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Impact of Service Quality on Customer Satisfaction at the Public Owned National Alcohol and Liquor Factory

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Impact of Service Quality on Customer Satisfaction at the Public Owned National Alcohol and Liquor Factory View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Unisa Institutional Repository Impact of service quality on customer satisfaction at the public owned National Alcohol and Liquor Factory. A Research Report Presented to the Graduate school of Business Leadership University of South Africa In partial fulfillment of the requirement for the MASTERS DGREE IN BUSINESS LEADERSHIP UNIVERSITY OF SOUTH AFRICA By Tibebe Zeleke Student No. 72194855 E-mail [email protected] Promoter: Frederick Ahwireng - Obeng, (professor) January, 2012 i Abstract The purpose of the study is to analyze whether perceived customer service directly related to customer satisfaction regarding the National Alcohol & Liquor Factory (NALF) customers in Addis Ababa. The research uses a quantitative methodology and a self- completion questionnaire with closed questions was conducted to test the hypothesis. Accordingly a sample of 300 was taken from 4200 customers in Adds Ababa which is 7.14% of the total population to increase the margin of accuracy. The findings of the study indicated that five service quality dimensions were positively related to overall service quality and are indeed drivers of service quality which in turn has an impact on customer satisfaction. The study findings also indicated that all the standardized coefficients relating the service quality dimensions to overall service quality and to customer satisfaction have the expected positive sign and are statistically significant. The impact of five service quality dimensions on customer satisfaction was significant in all factors of service quality. More specifically, customers indicated high satisfaction with the five dimensions of service quality examined in the study (Reliability, Responsiveness, Empathy, Assurance, and Tangibles). In this regard it was interesting to note that the dimension of Responsiveness and empathy had the lowest mean ratings; however, the correlation between Assurance and customer satisfaction was the highest, which implies that improvement in employees Assurance is an important issue that requires attention. The research also concluded that service quality can be used to predict customer satisfaction. 79.2% of the variation in customer’s satisfaction was explained by the five service dimensions studied here, the remaining 20.8 % is explained by other factors that were not examined in this study. For example, customer’s satisfaction might be influenced by such factors as price, and service variety. It might be desirable for future studies to include these (and other) factors. Keywords: Service Quality, SERVQUAL, Customer Satisfaction, NALF. ii ACKNOWLEDGEMENTS I would like to thank my supervisor, Frederick Ahwireng - Obeng, (Professor) for his unconditional support and great guidance to complete this research paper. Furthermore, I would like to extend my sincere gratitude to my group (ETH 309) members whose support, understanding, team spirit and hard work have been very helpful in my achievement of this program. The long Journey of this study would not have been possible without the help and encouragement of National Alcohol and Liquor Factory’s (NALF) management especially the CEO, Ato Halilmariam Gdahy. To the respondents and NALF’s sales drivers who participated in this study, I could not have done this without you. I am very grateful for the time and effort you put into this study. Special thanks to my family, friends and relatives especially, to my mother and father who has been always prayed for my success. Most of all, I am truly in short of words how to thank my dear wife Hiwot Kassaye for being both a father and a mother to my children while I was absent and preoccupied with my studies. I truly want to thank my group again, without their hard work and support it would never have been possible to reach where I am now. Much appreciation to all and those not mentioned. iii DECLARATION I, Tibebe Zeleke, hereby declare that the contents of this thesis report are my own work, and that all sources utilized, have been accurately reported and acknowledged. This thesis report has not, nor is submitted for any degree / examination at any university. Signature: ___________________________________ Tibebe Zeleke iv TABLE OF CONTENTS Title Page Abstract ....................................................................................................................... ii Acknowledgment ......................................................................................................... iii Declaration .................................................................................................................. iv Table of Contents ........................................................................................................ v-x List of Tables ............................................................................................................... x-xi List of Figures .............................................................................................................. xii-xiii CHAPTER 1 1.1 Introduction ............................................................................................................ 1 1.2 Problem Statement and Hypotheses ................................................................... 4 1.2.1 Problem Statement ..................................................................................4 1.2.2 Formulation of research hypotheses .......................................................5 1.3 Objectives of the study ......................................................................................5 1.4 Definition of Terms ............................................................................................6 1.5 Limitations of the study ......................................................................................7 1.6 Delimitation of the study ....................................................................................7 1.7 Importance of the study .....................................................................................7 1.8 Outline of the research report ............................................................................8 CHAPTER 2 2.1 Overview of the Ethiopian Socio-Economic Situation ........................................10 2.1 Economic policy and strategy ............................................................................12 v 2.3 Alcohol and Liquor industries ............................................................................16 2.4 Alcohol and Liquor industries in Ethiopia ...........................................................16 2.4.1 Alcoholic liquor Production ..........................................................................17 2.4. 2 Pure alcohol local production .......................................................................18 2.4.3 Denatured Alcohol .......................................................................................19 2.5 Market Share .....................................................................................................20 2.6 Marketing Mix ....................................................................................................22 2.6.1 Product ........................................................................................................23 2.6.2 Distribution ...................................................................................................23 2.6.3 Pricing ..........................................................................................................24 2.6.4 Promotion ....................................................................................................25 2.7 Major competitors of National Alcohol & Liquor Factory (NALF) .......................26 CHAPTER 3 3.0 CHAPTER 3: Theoretical Foundation Literature review .....................................30 3.1.1 Definition of service .....................................................................................30 3.1.2 Deference between goods and service........................................................32 3.1.2.1 Characteristics of service .......................................................33 3.1.3 Service marketing mix .................................................................................36 3.1.4 Service quality .............................................................................................37 3.1.5 Service quality model...................................................................................42 3.1.5.1 Service quality model (Gronoors)...........................................42 vi 3.1.5.2 SERVQUAL Model .................................................................44 3.1.5.3 Five gap Model ......................................................................50 3.1.5.4 The service profit chain model ...............................................53 3.1.5.5. The KANO model ..................................................................54 3.2.1 Customer satisfaction .....................................................................................55 3.2.1.1 Reason for measuring customer satisfaction .........................57 3.2.1.2 Service excellence .................................................................57 3.2.1.3 Service recovery ....................................................................59 3.2.1.4 Complaints management .......................................................62 CHAPTER 4 4.0 CHAPTER 4: RESEARCH methodology ..........................................................63
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