapter 5: Research methodology impact on the results of a survey. A questionnaire should be divided into sections specifically if different types of information are needed. A questionnaire that is well laid out will guide respondents through the questionnaire and enhance respondent participation and minimise respondent error (Malhotra et al., 2012:474).
The layout questionnaire used in this study commences with a preamble. The aspects communicated in the preamble include the identity of the author, the purpose of the research, as well as a request for assistance in providing information. The preamble also communicates the required time to complete the questionnaire and that all responses will be anonymous and voluntary (Churchill et al., 2010:309). The questionnaire continues with a screening question in order to ensure respondents are high fashion customers (Appendix A). The respondents were instructed to have a specific high fashion retailer in mind. The specific high fashion retailer should be the one they supported most recently. The questionnaire is furthermore divided into four sections (as indicated in Table 5.5), namely:
Section A measures the customer value respondents’ perceived they derived from the high fashion retailer from which they buy;
Section B also measures respondents’ overall customer satisfaction with the high fashion retailer from which they buy;
Section C measures the repurchase intention of respondents; and
Section D gathers information regarding the demographic profile of respondents.
5.3.2.4 Step 7: Pretest the questionnaire
Once a questionnaire has been developed, the next step is to pretest it (Shiu et al., 2009:348). Pretesting a questionnaire involves testing the questionnaire on a small sample of respondents (Malhotra et al., 2012:476). The purpose of pretesting is to identify and remove any problems as well as improve the existing questionnaire. Every aspect of the questionnaire, namely structure, scales, question content and layout, should be pretested. The respondents used in the pretest should be the same in terms
125 Chapter 5: Research methodology of characteristics as those who will form part of the actual sample (Malhotra et al., 2012:477). Two methods of pretesting can be used namely, protocol analysis and debriefing. Protocol analysis refers to a situation where respondents are asked to write comments on the questionnaire while they are answering it. Debriefing is when the respondents are told it was a pretest after they had completed the questionnaire. They are then asked to explain the meaning of each question and whether they have had encountered any problems while answering the questionnaire (Malhotra et al., 2012:478). Problems identified during pretesting should be corrected after which the questionnaire should again be pretested using a different sample of respondents.
In this study, the questionnaire was pretested among thirty respondents from the same population as used in the study, using protocol analysis. The respondents did not indicate any difficulty with answering or understanding the questions. Therefore no adjustments were made to the questionnaire presented in the pilot test.
5.3.3 Phase III: Execute the research design
During this phase the data for the study is gathered, prepared and analysed (Shiu et al., 2009:65).
5.3.3.1 Step 8: Collect and prepare data
The quantitative data collection methods utilised in descriptive research designs (section 5.3.2.1) are survey methods (Zikmund & Babin, 2007:135). Survey methods are research processes of gathering large volumes of raw data by utilising question- and-answer formats. These methods are relatively inexpensive, enable the use of advanced statistical analysis and results can be generalised to the larger target population. However, with survey methods there is a lack of in-depth detailed data, and a low response rate (Feinberg et al., 2013:236). The typical survey methods used in descriptive research designs are summarised in Table 5.7.
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Table 5.7: Survey methods
Survey Description Types Advantages Disadvantages method
Interviewer is present In-home surveys: to explain complex or Difficulty in gaining Face-to-face confusing questions access to homes question-and- Survey is conducted answer surveys Time consuming in respondent’s own A survey that take place in familiar surroundings Issues with safety of method that the respondent’s interviewers makes use of home Increased quality of the presence of responses Interviewer- a trained administered interviewer who The survey is time surveys Mall-intercepts asks the consuming surveys: questions and Interviewer Respondents do not records the Respondents are answers interacts with the easier to recruit represent target respondents population face-to-face Convenient and cost Target population within shopping effective method shops at different days centres and of the week and times shopping sites of the day
Purchase- intercept Difficulty to gain access surveys: Face-to- to stores where face question- purchase behaviour and-answer can be observed The recentness of the Interviewer- survey purchase behaviour Only respondents who administered conducted enhances actually display surveys directly after a respondents’ recall specified purchase specified behaviour are included, purchase not those observed by the contemplating interviewer has purchase taken place
Less expensive and Survey is limited within faster the national borders of The interviewer a country conducts his Interviewers are question-and- located in a central Is shorter in length answer survey location and can since respondents do Telephone- using a easily be supervised not like to spend too administered telephone and much time on the It is easy to make surveys captures telephone answering callbacks to those responses questions respondents who did directly into a not answer their Simple type of data computer phones the first time that can be collected database since complicated Can reach a large scales and measures number of pose difficulty for the
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Survey Description Types Advantages Disadvantages method respondents spread respondent to answer over a large geographical area
Absence of a trained Respondents Low cost per interviewer complete the questionnaire questionnaire Increased possibility of Self- themselves Absence of respondent answering administered without the interviewer bias questions incorrectly surveys presence of a because of possible Increased anonymity trained misinterpretation of respondents interviewer Low response rate
Can be sent to a Researchers large number of use a question- respondents Limited Internet access Email surveys: answer format simultaneously in developing countries respondents to collect data receive and Can be completed Can infringe on Online surveys from return the survey and returned in short respondents’ right to respondents by email in time frame privacy with the aid of electronic format online Low cost Low response rate technologies Can be used in international research
Can reach large Internet surveys: numbers survey is placed simultaneously on a website Limited Internet access Online surveys where Can be completed in developing countries respondents and returned in short Low response rate access, complete time frame and submit them Low cost Adapted from Feinberg et al. (2013:236); Malhotra et al. (2012:327) and Shiu et al. (2009:190)
In this study, a variation of the interviewer administered mall-intercept surveys was utilised since the respondents were not interviewed inside the shopping centres, but on their way to and from the shopping centres. This is a suitable survey method for this study as the target population are customers of high fashion retailers. The high fashion retailers are located in shopping centres and therefore their customers were found in close proximity to the shopping centres. This survey method made it convenient and cost effective to recruit the respondents required for the purpose of this study (Feinberg et al., 2013:236).
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According to Malhotra (2010:435), the collection of data also requires the selection, training and supervision of fieldworkers. Fieldworkers are the individuals responsible for selecting the participating respondents as well as ensuring that the data is collected. Fieldworkers should be selected based on the characteristics required for the particular study, as well as the type of skill needed for administering the data collection instruments. Training fieldworkers also ensures that the data is collected uniformly (Malhotra, 2010:436).
In this study, the fieldworkers were third-year and honours students from the Department of Marketing of the University of Johannesburg. They have had exposure to a course in marketing research methodology both in undergraduate as well as during the honours degree. In this study, 30 fieldworkers were selected to administer and complete the questionnaires from customers shopping at high fashion retailers in Gauteng, South Africa. The fieldworkers were trained in administering an interviewer- administered questionnaire. The fieldworkers were provided background information on the study. They were informed about what is meant by high fashion retailers as well as given examples of types of high fashion retailers in order to assist them with identifying possible respondents for the study. They were taken through the questionnaire to familiarise them with its content so that they would be able to address any questions regarding the questionnaire.
Fieldworkers interviewed customers of high fashion retailers outside the seven shopping centres selected as sampling units where high fashion retailers are located in Gauteng, South Africa based on convenience. Customers were intercepted on their way to or from the shopping centres (the author did not obtain permission to interview shoppers inside the shopping centres). Fieldworkers approached customers at different times of the day and different days of the week in order to make the sample more representative of the target population concerned (Feinberg et al., 2013:238). Respondents were approached on Mondays, Wednesdays, Fridays, Saturdays and Sundays, between 9:00 – 11:00 am, 13:00 – 14:00 pm and 16:00 – 18:00 pm respectively. The data was gathered during a three-week period from 5 October 2012 to 25 October 2012. Fieldworkers asked the shoppers a screening question to determine whether they had
129 Chapter 5: Research methodology shopped at a high fashion retailer within the past year. The screening question was also used to ensure that respondents shopped at high fashion retailers. The screening question included a list of high fashion retailers. Only the shoppers who indicated that they had shopped at a high fashion retailer, were asked to participate in the survey and provided a questionnaire to complete. Fieldworkers were available throughout the survey process to provide clarity to respondents in the event that they experienced any difficulty with the questionnaire. During the process of editing, coding and cleaning of the data (section 5.3.3.2) data was checked by the author to minimise the potential of fieldworker fraud (Malhotra, 2010:175).
Response errors occur when the responses that the respondent provides are flawed (Shiu et al., 2009:231). Reasons for the flawed responses mostly lie in the respondent’s deliberate falsification of information or misrepresentation (Shiu et al., 2009:231; Zikmund & Babin, 2007:190). This approach limits the occurrence of response errors as the interviewer is present to assist the respondents if necessary (Malhotra et al., 2012:103; Churchill et al., 2010:381; Shiu et al., 2009:231).
5.3.3.2 Step 9: Analyse data
The next step in the research process is to analyse the data collected in the previous step. Data is analysed in order to create data structures useful to decision-makers (Shiu et al., 2009:67). Before data can be analysed it must first be edited, coded, transcribed and cleaned. Editing is done to verify the completeness, consistency and accuracy of data. Incomplete responses are cleaned up and codes assigned to the raw data for capturing. Coding comprises numbers or scores being assigned to each possible response in the questionnaire. Editing and coding ensure more accurate data analysis (Malhotra, 2010:454).
For the purpose of this study, data was checked for accuracy, completeness and validity (Malhotra, 2010:454). Data was entered by STATKON, the Statistical Consultation Service of the University of Johannesburg, into a statistical computer programme called SPSS (Statistical Package for the Social Sciences) version 20 and MPlus in order to
130 Chapter 5: Research methodology proceed with data editing, coding, transcribing, cleaning and analysis. The following editing, coding, transcribing and data cleaning processes were followed in this study:
Editing - The researcher checked for completeness and all the questionnaires with missing pages, sections or questions that had not been completed, were omitted from the study.
Coding - The closed-ended questions were precoded (Appendix A). Numeric codes were assigned to the predetermined responses on the questionnaire. Open-ended questions were coded as soon as questionnaires had been edited.
Transcribing – Refers to capturing the coded data from the questionnaire directly into computers (Malhotra, 2010:458). Data was entered by STATKON, the Statistical Consultation Service of the University of Johannesburg, into a statistical computer programme called SPSS (Statistical Package for the Social Sciences) version 20 in order to proceed with data cleaning.
Data cleaning – Refers to consistency checks and treatment of missing responses (Malhotra, 2009:459). This process entails doing a final computerised error check of the data (Shiu et al., 2009:494). Consistency checks identify data that is out of range or logically inconsistent. It also includes data that has extreme values (Malhotra, 2009:460). SPSS was used to identify out-of-range values for each variable. Missing responses occur when respondents provide ambiguous answers or their answers were not properly recorded. This happens because the respondent either refuses, or is unable to answer specific questions (Malhotra, 2009:460).
For the purpose of this study, only responses of respondents who had answered a particular question were captured, and once the data had been edited, coded, transcribed and cleaned, data analysis could commence. The data analysis strategy followed in this study is as follows:
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Reporting the descriptive statistics
Descriptive statistics are used to provide a quick summary of the characteristics of the different variables in the data (Pallant, 2010:53; Shiu et al., 2009:513).
The descriptive statistics reported in this study include the count (N), mean, low-box score, top-box score and standard deviation. Each can be described as follows:
Count (N) – Presents nominal and ordinal values and indicates the number (raw response), as well as the percentage, in a data set (Shiu et al., 2009:514).
o Mean – Provides a description of the average within the distribution of the data of the study. This is calculated by adding up the value of the responses and dividing it by the number of responses (Burns & Bush, 2010:108; Shiu et al., 2009:529).
o The top-box score and the low-box score represent the number (or percentage) of respondents who elected the lowest value in the scale (low-box score) or the highest value in the scale (top-box score) with respect to a specific statement (Pallant, 2010:56).
o Standard deviation – Is the average distance of the distribution values of a data set from the mean. This difference between the distribution and the mean is called the deviation (McDaniel & Gates, 2010:89; Shiu et al., 2009:533).
Determining the validity and reliability of scales
Validity refers to the correctness of a measure or degree to which any scale or other measure accurately measures what it is supposed to measure (Churchill et al., 2010:257; Pallant, 2010:7). There are three different types of validity, namely (Churchill et al., 2010:258; Pallant, 2010:7; Shiu et al., 2009:282):
o Content validity – The ability of a measure to capture the most important aspects associated with a characteristic or behaviour adequately. This is also known as face validity. Content validity is improved by systematically developing the items used to measure some construct (Churchill et al., 2010:259; Pallant, 2010:7). The
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systematic process involves a literature review to determine what measures of a concept have been used by other researchers. Items covering all aspects of the characteristic are developed to be refined later to ensure all aspects of the characteristic are covered (Churchill et al., 2010:260; George & Mallery, 2010:37).
o Construct validity – The degree to which a measure actually measures the construct or characteristic as well as shows a correlation with other items in the instrument. It is the most difficult type of validity to ascertain. Establishing construct validity requires a measure to demonstrate convergent validity (highly positive correlation with other measures of the same construct); discriminant validity (not highly positive correlation with other related constructs); and nomological validity (related to other constructs in theoretical predictable ways) (Shiu et al., 2009:282).
o Criterion validity - Verifies the relationship between scale scores and some specified, measurable criterion. Criterion validity attempts to estimate or predict whether the current behaviour of a respondent will be repeated (George & Mallery, 2010:39; Pallant, 2010:7).
For the purpose of this study, both content and construct validity were assessed. As for content validity, the questionnaire was developed by adapting scales used by other authors discovered through the literature review (section 4.2 and Table 5.6) – before it was fielded. In addition, the questionnaire was pretested as discussed earlier (section 5.3.2.4).
In terms of construct validity, an exploratory factor analysis (EFA) was conducted using SPSS to uncover the underlying structure of constructs and a confirmatory factor analysis (CFA) using MPlus software to confirm the underlying structure of constructs. This is discussed in more detail later on in this chapter (section 5.3.3.2).
Reliability refers to the ability of a measure to generate the same scores over different times and different measurements. Consistency is the key characteristic of reliable
133 Chapter 5: Research methodology scores and improving reliability requires decreasing random error (Churchill et al., 2010:257). Reliable data instruments are not necessarily valid (Churchill et al., 2010:257). There are three tests of reliability that the author can use (McDaniel & Gates, 2010:313-316; Zikmund & Babin, 2010:334-335; Eiselen et al., 2007:112; Malhotra, 2010:284):
o Test-retest reliability - Measures the stability of results and is usually used to determine whether the results are consistent when the same questionnaire is provided to the same respondent at different times. A correlation coefficient is calculated to determine whether the results are similar. The higher the correlation coefficient, the more reliable the results.
o Alternative-forms reliability - Measures two corresponding sets of scales among the same group of respondents at two different time intervals.
o Internal consistency reliability - Assesses the ability to produce similar results when different samples are used to measure a phenomenon during the same time period. This reliability test is based on the concept that the various statements in the scale measure some aspect of the construct, and these statements should be consistent in measuring the construct. It therefore focuses on the level of internal consistency between the set of statements and the complete scale. Two types of internal consistency tests are available, namely the split-half reliability test and the coefficient alpha. The split-half reliability test divides the scale into two halves and correlates the results with one another. The coefficient alpha, or Cronbach’s alpha coefficient test, calculates an average for all the possible split-half coefficients by splitting the scale statements in different ways (George & Mallery, 2010:81; McDaniel & Gates, 2010:316).
For the purpose of this study, Cronbach’s alpha coefficients were calculated to determine whether the scales used to measure, customer value, customer satisfaction, as well as repurchase intention were reliable. The Cronbach’s alpha coefficient’s values range from 0 to 1, with higher values indicating greater reliability. While different levels of reliability are required, depending on the nature and purpose of the scale, a minimum
134 Chapter 5: Research methodology level of 0.7 Cronbach alpha coefficient value is recommended. If the Cronbach alpha coefficient is less than 0.7, the scale is not considered reliable (Pallant, 2010:6; Eiselen et al., 2007:112).
Conducting an exploratory factor analysis (EFA) The exploratory factor analysis (EFA) is a multivariate statistical technique used to reduce data from a large set of variables to a smaller set of factors or components. The EFA is used to explore the interrelationships among a set of variables (Pallant, 2010:181, Eiselen et al., 2007:105). The key objective of an EFA is to simplify the data, and to determine the underlying factors in a set of opinion-related questions (McDaniel & Gates, 2010:616; Eiselen et al., 2007:104).
In this study, an EFA was conducted to uncover underlying factors that naturally occur in the data for the customer value construct. To ensure that an EFA provides valid results, the sample size needs to be at least 300 respondents. The number of respondents per statement is another guideline that can be used to evaluate the acceptable sample size (Pallant, 2010:183, Eiselen et al., 2007:105). The number of respondents should be at least four times the number of statements, and ideally the ratio of respondents to the number of questions in the factor analysis should be 10 to 1 (Eiselen et al., 2007:105).
Sample size is, however, not the only determinant to ensure that an EFA will provide valid results (Eiselen et al., 2007:105). Other determinants include the method of extraction, method of rotation, the Bartlett’s test of sphericity and the Kaiser-Meyer- Olkin (KMO) measure of sampling adequacy that assess the factorability of the data (Pallant, 2010:183).
Kaiser-Meyer-Olkin (KMO) and Bartlett’s test of sphericity are measures used to determine the suitability of data for a factor analysis (Pallant, 2010:187). Bartlett’s test of sphericity tests the null hypotheses that the variables are uncorrelated. When the p value is < 0.05, not all variables are uncorrelated and the null hypothesis can be rejected. The KMO index ranges from 0 to 1, with 0.6 suggesting sufficient correlation
135 Chapter 5: Research methodology between variables to warrant a continuation with the factor analysis (Malhotra, 2007:614; Pallant, 2010:183).
The next aspect to investigate is the communalities. To determine how much a single variable has in common with all the remaining variables, communality is investigated. It is a measure of the relationship between a particular variable and the set of remaining variables in the analysis (Zikmund & Babin, 2010:627; Meyers, Gamst & Guarino, 2006:490-491). Communalities provide information about how much of the variance in each item is explained. A value of less than 0.3 indicates that the variable does not fit well with the other variables. This information can be used to improve or refine a scale, and variables can then be deleted from the scale. When removing items with low communality, values tend to increase the total variance explained (Pallant, 2010:198).
The most commonly used approaches to extract the underlying factors from the data, are Principal Components Analysis (Pallant, 2010:183) and according to Eiselen et al. (2007:108) Principal Axis Factoring. According to Costello and Osborne (2005:2) indicates that Principal Axis Factoring is the most suitable approach to rotate the factor solution, as Principal Components Analysis is only a data reduction method, which is a superior alternative to Principal Axis Factoring. Therefore, for the purpose of this study, Principal Axis Factoring has been deemed most suitable.
Rotation is used to assist with the identification of the variables contributing most to a factor (Eiselen et al., 2007:105). There are two main approaches to rotation, resulting in either orthogonal (uncorrelated) or oblique (correlated) factor solutions (Pallant, 2010:185; Salzberger, 2009:247).
For the purpose of this study, an orthogonal rotation method, namely the Varimax rotation was used. To determine the number of factors extracted during the process the eigenvalues are considered. The number of eigenvalues greater than 1 indicates the number of factors extracted (Pallant, 2010:192; Eiselen et al., 2007: 107).
The rotated factor matrix is also analysed to determine the variables that load on a particular factor (Eiselen et al., 2007:109). Once this has been established, the author
136 Chapter 5: Research methodology labels each factor with an appropriate name describing all the variables included in each factor (Pallant, 2010:198). The loading of a particular variable on a factor can be assessed by using the guidelines provided by Shiu et al. (2009:634). According to the authors, a loading of > 0.30 is considered acceptable. Based on Shiu et al.’s (2009:634) recommendations, all customer value statements (section 6.5.2) were retained for further analysis as their factor loading was above 0.3.
Conducting a confirmatory factor analysis (CFA) Confirmatory factor analysis (CFA) is similar to exploratory factor analysis (EFA) in that it is also used to examine the relationships between a set of measured variables and a smaller set of factors that might account for the variables (Ary et al., 2006:393). Confirmatory factor analysis (CFA) is a more sophisticated set of techniques used to confirm the structure underlying a set of variables (Pallant, 2010:181; Salzberger, 2009:246).
For the purpose of this study, the MPlus statistical programme was used to conduct CFA analysis. By performing an EFA, the underlying factor structure is identified, and by performing CFA the factor structure of a set of observed variables is verified (Zikmund & Babin, 2010:625; Ary et al., 2006:393).
There are several statistical tests utilised in CFA in order to determine the extent of the fit-of-the-measurement model. For the purpose of this study, a combination of the following fit indices have been considered:
o The root mean square error of approximation (RMSEA) - The average of the residuals between the observed correlation/covariance from the sample and the expected model estimated for the population. Values range from 0 to 1 with a smaller RMSEA value indicating better model fit. Lower values of these measures indicate a better model fit. Therefore values of ≤ 0.09 are desirable, but should not be greater than 0.2 (Malhotra et al., 2012:875; Shiu et al., 2009:650; Hair et al., 2007:746).
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o The comparative fit index (CFI) - Ranges from 0 to 1 with a larger value indicating better model fit. High values of these measures in the range of 0.80 and above are considered acceptable (Malhotra et al., 2012:874; Salzberger, 2009:428).
o Tucker Lewis index (TLI) – Ranges from 0 to 1 just like (CFI). High values of these measures in the range of 0.80 and above are considered acceptable (Malhotra et al., 2012:874; Salzberger, 2009:428).
o Standarised root mean square residual (SRMR) - Values range from 0 to 1 with a smaller SRMR value indicating better model fit. Lower values of these measures indicate a better model fit. Therefore values of ≤ 0.09 are desirable, but should not be greater than 0.2 (Malhotra et al., 2012:875; Shiu et al., 2009:650; Hair et al., 2007:746).
Performing structural equation modelling (SEM) to test the theoretical model of the study Structural equation modelling (SEM) is a hybrid multivariate that examines the structure of interrelationships among a diverse set of variables (Salzberger, 2009:264). The above-mentioned techniques only examine a single relationship between the dependent and independent variables. This limits the author’s ability to address a set of interrelated questions regarding the research study (Shiu et al., 2009:648). Structural equation modelling depicts all the relationships among the various constructs as a set of structural equations. The equations model all the relationships among constructs. Any single construct can be independent only, dependent only or both independent and dependent (Zikmund & Babin, 2010:130). Structural equation modelling assesses unobservable or latent factors as constructs represented by multiple variables. SEM provides evidence of systematic covariation and is mainly used as a confirmatory technique (Malhotra et al., 2012:866). SEM was conducted with the aid of MPlus software.
The validity of the measurement model is dependent on the goodness-of-fit results. Fit measures in SEM need to be cautiously interpreted. Similar fit measures are employed for SEM as for CFA. For the purpose of this study, a combination of fit measures have
138 Chapter 5: Research methodology been interpreted. The root mean squared approximation of error (RMSEA) should have values of ≤ 0.09, but should not be greater than 0.2 (Malhotra et al., 2012:875; Shiu et al., 2009:650; Hair et al., 2007:746). The comparative fit index (CFI) should be greater than 0.80 to indicate good fit, and is reported and interpreted (Hoe, 2008:77; Meyers et al., 2006:562, 615; West, Finch & Curran, 1995:233). In addition, the relative chi-square ratio or X2/dfratio that should be less than 3.0 indicating a good fit, is also reported and interpreted (Rotgangs & Schmidt, 2011:470; Hoe, 2008:77).
Once the goodness-of-fit for the model has been established, the next step in the SEM analysis is to investigate the paths among the factors (or variables) in order to evaluate their statistical significance and secondly, their strength using standardised path coefficients (Hoe, 2008:79; Meyers et al., 2006:615).
The causal paths can be evaluated in terms of statistical significance and strength using a standardised path coefficient that ranges between -1 and +1. The strength of the relationships among the variables is reviewed after the statistical significance of the standardised paths has been investigated. Standardised paths should be at least 0.20 and ideally above 0.30 in order to be considered meaningful (Hoe, 2008:79). A standardised path coefficient with absolute values less than 0.10 may indicate a ‘small’ effect, values around 0.30 a ‘medium’ effect, and values greater than 0.50 a ‘large’ effect (Suhr, 2006:4).
5.3.3.3 Step 10: Transform data structures into information
During this step, the data analysis conducted in the previous step is turned into information (Shiu et al., 2009:52). The results of the data analysis are presented in the next chapter. Chapter 6 presents the findings of the quantitative phase of this study which are interpreted using the various statistical methods described in this chapter.
139 Chapter 5: Research methodology
5.3.4 Phase IV: Communicate the research results
5.3.4.1 Step 11: Prepare and present final report
In this study, the final report is the thesis consisting of seven chapters capturing all the information as indicated in section 1.6.
Table 5.8 indicates the relationship between the research objectives, alternative hypotheses and the sections in the questionnaire in this study.
Table 5.8: Relationship between research objectives, alternative hypotheses and questionnaire
Related question in Secondary objective Alternative hypothesis questionnaire
To report on the state of affairs in the fashion retail industry with Objective achieved through literature review presented in sections specific reference to high 2.3 and 2.5 fashion retailing
To provide a theoretical overview of customer value, Objective achieved through literature review presented in sections customer satisfaction and 3.3, 3.4, 3.5 and 4.3 repurchase intention within a marketing context
To uncover the dimensions of Objective achieved through literature review presented in sections customer value proposed in the 3.5 and 4.2 literature
Section A – Customer value To empirically investigate the dimensions of customer value Section B – Customer as well as customer satisfaction satisfaction and repurchase intention in a Section C – Repurchase high fashion retail setting intention
H1: The customer value that high To determine the influence of fashion retail customers derive Section A – Customer value customer value on customer from high fashion retailers has a satisfaction in the high fashion significant and positive influence Section B – Customer retail industry on their customer satisfaction satisfaction levels
140 Chapter 5: Research methodology
Related question in Secondary objective Alternative hypothesis questionnaire
H2: The customer value that high To investigate whether fashion retail customers derive Section A – Customer value customer value influences from high fashion retailers has a repurchase intention in the high significant and positive influence Section C – Repurchase fashion retail industry on their on their repurchase intention intentions
H3: The customer satisfaction levels that high fashion retail To determine whether customer Section B – Customer customers experience from high satisfaction influences satisfaction fashion retailers have a repurchase intention in the high significant and positive influence Section C – Repurchase fashion retail industry on the repurchase intentions of intention these customers
Section A – Customer value To develop a multidimensional Section B – Customer model of customer value in the H1 to H3 satisfaction high fashion retail industry Section C – Repurchase intention
5.4 CONCLUSION
This chapter describes the steps of the marketing research process followed in this study. It specifically describes the identification of the research problem and the objectives and hypotheses formulated for this study. It also discusses the research design followed, the identification of a target population, the sampling procedure, the collection and analysis of the research data, and finally, the data analysis strategy followed in the reporting of the results of the study.
The following chapter provides a discussion of the results of the study as well as an interpretation of the results of the study.
141
CHAPTER 6: INTERPRETATION OF RESULTS
6.1 INTRODUCTION
This chapter presents a discussion and interpretation of the results obtained from the empirical research phase of the study. The chapter commences with a discussion of the sample realisation rate, followed by a presentation of the demographic profile of the respondents, as well as their high fashion retailer purchasing habits. Furthermore, a discussion and interpretation of the descriptive results for customer value, satisfaction and repurchase intention is provided. The results of the data reduction techniques utilised are presented.
Consequently, the results of the reliability analysis for two constructs (satisfaction and repurchase intention) and the underlying factors of the customer value construct are reported and overall mean scores for these are presented. The chapter concludes with a discussion of the results for the theoretical model tested through a discussion of the structural modelling process. The main findings observed based on the results are also summarised in this chapter.
6.2 SAMPLE REALISATION RATE
The aim of the study is to develop a model that embodies the interrelationships between customer value, customer satisfaction and repurchase intention in the high fashion retail industry in Gauteng, South Africa. It was therefore essential that the sample selected for the study consisted of high fashion customers shopping at high fashion retailers in Gauteng, South Africa. The author subsequently selected 700 high fashion customers, using convenience sampling, who had purchased clothing and/or accessories from a high fashion retailer most recently in the previous year as respondents. In total, 620 respondents completed the questionnaire. The procedure followed to deal with missing elements is discussed in section 5.3.3.2. The sample realisation rate is 88.57% and the 620 responses obtained from respondents were consequently subjected to data analysis.
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6.3 DEMOGRAPHIC PROFILE OF RESPONDENTS
Table 6.1 summarises the demographic profile of the respondents who took part in the study.
Table 6.1: Demographic profile of respondents
Variable Overall
Gender N %
Male 312 50.5
Female 306 49.5
Total 618 100
Age group N %
Younger than 25 281 45.4
25 – 34 210 33.9
35 – 44 72 11.7
45 – 54 43 6.9
55 and older 13 2.1
Total 619 100
Racial classification N %
African 285 46.3
Asian 19 3.1
Coloured 70 11.3
Indian 102 16.5
White 137 22.2
Other 4 0.6
Total 617 100
Marital status N %
Single 311 50.2
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In a long-term relationship / Living together 106 17.1
Engaged 48 7.8
Married 128 20.7
Divorced 21 3.4
Widowed 3 0.5
Other 2 0.3
Total 619 100
Language preference N %
Afrikaans 71 11.8
English 330 54.8
Nguni (Zulu, Xhosa, Swati, Ndebele) 100 16.6
Sotho (Sepedi, SeSotho, Tswana) 78 12.9
Venda / Tsongo 22 3.6
Other 2 0.3
Total 603 100
Highest completed level of education N %
Grade 10 / Standard 8 15 2.5
Grade 12 / Matric 202 33.4
Diploma / Certificate 116 19.2
B-degree 161 26.5
Postgraduate degree / diploma 105 17.4
Other 6 1.0
Total 605 100
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Main employment status N %
Employed by an organisation 294 48.9
Self-employed 95 15.8
Student 177 29.5
Housewife / Househusband 17 2.8
Retired 3 0.5
Unemployed 15 2.5
Total 601 100
Total household income per month after tax N %
Less than R10 000 169 28.9
R10 001 – R20 000 109 18.7
R20 001 – R30 000 86 14.7
R30 001 – R40 000 53 9.1
R40 001 – R50 000 47 8.0
R50 001 – R60 000 37 6.3
R60 001 – R70 000 20 3.4
R70 001 – R80 000 11 1.9
R80 001 – R90 000 12 2.1
145 Chapter 6: Interpretation of results
Total household income per month after tax N %
R90 001 – R100 000 15 2.6
R100 001 – R110 000 7 1.2
R110 001 – R120 000 7 1.2
R120 001 – R130 000 1 0.2
R130 001 – R140 000 0 0.0
R140 001 – R150 000 2 0.3
R150 001 and more 8 1.4
Total 584 100
Table 6.1 indicates that the majority of respondents were male (50.5%), however, the genders were almost evenly represented in the sample with females representing 49.5% of the sample. The majority of the respondents were younger than 25 years of age (45.4%), followed by respondents who were between 25 and 34 years of age (33.9%). The majority of respondents were African (46.3%), followed by white (22.2%) and Indian (16.5%). The majority of the respondents were single (50.2%) and 20.7% of them were married. The language preference of the majority of the respondents was English (54.8%), followed by Nguni (Zulu, Xhosa, Swati, Ndebele) at 16.6%. The majority of the respondents’ highest level of completed education was grade 12 (33.4%), closely followed by a B-degree (26.5%). The highest percentage of the respondents was employed by an organisation (48.9%). This was followed by students (29.5%). Furthermore, the majority of respondents had a household income of less than R10 000 per month (28.9%). The second highest percentage of household income per month was 18.7% allotted to the income category between R10 001 and R20 000, followed by 14.7% for the income category between R20 001 and R30 000. This, together with the age of the respondents, is aligned with the literature indicating that Generation Y are brand conscious with high spending patterns on high fashion brands (section 2.5). The rest of the income categories were fairly equally represented amongst respondents.
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6.4 PURCHASING HABITS OF RESPONDENTS
Table 6.2 provides insight into the high fashion retailers from which respondents most recently purchased clothing and/or accessories in the year preceding the study, as well as the shopping centre where these high fashion retailers are located.
Table 6.2: High fashion retailers and shopping centres purchased from
High fashion retailer N %
Aca Joe 48 7.8
Gucci 26 4.2
Guess 101 16.4
Fossil 25 4.1
Hilton Weiner 14 2.3
Jenni Button 8 1.2
Levi 100 16.3
Louis Vuitton 19 3.1
Marion & Lindie 6 1.0
Stuttafords 81 13.2
YDE 72 11.7
Zara 39 6.3
Other, please specify 76 12.4
Total 615 100.0
Shopping centre N %
Bedford Shopping Centre, Johannesburg 12 1.9
Brooklyn Mall, Pretoria 10 1.6
Carlton Shopping Centre, Johannesburg 23 3.8
Centurion Mall, Pretoria 22 3.6
Clearwater Mall, Johannesburg 40 6.5
147 Chapter 6: Interpretation of results
Cresta Shopping Centre, Johannesburg 71 11.5
Eastgate Shopping Centre, Johannesburg 64 10.4
Melrose Arch, Johannesburg 25 4.0
Menlyn Shopping Centre, Pretoria 49 7.9
Rosebank Mall, Johannesburg 43 6.9
Sandton City Shopping Centre, Johannesburg 150 24.2
The Glen Shopping Centre, Johannesburg 16 2.4
Other 95 15.3
Total 620 100
Table 6.2 indicates the high fashion retailers that respondents had most recently purchased clothing and/or accessories from the most in the last year were, Guess (16.4%), closely followed by Levi (16.3%). The high fashion retailers that respondents most recently purchased clothing and/or accessories from the least in the last year were Marion & Lindie (1.0%) followed by Jenni Button (1.3%). The “Other” option included numerous high fashion retailers, such as Polo.
It is also apparent from Table 6.2 that the majority of high fashion retailers that respondents had most recently purchased clothing and/or accessories from, were high fashion clothing retailers situated in Sandton City Shopping Centre (24.2%), Cresta Shopping Centre (11.5%), followed by Eastgate Shopping Centre (10.4%). The “Other” option included a variety of shopping centres located all over South Africa, such as the Gateway Shopping Centre (KZN).
6.5 CUSTOMER VALUE
Section A of the questionnaire presented the respondents of this study with 75 customer value statements (section 5.3.2.3 and Table 5.7) in order to measure customer value at high fashion retailers. The respondents were asked to indicate to which extent they agree with each of the 75 customer value statements, measured on a seven-point
148 Chapter 6: Interpretation of results unlabelled Likert-type scale, where 1 is “strongly disagree” and 7 is “strongly agree” (section 5.3.2.3).
This section provides the descriptive results for each statement in order to establish respondents’ level of agreement with individual statements and reports the count (N), mean, low-box score, top-box score and standard deviation for all 75 customer value statements (section 5.3.3.2).
The results of an exploratory factor analysis (EFA), as well as a confirmatory factor analysis (CFA) are presented (section 5.3.3.2). Next the reliabilities for the resulting factors are tested. This section concludes with a presentation of the overall mean scores for the valid and reliable factors.
6.5.1 Descriptive results
In Table 6.3 the descriptive results for Section A in the questionnaire are presented.
Table 6.3: Descriptive results for customer value statements
Low- Top- Standard Statement N Mean box box deviation score score
In general, the merchandise from this A1 620 6.13 0.2 45.3 0.979 retailer is of high quality
The retailer provides merchandise that is A2 615 5.86 0.8 38.5 1.246 free of defects
The merchandise from this retailer is A3 613 6.25 0.2 51.5 0.937 stylish
The design of the merchandise is in line A4 619 6.05 0.5 44.6 1.109 with the latest fashion trends
The finishing on the merchandise is of high A5 619 6.13 0.3 47.0 1.050 quality
A6 The merchandise is comfortable to wear 615 6.24 0.2 51.1 0.959
This retailer offers a variety of A7 611 5.89 0.5 39.6 1.208 merchandise to choose from
A8 Paying a high price to own merchandise 613 5.82 0.7 36.1 1.243
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Low- Top- Standard Statement N Mean box box deviation score score from this retailer is worth it
Considering the price of merchandise at A9 this retailer, I would say the prices 617 5.72 0.8 32.1 1.241 represent value for money
The retailer’s merchandise is not too A10 616 4.95 3.1 22.2 1.634 expensive
The merchandise from this retailer is A11 615 5.47 1.1 27.2 1.343 acceptable for the price I pay
I do not waste money when buying A12 614 5.44 2.4 29.3 1.497 merchandise from this retailer
Buying from this retailer enhances my A13 610 5.13 5.2 28.5 1.793 status with my friends
Wearing merchandise from this retailer A14 618 5.09 5.0 25.9 1.780 improves the way I am perceived by others
Wearing merchandise from this retailer A15 618 4.36 8.6 18.6 2.056 helps me be more accepted by my friends
Wearing merchandise from this retailer A16 619 5.05 4.8 23.9 1.700 makes a good impression on other people
Wearing merchandise from this retailer A17 618 4.87 5.0 23.1 1.864 leads to social approval
Merchandise from this retailer has a A18 614 5.33 3.4 30.1 1.632 positive social image
I have a lot in common with other A19 618 4.85 4.9 22.8 1.826 customers shopping at this retailer
I like to buy from this retailer because the A20 619 5.38 2.7 30.5 1.595 brand provides exclusivity
I try to keep my wardrobe up to date with A21 619 4.90 6.1 24.2 1.804 merchandise from this retailer
This retailer is known for carrying the latest A22 616 5.64 1.5 33.4 1.367 fashion trends
A23 This retailer is known for luxury 616 5.81 0.6 39.6 1.300
A24 This retailer is viewed as prestigious 613 5.72 0.7 36.9 1.330
A25 The retailer is well known among those 618 5.77 1.3 40.1 1.359
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Low- Top- Standard Statement N Mean box box deviation score score who purchase high/luxury fashion
This retailer is known as one of the top A26 616 5.76 0.8 36.7 1.293 high fashion retailers
The staff of this retailer is always A27 617 5.51 1.0 28.7 1.345 welcoming
I always receive good advice from the staff A28 619 5.33 1.8 26.2 1.446 of this retailer
A29 The staff of this retailer is friendly 617 5.51 0.8 29.3 1.346
The staff of this retailer gives me prompt A30 617 5.47 1.0 28.5 1.370 service
The staff of this retailer gives me personal A31 619 5.39 2.1 28.6 1.482 attention
The staff of this retailer has the knowledge A32 619 5.45 1.5 27.6 1.398 to answer my questions
The staff of this retailer knows what they A33 618 5.42 1.3 27.0 1.343 are talking about
A34 The retailer is adequately staffed 614 5.40 1.6 26.2 1.377
The waiting time at the pay point is A35 617 5.61 1.5 30.6 1.334 reasonable
This retailer provides good online A36 592 4.85 4.9 22.8 1.752 purchase options
It is easy to complete an online transaction A37 593 4.67 4.9 24.6 1.750 on the retailer’s website
A38 This retailer has an efficient website facility 592 4.89 3.5 22.3 1.665
This retailer has all the credit/debit card A39 605 6.12 0.3 50.2 1.140 facilities in store you need
This retailer keeps me informed of their A40 611 4.21 7.5 20.3 2.166 latest offerings via sms/email
All the merchandise I expect to buy is A41 610 5.32 2.1 26.6 1.501 available in store
A42 I find the merchandise I needed easily 610 5.52 1.3 28.9 1.372
A43 The atmosphere inside the store is 611 5.89 0.7 40.8 1.208
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Low- Top- Standard Statement N Mean box box deviation score score pleasant
The window displays of the store are A44 615 5.97 0.7 44.4 1.236 stylish
The lighting inside the store creates the A45 616 5.91 0.2 39.3 1.158 proper mood
A46 The store has stylish dressing rooms 611 5.66 1.0 35.2 1.344
A47 The store layout is attractive 617 5.85 0.5 38.6 1.217
A48 The store smells pleasant 615 5.82 0.3 38.4 1.232
A49 The store is conveniently located 615 5.76 0.5 35.1 1.278
A50 I enjoy shopping at this retailer 617 5.88 0.6 39.4 1.206
This retailer’s merchandise brings me joy A51 615 5.87 0.8 39.2 1.236 to wear
While shopping at this retailer I feel a A52 615 5.37 2.6 29.8 1.542 sense of adventure
I feel a sense of joy to look at the A53 616 5.70 1.0 33.6 1.297 merchandise
I feel excited about going to the retailer’s A54 613 5.61 1.0 34.3 1.387 store
I feel excited about walking into this A55 614 5.59 1.3 32.1 1.360 retailer’s store
I feel good about myself when I buy from A56 615 5.66 1.0 34.8 1.344 this retailer
I choose this retailer to express my identity A57 615 5.00 4.2 25.5 1.773 to others
A58 This retailer fits the type of person I am 613 5.37 2.3 27.7 1.466
Buying from this retailer says something A59 608 5.15 4.1 24.7 1.623 about me as a person
Buying from this retailer allows me to A60 617 4.51 6.6 19.3 1.962 associate with specific people and groups
Buying from this retailer distinguishes me A61 615 4.77 5.2 22.3 1.827 from others
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Low- Top- Standard Statement N Mean box box deviation score score
I find merchandise at this retailer that is A62 614 5.54 1.3 30.5 1.341 consistent with my style
Other people notice that I buy clothing A63 611 5.25 4.6 27.8 1.695 from this retailer
This retailer is associated with the social A64 612 4.98 3.8 22.5 1.698 class I belong to
I communicate my achievements through A65 612 4.68 6.9 21.4 1.869 supporting this retailer
Buying from this retailer causes others to A66 617 4.74 7.3 21.9 1.881 think more of me
Buying from this retailer makes me look A67 612 4.99 4.7 25.7 1.771 financially successful
This retailer’s brand label is visible on the A68 613 5.35 3.8 30.8 1.690 merchandise
A69 This retailer is suitably located 616 5.65 0.6 30.8 1.279
I have a comfortable relationship with this A70 615 5.48 1.3 27.8 1.343 retailer
I have a positive relationship with this A71 617 5.49 1.1 29.2 1.325 retailer
I have a happy relationship with this A72 616 5.50 1.3 27.9 1.365 retailer
A relationship with this retailer is valuable A73 617 5.19 3.1 25.1 1.585 to me
This retailer builds a personal relationship A74 616 4.86 5.2 21.6 1.771 with me
I have a long-term relationship with this A75 618 4.98 5.3 25.1 1.770 retailer
Respondents overall demonstrate the strongest level of agreement with the statements “The merchandise from this retailer is stylish” (mean = 6.25), “The merchandise is comfortable to wear” (mean = 6.24), “In general, the merchandise from this retailer is of high quality” (mean = 6.13), and “The finishing on the merchandise is of high quality” (mean = 6.13). Statements with the lowest level of agreement include “This retailer
153 Chapter 6: Interpretation of results keeps me informed of the latest offerings via sms/email” (mean = 4.21), “Wearing merchandise from this retailer helps me be more accepted by my friends” (mean = 4.36), and “Buying from this retailer allows me to associate with specific people and groups” (mean = 4.51). The following main findings with respect to customer value (CV) are as follows:
Main finding CV1: With regard to the customer value statements measuring the level of agreement amongst respondents regarding the customer value offered by high fashion retailers, respondents agreed the most with the statements that the merchandise is stylish, comfortable to wear, of high quality with high quality finishes.
Main finding CV2: With regard to the customer value statements measuring the level of agreement amongst respondents regarding the customer value offered by high fashion retailers, respondents agreed the least with the statements that the retailer keeps them informed of the latest offerings via sms/email, that they wear merchandise from the retailer to be accepted by friends, and that they buy from the retailer to associate with specific people and groups.
6.5.2 Exploratory Factor Analysis (EFA)
It is necessary to utilise an exploratory factor analysis (EFA) to determine the nature of interrelationship between the statements and if the statements can be reduced to a more manageable number of factors. This section presents the results of the EFA conducted for the 75 customer value statements in more detail. Table 6.4 portrays the KMO Measure of sampling adequacy and Bartlett’s test of sphericity results.
154 Chapter 6: Interpretation of results
Table 6.4: KMO and Bartlett’s test results for EFA
Test Value of EFA
Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.963
Approx. Chi-square 33620.332
Bartlett’s Test of Sphericity df 2775
Sig. 0.000
Table 6.4 indicates that the 75 customer value statements are suitable for factor analysis since the KMO is 0.963, which is above the cut-off point of 0.6, and the significance level for Bartlett’s test of sphericity is 0.000, which is smaller than the cut- off value of 0.05 (Pallant, 2010:187).
With respect to the communalities, no customer value statements had a value of less than 0.3 and therefore no customer value statements were omitted from further analysis. Using Principal Axis Factoring as extraction method and Varimax for rotation, the total variance explained results, are presented in Table 6.5.
Table 6.5: Total Variance explained results
Extraction sums of squared Rotation sums of squared Initial eigenvalues loadings loadings Factor Cumu- Cumu- Cumu- % of % of % of Total lative Total lative Total lative Variance Variance Variance % % %
1 30.955 41.274 41.274 30.109 40.145 40.145 18.995 30.955 41.274
2 5.486 7.315 48.588 2.936 3.915 44.060 18.411 5.486 7.315
3 3.574 4.765 53.353 5.046 6.728 50.788 21.225 3.574 4.765
4 2.760 3.679 57.032 2.930 3.907 54.695 10.517 2.760 3.679
5 2.309 3.079 60.112 2.315 3.087 57.782 19.976 2.309 3.079
6 1.858 2.478 62.590 1.564 2.085 59.867 18.897 1.858 2.478
7 1.818 2.424 65.013 1.419 1.892 61.758 15.775 1.818 2.424
8 1.568 2.091 67.104 1.213 1.617 63.375 21.916 1.568 2.091
155 Chapter 6: Interpretation of results
Extraction sums of squared Rotation sums of squared Initial eigenvalues loadings loadings Factor Cumu- Cumu- Cumu- % of % of % of Total lative Total lative Total lative Variance Variance Variance % % %
9 1.496 1.994 69.098 1.263 1.684 65.060 8.825 1.496 1.994
10 1.171 1.561 70.659 1.048 1.397 66.457 16.433 1.171 1.561
11 1.127 1.503 72.162 0.709 0.945 67.402 13.475 1.127 1.503
12 1.065 1.421 73.582 0.728 0.971 68.373 11.637 1.065 1.421
It is evident from Table 6.5 that twelve factors explain a total of 68.37% of the variance with an Eigenvalue of no less than 1 for all factors.
It was furthermore evident from the Pattern Matrix that for one factor (not labelled), only two statements (A60 and A61) loaded on this particular factor. The author drew on the theory (section 4.2.9) and the advice of the statistical consultant and determined that the two statements should be incorporated into another factor (eventually labelled as expressive value), therefore reducing the factor solution to eleven factors (Shiu et al., 2009:635). Table 6.6 indicates the factor loadings for the statements on each of the eleven underlying customer value factors (with appropriate labels assigned to them).
Table 6.6: Rotated Factor Matrix for the EFA including all the statements
Factor Factor Statement loading
A1 In general, the merchandise from this retailer is of high quality 0.630
A2 The retailer provides merchandise that is free of defects 0.551
A3 The merchandise from this retailer is stylish 0.573 Merchandise value A4 The design of the merchandise is in line with the latest 0.459 fashion trends (7 statements) A5 The finishing on the merchandise is of high quality 0.692
A6 The merchandise is comfortable to wear 0.593
A7 This retailer offers a variety of merchandise to choose from 0.308
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Factor Factor Statement loading
A8 Paying a high price to own merchandise from this retailer is 0.463 worth it
A9 Considering the price of merchandise at this retailer, I would 0.575 say the prices represent value for money Sacrifice value A10 The retailer’s merchandise is not too expensive 0.816 (5 statements) A11 The merchandise from this retailer is acceptable for the price 0.846 I pay
A12 I do not waste money when buying merchandise from this 0.685 retailer
A13 Buying from this retailer enhances my status with my friends 0.652
A14 Wearing merchandise from this retailer improves the way I 0.761 am perceived by others
A15 Wearing merchandise from this retailer helps me be more 0.670 accepted by my friends
Social value A16 Wearing merchandise from this retailer makes a good 0.810 (7 statements) impression on other people
A17 Wearing merchandise from this retailer leads to social 0.704 approval
A18 Merchandise from this retailer has a positive social image 0.667
A19 I have a lot in common with other customers shopping at this 0.306 retailer
A20 I like to buy from this retailer because the brand provides 0.475 exclusivity
A21 I try to keep my wardrobe up to date with merchandise from 0.308 this retailer
Reputational A22 This retailer is known for carrying the latest fashion trends 0.522 value A23 This retailer is known for luxury 0.702 (7 statements) A24 This retailer is viewed as prestigious 0.865
A25 The retailer is well known among those who purchase 0.701 high/luxury fashion
A26 This retailer is known as one of the top high fashion retailers 0.773
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Factor Factor Statement loading
A27 The staff of this retailer is always welcoming 0.773
A28 I always receive good advice from the staff of this retailer 0.887
A29 The staff of this retailer is friendly 0.985
A30 The staff of this retailer gives me prompt service 0.936
Service value A31 The staff of this retailer gives me personal attention 0.968 (9 statements) A32 The staff of this retailer has the knowledge to answer my 0.815 questions
A33 The staff of this retailer knows what they are talking about 0.634
A34 The retailer is adequately staffed 0.561
A35 The waiting time at the pay point is reasonable 0.438
A36 This retailer provides good online purchase options 0.903
A37 It is easy to complete an online transaction on the retailer’s 1.014 website
Technology value A38 This retailer has an efficient website facility 0.886 (5 statements) A39 This retailer has all the credit/debit card facilities in store you 0.335 need
A40 This retailer keeps me informed of their latest offerings via 0.468 sms/email
A41 All the merchandise I expect to buy is available in store 0.406
A42 I find the merchandise I needed easily 0.484
A43 The atmosphere inside the store is pleasant 0.731
A44 The window displays of the store are stylish 0.738 Store value A45 The lighting inside the store creates the proper mood 0.906 (9 statements) A46 The store has stylish dressing rooms 0.769
A47 The store layout is attractive 0.818
A48 The store smells pleasant 0.775
A49 The store is conveniently located 0.320
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Factor Factor Statement loading
A50 I enjoy shopping at this retailer 0.351
A51 This retailer’s merchandise brings me joy to wear 0.592
Experience value A52 While shopping at this retailer I feel a sense of adventure 0.485
(6 statements) A53 I feel a sense of joy to look at the merchandise 0.778
A54 I feel excited about going to the retailer’s store 0.786
A55 I feel excited about walking into this retailer’s store 0.761
A56 I feel good about myself when I buy from this retailer 0.625
A57 I choose this retailer to express my identity to others 0.514
A58 This retailer fits the type of person I am 0.699
A59 Buying from this retailer says something about me as a 0.683 Expressive value person (7 statements) A60 Buying from this retailer allows me to associate with specific 0.220 people and groups
A61 Buying from this retailer distinguishes me from others 0.213
A62 I find merchandise at this retailer that is consistent with my 0.307 style
A63 Other people notice that I buy clothing from this retailer 0.667
A64 This retailer is associated with the social class I belong to 0.864
A65 I communicate my achievements through supporting this 0.905 retailer Status value (7 statements) A66 Buying from this retailer causes others to think more of me 0.973
A67 Buying from this retailer makes me look financially successful 0.892
A68 This retailer’s brand label is visible on the merchandise 0.345
A69 This retailer is suitably located 0.399
A70 I have a comfortable relationship with this retailer 0.861 Relationship value A71 I have a positive relationship with this retailer 0.952 (6 statements) A72 I have a happy relationship with this retailer 0.949
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Factor Factor Statement loading
A73 A relationship with this retailer is valuable to me 0.650
A74 This retailer builds a personal relationship with me 0.484
A75 I have a long-term relationship with this retailer 0.602
It is evident from Table 6.6 that factor 1 (merchandise value) consists of 7 statements, with factor loadings all above 0.3, factor 2 (sacrifice value) consists of 5 statements of which all five statements have a factor loading above 0.3, factor 3 (social value) consists of 7 statements, with factor loadings all above a 0.3, factor 4 (reputational value) consists of 7 statements, of which all have a factor loading above 0.3. Factor 5 (service value) consists of 9 statements; with factor loadings all above 0.3, factor 6 (technology value) consists of 5 statements, with factor loadings all above 0.3, factor 7 (store value) consists out of 9 statements of which all statements have a factor loading above 0.3. Factor 8 (experience value) consists of 6 statements, with factor loadings above 0.3, factor 9 (expressive value) consists of 7 statements, of which two statements have a factor loading below 0.3 but as explained in section 6.5.2, it was decided to retain the statements. The other 5 statements all have a factor loading above 0.3. Factor 10 (status value) consists of 7 statements, with factor loadings above 0.3, and factor 11 (relationship value) consists out of 6 statements of which all 6 have factor loadings above 0.3.
It can be concluded from the EFA that the eleven factors of merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, expressive value, status value, and relationship value can be extracted from the 75 original customer value statements. By employing a confirmatory factor analysis (CFA), the eleven factors were furthermore verified and refined (Ary et al., 2006:393).
6.5.3 Confirmatory Factor Analysis (CFA)
In order to confirm or verify the structure that underlies the factors extracted with the aid of the EFA (fit-of-the-measurement model), four indices namely, the root mean square
160 Chapter 6: Interpretation of results error of approximation (RMSEA), the comparative fit index (CFI), the Tucker Lewis index (TLI) and the standardised root mean square residual (SRMR) are considered (section 5.3.3.2). The model fit was furthermore refined by the removal of statements from factors. Table 6.7 presents the CFA results, which include the number of statements omitted, and number of statements remaining within each factor in order to refine the model fit, as well as the fit indices.
Table 6.7: Fit indices for CFA models of customer value
Number of Statements Factor remaining RMSEA CFI TLI SRMR omitted statements
Merchandise value None 7 0.123 0.872 0.808 0.058
Sacrifice value None 5 0.152 0.915 0.830 0.037
Social value None 7 0.111 0.925 0.887 0.036
Reputational value None 7 0.103 0.914 0.870 0.047
Service value None 9 0.102 0.926 0.902 0.046
Technology value 1 4 0.028 0.998 0.994 0.011
Store value None 9 0.094 0.921 0.895 0.043
Experience value None 6 0.078 0.966 0.943 0.029
Expressive value None 7 0.125 0.889 0.833 0.056
Status value 1 6 0.103 0.945 0.908 0.036
Relationship value None 6 0.192 0.807 0.678 0.074
It is evident from the fit indices that all eleven factors exhibit a good fit after two statements were omitted from two of the eleven factors. The CFA indicated that one statement (A39) “This retailer has all the credit/debit card facilities in store you need” had to be omitted from the technology value (factor 6), and one statement (A69) “This retailer is suitably located” had to be omitted from the factor status value (factor 10) to improve the model fit, as these statements had individual factor loadings of below 0.3 (Shiu et al., 2009:650). After these statements had been omitted, technology value consists of four statements and status value of six statements (Table 6.7 & Table 6.8).
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The remaining nine customer value factors (merchandise value, sacrifice value, social value, reputational value, service value, store value, experience value, expressive value, and relationship value) retained all the original customer value statements as presented in Table 6.8.
The fit indices of the CFA indicate that technology value (factor 6) exhibits the best fit to the model (CFI = 0.998; RMSEA = 0.028). Experience value (factor 8) has the second best fit to the model (CFI = 0.966; RMSEA = 0.078), and the third best fit with the model is the store value (factor 7) (CFI = 0.921; RMSEA = 0.094). The factor with the second poorest fit is expressive value with an RMSEA value of 0.125, and a CFI of 0.889. Its CFI value still indicates an overall acceptable fit and was retained for this reason. The factor with the poorest fit in relation to its factor counterparts is relationship value (factor 11) that portrays an RMSEA value of 0.192, however its CFI value (0.807) still indicates an overall acceptable fit, and for this reason this factor was retained for further analysis. Although factors with an RMSEA value of 0.09 and below are considered a good fit, the RMSEA value should not exceed 0.2 (Hair et al., 2007:746). Those factors with an RMSEA value higher than 0.1, but with a CFI higher than 0.8 (representing an acceptable fit) (merchandise value, sacrifice value, social value, reputational value, service value, expressive value, status value and relationship value) indicate an overall acceptable fit to the model (Hair et al., 2007:746) (section 5.3.3.2). Therefore these factors were all retained for further analysis. Table 6.8 provides an exposition of the final set of factors and corresponding statements for customer value.
Table 6.8: Final set of factors and corresponding statements after CFA
Merchandise value (factor 1)
In general, the merchandise from this retailer is of high quality
The retailer provides merchandise that is free of defects
The merchandise from this retailer is stylish
The design of the merchandise is in line with the latest fashion trends
The finishing on the merchandise is of high quality
The merchandise is comfortable to wear
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This retailer offers a variety of merchandise to choose from
Sacrifice value (factor 2)
Paying a high price to own merchandise from this retailer is worth it
Considering the price of merchandise at this retailer, I would say the prices represent value for money
The retailer’s merchandise is not too expensive
The merchandise from this retailer is acceptable for the price I pay
I do not waste money when buying merchandise from this retailer
Social value (factor 3)
Buying from this retailer enhances my status with my friends
Wearing merchandise from this retailer improves the way I am perceived by others
Wearing merchandise from this retailer helps me be more accepted by my friends
Wearing merchandise from this retailer makes a good impression on other people
Wearing merchandise from this retailer leads to social approval
Merchandise from this retailer has a positive social image
I have a lot in common with other customers shopping at this retailer
Reputational value (factor 4)
I like to buy from this retailer because the brand provides exclusivity
I try to keep my wardrobe up to date with merchandise from this retailer
This retailer is known for carrying the latest fashion trends
This retailer is known for luxury
This retailer is viewed as prestigious
The retailer is well known among those who purchase high/luxury fashion
This retailer is known as one of the top high fashion retailers
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Service value (factor 5)
The staff of this retailer is always welcoming
I always receive good advice from the staff of this retailer
The staff of this retailer is friendly
The staff of this retailer gives me prompt service
The staff of this retailer gives me personal attention
The staff of this retailer has the knowledge to answer my questions
The staff of this retailer knows what they are talking about
The retailer is adequately staffed
The waiting time at the pay point is reasonable
Technology value (factor 6)
This retailer provides good online purchase options
It is easy to complete an online transaction on the retailer’s website
This retailer has an efficient website facility
This retailer keeps me informed of their latest offerings via sms/email
Store value (factor 7)
All the merchandise I expect to buy is available in store
I find the merchandise I needed easily
The atmosphere inside the store is pleasant
The window displays of the store are stylish
The lighting inside the store creates the proper mood
The store has stylish dressing rooms
The store layout is attractive
The store smells pleasant
The store is conveniently located
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Experience value (factor 8)
I enjoy shopping at this retailer
This retailer’s merchandise brings me joy to wear
While shopping at this retailer I feel a sense of adventure
I feel a sense of joy to look at the merchandise
I feel excited about going to the retailer’s store
I feel excited about walking into this retailer’s store
Expressive value (factor 9)
I feel good about myself when I buy from this retailer
I choose this retailer to express my identity to others
This retailer fits the type of person I am
Buying from this retailer says something about me as a person
Buying from this retailer allows me to associate with specific people and groups
Buying from this retailer distinguishes me from others
I find merchandise at this retailer that is consistent with my style
Status value (factor 10)
Other people notice that I buy clothing from this retailer
This retailer is associated with the social class I belong to
I communicate my achievements through supporting this retailer
Buying from this retailer causes others to think more of me
Buying from this retailer makes me look financially successful
This retailer’s brand label is visible on the merchandise
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Relationship value (factor 11)
I have a comfortable relationship with this retailer
I have a positive relationship with this retailer
I have a happy relationship with this retailer
A relationship with this retailer is valuable to me
This retailer builds a personal relationship with me
I have a long-term relationship with this retailer
Main finding CV3: The EFA conducted on 75 customer value statements extracted 11 underlying factors of customer value. The factor structure was subsequently verified and refined with a CFA, resulting in eleven factors of customer value comprising 73 customer value statements, namely merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, expressive value, status value and relationship value.
6.5.4 Reliability of customer value factors
The Cronbach’s alpha coefficients for the scales measuring the eleven factors that resulted from the EFA and CFA reported in section 6.5.2 and 6.5.3 are portrayed in Table 6.9.
Table 6.9: Cronbach’s alpha coefficients for the eleven customer value factors
Factor Number of statements Cronbach’s alpha coefficients
Merchandise value 7 0.863
Sacrifice value 5 0.861
Social value 7 0.926
Reputational value 7 0.887
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Service value 9 0.948
Technology value 4 0.871
Store value 9 0.922
Experience value 6 0.934
Expressive value 7 0.907
Status value 6 0.906
Relationship value 6 0.940
It is evident from Table 6.10 that the Cronbach’s alpha coefficients for the scales measuring all eleven customer value factors are above the acceptable point of 0.7, ranging between 0.861 and 0.948. The scales can thus be considered reliable measures of the underlying factors of customer value.
Main finding CV4: The results of the reliability testing indicate that the scales used to measure the eleven underlying factors of customer value are reliable.
6.5.5 Overall mean scores for customer value factors
Table 6.10 presents the overall mean scores for the eleven customer value factors.
Table 6.10: Overall mean scores for the eleven customer value factors
Factor Number of statements Overall mean score
Merchandise value 7 6.07
Sacrifice value 5 5.47
Social value 7 4.95
Reputational value 7 5.56
Service value 9 5.45
Technology value 4 4.61
Store value 9 5.73
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Experience value 6 5.67
Expressive value 7 5.13
Status value 6 4.99
Relationship value 6 5.24
It is evident from Table 6.10 that all eleven customer value factors realised an overall mean score higher than the mid-point of the scale (4.00). The highest overall mean score was realised by merchandise value (mean = 6.07), the second highest for store value (mean = 5.73), and the third highest mean score was realised by experience value (mean = 5.67). Although still above the mid-point of the scale, the lowest mean score was realised by technology value (mean = 4.61).
Main finding CV5: High fashion retailer respondents evaluate all eleven customer value factors measured at high fashion retailers favourably, realising overall mean scores for all factors above the mid-point of the scale.
6.6 CUSTOMER SATISFACTION
Section B of the questionnaire presented five customer satisfaction statements to respondents. The respondents had to indicate to what extent they agree with each of the customer satisfaction statements regarding their level of satisfaction with high fashion retailers. Respondents were asked to indicate, on a seven-point unlabelled Likert-type scale, where 1 indicated ‘strongly disagree’ and 7 ‘strongly agree’, the extent to which they agree with each one of the 5 customer satisfaction statements.
This section provides the descriptive results for each statement in order to establish respondents’ level of agreement with individual statements and reports the count (N), mean, low-box score, top-box score and standard deviation for all five customer satisfaction statements.
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Next, the results of a confirmatory factor analysis (CFA) are presented (section 5.3.3.2). The reliability for the resulting factor is also tested. This section concludes with the calculation of the overall mean score for the valid and reliable factor.
6.6.1 Descriptive results
Table 6.11 presents the descriptive results for Section B in the questionnaire.
Table 6.11: Customer satisfaction statements
Low-box Top-box Standard Statement N Mean score score deviation
My feelings about this retailer are very B1 614 5.83 0.3 37.9 1.190 positive
I feel good about shopping at this B2 611 5.87 0.7 39.0 1.193 retailer
I feel satisfied that what I get from B3 shopping at this retailer is the best that 615 5.55 1.1 31.2 1.366 can be achieved
I am content with the way in which this B4 615 5.49 1.3 28.1 1.336 retailer has taken care of me
The extent to which shopping at this B5 retailer has produced the best possible 614 5.63 1.0 31.4 1.291 outcome is satisfying
It is evident from Table 6.11 that respondents overall demonstrate the strongest level of agreement with the statements “I feel good about shopping at this retailer” (mean = 5.87) and “My feelings about this retailer are very positive” (mean = 5.83). Statements with the lowest level of agreement comprise “I am content with the way in which this retailer has taken care of me” (mean = 5.49) and “I feel satisfied that what I get from shopping at this retailer is the best that can be achieved” (mean = 5.55). The following main findings with respect to customer satisfaction (CS) are as follows:
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Main finding CS1: With regard to the customer satisfaction statements measuring the level of agreement amongst respondents regarding the satisfaction of high fashion retailers, respondents agreed most with the statement that they “feel good about shopping at the retailer”, as well as they “have positive feelings about the retailer”.
Main finding CS2: Being content with the way the retailer takes care of customers and being satisfied with getting the best that can be achieved when shopping at the retailer are the statements with the lowest level of agreement with regards to the customer satisfaction statements measuring the level of agreement amongst respondents regarding satisfaction of high fashion retailers.
6.6.2 Confirmatory Factor Analysis (CFA)
This section discusses the results of the confirmatory factor analysis (CFA). In order to determine the extent of the fit-of-the-measurement model, four indices namely, the root mean square error of approximation (RMSEA), the comparative fit index (CFI), the Tucker Lewis index (TLI) and the standardised root mean square residual (SRMR) are considered. Table 6.12 presents the CFA results.
Table 6.12: Fit indices for CFA model for customer satisfaction
Number of Statements Factor remaining RMSEA CFI TLI SRMR omitted statements
Customer satisfaction None 5 0.154 0.933 0.865 0.031
The fit indices of the CFA indicate that the customer satisfaction factor exhibits a good fit (CFI = 0.933; RMSEA = 0.154; TLI = 0.865; SRMR = 0.031). Although factors with an RMSEA value of 0.09 and below are considered an acceptable fit, the RMSEA value should not exceed 0.2 (Hair et al., 2007:746). Factors with an RMSEA value higher than 0.1 (average fit), but with a CFI higher than 0.8, represent a good fit. Furthermore, a TLI higher than 0.8 and a SRMR lower than 0.09, also represent a good fit. Therefore all
170 Chapter 6: Interpretation of results customer satisfaction statements are retained for further analysis. Table 6.13 provides an exposition of the final set of statements for customer satisfaction.
Table 6.13: The corresponding statements for customer satisfaction after CFA
Customer satisfaction
My feelings about this retailer are very positive
I feel good about shopping at this retailer
I feel satisfied that what I get from shopping at this retailer is the best that can be achieved
I am content with the way in which this retailer has taken care of me
The extent to which shopping at this retailer has produced the best possible outcome is satisfying
Main finding CS3: The CFA confirms the underlying structure of customer satisfaction measured by five satisfaction statements in total.
6.6.3 Reliability of customer satisfaction
The Cronbach’s alpha coefficient for the customer satisfaction scale is reported in Table 6.14.
Table 6.14 Cronbach’s alpha coefficient for customer satisfaction
Factor Number of statements Cronbach’s alpha coefficient
Customer satisfaction 5 0.937
It is evident from Table 6.14 that the Cronbach’s alpha coefficient for the customer satisfaction scale is above 0.7 and can thus be considered a reliable measure of customer satisfaction.
Main finding CS4: The results of the reliability testing indicate that the scale used to measure customer satisfaction is reliable.
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6.6.4 Overall mean score for customer satisfaction
Table 6.15 presents the overall mean score for customer satisfaction.
Table 6.15: Overall mean score for customer satisfaction
Factor Number of statements Overall mean score
Customer satisfaction 5 5.67
It is evident from the results presented in Table 6.15 that customer satisfaction realised a mean of higher than the mid-point of the scale (mean = 5.67).
Main finding CS5: High fashion retailer respondents evaluate their customer satisfaction with high fashion retailers favourably, realising an overall mean score above the mid-point of the scale.
6.7 REPURCHASE INTENTION
Section C of the questionnaire presented the respondents with five repurchase intention statements. The respondents had to indicate to what extent they agree with each of the repurchase intention statements regarding their intention to repurchase from a high fashion retailer in future. Respondents were asked to indicate, on a seven-point unlabelled Likert-type scale, where 1 indicated ‘strongly disagree’ and 7 ‘strongly agree’, the extent to which they agree with each one of the 5 repurchase intention statements.
This section provides the descriptive results for each statement in order to establish respondents’ level of agreement with individual statements and reports the count (N), mean, low-box score, top-box score and standard deviation for all five repurchase intention statements.
Next, the results of a confirmatory factor analysis (CFA) are presented. The reliability for the resulting factor is also tested. This section concludes with the calculation of the overall mean score for the valid and reliable factor.
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6.7.1 Descriptive results
In Table 6.16 the descriptive results for Section C in the questionnaire are presented.
Table 6.16 Repurchase intention statements
Low- Top-box Standard Statement N Mean box score deviation score
I would select the same retailer for C1 611 5.65 1.0 33.7 1.347 another high/luxury fashion purchase
I consider this retailer to be my first C2 611 5.16 4.6 29.0 1.729 choice
I intend to purchase from this retailer C3 610 5.99 0.5 45.2 1.204 again
I would continue to support this retailer C4 even if the prices are higher than those 613 5.14 4.6 28.4 1.753 of its competitors.
I consider doing more business with this C5 610 5.73 1.5 37.7 1.366 retailer in future
Table 6.16 indicates that respondents overall exhibit the strongest level of agreement with the statements “I intend to purchase from this retailer again” (mean = 5.99), followed by “I consider doing more business with this retailer in future” (mean = 5.73). Statements with the lowest level of agreement include “I would continue to support this retailer even if the prices are higher than those of its competitors” (mean = 5.14), and “I consider this retailer to be my first choice” (mean = 5.16). The main findings with respect to repurchase intention (RI) are as follows:
Main finding RI1: With regard to the repurchase intention statements measuring the level of agreement, respondents agreed the most with the statements “intending to purchase from the retailer again”, as well as “doing business with the retailer in future again”, regarding repurchase intention of high fashion retailers.
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Main finding RI2: Continuing supporting the retailer even if the prices are higher than those of its competitors, and considering the retailer to be a first choice, are the statements with the lowest level of agreement with regard to the repurchase intention statements measuring the level of agreement amongst respondents regarding repurchase intention of high fashion retailers.
6.7.2 Confirmatory Factor Analysis (CFA)
This section discusses the results of the confirmatory factor analysis (CFA). In order to determine the extent of the fit-of-the-measurement model (verification), four indices namely, the root mean square error of approximation (RMSEA), the comparative fit index (CFI), the Tucker Lewis index (TLI) and the standardised root mean square residual (SRMR) are considered. Table 6.17 presents the CFA results.
Table 6.17: Fit indices for CFA model for repurchase intention
Number of Statements Factor remaining RMSEA CFI TLI SRMR omitted statements
Repurchase intention None 5 0.153 0.894 0.788 0.050
The fit indices of the CFA indicate that repurchase intention exhibits a good fit to the model (CFI = 0.894; RMSEA = 0.153; SRMR = 0.05). Although factors with an RMSEA value of 0.09 and below are considered an acceptable fit, the RMSEA value should not exceed 0.2 (Hair et al., 2007:746). Factors with an RMSEA value higher than 0.1 (average fit), but with a CFI higher than 0.8, represent a good fit, as well as a SRMR lower than 0.09. Factors with a TLI higher than 0.8 are considered a good fit, however the TLI is marginally lower with all other indices considered a good fit or acceptable fit respectively (Salzberger, 2009:428). Therefore all repurchase intention statements are retained for further analysis. Table 6.18 provides an exposition of the final set of statements for repurchase intention.
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Table 6.18: Final set of repurchase intention statements after CFA
Repurchase intention
I would select the same retailer for another high/luxury fashion purchase
I consider this retailer to be my first choice
I intend to purchase from this retailer again
I would continue to support this retailer even if the prices are higher than those of its competitors
I consider doing more business with this retailer in future
Main finding RI3: The CFA confirms the underlying structure of repurchase intention measured by five repurchase intention statements in total.
6.7.3 Reliability of repurchase intention
The Cronbach’s alpha coefficient for repurchase intention is portrayed in Table 6.19.
Table 6.19: Cronbach’s alpha coefficient for repurchase intention
Factor Number of statements Cronbach’s alpha coefficient
Repurchase intention 5 0.886
It is evident from Table 6.19 that the Cronbach’s alpha coefficient for the repurchase intention scale is above 0.7 and can thus be considered a reliable measure of repurchase intention.
Main finding RI4: The results of the reliability testing indicate that the scale used to measure repurchase intention is reliable.
6.7.4 Overall mean score for factor
Table 6.20 presents the results of the overall mean score for the repurchase intention factor.
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Table 6.20: Overall mean score for repurchase intention
Factor Number of statements Overall mean score
Repurchase intention 5 5.53
It is evident from the results presented in Table 6.20 that repurchase intention realised a mean of higher than the mid-point of the scale (mean = 5.53).
Main finding RI5: High fashion retailer respondents evaluate their repurchase intention at high fashion retailers favourably, realising an overall mean score above the mid- point of the scale.
The following section discusses the testing of the theoretical model (section 4.4) by applying structural equation modelling (SEM).
6.8 TESTING THE THEORETICAL MODEL
Structural equation modelling (SEM) was utilised to test the theoretical model proposed in Chapter 4 (section 4.4). The interrelationship among customer value, customer satisfaction and repurchase intention was tested using MPlus (version 7.11), applying Maximum Likelihood (ML) estimation. Several authors view this as the preferred method of estimation for SEM (Kline, 2011:81; Meyers et al., 2006:558-562). This section reports the results of the measurement model and subsequent structural model that were tested. The theoretical model is depicted in Figure 6.1, and the subsequent alternative hypotheses (section 4.4.1, 4.4.2 and 4.4.3) are stated below:
H1: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels.
H2: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention.
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H3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers.
Figure 6.1: Theoretical model
6.8.1 The measurement model
An initial SEM was performed using the factors verified and refined through the three CFAs reported in sections 6.5.4, 6.6.3 and 6.7.3. The software was unable to generate any viable results. The author, with the assistance of the statistician, reviewed the CFA results for customer value and decided to omit a number of factors that fitted poorly from the model to yield results. The two factors with the poorest fit results, namely
177 Chapter 6: Interpretation of results relationship value and expressive value, were ultimately omitted and the SEM was performed again. Subsequently, results were generated.
Table 6.21 presents the fit indices for the measurement model generated. The extent of the fit of the measurement model is evaluated through three indices namely, the relative chi-square ratio (X2/df), the root mean square error approximation (RMSEA) and the comparative fit index (CFI) (Malhotra et al., 2012:873; Hooper, Coughlan & Mullen, 2008:54-55; Hair et al., 2007:746) (section 5.3.3.2).
Table 6.21: Fit indices for the measurement model
Fit indices Suggested cut-off point Fit indices value
Chi-square/degrees of freedom < 3.0 X2/df= 4969.359/2290 = 2.170 (relative chi-square ratio)
CFI ≥ 0.90 0.870
< 0.05 = good fit ≤ 0.08 = acceptable fit RMSEA 0.049 ≤ 0.10 = average fit
It is evident from Table 6.21 that the relative chi-square ratio or X2/dfratio (2.170) is less than 3.0 and therefore indicates a good fit (Rotgangs & Schmidt, 2011:470; Hoe, 2008:77). Although the chi-square ratio indicates a good fit, it is affected by the size of correlations between pairs of variables (larger correlations generally cause a poorer fit), and it is furthermore sensitive to the sample size and therefore it should be used with caution (Meyers et al., 2006:557). For this reason the CFI and RMSEA were analysed. Based on these measures, the model exhibits an acceptable fit with the CFI (CFI = 0.870), and the RMSEA (RMSEA = 0.049) (Meyers et al., 2006:559-560).
6.8.2 The structural model
In addition to determining the fit indices for the measurement model, the statistical significance of the paths between the factors were investigated. A path is statistically significant at a significance level of 0.05 (p-value < 0.05) (Hoe, 2008:79). Table 6.22
178 Chapter 6: Interpretation of results represents the statistical significant paths for the factors investigated in this study indicating the standard regression weights (β-weights) and the significance levels for each path.
Table 6.22: Statistical significant paths for the structural model
Significant paths Β-weight p-value
Merchandise value customer satisfaction 0.039 0.633
Sacrifice value customer satisfaction 0.215 0.002*
Social value customer satisfaction -0.095 0.089
Reputation value customer satisfaction 0.084 0.171
Service value customer satisfaction 0.104 0.044*
Technology value customer satisfaction 0.008 0.804
Store value customer satisfaction 0.234 0.001*
Experience value customer satisfaction 0.281 0.000*
Status value customer satisfaction 0.117 0.039*
Merchandise value repurchase intention -0.109 0.154
Sacrifice value repurchase intention 0.172 0.011*
Social value repurchase intention 0.022 0.722
Reputational value repurchase intention 0.102 0.214
Service value repurchase intention -0.028 0.561
Technology value repurchase intention 0.007 0.822
Store value repurchase intention -0.013 0.875
Experience value repurchase intention 0.012 0.882
Status value repurchase intention 0.013 0.834
Customer satisfaction repurchase intention 0.747 0.000* * statistically significant at the 0.05 level
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It is evident from Table 6.22 that five factors of customer value namely sacrifice value, service value, store value, experience value and status value realised statistically significant paths to customer satisfaction with p-values < 0.05 and β-weights ranging between 0.104 and 0.215. These β-weights are indicative of the small direct effect of the five customer value factors on customer satisfaction. It is further evident from Table 6.22 that sacrifice value only realised a statistically significant path to repurchase intention with a p-value of 0.011 and a β-weight of 0.172, also indicating a small direct effect of this customer value factor on repurchase intention. Customer satisfaction realised a significant path to repurchase intention with a p-value < 0.000 and a β-weight of 0.747, indicating a large direct effect of customer satisfaction on repurchase intention. The structural model is presented in Figure 6.2, indicating the β -values.
With respect to H1 stating that the customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels, the results indicate that sacrifice value, service value, store value, experience value and status value have a significant and positive, albeit small, influence on customer satisfaction. H1 can therefore be supported with respect to these five of the nine factors of customer value influencing the customer satisfaction levels of high fashion retail customers.
With respect to H2 stating that the customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention, the results indicate that only sacrifice value has a significant and positive, but small, influence on repurchase intention. H2 can therefore be supported with respect to only one of the nine customer value factors influencing the repurchase intention of high fashion retail customers.
With respect to H3 stating that the customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers, the hypothesis can be supported since the results indicate that customer satisfaction has a significant and positive influence that is large in effect size on repurchase intention.
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Figure 6.2: The structural model
Based upon the abovementioned results, the following main findings regarding the structural equation modelling (SEM) are presented:
Main finding SEM1: The sacrifice value, service value, store value, experience value and status value that high fashion retail customers derive from high fashion retailers have a significant and positive influence on their customer satisfaction levels, with a small direct effect.
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Main finding SEM2: The sacrifice value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention, with a small direct effect.
Main finding SEM3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on their repurchase intention, with a large direct effect.
6.9 SUMMARY OF FINDINGS
The purpose of this section is to provide a summary of the main findings discovered in the study. The main findings relating to the descriptive results are summarised, followed by the main findings concerning hypotheses testing.
6.9.1 Main findings pertaining to the descriptive results
The main findings for the descriptive results are summarised according to the three main constructs of the theoretical model as portrayed in the questionnaire namely, customer value (Section A of questionnaire), customer satisfaction (Section B of the questionnaire), and repurchase intention (Section C of the questionnaire). This section also includes the main findings with respect to the tested customer value model after structural equation modelling (SEM) was employed.
6.9.1.1 Customer value
Main finding CV1: With regard to the customer value statements measuring the level of agreement amongst respondents regarding the customer value offered by high fashion retailers, respondents agreed the most with the statements that the merchandise is stylish, comfortable to wear, of high quality with high quality finishes.
Main finding CV2: With regard to the customer value statements measuring the level of agreement amongst respondents regarding the customer value offered by high fashion retailers, respondents agreed the least with the statements that the retailer
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keeps them informed of the latest offerings via sms/email, that they wear merchandise from the retailer to be accepted by friends, and that they buy from the retailer to associate with specific people and groups.
Main finding CV3: The EFA conducted on 75 customer value statements extracted 11 underlying factors of customer value. The factor structure was subsequently verified and refined with a CFA, resulting in eleven factors of customer value comprising 73 customer value statements, namely merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, expressive value, status value and relationship value.
Main finding CV4: The results of the reliability testing indicate that the scales used to measure the eleven underlying factors of customer value are reliable.
Main finding CV5: High fashion retailer respondents evaluate all eleven customer value factors measured at high fashion retailers favourably, realising overall mean scores for all factors above the mid-point of the scale.
6.9.1.2 Customer satisfaction
Main finding CS1: With regard to the customer satisfaction statements measuring the level of agreement amongst respondents regarding the satisfaction of high fashion retailers, respondents agreed most with the statement that they “feel good about shopping at the retailer” as well as they “have positive feelings about the retailer”.
Main finding CS2: Being content with the way the retailer takes care of customers and being satisfied with getting the best that can be achieved when shopping at the retailer, are the statements with the lowest level of agreement with regard to the customer satisfaction statements measuring the level of agreement amongst respondents regarding satisfaction of high fashion retailers.
Main finding CS3: The CFA confirms the underlying structure of customer satisfaction measured by five customer satisfaction statements in total.
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Main finding CS4: The results of the reliability testing indicate that the scale used to measure customer satisfaction is reliable.
Main finding CS5: High fashion retailer respondents evaluate their customer satisfaction with high fashion retailers favourably, realising an overall mean score above the mid-point of the scale.
6.9.1.3 Repurchase intention
Main finding RI1: With regard to the repurchase intention statements measuring the level of agreement, respondents agreed the most with the statements “intending to purchase from the retailer again”, as well as “doing business with the retailer in future again”, regarding the satisfaction of high fashion retailers.
Main finding RI2: Continuing supporting the retailer even if the prices are higher than those of its competitors, and considering the retailer to be a first choice are the statements with the lowest level of agreement with regard to the repurchase intention statements measuring the level of agreement amongst respondents regarding repurchase intention of high fashion retailers.
Main finding RI3: The CFA confirms the underlying structure of repurchase intention measured by five satisfaction statements in total.
Main finding RI4: The results of the reliability testing indicate that the scale used to measure repurchase intention is reliable.
Main finding RI5: High fashion retailer respondents evaluate their repurchase intention at high fashion retailers favourably, realising an overall mean score above the mid-point of the scale.
The main findings formulated for hypotheses testing for the structural model are summarised in the following section.
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6.9.2 Main findings pertaining to the hypotheses testing
This section summarises the main findings pertaining to hypotheses testing and includes the hypotheses as well as the main finding formulated for each hypothesis.
H1: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels.
Main finding SEM1: The sacrifice value, service value, store value, experience value and status value that high fashion retail customers derive from high fashion retailers have a significant and positive influence on their customer satisfaction levels, with a small direct effect.
H2: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention.
Main finding SEM2: The sacrifice value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention, with a small direct effect.
H3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers.
Main finding SEM3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on their repurchase intention, with a large direct effect.
6.10 CONCLUSION
This chapter analyses and interprets the results obtained from self-administered questionnaires that were fielded by addressing the sample realisation rate, demographic profile and purchasing habits of respondents. This chapter also presents the descriptive results, reliability of factors, and overall mean scores for the three main constructs of the
185 Chapter 6: Interpretation of results proposed customer value model. Before this is done, an EFA as well as a CFA was conducted for the customer value construct to uncover, verify and refine its underlying factors. CFAs were furthermore conducted for both the satisfaction and repurchase intention constructs to confirm the factor structures of the set of observed variables. The theoretical model was tested by the application of a SEM. The SEM results indicate a good model fit and the structural model presents the paths between the customer value factors and the satisfaction and repurchase intention constructs that proved to be statistically significant. This chapter concludes with a summary of the main findings of the empirical phase of the study. In the following chapter an overview, conclusions and recommendations of the study are provided.
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CHAPTER 7: OVERVIEW, CONCLUSIONS AND RECOMMENDATIONS
7.1 INTRODUCTION
The purpose of this chapter is to provide an overview of the study, draw a number of conclusions and present specific recommendations based upon the results reported in Chapter 6 as well as the literature review presented in Chapters 2 to 4. This chapter commences with a brief overview of the study as well as an overview of the research methodology of the study. This is followed by a presentation of the conclusions and recommendations of the study.
A flow diagram is furthermore presented to link the objectives of the research study with the questions in the questionnaire, the main findings of the study, as well as the conclusions and recommendations presented in this chapter. In addition, a number of limitations of the research study are discussed after which the chapter concludes with recommendations for future research.
7.2 OVERVIEW OF THE STUDY
Due to the economic downturn and increased competition in the high fashion retail industry, high fashion retailers have realised the importance of implementing marketing practices to acquire and retain customers (Fahy & Jobber, 2012:8; Jobber, 2010:3). Retail customers have more alternatives to choose from and are better informed about alternatives available in the marketplace than ever before (Levy & Weitz, 2009:413).
To succeed in this competitive marketplace, high fashion retailers must become adept not just at providing quality products, but also at providing value to their customers (Chang & Dibb, 2012:252). Providing superior customer value is viewed as one of the major contributors to the attraction and retention of customers (Ferrand et al., 2010:85; Saha & Theingri, 2009:354). In order to ensure that high fashion retailers create a sustainable competitive advantage in this increasingly competitive environment, high fashion retailers need to gain an understanding of the customer value dimensions that
187 Chapter 7: Overview, conclusions and recommendations are most influential in determining the value offered by a high fashion retailer (Helkkula et al., 2012:59; Li & Petrick, 2010:205; Sparks et al., 2008:99).
Customer value is a multidimensional construct that is context specific (Edward & Sahadev, 2011:328), and it is thus important to comprehend the concept of customer value and its dimensions, as it is also seen as an accurate indicator of customer satisfaction and repurchase intention (Kitapci et al., 2013:243; Hume & Mort, 2010:177; Hu et al., 2009:121; Patterson & Spreng, 1997:416).
Therefore, a multidimensional model was developed to assist high fashion retailers in gaining an understanding of the dimensions that constitute customer value for high fashion customers. The model could assist high fashion retailers in determining the key dimensions determining customers’ value for their customers. This model could also further place the high fashion retailer in a better position to provide customer value that will consequently lead to customer satisfaction, repurchase and improved profitability.
7.3 RESEARCH METHODOLOGY OVERVIEW
In this study a qualitative, exploratory research design was utilised as part of the exploratory phase of the research. Focus groups were used to investigate the extent to which customer value dimensions identified in the literature are applicable in the high fashion retailers. The focus groups were furthermore probed to determine whether there are any other unidentified customer value dimensions relevant to high fashion retailers, as well as to determine the specific statements that describe the customer value dimensions for high fashion retailers.
The primary research design utilised for the purpose of this study, was a descriptive research design utilising quantitative methods to obtain information from customers of high fashion retailers (elements) shopping at shopping centres (units) in Gauteng. A non-probability, judgmental sampling technique was employed to select sampling units (shopping centres), and non-probability convenience sampling techniques to select the sampling elements (customers of high fashion retailers). An interviewer-administered questionnaire was employed to collect data.
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The results of the study, analysed with the aid of SPSS, report on the demographic profile of respondents (section 6.3) and their purchasing habits at high fashion retailers (section 6.4). Descriptive statistics were furthermore presented for each statement measuring the constructs of the study, namely customer value (section 6.5.1), customer satisfaction (section 6.6.1) and repurchase intention (section 6.7.1).
Exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were employed to uncover and confirm factor structures for the constructs of the study (sections 6.5.2, 6.5.3, 6.6.2, 6.7.2). This was followed by an assessment of the reliability of the scales measuring the constructs of the study (sections 6.5.4, 6.6.3, 6.7.3). Overall mean scores for the valid and reliable factors for the constructs were furthermore calculated (sections 6.5.5, 6.6.4, 6.7.4).
The last step involved testing the theoretical model of the study by employing SEM with the aid of MPlus software.
7.4 CONCLUSIONS AND RECOMMENDATIONS FOR SECONDARY OBJECTIVES
This section addresses the conclusions and recommendations for each of the secondary objectives formulated for the study.
7.4.1 Secondary objective 1
To report on the state of affairs in the fashion retail industry with specific reference to high fashion retailing.
The fashion retail industry, of which high fashion retailing is a component, plays an important role in the South African economy as it is the second largest contributor to retail income in South Africa (Statistics South Africa, 2012:2). The fashion retail industry is unpredictable and competitive in nature (Grannis, 2012; IMAP, 2010:5) and the industry’s market is fragmented with customers with very specific needs (Grewal & Levy, 2010:14). Fashion retail industry trends include shorter cycles, price deflation,
189 Chapter 7: Overview, conclusions and recommendations offshore sourcing, diversifying to survive, and following growth in populations to ensure sales growth (Datamonitor, 2010:14).
High fashion retailers are consistently recognised as the most successful retailers across different countries in the fashion retail industry (Moore et al., 2010:139). The high fashion retail industry is projected to be growing globally at 65 per cent between 2010 and 2015. The majority of its growth is expected to come from emerging economies of which South Africa is one (Datamonitor, 2011a). Although the global high fashion retail industry is least affected by the economic downturn, the recession has changed the industry dynamics and the shopping habits of customers (IMAP, 2010:3).
There are several developments within the high fashion retail industry globally that are evident. There is an increased focus on men’s clothing; decreased sales of affordable luxury and a shift towards an increased demand of genuine luxury products; and new markets for customers of high fashion are emerging worldwide (Datamonitor, 2011a; Rantisi, 2011:259).
With the inclusion of South Africa in 2010 into the BRICS markets, new opportunities opened up for luxury brands, and specifically high fashion retailers. South Africa is seen as the gateway for Africa, where there is potential for sales growth in the high fashion retail industry (Luxurysociety, 2011). In comparison with markets like China or India, the sales numbers in South Africa are still relatively modest, but there are opportunities for high fashion retailers to expand their markets even further into the relatively untapped African continent (Luxurysociety, 2011). The dominant sectors within the fashion retail industry have included furniture, high fashion and footwear (Luxurysociety, 2011).
There is also growing intensity in high fashion retail competition in South Africa due to the increase in international brands (Grail, 2009; Levy & Weitz, 2009:133; Sweeney & Soutar, 2001:206). The increased competition between different high fashion retailers for the share of wallet of customers, is forcing high fashion retailers to provide products and services that present value to their customers (Cottet et al., 2006:220; Wachter, 2000:121) (Chapter 2).
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Based upon Chapter 2 regarding the fashion and high fashion retail industry, the following conclusions are formulated:
Conclusion 1.1: A number of trends are observable in the fashion retail industry:
o fashion retailers’ decision-making turnaround times are affected by increasing shorter product life cycles (section 2.3.2);
o fashion retailers are increasingly sourcing raw materials and manufacturing capabilities offshore (section 2.3.2); and
o fashion retailers are diversifying into markets with growing populations to ensure growth possibilities (section 2.3.2).
Conclusion 1.2: A number of key environmental trends shape the high fashion retail industry:
o the high fashion retail industry is growing strongly especially in emerging economies such as South Africa, leading to more high fashion retailers entering the South African market. This will lead to an increase in competition (section 2.3.2);
o high fashion sales in South Africa are influenced by the knock-on effect of the developed markets’ slowdown (section 2.5); and
o the high fashion retail industry is, however, the least affected by the economic downturn, therefore opportunity for profitability is present (section 2.3.3.3).
Conclusion 1.3: Several trends in the high fashion retail industry are evident:
o the dynamic and competitive nature of high fashion retailing has created different business models and a wide range of new formats of which multi- channel retailing is an example (section 2.4.1 and 2.4.2); and
o global luxury fashion brands are considering South Africa as a new growth market for high fashion (section 2.3.3.2 and 2.5).
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Conclusion 1.4: Changes in consumer behaviour of customers impact both the fashion and high fashion retail industry in several ways:
o Customers’ buying behaviour has changed with the advent of the recession (section 2.3.4);
o in South Africa customer spending is decreasing (section 2.4.2);
o in South Africa there is a higher demand for quality products and/or services because of the Consumer Protection Act (section 2.4.2); and
o high fashion retailers can only attract and retain customers if they provide superior customer value (section 2.2.2).
Based upon conclusions 1.1 to 1.4, a number of recommendations are made:
Recommendation 1.1: Fashion retailers need to ensure their decision-making processes align with the shorter product life cycle for the timeously supply of relevant products to their customers when demanded, for example, ensuring their buying processes are short without too many individuals involved in decision- making. This will ensure more speedy decisions which will enable high fashion retailers to make products available in stores quicker.
Recommendation 1.2: Fashion retailers need to be aware of potential offshore suppliers and manufacturers in order to improve their competitiveness. High fashion retailers need to identify offshore suppliers who might be able to provide them with good quality at reasonable prices by actively using the Internet, as well as attend various international exhibitions and trade shows.
Recommendation 1.3: Fashion retailers need to constantly scan their environment for potential new growing market opportunities to improve their profitability, for example, gain insights into the BRICS countries and the potential to expand their business into those countries.
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Recommendation 1.4: High fashion retailers need to constantly adapt and reposition themselves to compete in an increasing competitive market. This could be achieved by for example changing the store design to reflect the latest trends in the high fashion retail industry, providing online shopping options if required, as well as ensuring that their merchandise personifies the latest fashion trends.
Recommendation 1.5: Fashion and high fashion retailers need to implement strategies to prepare for increased competition in the industry, namely developing new retail formats such as multichannel retailing to address customers’ changing purchase behaviour, and ensuring the provision of high quality products and/or services by sourcing the highest quality fabrics and finishes for their merchandise and employing professional staff.
Recommendation 1.6: High fashion retailers have to find new ways to create competitive advantage to attract and retain customers by incorporating the eleven customer value dimensions identified in this study, namely merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, status value, expressive value and relationship value.
7.4.2 Secondary objective 2
To provide a theoretical overview of customer value, customer satisfaction and repurchase intention within the marketing context.
7.4.2.1 Customer value
The function and significance of customer value are the concern of both businesses and customers (Perreault et al., 2012:18; Jobber 2010:7; Gallarza & Saura, 2006:438). Customer value is important to businesses, as it is a source of competitive advantage. It may also alter the direction and degree of satisfaction/dissatisfaction experienced by customers (Helkkula et al., 2012:59; Rintamäki et al., 2006:6; Khalifa, 2004:645).
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Customer value is relevant from customers’ perspectives since it is fundamental to all successful exchange transactions. It is a basic purchase outcome for customers (Helkkula et al., 2012:59; Patterson & Spreng, 1997:414). Therefore businesses should consider the customer’s point of view to be able to create and deliver superior customer value to their customers (Gallarza & Saura, 2006:438).
According to the definition of Zeithaml (1988) cited by Ravald and Grönroos (1996:22), customer value is an individual’s overall assessment of the benefit of an offering based on a perception of what is received and what is sacrificed. This assessment is a comparison of a product or service’s “get” and “give” components (Sweeney & Soutar, 2001:204). It is evident from the literature that the greater the difference between benefits and costs, the higher the value perceived by customers (Harmon & Griffiths, 2008:260).
For the purpose of this study, customer value is defined as customers’ overall assessment of a product and service provided by a high fashion retailer based on their perception of the benefits they as customers receive, relative to the sacrifice they have to exert within a high fashion retailing shopping environment (Sparks et al., 2008:99; Rintamäki et al., 2006:8; Petrick, 2002:128; Sweeney & Soutar, 2001:204; Zeithaml, 1998:5; Ravald & Grönroos, 1996:21).
Within the context of the various definitions of customer value, it is also important to gain an understanding of the nature of customer value. The nature of customer value is described in terms of its characteristics. Customer value is an interactive, relativistic, preference experience. The characteristics of customer value are not mutually exclusive, but are interconnected and overlapping. Combined they form the essence of the nature of customer value (Chen & Hu, 2010:536; Holbrook, 1999:5).
Based on the definitions of customer value, the benefit/sacrifice conceptualisation as well as the characteristics of customer value, customer value is viewed as a multi- dimensional concept from which several customer value perspectives have emerged. The different perspectives are in essence an attempt by various authors to clarify this complex and dynamic concept in order to determine what really constitutes customer
194 Chapter 7: Overview, conclusions and recommendations value (Sparks et al., 2008:99; Jensen & Hansen, 2007:603; Cottet et al., 2006:221). These perspectives of customer value have been investigated by a variety of authors in different situations and contexts within a variety of industries (Sparks et al., 2008:99; Jensen & Hansen, 2007:603; Cottet et al., 2006:221; Lin et al., 2005:320). By only studying customer value from one perspective, limits authors from having a complete understanding of customer value (Khalifa, 2004:648).
As evident from the customer value perspectives, authors have been able to identify several dimensions of customer value, yet there is a lack of agreement of what constitutes customer value, and the customer value dimensions change based on the perspective or the context investigated (Cottet et al., 2006:221).
From the literature review of customer value, its nature and perspectives, it is evident that customer value is a dynamic, multidimensional concept that involves a wide range of dimensions. Understanding the dimensions that constitute customer value for high fashion retailers is important, as they have potential implications for high fashion retailers’ future segmentation and positioning strategies to gain a competitive advantage (Helkkula et al., 2012:59). Grasping customer value, its nature and its perspectives can help high fashion retailers to better segment and target their market(s). Better segmentation will lead to higher levels of customer satisfaction and repurchase intention (Helkkula et al., 2012:59).
Customer value dimensions for high fashion retailers
From all the customer value dimensions uncovered in the literature (section 3.5 and Table 3.2), several of these have been considered relevant to the high fashion retail industry during the exploratory phase of the study. The customer value dimensions include, merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value and status value. Other customer value dimensions also became evident from the focus group discussions conducted during the exploratory phase of this study, namely expressive value and relationship value (section 5.3.2.5).
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In summary, eleven customer value dimensions were identified that could possibly underlie customer value in the high fashion retail industry; nine dimensions were drawn from the literature, and two dimensions were presented during the exploratory research phase of this study.
Based upon the theoretical overview of customer value, the following conclusions are formulated:
Conclusion 2.1: Customer value (section 3.2.2) is imbedded in the marketing concept and it has become critical that the marketing practices of a business should focus on the creation and exchange of customer value between the business and its customer in order to create a sustainable competitive advantage (Kotler et al. 2010:16; Gallarza & Saura, 2006:438).
Conclusion 2.2: The various definitions of customer value exhibit several differences and similarities (section 3.3.1), which are confirmed through the characteristics of customer value. Customer value differs in terms of its fundamental meaning, what is bought, and when it is bought. However, it is similar in that it is subjectively perceived by customers, is a trade-off between benefits and sacrifices and multiple perceived costs and benefits contribute to customer value.
Conclusion 2.3: Customers determine what they perceive as customer value, and it is perceived as a trade-off between benefit (get) and sacrifice (give) components (section 3.3.2).
Conclusion 2.4: Customer value (section 3.4) is interactive, it differs from person to person and situation to situation, it is influenced by emotions, and the customer must interact with a product and/or service to form an assessment of customer value.
Conclusion 2.5: The creation of customer value for, and the exchange of customer value with customers will result in these customers supporting the high fashion retailer that offers the highest levels of customer value in return (section 3.3.1 and 3.3.2).
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Conclusion 2.6: Emerging from the customer value perspectives, it is evident that customer value is multidimensional and the identification of a comprehensive set of customer value dimensions can result in an improved prediction of customers’ repurchase intention and provides high fashion retailers with a more accurate picture of the key customer value dimensions customers perceive as important in the delivery of superior customer value (section 3.5).
Based upon conclusions 2.1 to 2.6, a number of recommendations are made:
Recommendation 2.1: High fashion retailers need to ensure that their marketing practices focus on the creation and exchange of customer value by allocating resources to providing their customers with the best value for money, excellent service, a beautiful store, a wonderful shopping experience, as well as enhancing their customers’ need for status.
Recommendation 2.2: For high fashion retailers to be able to create a competitive advantage they need to engage in marketing research, and gain an understanding of how customer value is defined by their specific customers, how customer value evolves over time, and how it differs from customer to customer, and product category to product category.
Recommendation 2.3: High fashion retailers need to create customer value from the customer’s perspective. This customer value must match customers’ expectations with regards to the benefit and sacrifice components of customer value, so as to attract and retain these customers.
Recommendation 2.4: High fashion retailers need to determine what constitutes customer value for their customers when they decide which particular high fashion retailer to support.
7.4.2.2 Customer satisfaction
High levels of customer value lead to high levels of customer satisfaction, and this results in a visible increase in businesses’ profits (Williams & Naumann, 2011:21; Naik
197 Chapter 7: Overview, conclusions and recommendations et al., 2010:242; Sparks et al., 2008:105; Harris & Goode, 2004:150; Khalifa, 2004:645; Evans, 2002:134). Customer satisfaction results when the value provided by retailers meets or exceeds the customer expectations (Jobber & Fahy, 2009:6; Berman & Evans, 2007:35) (section 4.3.1). Customer satisfaction is considered to be one of the main contributors to repurchase intention (Kitapci et al., 2013:244; Olaru et al., 2008:556) (section 4.3.1).
Based upon the theoretical overview of customer satisfaction, the following conclusions are formulated:
Conclusion 2.7: Customer satisfaction or dissatisfaction is a result of the experience of the customer with the product and/or service and the comparison with their expectations. The more the customer’s expectations are met during the evaluation process, the more satisfied the customer will feel with the business’s product and/or service.
Conclusion 2.8: Improved customer satisfaction is associated with business success and improved profits.
Conclusion 2.9: Key aspects that form part of customer satisfaction include positive feelings about a business, as well as contentment with the way a customer is treated by a particular business (Edward & Sahadev, 2011:337; Ryu et al., 2011:208).
Based upon conclusions 2.7 to 2.9, a number of recommendations are made:
Recommendation 2.5: High fashion retailers need to determine what expectations their customers have with regard to their products and/or services in order to ensure these expectations are met, as this will lead to customer satisfaction.
Recommendation 2.6: High fashion retailers need to ensure business success and improved profits by cultivating positive feelings about the particular high fashion retailer; and treating the customer in such a manner that he/she is happy and content with the relationship they have with the particular retailer.
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7.4.2.3 Repurchase intention
Repurchase intention attempts to assess a customer’s intention to purchase a product and/or service in future, as well as the possibility to at least recommend that product and/or service. It is a commonly used measure to anticipate response behaviour in terms of tendency to continue, increase, or decrease in the amount of product and/or service purchased from a particular retailer (Choy et al., 2012:12; Ferrand et al., 2010:86) (section 4.3.2).
As competition and the cost of attracting new customers increase, businesses are focussing more on retaining their existing customers. The main focus for businesses is on causing their existing customers to repurchase their products and/or services, rather than acquiring new customers and increasing market share (Hellier et al., 2003:1763). Therefore customer repurchase is one of the main factors contributing to the success of a business (Hume & Mort, 2010:174). It is important for businesses to understand what are the aspects that will improve a customer’s repurchase intention (section 4.3.2).
Based upon the theoretical overview of repurchase intention, the following conclusions are formulated:
Conclusion 2.10: A positive attitude towards a particular retailer’s product and/or service is a good predictor of repurchase intention (Saha & Theingri, 2009:355).
Conclusion 2.11: Repurchase intention is a commonly used measure to anticipate response behaviour in terms of tendency to continue, increase, or decrease the amount of product and/or service purchased from a particular retailer (Ferrand et al., 2010:86).
Conclusion 2.12: Customer repurchase intention or retention is one of the main factors contributing to the success of a business (Hume & Mort, 2010:174).
Based upon conclusions 2.10 to 2.12, the following recommendation is made:
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Recommendation 2.7: High fashion retailers need to create experiences, products and/or services that will cultivate a positive attitude towards the high fashion retailer.
Recommendation 2.8: High fashion retailers need to ensure that their staff is trained to enhance customers’ positive experiences in store.
7.4.3 Secondary objective 3
To uncover customer value dimensions proposed in the literature.
As indicated in section 7.4.2.1, eleven customer value dimensions were identified that could possibly underlie customer value in the high fashion retail industry; nine dimensions were drawn from the literature, and two dimensions were presented during the exploratory research phase of this study. The customer value dimensions include, merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value and status value. Other customer value dimensions also became evident from the focus group discussions conducted during the exploratory phase of this study, namely expressive value and relationship value (section 5.3.2.5).
Merchandise value (also referred to as functional value (performance/quality), acquisition value, utilitarian value, excellence) is defined as a customer’s overall judgement of a retailer’s merchandise based on the perceived overall quality compared to the price of the merchandise (Chaudhuri & Ligas, 2009:407). Sacrifice value (also refers to transactional value, perceived relative price, functional value (price/value for money, monetary price) is described as the money customers have to give up in order to attain a product/service (Agarwal & Teas, 2004:244). Social value is the perceived benefit customers gain when the acquisition and use of a product/service strengthen or support their association with certain groups/peers (Gounaris et al., 2007:66). Reputational value (also refers to esteem, reputation) is defined as the prestige or status of a product/service based on the image of the retailer (Brengman & Willems, 2009:348). Service value (also refers to encounter-specific functional value, encounter-
200 Chapter 7: Overview, conclusions and recommendations specific technical value, service excellence, technical value, service quality) is associated with an individual customer’s assessment of properties by the service encounter relative to expectations (Jensen & Hansen, 2007:606). Technology value (also refers to temporal value, spatial value) is the overall assessment of the benefits gained through the use of technology (Pura, 2005:211). Store value (also refers to efficiency, behavioural price, time and effort spent, hedonic value) is described as the assessment of the benefits experienced when a customer engages with activities within a retail store (Diep & Sweeney, 2008:401). Experience value (also refers to emotional value, play, playfulness, emotional response, hedonic (affective) value) is the emotional response or joy received when a particular product and/or service is purchased (Petrick, 2004:402; 2002:123). Status value is described as the impression given to others, communicating a sense of achievement and pride, as well as increasing a sense of self- worth (Sparks et al., 2008:103). Expressive value is the benefits gained from satisfying desires for the expression of customers’ self-image or personality (Ko & Sung, 2007:119). Finally, relationship value is defined as the value of having a relationship or the value of the commitment of both parties (Ravald & Grönroos, 1996:23).
Based upon the theoretical overview of customer value dimensions, the following conclusions are formulated:
Conclusion 3.1: Studying customer value only from one perspective limits the complete understanding of customer value (Khalifa, 2004:648).
Conclusion 3.2: Customer value perspectives provide insight into the key features as well as the specific customer value dimensions underlying a particular customer value perspective.
Conclusion 3.3: The definitions of customer value, the “get/give” conceptualisation as well as the customer value perspectives presented in section 3.3.1 and section 3.5, assist in identifying nine customer value dimensions, namely merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, and status value, and two additional
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dimensions were uncovered in the exploratory phase of the study, namely expressive value and relationship value.
Based upon conclusions 3.1 to 3.3, two of recommendations are made:
Recommendation 3.1: High fashion retailers should not only focus on customer value dimensions as identified in a single perspective of customer value, but should investigate the dimensions included in a variety of perspectives to ensure that they gain a comprehensive understanding of customer value.
Recommendation 3.2: High fashion retailers should familiarise themselves with the customer value perspectives. The customer value dimensions underlying the perspectives should be tested through conducting marketing research in regular intervals to ensure that they stay abreast with which customer value dimensions are relevant to their customers, as these dimensions may change over time.
7.4.4 Secondary objective 4
To empirically investigate customer value dimensions as well as customer satisfaction and repurchase intention in a high fashion retail setting.
7.4.4.1 Customer value dimensions
Conclusion 4.1: Merchandise that is stylish, comfortable to wear, of high quality and with high quality finishes are agreed with the most by high fashion customers to add value. High fashion customers agreed the least with the fact that the retailer keeps them informed of the latest offering via sms/email with respect to customer value for a particular retailer (main finding CV1, CV2, section 6.5.1).
Conclusion 4.2: The nine customer value dimensions uncovered in the literature and considered relevant to the high fashion retail industry in the exploratory phase of the study include merchandise value, sacrifice value, social value, reputational
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value, service value, technology value, store value, experience value, and status value (main finding CV3, sections 6.5.3 and 6.8.1).
Conclusion 4.3: The two customer value factors (dimensions) that appeared from the focus group discussions conducted during the exploratory phase of this study include expressive value and relationship value (main finding CV3 and section 5.3.2.5).
Conclusion 4.4: The eleven reliable customer value dimensions are rated favourably overall by high fashion customers (main finding CV4, CV5, sections 6.5.4 and 6.5.5).
Based upon conclusions 4.1 to 4.4, a number of recommendations are made:
Recommendation 4.1: High fashion retailers need to ensure that their merchandise is stylish, comfortable to wear, of high quality and with high quality finishes. This can be achieved through sourcing and using high quality fabrics, delivering superior finishing, as well as employing reputable and highly skilled designers.
Recommendation 4.2: High fashion retailers need to provide each of the eleven customer value dimensions individually, namely merchandise value, sacrifice value, social value, reputational value, service value, technology value, store value, experience value, status value, expressive value and relationship value, in order to enhance the customers’ perception that they have received value (section 7.3.6).
Recommendation 4.3: High fashion retailers need to determine whether expressive value and technology value are important customer value dimensions by conducting research among their customers from time to time.
7.4.4.2 Customer satisfaction
Conclusion 4.5: High fashion customers agreed the most with feeling good about shopping at the retailer and having positive feelings about the retailer. They agreed the least with being content with the way the retailer takes care of customers and
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being satisfied with getting the best that can be achieved when shopping at the retailer with respect to customer satisfaction for a particular retailer (main finding CS1, CS2, section 6.6.1).
Conclusion 4.6: The five reliable customer satisfaction statements are rated favourably overall by high fashion customers (main finding CS3, CS4, CS5, sections 6.6.2, 6.6.3 and 6.6.4).
Based upon conclusions 4.5 and 4.6, a number of recommendations are made:
Recommendation 4.4: High fashion retailers need to ensure that their customers continue to feel good about shopping, as well as have positive feelings about the retailer by enhancing their in-store experience through well trained knowledgeable staff, beautifully designed stores, as well as providing high quality products and services.
Recommendation 4.5: High fashion retailers need to improve on their current customer care strategies by ensuring that staff members treat customers entering their store as valued clients, providing them with the required attention and professional assistance.
7.4.4.3 Repurchase intention
Conclusion 4.7: High fashion customers agreed the most with intending to purchase from the retailer again, as well as doing business with the retailer in future again. They agreed the least with continued support of a retailer if the prices are higher than those of its competitors, as well as considering the retailer to be a first choice with respect to repurchase intention for a particular retailer (main finding RI1, RI2, section 6.7.1).
Conclusion 4.8: The five reliable repurchase intention statements are rated overall favourable by high fashion customers (main finding RI3, RI4, RI5, sections 6.7.2, 6.7.3 and 6.7.4).
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Based upon conclusions 4.7 and 4.8, a number of recommendations are made:
Recommendation 4.6: Due to the competitive nature of the high fashion industry, high fashion retailers might not necessarily be the first choice of their customers. Therefore, high fashion retailers need to consistently provide positive in-store experiences and high quality products and/or services at competitive prices in order to improve their customers’ repurchase intention.
Recommendation 4.7: High fashion retailers need to provide competitive prices. Therefore, they need to take competitors’ prices into consideration. If their prices are much higher than the competitors’, they might lose some of their existing customers.
7.4.5 Secondary objective 5
To determine the influence of customer value dimensions on customer satisfaction in the high fashion retail industry.
Conclusion 5.1: Specifically, sacrifice value, service value, store value, experience value and status value have a significant and positive, albeit small, direct effect on customer satisfaction (main finding SEM1, section 6.8.2).
Literature indicates a positive relationship between overall customer value and customer satisfaction (Tahseen Arshi et al., 2013:11). The conclusion is drawn that overall customer value has a positive influence on customer satisfaction (section 4.4.1). Therefore, the following alternative hypothesis was formulated for the study:
H1: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels.
Based on the theoretical discussion of the influence of customer value on customer satisfaction, the following conclusion is formulated:
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Conclusion 5.2: The customer value that high fashion customers derive from high fashion retailers has a significant and positive influence on their customer satisfaction levels (section 6.8.2).
Based upon conclusions 5.1 and 5.2, the following recommendation is made:
Recommendation 5.1: In order for high fashion retailers to ensure high levels of customer satisfaction, they should specifically focus on the following five customer value dimensions:
o sacrifice value, by providing acceptable prices that represent value for money and that customers feel is worth the price they pay;
o service value, by employing knowledgeable, friendly staff who provide prompt and personal service;
o store value, by ensuring that all relevant merchandise is easily available in a fragrant, well-lit store with stylish displays and dressing rooms;
o experience value, by invoking feelings of joy and adventure with the merchandise and store atmosphere provided; and
o status value, by enhancing the customers’ needs to be seen as successful and belonging to a group of higher social class. This can be achieved through symbols and imagery in traditional media, social media and website. The high fashion retailer can also enhance the perception of status through providing a beautiful store with high quality finishes, displays and designs. The strategic use of brand labels on the high fashion retailers’ merchandise can also communicate status beyond the store.
7.4.6 Secondary objective 6
To investigate whether customer value influences repurchase intention in the high fashion retail industry.
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Literature indicates a positive relationship between customer value and repurchase intention (Olaru et al., 2008:560). The literature also indicates a indirect relationship between customer value and repurchase intention mediated through customer satisfaction. The conclusion is drawn that customer value has a positive influence on repurchase intention (section 4.4.2). The following alternative hypothesis has thus been formulated for the study:
H2: The customer value that high fashion retail customers derive from high fashion retailers has a significant and positive influence on their repurchase intention.
Based on the theoretical discussion of the influence of customer value on repurchase intention, the following conclusions are formulated:
Conclusion 6.1: The overall customer value that high fashion customers derive from high fashion retailers has a significant and positive influence on their repurchase intention (section 6.8.2).
Conclusion 6.2: Only sacrifice value has a significant and positive, but small, influence on repurchase intention with a small direct effect (main finding SEM2, section 6.8.2).
Based upon conclusions 6.1 and 6.2, a number of recommendations are made:
Recommendation 6.1: High fashion retailers need to ensure that they consistently provide high levels of customer value in order to ensure that they positively influence their customers’ repurchase intention. This could be achieved by assigning and focussing on different customer value dimensions to different market segments based on identified customer value needs, for example, sacrifice value as uncovered in this study.
Recommendation 6.2: In order for high fashion retailers to ensure high levels of repurchase intention, they should specifically focus on sacrifice value, by providing acceptable prices that represent value for money and that customers feel is worth the price they pay. High fashion retailers need to also take the prices of their
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competitors into consideration. High fashion retailers’ prices should not be much higher than that of their direct competitors, as this will result in their customers rather supporting their competitors.
7.4.7 Secondary objective 7
To determine whether customer satisfaction influences repurchase intention in the high fashion retail industry.
Literature also indicates a strong positive relationship between customer satisfaction and repurchase intention (He et al., 2008:951). The conclusion is drawn that customer satisfaction has a positive influence on repurchase intention (section 4.4.3). The following alternative hypothesis has thus been formulated for the study:
H3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers.
Based on the theoretical discussion of the influence of customer satisfaction on repurchase intention, the following conclusion is formulated:
Conclusion 7.1: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on the repurchase intention of these customers (SEM 3, section 6.8.2 and Figure 6.2).
Based upon conclusion 7.1, a number of recommendations are made:
Recommendation 7.1: High fashion retailers need to ensure high satisfaction levels of their customers by ensuring that their customers continue to feel good about shopping, as well as have positive feelings about the retailer. This can be achieved by conducting continued research regarding what makes their customers feel good and positive about them; as well as improving their current product and/or service quality levels. High fashion retailers could improve their current quality levels by
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communicating their customers’ quality expectations throughout the business. High fashion retailers should also provide continuous training to their staff with regard to delivering consistent high levels of quality, as well as recognising staff who provide exceptional high levels of quality.
Recommendation 7.2: High fashion retailers need to ensure high satisfaction levels of their customers by either introducing customer care strategies, or improving their current customer care strategies by conducting continued research regarding how high fashion customers would like to be taken care off, as well as implementing the suggestions uncovered by the research. Customer care strategies could include aftersales phone calls to customers, professional service when customers are in the retail store, as well as handling customer queries and complaints in a professional, respectful manner.
7.4.8 Secondary objective 8
To develop a multidimensional model of customer value in the high fashion retail industry.
Conclusion 8.1: Sacrifice value, service value, store value, experience value and status value have a significant and positive influence on the customer satisfaction levels of customers of high fashion retailers (main finding SEM1, section 6.8.2).
Conclusion 8.2: Sacrifice value has a significant and positive influence on the repurchase intention of customers of high fashion retailers (main finding SEM2, section 6.8.2).
Conclusion 8.3: The customer satisfaction levels that high fashion retail customers experience from high fashion retailers have a significant and positive influence on their repurchase intention (main finding SEM3, section 6.8.2).
Based upon conclusions 8.1 to 8.3 , the following recommendations are made:
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Recommendation 8.1: High fashion retailers need to focus on providing sacrifice value, service value, store value, experience value and status value (recommendation 5.1), as it has been confirmed that these dimensions will lead to a positive influence on customer satisfaction and therefore a competitive advantage. It has also been confirmed that higher customer satisfaction levels will lead to a strong positive influence on repurchase intention which will consequently strengthen the high fashion retailer’s competitive advantage as well.
Recommendation 8.2: High fashion retailers need to focus on sacrifice value (recommendation 6.2), as it has been confirmed that this dimension will lead to a positive influence on repurchase intention and therefore a competitive advantage.
Recommendation 8.3: It has been confirmed that higher customer satisfaction levels will lead to a strong positive influence on repurchase intention which will consequently strengthen the high fashion retailer’s competitive advantage as well. It is therefore recommended that high fashion retailers should focus on improving their customer satisfaction levels (conclusion 7.1, recommendations 7.1 and 7.2).
Figure 7.1 represents the structural model with its relevant significant paths as tested and verified by employing structural equation modelling (SEM).
In summary, the structural model (Figure 7.1) indicates that five customer value dimensions namely sacrifice value, service value, store value, experience value and status value have a significant path to customer satisfaction, but only one customer value dimension, namely sacrifice value has a significant path to repurchase intention. It is furthermore evident that the customer satisfaction that high fashion customers derive from a particular retailer has a significant path to repurchase intention.
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Figure 7.1: The structural model
7.5 LINKING THE OBJECTIVES, ALTERNATIVE HYPOTHESES, QUESTIONS IN THE QUESTIONNAIRE, THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Figure 7.2 summarises how the primary and secondary objectives, questions in the questionnaire, alternative hypotheses, findings, conclusions and recommendations are linked together.
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Figure 7.2: Summary of the primary and secondary objectives, questions in the questionnaire, alternative hypotheses, findings, conclusions and recommendations
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7.6 LIMITATIONS OF THE STUDY
This research study is not without limitations. Various limitations with regards to the literature review and empirical research are identified and discussed.
7.6.1 Limitations of the literature review
The following limitations with regard to the literature review are identified:
Although a number of research studies have been conducted on customer value within fashion retailing, the author could not identify any research studies within the South African high fashion retailing context, forcing the author to mainly rely on international studies for the literature review.
Limited research has been conducted on all possible customer value dimensions that constitute customer value. Most research is conducted by applying one specific customer value perspective within a given context.
The majority of literature covering customer satisfaction and repurchase intention is international with limited information available in the high fashion retail industry either internationally or in South Africa.
Limited research has been done on the interrelationships of customer value, customer satisfaction and repurchase intention specifically in the high fashion retail industry either internationally or in South Africa.
Limited theoretical models have been developed for the high fashion retail industry, but no models could be found that had been tested by employing structural equation modelling (SEM).
7.6.2 Limitations of the empirical research
After conducting the empirical research of the study, a number of limitations should be highlighted.
Due to time and budget constraints, the study had to focus on a sample only representing Gauteng. With a bigger budget and more time, the researcher would have been able to conduct the research nationally including other provinces, thereby 213 Chapter 7: Overview, conclusions and recommendations
increasing the representation of the sample and possibly uncovering more differences between customers of high fashion retailers.
Due to the nature of research methodology (specifically the non-probability sampling) followed for this study, the non-response error and sampling error could not be determined.
Although every effort has been made to include representatives from all age groups, more respondents younger that 25 years of age participated in the study.
7.7 RECOMMENDATIONS FOR FUTURE RESEARCH
A number of recommendations for future research are proposed, namely:
Since limited customer value research has been conducted focusing on the development of a comprehensive model, a similar study can be duplicated in different industries to determine whether there are similarities and/or differences in the main findings from this study.
A similar study can be conducted by targeting equal numbers of respondents from the different age groups, other provinces, as well as other countries to determine whether there are similarities and/or differences in the main findings from this study.
A qualitative in-depth study could be conducted to define and refine each of the key customer value dimensions in the high fashion retail industry.
A qualitative in-depth study could be conducted to define and refine customer satisfaction in the high fashion retail industry.
A qualitative in-depth study could be conducted to define and refine repurchase intention in the high fashion retail industry.
High fashion retailers in South Africa could conduct longitudinal research on aspects such as their customers’ changing demographic information, determining any changes in the dimensions that constitute customer value for their customers, and how these dimensions influence customer satisfaction and repurchase intention to
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improve their understanding of how to deliver superior customer value in order to create a sustainable competitive advantage in the future.
The statements included in the final questionnaire should be revisited to ensure face or content validity of statements included in the scales for the purposes of other studies to be undertaken.
7.8 CONCLUSION
Chapter 7 provides an overview of the study, as well as the methodology followed for this study. It also addresses the findings, conclusions, and recommendations related to the secondary objectives, as well as the limitations of the study. The chapter concludes with a discussion of the limitations relating to the literature review and the empirical analysis, as well as recommendations for future research.
Through conducting this study, the body of knowledge is enriched by providing more clarity on the interrelationships between the customer value dimensions that constitute customer value for high fashion customers, how these dimensions contribute to their customer satisfaction, and their repurchase intention at a particular high fashion retailer. High fashion retailers in South Africa could use the information from the study to develop strategies to improve their provision of superior customer value effectively in order to attract proportionally more customers with need satisfying offerings than a competitor who does not pay attention to customer value.
To summarise, the purpose of the study is to propose a multidimensional model of customer value in the high fashion retail industry. This is achieved by better understanding the customer value dimensions that constitute customer value for high fashion retailers and how this contribute to customer satisfaction and repurchase intention. The final model indicates that five specific customer value dimensions, namely sacrifice value, service value, store value, experience value and status value positively influence customer satisfaction of high fashion retailers. The final model also indicates that only sacrifice value positively influence repurchase intention with a strong positive relationship between customer satisfaction and repurchase intention.
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239
APPENDIX A: FINAL QUESTIONNAIRE USED IN THE STUDY
Researcher: Ms Elmarie Strydom
Department of Marketing Management
Tel. +27 (0) 11 559 4054, Fax. +27 (0)11 559 4943
DIMENSIONS OF VALUE FOR HIGH/LUXURY FASHION RETAILERS
Dear Respondent
I am a PhD student at the University of Johannesburg investigating the dimensions of value offered by high/luxury fashion retailers in South Africa. This questionnaire aims to identify the opinions of shoppers on their views of what constitutes the dimensions of value for high/luxury fashion retailers in South Africa. This study will provide useful insight for high/luxury fashion retailers on if and how they could provide value to their shoppers. The questionnaire comprises of four sections.
All information will be treated as confidential and would be used for research purposes only. Your participation in this survey is anonymous and voluntary. The survey should take approximately 15 minutes to complete.
Your time and willingness to participate is greatly appreciated.
Sincerely
Ms E Strydom Prof DJ Petzer Dr CF De Meyer
Researcher Supervisor Co-supervisor
240 Appendix A: Final questionnaire used in the study
SCREENING QUESTION: Please indicate your appropriate answer by means of an X.
From which ONE of the following high fashion retailers have you most recently purchased clothing and/or accessories in the last year?
Aca Joe 1
Gucci 2
Guess 3
Fossil 4
Hilton Weiner 5
Jenni Button 6
Levi 7
LouisVuitton 8
Marion & Lindie 9
Stuttafords 10
YDE 11
Zara 12
Another high/luxury fashion retailer you bought from that is not on the list, please specify 13 ______
If none, thank you for your time and participation. You do not need to complete the rest of the questionnaire.
If you have identified any of the retailers above, please keep that retailer in mind when completing the rest of the questionnaire.
______
INSTRUCTIONS:
Keeping the high/luxury fashion retailer you have identified at the beginning of the questionnaire in mind, on a scale of 1 – 7, where 1 = Strongly disagree to 7 = Strongly
241 Appendix A: Final questionnaire used in the study agree, rate the retailer on the following statements. Please attempt to answer all the questions.
SECTION A: CUSTOMER VALUE
Strongly Strongly STATEMENTS disagree agree
In general, the merchandise from this retailer is of high quality. 1 2 3 4 5 6 7
The retailer provides merchandise that is free of defects. 1 2 3 4 5 6 7
The merchandise from this retailer is stylish. 1 2 3 4 5 6 7
The design of the merchandise is in line with the latest fashion 1 2 3 4 5 6 7 trends.
The finishing on the merchandise is of high quality. 1 2 3 4 5 6 7
The merchandise is comfortable to wear. 1 2 3 4 5 6 7
This retailer offers a variety of merchandise to choose from. 1 2 3 4 5 6 7
Paying a high price to own merchandise from this retailer is worth 1 2 3 4 5 6 7 it.
Considering the price of merchandise at this retailer, I would say 1 2 3 4 5 6 7 the prices represent value for money.
The retailer’s merchandise is not too expensive. 1 2 3 4 5 6 7
The merchandise from this retailer is acceptable for the price I 1 2 3 4 5 6 7 pay.
I do not waste money when buying merchandise from this retailer. 1 2 3 4 5 6 7
Buying from this retailer enhances my status with my friends. 1 2 3 4 5 6 7
Wearing merchandise from this retailer improves the way I am 1 2 3 4 5 6 7 perceived by others.
Wearing merchandise from this retailer helps me be more 1 2 3 4 5 6 7 accepted by my friends.
Wearing merchandise from this retailer makes a good impression 1 2 3 4 5 6 7 on other people.
Wearing merchandise from this retailer leads to social approval. 1 2 3 4 5 6 7
Merchandise from this retailer has a positive social image. 1 2 3 4 5 6 7
I have a lot in common with other customers shopping at this 1 2 3 4 5 6 7 retailer.
242 Appendix A: Final questionnaire used in the study
Strongly Strongly STATEMENTS disagree agree
I like to buy from this retailer because the brand provides 1 2 3 4 5 6 7 exclusivity.
I try to keep my wardrobe up to date with merchandise from this 1 2 3 4 5 6 7 retailer.
This retailer is known for carrying the latest fashion trends. 1 2 3 4 5 6 7
This retailer is known for luxury. 1 2 3 4 5 6 7
This retailer is viewed as prestigious. 1 2 3 4 5 6 7
The retailer is well known among those who purchase high/luxury 1 2 3 4 5 6 7 fashion.
This retailer is known as one of the top high fashion retailers. 1 2 3 4 5 6 7
The staff of this retailer is always welcoming. 1 2 3 4 5 6 7
I always receive good advice from the staff of this retailer. 1 2 3 4 5 6 7
The staff of this retailer is friendly. 1 2 3 4 5 6 7
The staff of this retailer gives me prompt service. 1 2 3 4 5 6 7
The staff of this retailer gives me personal attention. 1 2 3 4 5 6 7
The staff of this retailer has the knowledge to answer my 1 2 3 4 5 6 7 questions.
The staff of this retailer knows what they are talking about. 1 2 3 4 5 6 7
The retailer is adequately staffed. 1 2 3 4 5 6 7
The waiting time at the pay point is reasonable. 1 2 3 4 5 6 7
This retailer provides good online purchase options. 1 2 3 4 5 6 7
It is easy to complete an online transaction on the retailer’s 1 2 3 4 5 6 7 website.
This retailer has an efficient website facility. 1 2 3 4 5 6 7
This retailer has all the credit/debit card facilities in store you need. 1 2 3 4 5 6 7
This retailer keeps me informed of their latest offerings via 1 2 3 4 5 6 7 sms/email.
All the merchandise I expect to buy is available in store. 1 2 3 4 5 6 7
I find the merchandise I needed easily. 1 2 3 4 5 6 7
The atmosphere inside the store is pleasant. 1 2 3 4 5 6 7
243 Appendix A: Final questionnaire used in the study
Strongly Strongly STATEMENTS disagree agree
The window displays of the store are stylish. 1 2 3 4 5 6 7
The lighting inside the store creates the proper mood. 1 2 3 4 5 6 7
The store has stylish dressing rooms. 1 2 3 4 5 6 7
The store layout is attractive. 1 2 3 4 5 6 7
The store smells pleasant. 1 2 3 4 5 6 7
The store is conveniently located. 1 2 3 4 5 6 7
I enjoy shopping at this retailer. 1 2 3 4 5 6 7
This retailer’s merchandise brings me joy to wear. 1 2 3 4 5 6 7
While shopping at this retailer I feel a sense of adventure. 1 2 3 4 5 6 7
I feel a sense of joy to look at the merchandise. 1 2 3 4 5 6 7
I feel excited about going to the retailer’s store. 1 2 3 4 5 6 7
I feel excited about walking into this retailer’s store. 1 2 3 4 5 6 7
I feel good about myself when I buy from this retailer. 1 2 3 4 5 6 7
I choose this retailer to express my identity to others. 1 2 3 4 5 6 7
This retailer fits the type of person I am. 1 2 3 4 5 6 7
Buying from this retailer says something about me as a person. 1 2 3 4 5 6 7
Buying from this retailer allows me to associate with specific 1 2 3 4 5 6 7 people and groups.
Buying from this retailer distinguishes me from others. 1 2 3 4 5 6 7
I find merchandise at this retailer that is consistent with my style. 1 2 3 4 5 6 7
Other people notice that I buy clothing from this retailer. 1 2 3 4 5 6 7
This retailer is associated with the social class I belong to. 1 2 3 4 5 6 7
I communicate my achievements through supporting this retailer. 1 2 3 4 5 6 7
Buying from this retailer causes others to think more of me. 1 2 3 4 5 6 7
Buying from this retailer makes me look financially successful. 1 2 3 4 5 6 7
This retailer’s brand label is visible on the merchandise. 1 2 3 4 5 6 7
This retailer is suitably located. 1 2 3 4 5 6 7
244 Appendix A: Final questionnaire used in the study
Strongly Strongly STATEMENTS disagree agree
I have a comfortable relationship with this retailer. 1 2 3 4 5 6 7
I have a positive relationship with this retailer. 1 2 3 4 5 6 7
I have a happy relationship with this retailer. 1 2 3 4 5 6 7
A relationship with this retailer is valuable to me. 1 2 3 4 5 6 7
This retailer builds a personal relationship with me. 1 2 3 4 5 6 7
I have a long-term relationship with this retailer. 1 2 3 4 5 6 7
SECTION B: CUSTOMER SATISFACTION
Strongly Strongly STATEMENTS disagree agree
My feelings about this retailer are very positive. 1 2 3 4 5 6 7
I feel good about shopping at this retailer. 1 2 3 4 5 6 7
I feel satisfied that what I get from shopping at this retailer is the 1 2 3 4 5 6 7 best that can be achieved.
I am content with the way in which this retailer has taken care of 1 2 3 4 5 6 7 me.
The extent to which shopping at this retailer has produced the best 1 2 3 4 5 6 7 possible outcome is satisfying.
SECTION C: REPURCHASE INTENTION
Strongly Strongly STATEMENTS disagree agree
I would select the same retailer for another high/luxury fashion 1 2 3 4 5 6 7 purchase.
I consider this retailer to be my first choice. 1 2 3 4 5 6 7
I intend to purchase from this retailer again. 1 2 3 4 5 6 7
I would continue to support this retailer even if the prices are 1 2 3 4 5 6 7 higher than those of its competitors.
245 Appendix A: Final questionnaire used in the study
I consider doing more business with this retailer in future. 1 2 3 4 5 6 7
SECTION D: BIOGRAPHICAL INFORMATION
(1) Indicate your gender.
Male 1
Female 2
(2) Indicate your age group.
Younger than 25 1
25 – 34 2
35 – 44 3
45 – 54 4
55 and older 5
(3) Indicate your racial classification.
African 1
Asian 2
Coloured 3
Indian 4
White 5
Other (Specify) 6 ______
(4) Indicate your marital status.
Single 1
In a long-term relationship/Living together 2
Engaged 3 246 Appendix A: Final questionnaire used in the study
Married 4
Divorced 5
Widowed 6
Other (Specify) 7 ______
(5) Indicate your language preference.
Afrikaans 1
English 2
Nguni (Zulu, Xhosa, Swati, Ndebele) 3
Sotho (Sepedi, SeSotho, Tswana) 4
Venda / Tsongo 5
Other (Specify) 6 ______
(6) Identify your highest completed level of education.
Grade 10 / Std 8 1
Grade 12 / Matric 2
Diploma / Certificate 3
B-degree 4
Postgraduate degree / diploma 5
Other (Specify) 7 ______
(7) Identify your main employment status.
Employed by an organisation 1
Self-employed 2
Student 3
247 Appendix A: Final questionnaire used in the study
Housewife / Househusband 4
Retired 5
Unemployed 6
(8) Indicate your total household income per month after tax.
Less than R10 000 1
R10 001 – R20 000 2
R20 001 – R30 000 3
R30 001 – R40 000 4
R40 001 – R50 000 5
R50 001 – R60 000 6
R60 001 – R70 000 7
R70 001 – R80 000 8
R80 001 – R90 000 9
R90 001 – R100 000 10
R100 001 – R110 000 11
R110 001 – R120 000 12
R120 001 – R130 000 13
R130 001 – R140 000 14
R140 001 – R 150 000 15
R150 001 and more 16
(9) Indicate the shopping centre in which the high fashion retailer, identified at the beginning of the questionnaire, is situated.
______
THANK YOU FOR YOUR PARTICIPATION.
248 Appendix B: Focus group discussion guide
APPENDIX B: FOCUS GROUP DISCUSSION GUIDE
Tel: 074 148 0288 E-mail: [email protected]
The focus group forms part of a research project by Elmarie Strydom of the University Of Johannesburg, Kingsway Campus. The goal of the focus group is ascertain the possible customer value dimensions deem important by customers when shopping at high fashion retailers in South Africa.
Discussion questions:
1. What is your understanding of fashion retailers?
2. What do you consider as high fashion / luxury fashion?
3. Which retailers would you consider as high fashion retailers?
4. Where do you typically buy your high fashion clothing?
5. Based on your understanding of high fashion retailers do you have different expectations from high fashion retailers (Jenni Button, Diesel, Gucci, Marion Linden) than from other fashion retailers such as Edgars, Foschini, Truworths?
6. What is important to you when shopping at high fashion retailers?
7. How would you describe the concept of customer value?
8. Based on your understanding provide me with synonyms for customer value.
9. What should high fashion retailers do for you to feel that they have provided customer value to you as one of their shoppers?
10. How could high fashion retailers improve on the customer value they deliver?
11. To what extend is the customer value that high fashion retailers offer influenced by customer value dimensions indentified in literature?
12. Please rate the customer value dimensions identified during our discussion from the most important to the least important.
249
APPENDIX C: CONSENT FORM FOR FOCUS GROUPS
Tel: 074 148 0288 E-mail: [email protected]
CONSENT TO BE A PARTICIPANT IN THE CUSTOMER VALUE FOR HIGH FASHION RETAILING FOCUS GROUP: A MULTIDIMENSIONAL CUSTOMER VALUE MODEL FOR THE HIGH FASHION RETAIL INDUSTRY
A. PURPOSE AND BACKGROUND Elmarie Strydom is conducting a research project on what constitute customer value for high fashion retailers in South Africa. She formulated basic questions for discussion. Your responses will help in understanding the dimensions of customer value for high fashion retailers in South Africa. Your participation in this study will be greatly appreciated.
B. PROCEDURE If you agree to be in this study the following will occur: 1. You will respond and take part in a focus group discussion about value dimensions for high fashion retailers. 2. After the discussion you will be required to complete a questionnaire. 3. Your participation will take no more than an hour for the focus group discussion and approximately 5 minutes for the completion of the questionnaire.
C. RISK/DISCOMFORT 1. The focus group discussion will take time from your daily schedule. 2. Confidentiality: All records will be handled as confidential as possible. Elmarie Strydom, Prof Danie Petzer, Dr Christine De Meyer and an independent transcriber will have access to your study records (recorded focus group discussion). No individual identifiers will be used in any reports or publications resulting from the survey and focus group discussion.
250 Appendix C: Consent form for focus groups
D. BENEFITS Participation in the focus group discussion holds the advantage of gaining knowledge of the value dimensions for high fashion retailers. The awareness of what constitute customer value for high fashion retailers will assist them in delivering better customer value to their shoppers. Your participation in the research will help the researcher to identify the customer value dimensions for high fashion retailers in South Africa. This will contribute to the development of a multidimentional customer value model for high fashion retailers in South Africa.
E. COST/PAYMENT There will be no cost to you as a result of participating in this study. You will receive no payment for your participation. You will only receive a report on the findings at the end of the study.
F. QUESTIONS You are welcome to contact: Elmarie Strydom at 074 148 0288 / [email protected] or Dr Christine De Meyer at 083 280 2343 / [email protected] if you have any questions.
G. CONSENT You will be given a copy of this consent form to keep.
Participation in this research is voluntary. You are free to decline to be in this study, or to withdraw from it at any point. Your decision as to whether or not to participate in this study will have no influence on your present or future status.
______DATE Signature of this study participant
______DATE Signature of person obtaining consent
251 Appendix D: Statistical analysis declaration
APPENDIX D: STATISTICAL ANALYSIS DECLARATION
252 Appendix E: :Language editing declaration
APPENDIX E: LANGUAGE EDITING DECLARATION
Elsabeth Marnitz
October 2014
TO WHOM IT MAY CONCERN
I, ELSABETH MARNITZ, hereby declare that the PhD of ELMARIE STRYDOM with the title
A MULTIDIMENSIONAL CUSTOMER VALUE MODEL FOR THE HIGH FASHION RETAIL INDUSTRY has been language edited by me.
ELSABETH MARNITZ 720004392 (University of Johannesburg) Cell: 083 501 1545
253 Appendix F: :Technical editing declaration
APPENDIX F: TECHNICAL EDITING DECLARATION
254