consumer behaviour in food and beverage...

CONSUMER BEHAVIOUR IN FOOD AND BEVERAGE

(F&B) INDUSTRY: A CASE STUDY OF FAST FOOD

INDUSTRY

THESIS

SUBMITTED TO UNIVERSITY OF JAMMU

FOR THE AWARD OF DEGREE OF

DOCTOR OF PHILOSOPHY

IN

MANAGEMENT

BY

SANDEEP SINGH CHIB

SUPERVISORS

PROFESSOR M.R RANA

The Business School, University of Jammu.

DR. VINAY CHAUHAN

Associate Professor, The Business School, University of Jammu.

FACULTY OF BUSINESS STUDIES

UNIVERSITY OF JAMMU, JAMMU.

NOVEMBER, 2012.

CERTIFICATE

Sandeep Singh Chib, who was registered for the degree of Ph.D. under our supervision,

has completed his work. The exact title of his thesis is “CONSUMER BEHAVIOUR IN

FOOD AND BEVERAGE (F&B) INDUSTRY: A CASE STUDY OF FAST FOOD

INDUSTRY”.

We certify that he has worked under our supervision and the work done by him is original

and worthy of consideration for the award of Degree of DOCTOR OF PHILOSOPHY

IN MANAGEMENT.

We further certify that:

1. The thesis embodies the work of the candidate himself;

2. The candidate worked under our supervision for the period required under

statues;

3. The candidate has put in the required attendance in the Department during

the period;

4. The candidate has fulfilled the Statutory conditions as laid down in Section

18 of Statutes Governing Doctor of Philosophy in Management; and

5. The conduct of the scholar remained satisfactory during the period of

research.

Dated:

Prof. M.R. Rana Dr. Vinay Chauhan

The Business School The Business School

University of Jammu University of Jammu

Jammu Jammu

DECLARATION

I, Sandeep Singh Chib, hereby declare that the thesis entitled “CONSUMER

BEHAVIOUR IN FOOD AND BEVERAGE (F&B) INDUSTRY: A CASE STUDY

OF FAST FOOD INDUSTRY” submitted to the University of Jammu for the award of

Degree of Doctor of Philosophy in Management, is an original research work carried

out by me in The Business School, University of Jammu during the period 2009-2012

under the supervision of Prof. M.R. Rana, The Business School, University of Jammu

and Dr. Vinay Chauhan, The Business School, University of Jammu. Any extract of

this research in part or as a whole has not been included, incorporated or added to any

other work or similar title by any scholar in any other University.

Date: Sandeep Singh Chib

DEDICATED

TO

MY FATHER, MOTHER, SISTER AND WIFE

FOR THEIR CONSTANT SUPPORT AND

ENCOURAGEMENT DURING THE WHOLE

RESEARCH PROCESS

CONTENTS

Acknowledgement

Preface …………………………………………………………………… (i-ii)

List of tables ……………………………………………………………... (iii-v)

List of abbreviations …………………………………………………….. (vi-viii)

Chapter 1 Introduction (1-32)

1.1 Fast Food and Beverage Industry in Economic Environment 1

1.2 Emerging Trends in Fast Food and Beverage Industry 4

1.3 Success Drivers of Fast Food and Beverage Industry 7

1.4 Consumer Behaviour in Fast Food and Beverage Industry 11

Chapter 2 Review of Literature and Research Gap (33-60)

2.1 Review of Literature 33

2.2 Research Gap and Rationale of the Study 54

Chapter 3 Research Design and Methodology (61-73)

3.1 Objectives of the study 61

3.2 Hypothesis of the Study 62

3.3 Scope of the Study 62

3.4 Data Source 62

3.5 Sample Design 63

3.6 Instrument Development 63

3.7 Statistical Tools and Techniques used in the Study 65

3.8 Data Purification through Factor Analysis 71

3.9 Organisation of the Study 72

3.10 Limitation of the Study 73

3.11 Future Relevance of the Study 73

Chapter 4 Organisational Profile (74-100)

4.1 McDonald’s 74

4.2 KFC (Kentucky Fried Chicken) 81

4.3 Domino’s 88

4.4 Pizza Hut 94

Chapter 5 Analysis and Interpretation (101-150)

5.1 Demographic Profile of the Respondents 101

5.2 Customer Satisfaction 103

5.3 Service Quality 122

5.4 Pricing Policy 130

5.5 Brand Loyalty 139

5.6 Effect of Brand Loyalty on Customer Satisfaction 144

5.7 Effect of Service Quality on Customer Satisfaction 147

5.8 Hypothesis Testing 149

Chapter 6 Findings and Suggestions (151-162)

6.1 Findings of the Study 151

6.2 Suggestions 161

Bibliography (163-182)

Annexure (183-186)

Acknowledgement

It is an opportunity to express my heartfelt appreciation for those who helped me in the

process of completing my doctoral research work.

I owe my sincere gratitude to my research guide Dr. M.R. Rana for being an invariable

source of motivation and inspiration who have led me through this research work

successfully.

I am extremely thankful to Dr. Vinay Chauhan for the efforts and time he has conferred

towards the successful accomplishment of this piece of research work and for being a

source of encouragement and impetus which has facilitated in the successful completion

of this arduous task. Moreover, I am obliged to both my guide and co-guide for helping

me in developing and nurturing my research acumen.

It is a privilege to express my sincere thanks to Prof. Versha Mehta Director of The

Business School University of Jammu, for being supportive whenever I approached her

for help.

I extend my gratitude and thank all the faculty members of The Business School specially

Prof. Keshav Sharma, Prof. Alka Shrma, Dr. Sameer Gupta and Dr. Komal Nagar for

extending their co-operation and help whenever seeked for.

I owe my gratitude to the library staff of The Business School for helping me with the

books and journals as and when required by me.

I express my thanks to all other non-teaching staff members of The Business School for

the support they rendered me throughout my research work.

I am also thankful to the scholars of TBS for their co-operation and help they extended

towards me.

I am thankful to the library staff of Shri. Mata Vaishnou Devi University for providing

me access to the literature concerning my research work.

I give my heartfelt thanks to my friend Associate Professor Pabtra Jenha (Shri Mata

Vaishno Devi University) and Professor B. P. Yadav (Rani Durgavati Vishwavidyalaya,

Jabalpur) who have always been inspiring and helping me in my research work.

I express my thanks to my parents Col. B.S Chib and Mrs. Raj Chib, my sister Miss.

Anupama Chib and wife Mrs. Sushma Chib for being supportive and helpful in many

ways to accomplish this tedious task.

Above all, I express my deep gratitude to the Goddess Kali who blessed me and made me

capable for accomplishing this research work.

Date: Sandeep Singh Chib

Preface

The process of understanding the consumer behaviour in fast food and beverage industry

helps those incumbent business organisations which are operational in fast food and

beverage industry to devise pristine strategies which can accommodate the organisations

in achieving their short term and long term objectives. Now days, the concept of

consumer behaviour has gained tremendous attention of the academia and the industry

simultaneously as it affects the operational efficiency and performance of every

organisation. Moreover, it has been realised that by precisely interpreting consumer

behaviour, the business organisations can elevate the customer satisfaction level by

adjusting their operations in accordance to the fluctuating needs and requirements of the

customers.

India has recently been exposed to the globalisation and the same is true for the fast food

and beverage industry. Hence, this industry is immature and dearth of research pertaining

to important issues in fast food industry related to the effect of demographics on

consumer satisfaction, relationship between service quality and the brand loyalty,

relationship between pricing strategy and customer satisfaction has engendered a need to

undertake research work associated with the above mentioned concepts. Furthermore, the

research will facilitate in bridging the gap between the theory and the practice which has

been identified in number of studies as well as has been surfaced in various forms. As a

result of which there exists a sense of dissatisfaction between academicians and industrial

populate. Additionally, the study holds importance due to its empirical nature in the area

of consumer behaviour pertaining to the fast food industry, especially in the Indian

context, as the work done is diminutive in this regard. This study is a contribution to the

literature on consumer behaviour in fast food industry. In addition, it also has favourable

implications for students, academicians and industry people.

The study has been exhibited in six chapters, where the first chapter consists of the

introduction of the topic, scope of the study, justification, objectives and hypothesis. The

second chapter covers the review of literature pertaining to the study area. The third

chapter divulges the research design and methodology. This part of the study discuses the

information regarding sample design, data source, developing instrument, statistical tools

used in the study, chapter plan, limitations of the study and the future relevance of the

study. Additionally, the fourth chapter consists of the profiles of fast food companies like

KFC, Domino’s, Pizza Hut and McDonald’s which are operating in national capital

region of India. The fifth chapter deals with the analysis and interpretation of the results

derived by applying

various relevant statistical tools and techniques to the data. Finally, the sixth chapter

reveals the summary of the research findings and highlights the conclusion and

suggestions emerging from the discussions.

List of Tables

5.1 Demographic Profile of the Respondents 101

5.2 Customers Satisfaction Index in the Fast Food Industry 103

5.2.1 Comparative Analysis of Customer Satisfaction Among the

Selected Organisations 106

5.2.2 (a) Satisfaction Level of Customers of Pizza Hut, Domino’s, KFC,

Mc Donald 108

5.2.2 (b) ANOVA Table 109

5.2.3 Customer Satisfaction on the Basis of Demographics 110

5.2.4 KMO and Bartlett’s Test 112

5.2.5 Factor Analysis of Customer Satisfaction Statements 113

5.2.7 (a) Correlation between the Factors SPA, PD, WMS, TS, CIS,

MTWS, PA, UOS and AKOW 118

5.2.7 (b) Statement Wise Customer Satisfaction Index after Factor Analysis 119

5.2.8 (a) Coefficient of Regression 121

5.2.8 (b) Multiple Correlation and Multiple Regression 122

5.3.1 Statement Wise Service Quality Index in Fast Food Industry 123

5.3.2 Statement Wise Service Quality Index in Fast Food Industry After

Factor Analysis 125

5.3.3 Comparative Analysis of Service Quality among the Selected

Organisations 126

5.3.4 Correlation between the Factors Tangibles, Responsiveness,

Assistance, Empathy and Reliability 127


5.3.5 (b) Multiple Regression 129

5.4.1 Statement Wise Pricing Index 130

5.4.2 Comparative Analysis of Pricing among the Selected Organisations 132

5.4.3 Correlation between Statements of Pricing 134


5.4.4 (b) Multiple Correlations and Multiple Regression 136

5.4.5 (a) Correlation between Overall Pricing and Overall Customer

Satisfaction 137

5.4.5 (b) Coefficient of Regression 138

5.4.5 (c) Regression between Overall Pricing and Overall Customer

Satisfaction 138

5.5.1 Statement Wise Branding Index 139

5.5.2 Comparative Analysis of Brand Loyalty among the Selected

Organisations 140

5.5.3 Correlation between Statements of Branding 142


5.5.4 (b) Multiple Correlation and Multiple Regression 144

5.6.1 Correlation between Overall Brand Loyalty and Overall Customer

Satisfaction 145


5.6.2 (b) Regression between Brand Loyalty and Customer Satisfaction 146

5.7.1 Correlation between Service Quality and Customer Satisfaction 147


5.7.2 (b) Regression between Service Quality and Customer Satisfaction 149

List of Abbreviations

ACSI American Customer Satisfaction Index

ANNOVA Analysis of Variance

APPROX. Approximately

CEO Chief Executive Officer

CORP’S Corporation’s

CSI Customer Satisfaction Index

CSQ Customer Satisfaction Questionnaire

ECSI Europe Customer Satisfaction Index

GDP Gross Domestic Product

I.E That Is

INC. Inclusive

IPHFHA International Pizza Hut Franchise Holders Associations

ISS International Space station

KFC Kentucky fried Chicken

KM Kilometre

KMO Kiser Merlin Orlin

LTD. Limited

MC Mac

NCR National Capital Region

NYSE New York Stock Exchange

PVT. Private

QSR Quick Service Restaurants

SERVOUAL Service Quality

SPSS Statistical Package For Social Sciences

TQM Total Quality Management

USA United States of America

USD American Dollar

Chapter – I

Introduction

Chapter 1 Introduction (1-32)

1.1 Fast Food and Beverage Industry in Economic Environment 1

1.2 Emerging Trends in Fast Food and Beverage Industry 4

1.3 Success Drivers of Fast Food and Beverage Industry 7

1.4 Consumer Behaviour in Fast Food and Beverage Industry 11

1.4.1 Customer Satisfaction and Fast Food and Beverage Industry 15

1.4.2 Brand Loyalty in Fast Food and Beverage Industry 18

1.4.3 Pricing in Fast Food and Beverage Industry 21

1.4.4 Service Quality in Fast Food and Beverage Industry 25

1.1 FAST FOOD AND BEVERAGE INDUSTRY IN ECONOMIC

ENVIRONMENT

Fast food and beverage industry has shown phenomenal growth because of innovation,

quality control and competitive pricing. Fast food restaurants represent one of the largest

segments of the food industry. In 2006, the global fast food market grew by 4.8 percent

reaching a value of 102.4 billion Pound and a volume of 80.3 billion transactions

(Wikipedia, 2012). In 2011, estimated total revenue of the food industry was

approximately $185 billion USD. However, in 2012 this industry is estimated to account

for revenue of $706.7 billion USD (IBIS World, 2012). This colossal amount accounts

for about 36.5 percent of the total global food service sub-sector.

In order to analyze such rampant growth in fast food industry a worldwide study was

conducted to count the number of fast food restaurants per person. United Kingdom has

claimed this title with Australia at second position and the United States at third position

(QSR News, 2011). Moreover, according to Brewis and Jack as the people become

richer, they have less time for their social life and this proclamation is consistent with the

idea that, better off families may be time poor (Brewis and Jack, 2005). The consistent

fact was unearth by the study conducted by Gan and Vernon who advocates that, the

families with higher income have elevated probability to purchase take away food rather

than taking the less expensive option of preparing the food at home (Gan and Vernon’s,

2003). As colossal percentage of people in metros are not having enough time to cook

food for themselves regularly. They prefer to eat out at fast food restaurants and this

behavioural pattern of metro dwellers has lead to the employment of large numbers of

people in the Fast Food Industry.

As the employability went up, so did the demand of the fast food. Consequently, there

was an urgent need for the fast food companies to expand faster and reduce their

administrative burden. Hence, they came out with the idea of franchising and in order to

best maximize their profits, the big fast food giants created the franchise system.

Franchising was introduced by A&W Root Beer in 1921. However, the restaurant

concept was first franchised by Howard Johnson in the mid 1930s. The franchise system

http://en.wikipedia.org/wiki/Australia

http://en.wikipedia.org/wiki/A%26W_Root_Beer

http://en.wikipedia.org/wiki/Howard_Johnson%27s

allows the companies to maintain overall control of the product and give them a

guaranteed rate of return. Franchise system also allowed the local owners to create a low

wage work force best suited to local conditions. The growing business and the enormous

circulation of financial resources in the market helped the fast food and beverage industry

to gain a prominent place in the Indian economy. The Indian economy has shown

encouraging statistics in past three decades. Indian economy is growing at 9 percent per

annum the fastest after China (Nanjundaiya Ramesh, 2011). India ranks 12th among the

largest global economy and third largest in Asia Just behind China and Japan. In India,

the per capita disposable income has increased by 8 percent over last five years, which

has led to an increase in the per capita consumption expenditure on food by 20 percent.

During 2004 to 2008, there was soaring growth recorded in the Indian food industry from

141 billion USD to 181 billion USD, a compounded annual growth rate of 6.4 percent.

According to Kochi, the consumer spending on processed food has increased at an

average rate of 7.6 percent annually from 2008 to 2010 and this is expected to rise at an

average of around 8.6 percent till 2012 (Kochi, 2011). Additionally, by 2015 the Indian

food industry is expected to reach 258 billion USD. Total domestic food spending is

expected to reach 318 billion USD by 2020. This growth is expected to be sustained till

2020, where the industry size is expected to touch 318 billion USD (Ganesan Sathish,

2012).

This enormous increase in the industry size has led the Indian current per capita

expenditure on food to be 1/6th

that of China and 1/16th

that of US (Wikipedia, 2012). If

other outside foods like restaurant meals are also included with the fast food consumed

outside the house, then on an average an Indian consumer spends around 77 USD (Rs

4,389) per month on eating outside. Moreover, as the demand for food is on rise so is the

spending of the customers. Food is the biggest consumption category in India with

spending amounting to about 21 percent of India’s GDP. Along with the strong

fundamental growth of the economy which provided a push to consumption, there was an

increased market penetration by domestic and international food players which resulted

in availability of products and provided the required impetus for consumption.

http://www.scribd.com/sathish_ganesan

Moreover, the size of the consumer base is also increasing by manifolds. It is estimated

that the middle class, upper middle class and the rich class is projected to increase at

more than 300 percent between 2005 and 2015. During the same period the youth

population (age group 15 – 25 years) in India is expected to grow by 11 percent

(http://www.twnside.org.sg). This will lead to an increasing demand for the food

products. The principal factors that drive the demand for fast food restaurants is the

increasing disposable incomes among the target groups, increase in the number of

working women, urbanization, globalization, the consequent changes in life styles and the

brand pull which will make Indian Tier one and Tier two cities a hot spot for the fast food

companies in the near future.

Recent researchers reveal that out of the total Indian consumer spending on food 26

percent is on tertiary value-added processed products, which accounts for approximately

47 billion USD. Out of these spending beverages, oils and oilseeds accounts for more

than a 50 percent share, since these products are mostly consumed in the tertiary

processed from in India there is large potential for tertiary processed food products. The

traditional habit of Indian consumer is to buy products in the basic or primary from and

then process them at home. This is largely due to the fact that Indian women or the

available domestic help have time at home to cook and freshness of food item is

considered an important element of the Indian diet. The processed food industry in India

is at an early stage with low penetration and high potential. Currently, the echelon of food

processing is low across the product categories and only 2.2 percent of the total food and

vegetable production of India is processed as compared to 65 percent in the US and 23

percent in China (Awasthi, Jaggi Raman, Padmanand V, 2006). The potential lies not

only in the processed food sector but also in the food tourism. The tourists play a pivotal

role in spreading of the fast food industry at global level. Many tourists spend a lot of

money on their tour trips, this spending and word of mouth advertisement helps fast food

industry to distend at global level. Tourist spending on food can constitute up to one-third

of the total tourist expenditure (Hall & Sharples, 2003). Furthermore, eating is a unique

from of tourist activity that gratifies all five senses that is vision, tactile, auditory, taste,

and olfaction (Kivela & Crotts, 2006). According to Rajendra, Indians would spend close

http://www.twnside.org.sg/

to Rs 4,449 crore in a year (approx. €767 million) at fast-food joints (Chaudhari. G.

Rajendra, 2012). The fast food market would be growing at a rate of 40 percent per year.

Even if the researcher assumes a modest growth of 30 percent per annum only, the

business potential for fast food restaurants in India may be reckoned approximately at Rs

13,580 crore by 2016. Hence it is not surprising to see that India is a hot spot for fast food

companies and they are penetrating the Indian food market with the help of franchising.

Franchising is a good strategy because it not only provides job opportunity to the local

population but also utilises the limited resources in the best possible way. Moreover, as

franchising involves mass participation, it is more inclined towards the local culture

ultimately leading to the increased number of satisfied customers. This has lead to the

expansion of the franchise market in India.

The franchise market in India is estimated to be worth 3.3 billion USD and is growing at

a rate of 30 percent per annum (Wadhawan Nisha, (2012). Yum Brands, which owns the

KFC, Taco Bell and Pizza Hut chains, runs about 108 Kentucky Fried Chicken outlets in

India. McDonald's Corporation has 211 restaurants in India with over 2,50,000 customers

visiting their franchise outlets every day. Indian fast-food operator Jubilant Food works

Ltd. runs the Domino’s Pizza chain in the country. Domino's Pizza in India has grown

into a country wide network of more than 300 franchise stores with a team of over 9,000

people. Subway Systems India Pvt. Ltd, part of the U.S. sandwich chain Subway has also

entered into the franchise competition by opening its first franchise restaurant in India in

2001. Now, Subway has grown its operations to 183 franchise outlets in 26 cities.

Another Pizza chain, Papa John's International Inc. has opened 25 franchise outlets in

India. Pizza Hut runs more franchise stores as compared to company administered stores.

This indicates that franchise business is booming in India and this inflow of western

chains does not pose a threat to the local players because the Indian market is big enough

for both, local and foreign companies to grow. India caps foreign ownership in single

brand retail at 51 percent only forcing all other foreign chains to seek partnerships to do

business in Asia's third largest economy.

http://www.scribd.com/gchaudhari_2


1.2 EMERGING TRENDS IN FAST FOOD AND BEVERAGE

INDUSTRY

If a company wants to succeed in fast food industry, it is imperative for it to adapt a good

marketing plan. In marketing, a great emphasis is given to the changing business trends in

the industry. As the demand changes so does the supply and the habits of the customers

play a pivotal role in shaping new trends related to the changing demands. According to

Wesslen, Sepp and Fjellstrom the eating habits formed in early years become slightly

unchangeable practice of life as children learn everything from the family and society

(Wesslen, Sepp and Fjellstrom, 2002). However, society and culture goes hand in hand

and change in one causes inevitable change in the other. It is generally agreed that food

cultures do not remain static but are continually evolving and changing in response to

different internal and external stimuli (Mennell, 1985). One of the prominent external

stimuli is the experiences which the people carry with them while they move from one

place to another. Indeed, human mobility, which includes movements associated with

migration, immigration and tourism, has significant impact on globalisation of food

(Inglis & Gimlin, 2009). Hence, the movement of customers does affects the menu of

many Fast Food restaurants. However, Hall and Mitchell emphasize that despite the rapid

globalization of the food market in many destinations, homogenization of production or

consumption has less certainty in comparison to the heterogeneity for the market (Hall

and Mitchell, 2000).

Homogenization of consumption is not guaranteed because of the increasing awareness

of the cultural preferences by many multinational food corporations. For instance,

McDonald’s has introduced localised products such as Mc Kroket in the Netherlands, Mc

Kebab in India, Teriyaki Burger in Japan, and Mc Rice Burger in Hong Kong. In Israel,

Mc Donald’s has increased the size of its hamburger by 25 percent and adjusted the

preparation technique by using a combination of fire and charcoal in order to respond to

the Israeli customers’ preferences for large portion of grilled meat (Upadhya. Ram,

2004). The internationalization and globalization of the fast food have also been

explained by Calhoun, who points out that “Samosas are now English food just as pizza

is American and Indonesian curry” is Dutch. Even where the exotic food is found

prominent, customers have access to international dishes. That is why customers can eat

Mexican food in Norway and Ethiopian food in Italy (Calhoun, 2002). This pattern of

distribution reveals that due consideration has been given to the effective advertisements

to develop a positive cognitive attitude of the customers towards the cross cultural

consumption precedent and also giving consideration to the health issues.

In such environments, the customers’ reckless eating habits have surprised the fast food

companies as their initiatives to provide healthy foods are annihilated by these careless

customers. As a result of which low calorie diet foods do not work well as compared to

the traditional fried fast food items, several fast food items do have trans fats which are

considered dangerous for the heart and vital parts of the human body. That is the reason

why Mc Donald’s launched its Mc lean burger, which had very less fat content as

compared to its regular fast food products. It was surprising to know that the product

which is good for health did not work well on ground as a result of which the newly

launched Mc Lean burger did not work well in such economies. On the other hand, the

study reveals that numerous customers value taste more than nutritional content when

they are purchasing food item. Additionally, it is human nature to ask for more

especially, when it comes to paid food. Consequently, as per Harris consumers purchase

different food items for varied reasons and these reasons undoubtedly extend beyond

price to include taste, convenience and presence or absence of desired nutrient content.

The study also expounds that customers do give apposite consideration to the size of the

product they intend to consume. It was found that Mc Donald was able to attract more

customers towards its Deluxe Series of products (Arch Deluxe, Fish Filet Deluxe, Crispy

Chicken Deluxe and Grilled Chicken Deluxe) just by increasing the size of the burger by

20 percent as compared to its normal products in the same category. Although, the deluxe

products costs a little more and had the same taste as the regular food items, the sales of

the deluxe products experienced a steady rise just after its launch. Moreover, among the

various extrinsic factors pricing plays a pivotal role in influencing the purchase decision

of the customers. Value pricing is the new strategy which practiced by fast food

companies do attract customers by providing them more eatables at reduced cost. It

generally consists of combination of two or more food items which are served at low cost

as compared to purchasing the same food items individually at the same fast food

restaurant. For example combo meal, Mc meals, they consist of burger plus French fries

and medium coke. Another example is Boston Market's Chicken Carver Combo which

includes a chicken breast sandwich, a side dish and a medium soft drink for $4.00 to

$5.00. Value-priced meals at fast food restaurant also started including a sandwich,

French fries and a soft drink that resulted in the increase of the sales of French fries and

soft drinks, which are high profit margin items. The similar trend was also applied by the

Pizza hut by offering a combo of value meal for Rs 130 only. Moreover, the burger

chains did not grow as fast as the pizza and chicken chains over the last five years, but

are still approximately double the size of pizza chains and nevertheless make up almost

half of the dollar volume of the total fast food market. Hence, a good fast food restaurant

needs to focus on both Pizzas and burgers.

Another new trend which has dramatically changed the customer holding strategy in the

fast food industry is multiple branding. The use of multiple branding whereby several

restaurant chains operate at the same location is an attempt to draw more customers by

offering a large number of items and provide enormous variety to the customers. Fast

food chains that engage in multiple branding can better absorb fixed operating costs such

as rent, electricity and water bills, security costs etc. Pepsi Co owner of Taco Bell, KFC

and Pizza Hut has started co-branding where a customer can see a Taco Bell kiosk in a

KFC store. Simultaneously, Mc Donald and Pepsi have also plunged into the same pool

of co-branding marketing strategy.

These are some of the emerging trends which are now absorbed and modified by the fast

food industry according to their own individual requirements as different strategies are

effective in different environments the fast food companies are carefully selecting their

strategy. As long as the customers continue their fierce competitiveness in the workplace,

working longer hours with no time to prepare for food at home and continue its interest

for new restaurant concepts. The most creative and aggressive fast food companies will

flourish with these trends and also create new trends. Therefore, the fast food industry

cannot be annihilated from the present phenomenon of globalization. Hence, fast food

industry is the next big movement of the modern business era, which will have huge

impact on the way the society works and lives.

1.3 SUCCESS DRIVERS OF FAST FOOD AND BEVERAGE

INDUSTRY

Success is often the result of hard work, effective planning and combination of several

key elements that go into developing a successful matrix for any company. These

elements vary according to the environmental milieu and the nature of the organisation.

Interestingly, the fast food companies are conscious about the combination of these

elements to device the appropriate strategy in the light of ever changing business

environment. To grow and survive in the present competitive and dynamic market

environment over the period of time, the fast food companies have adopted different

marketing strategies to suit the global and regional economic fluctuations. Sometimes,

during recession fast food chains merge together in order to grab a bigger market share

and increase their profits. Mergers also facilitate the fast food restaurants to increase their

revenue and customer base by expanding the choices available to their customers and

also by increasing the hours of operation. For example, a restaurant chain that doesn’t

serve breakfast merged with a chain that does. A burger making food chain merged with

a Pizza making food chain to tap both kinds of customers. A classical example of the

above mentioned concept is the merger of Arby and Wendy in the year 2008. In Australia

Coke has devised a contract with Mc Donald’s and they sell Diet coke at Mc Donald’s

outlets. This strategy has helped both the companies to entice more customers to their

products and eventually the customers perceived this as a value for money bargain.

Additionally, price formulates as one of the most important inputs for strategy

formulation especially in the product category which is have service dominance like fast

food sector. Price of the food products fluctuates in accordance with the external and

internal environments. As soon as slow economies begin to recover low meal prices were

of less concern for the consumers and quality became the new imperative factor.

Although these new healthier food items were more expensive as compared to the other

items on the menu list, still they attract the educated and economically sound customers

because of their health benefits. According to the “QSR” magazine when the McDonald’s

included fruit smoothes and other new healthier but relatively more expensive food items

on its menu, the 2011 sales of the company outpaced the 2009 sales by 1.5 billion USD

(QSR, 2011).

Almost all big players in the fast food industry are implying strategies to ensure least

amount of commodity pricing. By gaining access to low prices meats, vegetables and

other commodities fast food restaurants reduce meal prices without losing profits. This is

achieved by complying with strategies like bulk buying, having contract with the farmers

who are producing vegetables, establishing variable financial relations with slaughter

houses, transport organisations etc. This strategy plays a pivotal role in outperforming the

competition especially in developing economies like India. As a result of this, there is a

price war among the fast food companies in India which are running on thin profit

margins. In this commercial environment functioning efficiently is critical for the

endurance of the restaurant. Focusing on minimizing food waste, hiring assistance at

minimum wage and accruing benefits from economies of scale.

Moreover, developing unique value proposition having distinction from the competition

is of grave importance for enticing potential customers. While applying the concept the

fast food industry has created a unique, innovative, entertaining menu cum gift item that

can differentiate them from the rest of the competition. Many fast food restaurants in

order to stand apart from the competition and allure customers started emphasizing on the

fifth P of the marketing mix i.e. physical evidence by providing some recallable

souvenirs to the customers visiting their outlets. Additionally, fast food companies have

started driving customer traffic through collectibles particularly those that are enjoyed by

the young customers. According to this strategy, a fast food company selects a movie or a

popular animated film and determines other companies who sell dolls, glasses or other

mementos that are related to the movie. Then, the company offer four to six characters

related to the movie and distributes one free item with one purchase. This fast food

marketing strategy magnetizes the people to come back until they have earned all the

collectibles. Big players in fast food industry choose a popular theme for their collectibles

which other fast food companies are not marketing.

Companies are also segmenting their market by various activities, attitudes and customer

usage patterns. For example, if majority of a fast food restaurant’s customers are between

the age group of 18 to 24 years and earn less than Rs. 10,000 per month then the

company can locate clusters of this demographic group within 10 km radius of its

restaurant. Then, they retrieve the addresses of the potential customers’ residence and

mail them the coupons. There are many more direct marketing techniques which

companies are employing now a days to magnetize the attention of the potential

customers. Understanding the relevance of distribution, accessibility and income majority

of the fast food restaurants have identified the market clusters and have opened business

outlets keeping distribution, accessibility and income in view. Another example is that of

KFC which is now targeting college students in India by launching products which are

cheap and easily accessible to Indian students.

Further, another marketing strategy practiced by leading fast food restaurants is attracting

and retaining right customers and developing long term relationships by offering loyalty

and reward programmers to retain the old customers. Frequency card programs are a

popular type of loyalty programs for fast food restaurants. These programmes help in

increasing the revisit incidence of the customers by rewarding their repeat behaviour in

conjugation to their enhanced loyalty towards the organisation. For example, many fast

food companies are offering its customers a free drink after their first four visits and free

French fries after their next four visits. Ultimately, a customer can earn a free meal after

twelve visits. Fast food companies keep on repeating this cycle for six, eight or ten weeks

according to their preferences and requirements.

Another input factor exploited for expanding services, especially pertaining to fast food

restaurant is the time factor. Time is the most valued resources which helps to elevate the

efficiency of the organisation as it is precious and every growing organisation wants to

utilize it in the best possible way. One of the most important reasons for quick service in

the fast food restaurants is to annihilate the cognition caused by the presence of excessive

customers in the restaurant at the same time. The fast food restaurants want that the

customers must come, eat and go so that the operational efficiency of the restaurant is

increased. Additionally, in restaurants operations production time, convenience and short

service time are major success drivers for fast food chains. This coinciding with the faster

pace of life in the modern world places fast food as a regular dining choice for time

conscious people. Majority of the fast food chains also offer drive thru services where a

customer while driving to work or school in a hurry can grab food item easily without

wasting much of their precious time by driving through a strip specially designed by the

restaurant where the customer can give order while sitting in their cars and instantly the

ordered food is served. However, apart from demographic considerations the knowledge

of market and consumer behaviour acts as a decisive element in the success of any fast

food company. In fact the change in consumer preferences have produced new

consumption patterns towards this food sector. Therefore, consumer behaviour is a subset

of human behaviour which is important to understand in view of the behaviour displayed

in obtaining, consuming and disposing off the fast food products.

1.4 CONSUMER BEHAVIOUR IN FAST FOOD AND BEVERAGE

INDUSTRY

Consumers exhibit varied taste and preferences for food. Therefore, it is imperative for

the fast food companies to understand the conception of consumer behaviour so that the

companies can devise appropriate strategies in response to the altering demands of the

market and stay competitive. Consumer behaviour is a process of incorporating the deeds

displayed by the consumers in searching, purchasing, using, evaluating and disposing of

products and services that they expect will satisfy their needs. In other words consumer

behaviour is about how individuals make decisions to spend their available resources,

such as time and money on consumption related items. The main objective of studying

consumer behaviour is to acquire the requisite knowledge and skills in order to carry out

detailed consumer analysis which could be used for understanding markets and

developing dexterous marketing strategies. It blends elements from

psychology, sociology, anthropology and economics which are imperative in consumer

decision-making.

The consumer’s decision-making reflects both cognitive and emotional aspects of the

consumer behaviour which marketers and managers can employ to formulate product

mix, communication and sales strategies. In fact, decision making incorporates the

procedure of choosing between two or more alternatives. Consumer decision making may

be defined as a process of gathering and processing Information, evaluating it and

selecting the best possible option so as to solve a problem or make a buying choice.

Every decision-making process results into a final choice and the output can be an action

or an opinion of alternative choices. There are five stages of consumer’s decision-making

process which are explained by the following diagram. On the basis of the available

information, the consumer’s decision-making process can be explained in five stages as

mentioned below:

Figure 1.4.1 Customer Decision Making Process

Evaluation and

comparison

III

Information

Search

II

Need Reorganisation

I

Post purchase

V

Decision making

IV

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Stage – I: Need Recognition

The customer decision making process commences with the awareness of unfulfilled

need which is causing discomfort for the customer. For the customer, this unfulfilled

need is simply a difference between an existing and desired state of satisfaction. In case

of habitual decision making, the customer already knows the product or service which

will satisfy his specific need. However, in the case of extended decision making the

customer does not exactly knows which product or service can satisfy his particular need.

For this reason, the customer has to undertake in-depth detailed research and the

customer resorts to the process of Information search.

Stage- II: Information Search

After the recognisation of the problem, the customer undertakes the process of

Information search to ascertain and isolate the presumed effective solution. The

procedure of Information search may be extensive, brief or sometimes in between the two

extreme points. In order to allure the customer towards themselves, the companies

provide them relevant Information which acts as pedestal for their decision-making

process. Communicating Information needs

dexterity as it is not certain whether the company is loading the customer with too much

of Information or depriving the customer off the vital Information for consumer decision

making. Devising right communication mix is critical to persuade the consumers to take

favourable decisions. In order to fight back with this problem, the companies are

developing websites where the customers themselves will decide what and how much

Information they want. This interactive Information system allows the customers to be

appropriately selective in their own Information search.

Stage-III: Alternative Evaluation

In order to drive value from the selection of the product or service, the customer starts

analysing the alternatives pertaining to the product or service and the providers of the

same. The customer assesses the product attributes while evaluating the product. The type

of evaluative criteria a customer uses in a decision making process can diverge from the

tangible attributes i.e. cost, performance and features to the intangible product attributes

such as style, taste, prestige, and brand image. The impression which a customer has

developed in his or her mind pertaining to the brand or the product plays a pivotal role in

helping the customers to make their decision. This process can be illustrated by the figure

1.4.2 as given below:

The above mentioned figure scrutinizes

how individual customers from utilities and compare products to from preferences among

the available alternatives. In fact, Utility formulation is influenced by many factors such

as cultural factors, demographics, social characteristics, personal characteristics and

psychological characteristics. Even though these items are stable over a very short period

of time, intense gigantic changes related to environment can also occur unexpectedly.

Sudden loss of customers’ confidence due to economic recession and widespread of

wrong Information is often the core reason for this abrupt change in the customers. These

Static in short run

Cultural

factor

Psychological

Characteristics

Personal

Character

Social

character

Demographic

Dynamic in

Short run

Usage Choice / Alternative

A B N Deny Delay

A Buy 7

Use 1 Now

Use 2 Next week

Keep 5 for next month

Wait for right time

Wait for right functionality

Wait of affordability

Wait for appropriate price

Figure 1.4.2 Alternative Evaluation

antecedents are often targeted and influenced by marketing communication efforts such

as advertising in order to influence the customer decisions in companies favour.

Additionally, the usage also plays important role in customer decision making. While

demographic and psychographic characteristics do not change in short run, the mood of a

consumer does. For example in a single week, the first day customer might eat at Pizza

Hut, the other day accompany a friend to dinner at an expensive restaurant the and next

day avail the take-away service provided by the fast food restaurants. Therefore, the

consumer behaviour is heavily influenced by the usage situation and this situation alters

continuously.

Stage-IV: Purchase decision

Purchase decision incorporates series of choices made by a consumer prior to making a

purchase that begins after the consumer has established a willingness to find the solution

to the identified need or problem. In other words at this stage of decision making process

the customer is mentally and financially prepared for the purchase. The customer contacts

the retailer and finally reviews all the statistical and relevant Information before making

the final decision. The customer must then decide where to make the purchase, what

brand, model, or size to purchase, when to make the purchase, how to purchase and the

pros and cons of the purchase, how much to spend and what method of payment to be

used, weather to buy in installments or one time whole payment. The marketer attempts

to influence each of these decisions by supplying Information that may shape the

consumers’ evaluation process. At this stage, emphasis of the retailer is on providing the

easiest possible way for the customer to carry out their orders so that the customer can be

satisfied with the purchase decision process.

Stage-V: Purchase evaluation

In the course of the post purchase phase, consumers evaluate the product they have

purchased. This post purchase evaluation of a product is based on the consumption

experiences attained while utilizing and consuming products or services. In this regards

there can be two distinguished underlying evaluative criteria namely utilitarian and

hedonic appraisal (Westbrook, Robert A. 1980). Utilitarian appraisal is associated with

the utilitarian performance of a product whereby one focus on the degree to which a

product fulfils a useful function. For utilitarian appraisal the consequence of the product

use is important as by consuming a product functional benefits are derived that removes a

particular problem (Holbrook & Hirschman, 1982). Divergent to the utilitarian appraisal,

hedonic appraisal is not based on the utility related to the consumption and attention is

paid to the extent to which the experience of the consumption of product or service is

pleasing. Hedonic products, such as entertainment, arts and leisure activities are bought

to derive hedonic experiences. The consequences of consumption appear in the

enjoyment that is offered and the resulting feelings of pleasure evoked when the product

and service are used (Klinge, E., Barta, S.G. & Maxeiner, M.E. (1980).

In the case of leisure activities, such as reading, watching, listening etc. customer do not

perform the activity primarily to spend time, or to get informed but because it is amusing

to experience it. Therefore, the post purchase evaluation of the product will mainly be

based on weather appraisal of the consumption experience is for functional or

psychological utility. Considering all types of business organisation consumer

satisfaction is the most important and considered as the most reliable feedback for the

excellence of any business organisation.

1.4.1 CUSTOMER SATISFACTION IN FAST FOOD AND

BEVERAGE INDUSTRY

In the present business scenario there is no industry which can work efficiently by

ignoring customer satisfaction. Customer’s access to a lot of variety and cutthroat

competition has turned the tables and put the customer in the dominant position. It is well

established fact that satisfied customers play crucial role in long term business success

(McColl-Kennedy and Schneider, 2000). The importance of customer satisfaction is

ostensible from the research conducted by Shoultz which advocates that out of 700 top

executives, 64 percent agreed that customer satisfaction was their number one priority

and the remaining 36 percent revealed that it was one of their top priorities (Donald.

Shoultz, 1989). Classification of the customers on the basis of satisfaction has been

studied by number of researchers. Jones and Suh have suggested two distinct categories

of customer satisfaction which are transaction specific and overall satisfaction (Jones and

Suh, 2000). Here transaction specific satisfaction is associated with a definite encounter

pertaining to the organisation, whereas overall satisfaction is a cumulative construct

figuring up satisfaction with specific products or services of the organisation by means of

various other facets of the company. The overall rating epitomizes a more broad-

spectrum attitude of the customer towards a specific product or service provided by the

organisation. Further as per Jones and Sasser, on the basis of the satisfaction customers

behave in one of the four basic ways as loyalist, defectors, missionaries and hostages.

Within the loyalist category, the individuals are so satisfied that their experience exceeds

their expectation and they share a strong positive feeling with others. Defector rank

includes those customers who are neutral or merely satisfied and not all defectors need to

be retained by the company because most dangerous defectors are also referred to as

terrorists. Another customer category is referred to as missionary, which encompasses

those customers who are completely satisfied but exhibit almost no loyalty due to their

sheer interest in the financial gains. Whereas, the hostages are such individuals who

experience the product the company has to offer largely due to monopolistic environment

and would revere to shift if competitive environment exists.

Thomas Jones and Sasser Jr. have suggested that as the market shifts towards saturation

the organisation shrinks and strives to elevate the customer satisfaction level by retaining

affirmative existing customers rather than devoting additional resources to entice

potential new customers. As a result understanding and tracking satisfaction level has

become of paramount import for sustaining business success relationships. Most

important customer satisfaction is viewed as a means rather than an end pertaining to a

cycle of continuous improvement in service delivery system (Thomas Jones and Sasser

.Jr, 1995).

One of the most popular and extensively employed methods to measure customer

satisfaction in the business world is the confirmation-disconfirmation method. This is

based on comparison of the customers’ expectations with the customers’ current

experiences (Yu ksel and Rimmington, 1998). A tool devised to be effective in this

particular note is the customer satisfaction index (CSI) which was developed by

University of Michigan's Ross School of Business in 1944. The CSI method is

predestined on predictive model that comprises of preceding customers’ expectations,

perceived quality based on the customers’ post service assessments and the customers’

perceived value which leads to the conception of customer satisfaction index (CSI) score

assorting from 0-100. This technique is widely applied in the USA (ACSI) and Europe

(ECSI). According to Eugene W, Anderson and Fornell the customer satisfaction index

scores pertaining to customers’ satisfaction operates as a intangible economic indicator

and is used to monitor the financial viability of the companies, industries and

international trade unions. They work as momentous assessments of the feasibility of

large economic federations operational in Europe and USA. The post service assessments

are completed by telephone and are comprised of the customers’ ratings on three criteria:

overall quality, reliability, and meeting the customers’ needs. The national CSI measures

the quality of goods and services knowledgeable by the consumers. An individual firm’s

CSI rating represents its served market’s overall evaluation of the total purchase and

consumption experience, both actual and anticipated (Eugene.W, Anderson and Fornell,

2000). The national index is updated each quarter. According to the latest ACSI rating,

pizza makers are riding on the top of the wave. Papa John’s leads the fast food category

by jumping to 7 percent increase as compared to the previous year ACSI ratings,

followed by Pizza Hut which increased by 5 percent. KFC is the other big gainer, by

ceasing an increment of 9 percent as compared to previous year. Despite rolling out new

ingredients and reinventing the Domino’s pizzas from the crust up, Domino’s is still

stuck at the same level. It is surprising to recognize that McDonald’s ACSI rating has

dropped by 4 percent as compared to the previous year (American Customer Satisfaction

Index, 2012).

1.4.2 BRAND LOYALTY IN FAST FOOD AND BEVERAGE

INDUSTRY

Modern marketing era witness a significant thrust on developing brand loyalty

relationship. Wherein, brand loyalty refers to consumers’ consistent preference and

purchase of the same brand in specific product or service. Within the domain of loyalty

Neal opinioned that customer loyalty is the preference of consumer’s choosing the same

product of service building loyalty in a sum total of three components of perceived

loyalty, emotional loyalty and action loyalty (Neal, 1999). Emotional loyalty approach

explores emotional, cognitive, general and transactional dimensions of customer’s

satisfaction and loyalty process in multichannel customer relations. It aims at improving

the customers experience associated with every first encounter with the company. Action

loyalty pertaining to communication with customers has three sub-dimensions which are

acquisition, selection and transmission of Information. The degree of these dimensions

enhance with the increase in the levels of loyalty. Further, different pattern of

communicative action would be observable among individuals with different levels of

behavioural and attitudinal loyalty. Perceived loyalty refers to the perceived value of the

customer associated with the loyalty programme. It takes into consideration the economic

value and special treatment provided to the customer. However, apart from the above

mentioned loyalty components, the process of developing loyalty also varies subjected to

the nature of product, brand and the industry.

Taking into consideration the fast food industry the cost of accruing a new customer is

approximately five to nine times more as compared to the cost to maintain an old

customer. Previous researchers reveals that if the customer loyalty is be increased by five

percent effectively, then the profit can be increased by 25 to 85 percent. Therefore, if the

service industry wants to reduce the cost on money and time it must focus on retaining

customers than attracting new customers. This will result into a large pool of satisfied

customers with a strong sense of trust as also building long term loyalty.

Brand loyalty, is consumer's commitment to continue using the same brand and this

phenomenon can be demonstrated by repeated buying of a product or service or other

positive behaviours, such as word of mouth advocacy. For companies in food industry it

is of great importance that the concept of brand and perception should not be ignored for

the reason that the consumers associate product categories with brands and countries

(Roth and Romeo, 1992). Therefore, fast food chains like Mc Donald's, Burger King and

Wendy's have developed extremely successful fast food branding strategies. Their signs,

logos and slogans are recognizable around the world.

Fast food companies endeavour to access high traffic shopping malls near the target

markets where brand and image plays a decisive role in attracting the customers to the

fast food restaurants. These two ingredients are the main drivers in marketing

communication. According to the website customer service zone, fans of fast food like

clear communication and predictability as they want to know exactly what they are going

to get before they go through the doors. By providing consistent, easily recognizable and

simple brand messages a fast food restaurant reassures the customers that nothing has

changed.

Simple slogans that lodge themselves into the brains of the customers are repeated

endlessly on television and radio commercials, ensuring that when customers see the fast

food outlet, they are already primed to respond positively because by now the brand is

inside them. This enables the fast food companies to acquire increased level of customer

traffic ultimately elevating the profits. Company like Mc Donald always reveals a happy

person after eating their product. Moreover, punch lines like “I am loving it”, illustrates

that the product is giving more ant required satisfaction to the consumer. Additionally,

the body language and the facial expression of the people consuming the product on

commercials are extremely positive. All their actions result in affirmative interpretation

of the message and develop an optimistic impact on the potential customers.

Many researchers have found that consumers develop associations between brands and

perceived benefits from the brands (Krishnan, 1996). This effect can be observed in fast

food industry as well, where brands like KFC and Subway has developed a perception in

the mind of the customers that the products of their brand are hygienic and tasty. As a

result these brands have been able to attract those customers who are looking for quality

and hygiene. Moreover, recent research has also found that the customers associate

quality with KFC, price value with Pizza Hut, availability with McDonalds and the

delivery service with Dominos. Additionally, when the customer develops value

associations with the brand the customer is inclined towards developing some degree of

positive attitude with the brand as well. Recent researches have revealed that customers

having long term association with the company were less sensitive to price increases in

comparison to the other customers. Brand loyalty is viewed as a multidimensional

construct which is determined by several distinct psychological processes and entails

multivariate measurements. Customer’s perceived value, brand trust,

customer’s satisfaction, repeat purchase behaviour and commitment are found to be the

key influencing factors of brand loyalty.

Philip Kotler has segmented the loyal customer into four categories which are hard core

loyal, split loyal, shifting loyal and switchers (Kotler Philip, 2002). Hard core loyal are

those customers who are very particular about the brand they are buying. These

customers will travel longer distances in order to get the product of their brand. Hard

core loyal are asset for every company because these customers will buy only from one

company and in addition to that they also spread good word of mouth and draw new

customers to the company resulting in the expansion of the customer base. Therefore,

every company wants to retain and develop large number of hard core loyal customers.

Split loyal customers are very tricky to handle because they are not loyal to any one

particular company. Their loyalty changes with the change in external factors like price

of the product, features of the product, availability of the product, after sales service of

the product and many other external factors. Split loyal customers are difficult to keep

with the company as they do not mind shifting from the company if they get a better deal.

It is a tedious task to predict the behaviour of the split loyal customers. However, the

companies try their level best to retain as much split as loyal customers as possible

because they are just like extra bonus for the company and they may or may not spread

good word of mouth in lieu of the company. Hence, the fast food companies try to keep

them happy and contented by providing unique and customised services and products.

Shifting loyal customers are to some extent similar to split loyal customers. The only

difference lies in the proportion and frequency of shifting from one company to another.

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On the contrary, switchers are those customers who are not at all loyal to any company.

These types of customers are very difficult to envisage because their buying behaviour is

erratic and unpredictable. Moreover, non loyal customers constitute the majority of the

customers’ base and therefore all the companies squander a fortune to attract these non-

loyal customers. However, researchers conducted on non loyal customers have illustrated

that just like other customers they also like to revisit restaurants which are hygienic,

beautiful, calm and attractive. Additionally, the recent researchers have also revealed that

ergonomics and internal design of the restaurant has a tremendous impact on the

cognitive abilities of the customers. Keeping this in view Mc Donald's is also changing

its look and attire for re-establishing its brand with a new get up. It is projecting itself as a

brand meant for the young and happening through a Wi-Fi look. Mc Donald's has brought

change in its traditional colour composition for re-inventing its brand image. The

dominant yellow color is being replaced with golden and red with terracotta. Besides this

the colour combination would also include sage green and olive. Restructuring would

include prevalence of wood along with bricks lessening the earlier plastic texture. Mc

Donald's is attiring its restaurants with lights having mild touch for a soothing

ambience. Further, keeping in view the target audience the restaurants are specifically re-

designed into three segments. The first zone is the linger zone where the young techno

savvy generation could access technologically advanced equipments and linger around on

sofas and armchairs. The second segment is flexible zone which is meant for families,

where a person could relax with his or her family. Last but not the least is the grab and go

zone. This part of the Mc Donald joint caters to the lone diners and its characteristic

features include bar stools, tall counters and plasma televisions. All these improvisations

help in increasing the longitiviety of the relationship between the customer and the fast

food companies resulting in enhanced loyalty. Developing economies like India which

are well known for their price sensitive markets, where every rupee counts and can

dramatically alter the decision of the customers. It is imperative for the companies to

continuously audit and maintain an appropriate price for their offerings in order to sustain

and grow in this extremely competitive market.

1.4.3 PRICING IN FAST FOOD AND BEVERAGE INDUSTRY

Pricing is a fundamental aspect of financial modeling and is one of the four Ps of the

marketing mix. The other three aspects are product, promotion, and place. Price is the

only revenue generating element amongst the four Ps as the rest are cost centric. Without

appropriate money generation, no organisation can work and expand effectively because

the wealth is generated from the customers and therefore, it is imperative that the

customer should be willing and have the capacity to purchase the product or service.

Moreover, the needs of the consumer can be converted into demand only if the customers

feel that the price charged is genuine and to achieve this purpose the management looks

forward to the pricing factors. Factors affecting the price determination are known as

pricing factors which are manufacturing cost, market place, competition, market

condition, and quality of product. Due to the above mentioned reasons many fast food

companies are devising strategies to influence these factors for their own benefits. Like

McDonald has launched low priced products to reduce the manufacturing costs, KFC has

started to offer both halal and jhatka meat to the customers, Domino’s has started free

home delivery services in order to entice the customers of even those areas which are far

from Domino’s restaurant and other food options are available to them in their nearby

vicinity. The price of the Pizza Hut food products vary according to the quality associated

with them. This helps them to provide options for customers bellowing to different

economic strata hence, increasing their overall customer base.

Unfortunately, the pricing factors and the associated pricing strategy differs depending

upon the product, brand and nature of the market plus economy. Unorganised markets in

less developed economies have shown the evidence of unfair and unhealthy pricing

practices which not only deteriorates the image of the organisations but also motivates

the customers to look for other options. That is why price fairness is very important for

any company. According to researchers Price fairness refers to consumer’s assessments

of whether a seller’s price is reasonable, acceptable or justifiable (Xia et al., 2004). The

history of the business world has proved that only those companies have been successful

who have provided products and services at fair prices. In order to gain repeat customers,

it is essential for the business organisations to satisfy the customers from monetary point

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of view. In another study conducted by Herrmann, it was concluded that customer

satisfaction is directly influenced by price perceptions while indirectly through the

perception of price fairness. The researcher accepts the fact that the price does plays a

pivotal role in the overall revenue generation process of the company (Herrmann et al.,

2007). The relevance of the statement further increases by the fact that there is a strong

consensus within the literature, supporting the fact that price promotions do have a

significant impact on short term sales (Hawkes, 2009).

Many fast food and beverage companies have taken into consideration the laws that

influence a consumer’s perceives at a given price and how price sensitivity influences

their purchase decisions. These laws also referred to as “effects” are reference pricing

effect, switching cost effect, price quality effect, expenditure effect and shared cost

effect. The reference price effect advocates that buyer’s price sensitivity for a given

product increases in proportion to the product’s price relative to perceived alternatives.

Switching costs effect puts light on the fact that the higher the product specific

investment, a buyer must make to switch suppliers, the less price sensitive that buyer is

when choosing between alternatives. Price quality effect advocates that the buyers are

less sensitive to price if higher prices signal higher quality. Products on which this effect

is applicable includes image products, exclusive products and products with minimal cues

for quality. Further, according to the expenditure effect, the buyers are more price

sensitive when the expense accounts for a large percentage of buyer’s budget. According

to Shared cost effect, the smaller the portion of the purchase price the buyers must pay

the fewer prices sensitive he/she will be.

Keeping in view the above information, the fast food companies utilize different pricing

strategies but the most common strategies includes skimming pricing, limit pricing, value

pricing, penetration pricing, customary pricing and bundle pricing strategies. Skimming

Pricing strategy is very popular pricing strategy in which business organisations sell a

product at a high price, sacrificing high sales to gain a high profit. This pricing strategy is

usually employed to reimburse the cost of investment of the original research into the

product. In other words, extract from the buyer as much as much possible. Many times

when the fast food companies launch a new food item or a beverage company a new

drink, they usually price it employing the skimming pricing strategy and cater depending

upon the customers’ response, they change the pricing strategy to best suit the scenario.

Further, Value pricing strategy is a process of offering products and services to the

customers at a fair and reasonable price with the assumption that the customers observe

price as a primary indicator of a service value. According to this strategy, the company

decreases the prices of the products without reducing the size or maintains the present

cost of the product and reasonably increase the size of the product. An example of the

value pricing is the value meal known as medium meal combo offered by Mc Donald

which consists of burger, fries and Coke priced much lower than the sum of

individualized product costing. Whereas penetration pricing is most commonly associated

with a marketing objective of increasing market share or sales volume rather than to

make profit in the short run. Penetration pricing is the act of setting a relatively low initial

entry price, often lower than the present market price, to attract new customers. The

strategy works on the expectation that customers will switch to the new brand because of

lower brand. Fast-food restaurants often utilize penetration pricing when introducing a

new menu item. On the other hand, customary pricing is a practice of determining the

price based on the customers’ perceived expectations. Customary pricing is established

by tradition or competition and fast-food restaurants employ customary pricing on a

regular basis. For example, if the majority of fast-food restaurants are selling

cheeseburgers for Rs. 50 then mainstream fast-food restaurants will be selling its

cheeseburgers Rs. 50 as well for the reason that, they do not want to bear the risk of

losing sales to the competition. Bundle Pricing as a strategic pricing practice in the fast

food sector, is a act of marketing and selling two or more products as a single package

with the intention of saving the customer money. Fast-food restaurants engage in bundle

pricing quite frequently as they may call it a value meal or a meal deal. A customer can

purchase a sandwich, fries and a drink as a value meal for far less than the price of

purchasing each item separately. On the other hand the limit pricing strategy is a tool in

the hands of a monopolist to discourage economic entry of the other business

organisations into the market. The limit price is often lower than the average cost of

production or just low enough to make entering into the market not profitable. This

strategy discourages new entrants in the business because they will not be able to achieve

the breakeven point in near future. This strategy is declared illegal in many countries.

Another pricing strategy known as premium pricing approach is the practice of keeping

the price of a product or service artificially high in order to encourage favorable

perceptions among the buyers based solely on the price. Food items in seven star hotels

are priced keeping in mind the same pricing strategy. Target pricing strategy, is a pricing

method whereby the selling price of a product is calculated to produce a particular rate of

return on investment for a specific volume of production. As the market trends and

scenario change so does the pricing strategy of the fast food companies. They many times

execute permutation and combination of these strategies pertaining to their preferences in

response to changing business environment. However, customers persistently associate

price with quality. Therefore, it is imperative for the fast food and beverage companies to

provide high service quality and charge appropriate price in order to attain desired

customer traffic and higher stratum of customer satisfaction.

1.4.4 SERVICE QUALITY IN FAST FOOD AND BEVERAGE

INDUSTRY

In today’s competitive business environment, it has become imperative for successful

enterprise to focus on creating, maintain and replicating service quality. Service quality is

inarguably one of the core concepts that is at the crux of the marketing theory and

practice (Richard Spreng A and Mackoy D Robert, 1995). Bitner, Booms and Mohr have

defined service quality as the consumers overall impression of the relative inferiority of

superiority of the organisation and its service (Bitner, Booms and Mohr, 1994). While

Cronin and Taylor view service quality as a form of attitude representing a long fun

overall evaluation (Cronin and Taylor, 1992). Parasuraman, Zeithaml and Berry defined

service quality as a function of the difference between expectation and performance along

the quality dimensions (Zeithaml,V.A., Berry, L. L., & Parasuraman, A., 1996). Infact,

the key to sustainable competitive advantage lies in delivering high quality service that

will in turn result in satisfied customers. Therefore, there is no doubt that providing

immaculate service quality and customer satisfaction is the ultimate goals of all service

providers. According to Bitner, satisfaction leads to higher perceptions of quality wherein

the customer’s overall satisfaction with the service of the organisation is based on all the

direct encounters and experiences of the customers with the employees of the serving

organisation (Bitner, 1990).

Having understood the service dimensions namely assurance, empathy and

responsiveness as a significance output of human factor all virtuous companies allocate

enormous resources towards training and development of their employees. As a result of

which, appropriate behaviour of the staff annihilates the impediments of the customers

and encourages the customers to develop a positive cognition towards the company

ultimately influencing consumer behaviour.

Substantial empirical and theoretical evidence in the literature suggests that there is a

positive relationship between service quality and behavioural intentions of the customers

(Bolton and Drew, 1991). Among the various behavioural intentions considerable

emphasis has been placed on the impact of service quality in determining repeat purchase

and customer loyalty (Jones and Farquhar, 2003). Moreover, Boston points out that the

service quality influences preferences, loyalty and patronage. Furthermore, Cronin and

Taylor have supported the fact that service quality has a significant effect on trust and

repurchase intentions.

The importance of service quality is substantially addressed in the fast-food management

literature. Ajzen & Fishbein defined quality in fast food chain not just as product quality

itself but also the franchiser’s operating instructions in order to deliver a standardized

high quality product (Ajzen, I. & Fishbein, M,. 1980). Caves and Murphy further

explained that in the franchise chain, due to all units are working under the same

trademarks the service and product quality provided by one food franchise outlet will be

the similar to the others (Caves and Murphy, 1976). Furthermore, it was found that it is

important for the success of the franchise system that it provides immaculate standardized

service across all its locations. Under the chain builder franchise strategy, the franchisee

of the franchise chain attempts to devise and maintain a superior brand reputation by

providing and delivering the same high quality of service in all locations. Therefore, it is

crucial for fast food service managers to understand how customers perceive the service

they provide and what components might determine the nature of the perceived service

quality in fast food restaurants.

In the literature associated with the quality, there are four different perspectives defining

quality. These are indentified as transcendental, user-based, manufacturing and value

based perspectives. Transcendental prospective throws light on the five senses of human

beings. These five senses include touch, smell, seeing, hearing and tasting. The customer

makes the final impression about the company product or service by interpreting the

information the customer has derived from these sensory organs. Once this process is

complete, the customer interprets the feelings and compares the interpreted feelings with

the feelings the customer perceived or expected before the experience. Every industry,

every business organisation nowadays understands the importance of transcendental

process. This process helps the business organisations to get repeat customers and good

mouth to mouth publicity. In order to perfectionise transcendental process many

companies ask their customers to fill up feedback forms. The Information retrieved from

these forms plays a pivotal role in decision making while devising new strategies. Hence,

the main focus is on features, reliability, durability, service ability and the perceived

quality of the product. This again is differently interpreted by different customers based

on discrete personal perception and diverse external factors.

User based is the other perspective defining quality, where the customer judges the

product based on the fitness for use in preview of the requirements of the customer and

requirements can vary from rarely use to heavily used. The third perspective defining

quality is the Manufacturing base perspective which advocates that the producer also

plays a vital role in manufacturing based quality control. There are some well tested

criteria like density, tensile strength, thickness to name a few which the company has

established over a period of regular tests and research work. If the product matches with

the laid down criteria then the producer will approve the product and the consumer will

receive a generalized and highly predictable product. The guarantee and warrantee of a

product further fosters the concept that, the producer is putting its level best in order to

achieve the deliverance of the promised product or service to the customer. This not only

kindles confidence in the customers but also help the manufacturer to maintain high

degree of product quality. Value based perspectives defining quality focuses and tries to

maintain balance between conformance and performance with respect to the price

charged from the consumer. Continuous effort and research has resulted in revealing

reliable and accurate statements which help the researchers to measure the perception of

the quality of customers, allied with the fast food and beverage industry. The dimensional

matrix of the consumer behaviour in terms of customer satisfaction, branding, service

quality and pricing cannot be applied in Indian context without examining the

socioeconomic environment affecting the food business in India. Hence, any attempt to

study and apply consumer behaviour concept will not fetch much significance and

relevance with our looking into the environmental factors in both micro and macro

context. Thus, the present study examines the consumer behaviour applications for

designing strategic implications for fast food and beverage industry in India.

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Chapter – II

Review of Literature and

Research Gap

Chapter 2 Review of Literature and Research Gap (33-60)

2.1 Review of Literature 33

2.2 Research Gap and Rationale of the Study 54

References 55

2.1 REVIEW OF LITERATURE

During the past two decades, growing number of fast food companies in an increased

competitive scenario have undertaken a number of methodical endeavours to reshape the

consumers’ behaviour for influencing favourable decision towards themselves. Therefore,

high customer satisfaction is of pivotal importance for the success of the whole fast food

and beverage industry, especially for the financial and economic sustenance of these fast

food restaurants. However, existing literature and research indicates that there is

inadequacy of the delivery of the required customer satisfaction level in this industry.

Due to the vast scope of the relationship matrix between customer satisfaction, brand

loyalty, pricing policy and service quality, it is an arduous task for the researcher to

address all the related research work. However, through this chapter an effort has been

endeavored to provide a comprehensive account of the findings of the various studies

related to the subject matter of the present study, so as to provide a basis for the

formation of an outline of the research design to be adopted for the study.

Jooyeon Ha and Soo Cheong Jang (2010) have empirically examined the relationship

among perceived service quality, satisfaction and loyalty in the Korean ethnic restaurant

segment. The researchers have used hierarchical regression analysis to investigate the

direct effects of service and food quality on customer satisfaction and loyalty. The study

also highlights the significance of the customer perception of atmosphere on the success

of the ethnic restaurants. The study points out that the service and food quality has

positive and significant effect on customer satisfaction and loyalty. The study suggests

that employees service and food quality are of immense importance for ethnic

restaurants. Additionally, this study found that employee service together with ideal

restaurant atmosphere effectively increases the satisfaction and loyalty of customers. The

study makes important contribution towards understanding the formation of satisfaction

and loyalty. From a practical prospective, the quality of physical environment is a critical

tool for overall success of the organisation.

Victor P. Lau, Thamis Wing-chun Lo, Zhenquan Sha and He Yun (2007) in the

research on “Service quality in restaurant operations” have proposed and tested a

conceptual model of service quality with the help of structural equation modelling. Using

http://www.sciencedirect.com/science/article/pii/S0278431906000636

data from two large full service restaurants in southern China, the researchers have

investigated the relationship among the service quality, customer satisfaction, and

frequency of patronage. The results of the study supported significant relationship

between service quality and customer satisfaction, service quality and repeat patronage.

However, the relationship between customer satisfaction and repeat patronage was found

insignificant and could not be supported. For the model under study, the researchers also

provided important insights into some of the additional dimensions of service quality that

are significant in the field of restaurant operations. The researchers have also

necessitated the development of strategies which have the fusion of the elements of

service quality, customer satisfaction and repeat patronage in order to elevate the overall

sales turnover of the restaurants.

Cuma Akbay, Gulgun Yildiz Tiryaki and Aykut Gul (2007) have investigated the

relationship among consumers’ attitudes, socio-economic characteristics and fast

food consumption frequency. The researchers have used Chi-square test of independence

to compare the consumers’ fast food consumption frequencies. The researchers have

developed an empirical model that signifies on the basis of consumer, the consumption

frequency of fast food products using the random utility framework. The empirical model

was estimated by using an ordered probit approach to obtain the coefficients that are

applied to the calculation of marginal effects and probabilities. The sign and significance

of coefficients and marginal effects were used to ascertain consumer characteristics,

which are important to study the frequency of fast food consumption. The results of the

study indicate that demographics such as age, income, education, household size,

presence of children along with other behavioural factors such as consumer attitude

towards the price of fast food, health concerns and children preference, significantly

influence the frequency of fast food consumption.

M.Omer Azabagaoglua and Yasemin Oramana (2011) have analysed customer

expectations in food sector in the province of Istanbul, Ankara and Izmir after 2008

world economic crisis. The researcher has applied theory of reasoned behaviour. The

measurement of customer attitude towards food products have taken into consideration

the product features, effect of preference group, past behaviour and behavioural intention

variables. The Variables which influencing consumers’ purchase intention have been

tested with the help of GLM model. The research model for the study indicates that

respondents’ attitude towards the particular food product has influence on their purchase

intention. With other variables in the model, price was not statistically significant as a

determinant of purchase intention. After the 2008 global economic crisis, surveys on food

shopping behaviour indicates that the consumer intend to decrease food expenditure,

prefers cheaper brands and cheaper retailers.

Wen-Bao Lin (2007) has presented an innovative model for understanding customer

satisfaction and used the nonlinear fuzzy neutral network for testing the model. The result

of the empirical research illustrates that in functional quality, the interpersonal based

service encounter is better than the technology based service encounter. Moreover, when

it comes to technical quality, the technology based service encounter is better than the

interpersonal based service encounter. The study reveals that the functional quality has a

positive and significant effect on customer satisfaction, the service quality has a positive

and significant effect on service value, the service value has a positive and significant

effect on customer satisfaction. The service encounter has a positive and significant effect

on relationship involvement and the relationship involvement has a positive and

significant effect on customer satisfaction.

Ying-Feng Kuo, Chi-Ming Wu and Wei-Jaw Deng (2009) have analysed the

relationships among the service quality, perceived value, customer satisfaction, and post

purchase intentions in the fast food industry. The researchers have used structural

equation modelling and multiple regression to analyze the data collected from students of

15 major universities in Taiwan. The study reveals that service quality positively

influences both perceived value and customer satisfaction whereas, perceived value

positively influences both customer satisfaction and post purchase intention. However,

the study depicts that the service quality has a negative influence on post purchase

intentions. The study suggests that in order to increase the customer satisfaction, the

business organisation must focus on increasing the perceived value and service quality.

Farhana Nadia and Islam Shohana (2011) while conducting the study “Exploring

Consumer Behaviour in the Context of Fast Food Industry in Dhaka City” have examined

the relationship between customers’ attributes, quality, value and convenience related

perception with income. The study reveals that quality and value related perception is

strongly and positively influenced by income. The study highlights that there is a strong

and positive relationship between overall customer service and attributes related to the

quality and value. Moreover, the study reveals that the customers are interested to travel

distances for their favourite restaurants. In order to increase the customers’ satisfaction

with regards to customer service, the fast food restaurants must focus their strategies to

increase the attributes related to the quality. Additionally, the study suggests that the

people are loyal to their favourite fast food restaurants without having any effect of price

variance.

Verbeke Wim (2005) has evaluated the factors which are affecting the acceptance of the

concept of functional foods. According to the researcher, the acceptance of functional

foods is determined by having a score of minimum 3 on a 5 point Likert scale measuring

likes or dislikes of the food. If the food tastes good, the consumer will give a score of 3 or

above. The study shows that among the sample, approximately 50 percent have the

acceptability of the concept of functional foods. A multivariate probit model is used by

the researcher to test the simultaneous impact of demographic, cognitive and attitudinal

factors on acceptance of functional foods. The study highlights that the belief in the

health benefits of functional foods is the main determinant for the acceptance of

functional foods. Moreover, the likelihood of accepting functional food increases with the

presence of an illness in the house. The study exhibits that the likelihood of rejecting

functional foods decreases with the increase in the level of awareness of the concept

pertaining to the health benefits delivered by functional foods. The study reveals that this

adverse impact of low awareness decreases with increased consumer age, belief,

knowledge and presence of an unhealthy family member.

Yinghua Liu and Soo Cheong Jang (2009) have analysed the effect of food quality,

service reliability and environmental cleanliness on the satisfaction level of the

American customers visiting Chinese fast food restaurants. This study also identifies the

attributes of the Chinese restaurants which mostly influence the satisfaction and

behavioural intentions of the customers. In this study, the researchers have used

Importance Performance Analysis approach to find the quality gaps. The study points out

that food quality, service reliability and environmental cleanliness have strong and

positive influence on the satisfaction level of American customers. Moreover, the study

shows that these three attributes are pivotal to create positive post dining behavioural

intentions. Additionally, food taste and service reliability appear to be the next most

important attributes for the success of the Chinese restaurants. The Importance

Performance Analysis shows that the waiting time after giving order and considerate staff

service are the two important areas where Chinese restaurateurs need to make

improvements. The study also suggests that the managers of the Chinese restaurants

should rationally allocate their resources for enhancing the customers’ satisfaction and

desired behavioural intentions.

Joon David and Wuk Kwun (2011) have examined the relationships among campus

food service dimensions, perceived value and the satisfaction level of the patrons of the

fast food industry. The study also analysis the effects of perceived value and campus food

service attributes on consumers’ attitude. The study also evaluates the roles of gender

differences in the process of attitude fromation. The researchers have used general linear

model, multiple regression and descriptive statistics in order to find the answers to the

research questions. The results of the study point out that the campus food service

attributes and perceived value positively influence the satisfaction level of the customers.

Moreover, perceived value and campus food service attributes have direct and positive

effect on the consumers’ attitude. The study also reveals that the attitude fromation

process differ notably between male and female consumers. The study suggests that in

order to increase the customers’ satisfaction level, management should direct their

resources towards the strategies which can elevate the campus food service attributes and

perceived value of the customers.

Groth Markus and Gilliland W Stephen (2001) have conducted research on the basis

of two field studies which examined the role of procedural justice in the delivery of

services in fast food restaurants. In the study, waiting time and waiting procedures are

considered as two dimensions of the procedural justice. The study analysis the customers’

reaction towards these identified two dimensions of procedural justice. The first field

study examines the service experience and perceptions of justice of the customers of the

two fast food restaurants. Under the experiment, the restaurants used two different types

of waiting procedures single-line systems and multiple-line systems which were switched

systematically between each other in such a way that there was no difference in the

specified waiting time and consequently its effect was measured towards customers’

opinion. The second study consisted of a field survey in which customers of a fast food

restaurant were asked regarding their service experiences towards waiting time to service

delivery. The results of both the studies showed that customers in single line system

perceived waiting time to be shorter as compared to customers in multiple line system.

Furthermore, perceived waiting time and perceptions related to the waiting procedures

had direct effect on the customers waiting experience. Moreover, the study suggests that

the customers’ reaction to the waiting period is more positive when perceived wait time is

short and the waiting procedures were perceived as adequate.

Seung-Hee Baek, Sunny Ham and Il-Sun Yang (2006) have empirically examined the

perception of college students visiting the fast food restaurants in Philippines. The study

identifies the dimensions which the students feel important while selecting a fast food

restaurant. The researchers have used conjoint analysis and descriptive statistics to find

the answers to the research questions. The study reveals that menu price is the most

important dimension followed by quality of the food served, restaurant brand, staff

service and hygiene related factors. The study suggests that in order to increase the

frequency of the college students, the management of the fast food restaurants need to

concentrate on menu pricing and improve upon the staff service, food quality and

restaurants cleanliness. Moreover, this study is imperative for fast food companies which

are planning to enter Philippines market as the study helps in understanding the different

components of the Philippines food service industry and developing effective marketing

and operational strategies.

Lefa Teng (2009) has investigated the consumers’ response towards the price discount

associated with or without minimum purchase requirements. The researcher has used

brand categorization model and mixed logit statistical technique on the data collected

from customers of fast food restaurants in China. The study illustrates that when the

discount is given to the customers in exchange of minimum purchase, the customers are

less inclined towards buying whereas, when the customers are given discount without a

minimum purchase, they are more inclined towards acquiring the product. The effect of

the discounts reveal that they change consumers’ attitude and purchase intentions

regarding a particular brand by moving it from consumers hold set to consideration set.

The result of the study provides new insight regarding the use of brand categorization

model to predict the effects of different types of price discounts

on consumers’ purchase behaviour. Moreover, the study shows that when a price discount

without a minimum purchase requirement is applied to a brand, it moves to consideration

set. Additionally, the study reveals that the effects of the two types of price discounts

on consumers' attitudes and purchase intentions are significantly different.

Riadh Ladhari, Isabelle Brun and Miguel Morales (2008) have analysed the effect of

restaurants services on dining satisfaction of customers in the fast food industry. The data

was collected from the students of University of Moncton and University Saint Mary's

situated in Canada. The study reveals that positive emotions, perceived service quality

and negative emotions are the three sources of customer’s satisfaction vis-a-vis restaurant

services. Moreover, the study shows that emotions mediate the impact of perceived

service quality on dining satisfaction wherein positive emotions have more impact on

customers’ satisfaction than negative emotions. Dining satisfaction has a significant

impact on recommendation, customer loyalty and willingness to pay more. Furthermore,

the study suggests that fast food restaurants in Canada need to enhance the positive

perception of the customers related to the restaurants’ service in order to increase the

overall dining satisfaction.

Cheol Park (2004) has explored the relationship between consumer values and the

importance of fast food restaurants’ attributes. The researcher has used structural

equation modelling and multiple regression to analyse the customers of fast food

restaurants in Korea. The consumer values can be divided into Hedonic and Utilitarian

factors. The study reveals that Hedonic value of eating out had positive correlation with

mood, quick service, cleanliness, food taste, employee kindness, and facilities whereas,

the Utilitarian value is centred on reasonable price, and promotional incentives. The study

highlights that when it comes to buying frequency of the customers, the Hedonic value is

more influential than Utilitarian value. This study proves that Korean consumers choose

fast food restaurants more by hedonic values of eating out rather than the utilitarian

value. The study suggests that fast food restaurants in Korea must consider Hedonic

aspects while devising strategies for attracting customers.

Heung C.S. Vincent and Gu Tianming (2012) have empirically investigated the

influence of the restaurants’ atmosphere on the dining satisfaction and behavioural

intentions of the customers of fast food restaurants. In the study, the data is collected

from 10 full service restaurants in Hong Kong. The researchers have identified five

dimensions of restaurant atmosphere, which are facility aesthetics, ambience, spatial

layout, employee factors, and the view from the restaurants window. The researchers

have used factor analysis and multiple regression analysis to answer the research

questions. The results of the study reveal that the restaurants’ atmosphere has a positive

and significant influence on customers’ dining satisfaction and their behavioural

intentions. Moreover, the study identifies that the restaurant’s atmosphere positively

influence the customers’ willingness to pay more and their intentions to spread positive

word of mouth. Additionally, the dining satisfaction was found to have a positive and

significant influence on behavioural intentions, specially recommending the restaurant to

their acquaintances.

Young Hoon Kim, MinCheol Kim and Ben K. Goh (2011) have analysed the effects of

perceived value on customers’ intentions to revisit and their satisfaction level. The study

also observes the effect of satisfaction on customers’ intention to revisit. In this study, the

researchers have used modified theory of reasoned action. The study unveils that

perceived value has a strong and positive effect on the customers’ satisfaction and

intentions to revisit. Moreover, the study shows that customer satisfaction and intention

to revisit are directly proportional to each other. The study reveals that patrons’ intention

to revisit is predicted by their level of satisfaction and perceived value. The study

suggests that in order to increase the customer frequency, the management of the business

organisations must focus their resources towards elevating the present condition of

perceived value and customers’ satisfaction.

Ungku Zainal (2011) has found that unlike health inspectors, fast food consumers can

only rely on the visible cues to judge the level of food safety in eating establishments.

Therefore, the researcher has conducted this study in order to know the effect of

constructs of food safety cues on the customers dining decisions. The researcher has used

confirmatory factor analysis and descriptive statistics to answer the research questions.

The findings of the study indicate that food service hygiene is one of the top

considerations for the customers while selecting a dining place. The researcher suggests

that for effective functioning of the restaurant, the management needs to incorporate the

food service hygiene as one of their most important priorities.

Nam Jang-Hyeon and Timothy Lee (2011) have analysed the relationship among

foreign travellers’ satisfaction, intentions to recommend and revisit the traditional Korean

restaurants. In the study, the researchers have used dimensions of SERVQUAL and

applied co-relation, multiple regression and structural equation modelling on the

customers of conservative Korean restaurants. The study reveals that the dimensions of

service quality like reliability, assurance, tangibility, empathy and responsiveness had a

positively influence on the foreign travellers’ satisfaction via-a-via the traditional Korean

restaurants. The study also illustrates that the foreign travellers’ satisfaction has a positive

influence on their intentions to revisit and recommend the name of the restaurant to their

acquaintances. The study suggests that the restaurants need to direct more attention

towards reliability, assurance, tangibility, empathy and responsiveness of the staff to

increase the satisfaction level of the foreign travellers. Moreover, the results of the study

can help the management of the restaurants to develop strategies which may strengthen

the foreign travellers’ satisfaction towards the traditional Korean restaurants.

Burton Scot, Howlett Elizabeth and Heintz Andrea Tangari (2009) have examined

how objective nutritional information influences purchase intentions. The study also

analyse how accurately consumers of fast food restaurants are able to estimate the sodium

contents, calories and fats in their food. The researchers have applied ANOVA and

descriptive statistics on the data collected from the customers of fast food restaurants in

the city of North Carolina USA. The study points out that many consumers have little or

no understanding of the calorie, fat, and sodium levels of many fast food meals which

they consume. Moreover, the study reveals that objective nutritional information has

strong and positive influence on the purchase intentions of the customers. The study also

shows that as the customers became more aware of the nutritional information in the

meals, they inclined more towards healthy meals as compared to less healthy but more

tastier meals. The study suggests that the fast food restaurants need to provide more

nutritious food items and present more nutritional information about them in order to

increase the purchase intention of the customers.

Young Namkung, SooCheong Jang and Soo Keun Choi (2011) have investigated how

the consumers of the quick service restaurants respond to the service failure at different

service stages and loyalty levels. The data was collected by distributing a self

administered questionnaire to the customers of fast food restaurants in USA. The study

reveals that when a service failure occurred during the greeting or seating, which is stage

one and order taking or delivery, which is stage two, the customers were likely to

complain at any service stage. Moreover, the study illustrates that highly

loyal customers showed a significantly higher willingness to complain as compared to the

less loyal customers. The study recommends that the managers of the fast food

restaurants need to consider the complaints of dissatisfied customers seriously and take

immediate appropriate corrective actions to ensure that mistakes are not repeated and the

customers remain loyal to the restaurants.

Dohee Kim, Vincent P. Magnini and Singal Manisha (2011) have analysed the

relationship among brand personality perceptions, brand preference, attitudinal loyalty,

and positive word of mouth behaviour for the Olive Garden and Chili's restaurant chains.

The researchers have used structural equation modelling, co-relation and descriptive

statistics to achieve the objectives of the research. The study reveals that for both the

restaurant chains, brand personality perceptions have a strong and positive effect on

brand preference and attitudinal loyalty. Moreover, the brand preference has a positive

impact on attitudinal loyalty wherein attitudinal loyalty has a positive influence on word

of mouth communication among the customers. The study advocates that in order to

increase brand preference and attitudinal loyalty the management of Olive Garden and

Chili's restaurant chains need to concentrate more resources towards enhancing the brand

personality perceptions of their customers.

Hyun Sean Sunghyup, Kim Wansoo and Lee Jae Myong (2011) have analysed the

effect of advertising, perceived value and behavioural intentions on patrons’ emotional

responses in the restaurant industry. Moreover, the study aims to investigate that which

attributes of the advertising bears the strongest impact on behavioural intentions of the

patrons. The researchers have employed factor analysis, multiple regression and

descriptive statistics to achieve the objective of the research. The study reveals that

perceived value, behavioural intentions and advertising has strong and positive effect on

patrons’ emotional responses. Additionally, out of four attributes of the advertising,

stimulation was found to plonk the strongest impact on patrons’ behavioural intentions.

Furthermore, the study illustrates that the level of arousal induced by advertising plays a

moderating role in the relationship between patrons’ emotional responses and hedonic

values. The study suggests that in order to acquire better emotional responses from the

customers, the management of the restaurants must focus their resources towards

elevating the present condition of customers’ perceived value and simulation.

Kim Wansoo, Ok Chihyung and Canter D. Deborah (2010) have empirically

investigated the effect of social switching costs, intrinsic inertia and intrinsic variety

seeking on the frequency of revisit of the customers of fast food restaurants in the United

States of America. The researchers have used series of moderated hierarchical regression

analysis on the data collected from the customers of the fast food restaurants to answer

the research questions. The study reveals that social switching costs and intrinsic inertia

have strong and positive effect on the frequency of revisit of the customers, whereas

intrinsic variety seeking has negative effect on the frequency of revisit of the customers.

Moreover, the study highlights that the customers’ involvement with the restaurant and

perceived brand heterogeneity enhanced the frequency of revisits.

Glanz Karen, Hewitt M. Anne and Rudd Joel (1992) have examined the influence of

nutrition labelling, customer shopping behaviour and point of purchase on the purchase

decision of the customers of quick service restaurants. The data has been collected from

the customers of restaurants in Philadelphia, Scottsdale and Arizona. The study shows

that many customers want nutritional information, but they often do not employ it

because it is difficult to use and not readily available. The customers have been found to

consider nutrition as one of the several factors influencing purchase decision. The study

shows that nutrition labelling, point of purchase and customers’ shopping behaviour has a

positive influence on the purchase decision of the customers. The study also reveals that

nutrition is not the only criteria which will influence the purchase decision of the

customers. Ergonomics of the food store, cleanliness, good behaviour of staff and local

touch plays a pivotal role in the overall satisfaction of the customers.

Lazzarin Uggioni Paula and Elisabete Salay (2012) have found that the accurate

measurement of consumers’ attitude could be an important tool for

understanding consumer behaviour in food sector. Therefore, the researchers have

developed a scale to measure consumer attitude regarding food safety. To achieve the

above mentioned research objective, the researchers developed interview items followed

by complete pilot testing, item analysis which includes influence of social desirability

and total item correlation, reliability test which consists of internal consistency and test

retest and finally the validity assessment consisting of discriminative validity and

exploratory and confirmatory factor analysis. The data for the research was taken from

Campinas, a city of Brazil. The final scale included 24 items and had a Cronbach’s alpha

coefficient of 0.79 and a content validation coefficient of 0.99. The confirmatory factor

analysis validated a model with five factors and the final instrument distinguished

reasonably well between the groups and showed satisfactory reproducibility (r = 0.955).

The study concludes that the scale validity and reliability were satisfactory.

Kisang Ryu, Heesup Han and Kim Tae-Hee (2008) in the research “The relationships

among overall quick-casual restaurants’ image, perceived value, customer satisfaction,

and behavioural intentions” the researchers have analysed the relationship among

customer satisfaction, overall quick-casual restaurants’ image, perceived value and




customers’ behavioural intentions. The study revealed that perceived value significantly

influenced the customer satisfaction and overall quick casual restaurant’s image.

Moreover, the study shoes that perceived value and customer satisfaction are significant

predictors of customers’ behavioural intentions. The study suggests that overall quick-

casual restaurants image produces a significant impact on the perceived value of the

customers. Additionally, customer satisfaction can act as a partial mediator in the

relationship between overall quick casual restaurant image and behavioural intentions.

Woo Kim Gon, Christy Yen Nee Ng and Kim Yen-soon (2009) have investigated the

relative importance of institutional dine serve dimensions which includes food quality,

atmosphere, service quality, convenience, value and price that affects customers

satisfaction in the university dining facilities. The study examines the influence of

customers’ satisfaction on return intentions and word of mouth endorsements. The

researchers have used a web based survey questionnaire which was distributed to the

students of Midwest public University. The researchers have used factor analysis,

ANOVA, co-relation and multiple regression to analyze the data. The study highlights

that all institutional dine serve dimensions had a significant and positive effect on overall

customer satisfaction and intentions to revisit. The researchers have concluded that this

will not only strengthen customers’ loyalty but also improve the reputation of the dining

facilities and generate greater revenue.

Kynda R. Curtis, Jill J. Mccluskey and Thomas I. Wahl (2007) have examined the

effect of gender, higher income levels, age, and opinions concerning the taste of

western foods on fast food consumption in China. In the study, the researchers have used

ordered logit model on the data collected from the fast food consumers dwelling in

Beijing city of China. the study reveals that the female gender, higher income levels,

younger adults, existence of children in the house, and positive opinions concerning the

taste of the western food have a positive and significant influence on the consumption of

fast food in China. Moreover, the study suggests that proper targeting of consumers who

exhibit preferences for western foods will be essential for companies wishing to

successfully enter into the Chinese food market.

Kristin L. Morse and Judy A. Driskell (2009) have analysed the influence of gender

on consumption of fast food and nutritional self assessments of students. A 12 item

structured questionnaire was filled by male and female students aged between19 to 24

years of Midwestern University. The study revealed that five to seven percent of the

students ate lunch and dinner at a fast food restaurant. The predominant reasons given for

eating at fast food restaurants were limited time, good taste, eating with family or friends

and economical services. The study found that larger number of male students as

compared to female students ate at fast food restaurants because male students thought

that these restaurants were inexpensive and economical. Moreover, the study reveals that

the frequency of eating at the fast food restaurants was significantly different for male

students as compared to female students because male students gave more attention to the

energy content of the food items while making their selection decision. Additionally, the

study shows that the body mass indices of male students were significantly higher than

that of female students. Furthermore, the study illustrates that higher percentage of

female students strongly agreed with the statement “the nutrition content of food is

important to me.” The study concludes that several gender differences were observed in

the fast food consumption and nutritional beliefs of these college students.

Kirsten I. Dunn, Mohr Philip, Wilson J. Carlene and Wittert A. Gary (2011) have

analysed how successfully the theory of planned behaviour predictes fast

food consumption patterns in Australia. The researchers have used structural equation

modelling to answer the research questions. The study indicated that the theory of

planned behaviour successfully predicted fast food consumption patterns. The study also

reveals that consideration of future consequences, self evaluation and fear of negative

evaluation has direct effect on the fast food consumption in Australia. Moreover, the

study suggests that the fast food consumption is influenced by general demand for meals

which are tasty, satisfying, and convenient to purchase. These factors

reflect immediate need and over rule the customers’ concerns about longer term health

risks associated with the intake of fast food.

Dag Bennett (2004) has examined the influence of retail environment on the loyalty of

Australian and Taiwanese fast food customers. The researcher has used ANOVA post

hoc tests, factor analysis and descriptive statistics to achieve the research objective. The

study reveals that retail environment has strong and positive effect on the loyalty of

Australian and Taiwanese fast food customers. The study illustrates that in both the

countries, there is one third purchase from the same branded outlet twice in a week,

whereas during the same time period, two third of the customers buy from a different

branded outlet. This was true for all the brands irrespective of the type of food on offer

and whether the brand was local or global. Moreover, the study found that despite big

differences in Australian and Taiwanese culture, type of food and retail environment, the

loyalty of the fast food customers towards the fast food outlets is nearly identical. The

study suggests that business organisations need to attract customers rather than focusing

their resources on encouraging the loyalty of the customers.

Mueller R.D, Mack R. and McMullan R. (2003) have evaluated the effect of service

failure and compensation methods on the repeat patronage intentions of the customers.

The data for the study has been collected from the customers of American restaurants.

The study shows that the customers expect the compensation, once the service failure has

occurred. Moreover, the study reveals that service failure has a negative effect whereas

compensation methods have a positive effect on the repeat patronage intentions of the

customers. The study suggests that restaurants need to use less expensive compensation

methods in order to bear minimum financial damage to the organisation. Additionally, as

a large number of service firms continue to seek opportunities in foreign markets, more

efforts need to be directed at assessing cross national similarities and differences so that

appropriate strategies can be devised.

Carmen Berne, Jose M Mugica and M Jesus Yague (2001) have analysed the effect of

variety seeking on the customers’ retention for food services. The researchers have used

structural equation modeling and descriptive statistics on the data collected from the

University of Zaragoza, University of Navarra and University of Madrid situated in Spain

to answer the research question. The study shows that variety seeking has strong and

negative effect on the customers’ retention for food services i.e. the more is the variety

seeking behaviour in the customers, the less they will come to the same restaurant leading

to the reduced retention of the customers. The study suggests that in order to elevate

customer retention, the management of the business organizations must focus their

resources towards improving the condition of service quality, customer satisfaction and

staffs’ involvement in the relationship with the customer.

Kenneth L. Bernhardt, Donthu Naveen and Kennett A. Pamela (2000) have

examined the relationship between customer satisfaction, employee satisfaction and

performance of the employee. In the study, the researchers have used time series data to

accomplish the objective of the research. The study reveals that employee satisfaction has

strong and positive relationship with customer satisfaction. Moreover, the study

illustrates that employee satisfaction has strong and positive relationship with

performance of the employees. The study advocates that in order to increase the customer

satisfaction, the management of the organisations must improve the employees’

performance which is directly related to the employees satisfaction.

Chen Mei-Fang (2007) have analysed the factors affecting the food purchasing

behaviour of the customers of fast food restaurants in Taiwan. The researcher has used

Moderated regression analysis and Ajzen’s Theory of Planned Behaviour to explain the

consumers’ food purchasing behaviour on the data. The findings of the study reveal that

the food related personality traits, price of the food item, place of purchase, nutritional

value of the food and brand associated with it exerted maximum influence on the food

purchasing behaviour of the customers. Moreover, good furniture, lightings and music

also played a pivotal role in the decision making process of the customers. The study

recommends that personality traits, place of purchase, price of the food item, nutritional

value, brands associated with the food, furniture of the restaurant, lightings and music

must be improved by the fast food restaurants in order to attract the customers to their

favourite food serving locations and ultimately increasing the profits of the organisation.

Goyal Anita, Singh N.P (2007) have analysed the effect of hygiene and nutritional

values on the level of satisfaction of young Indian consumers of fast food restaurants.

The researchers have used multivariate statistical tools to answer the research questions.

The study reveals that that hygiene and nutritional values have positive effect on the

satisfaction level of the Indian consumers. Moreover, the study shows that the young

Indian consumers have passion for visiting fast food outlets for fun and change but their

first choice is homemade food. They feel homemade food is much better than food served

at fast food outlets. They have the highest value for taste and quality followed by

nutritional value and hygiene. The study suggests that fast food providers need to focus

on hygiene and nutritional values to increase the customer satisfaction. There is need to

communicate the information about hygiene and nutritional value of fast food to the

customers which will help in building the trust in the food providers.

Hong Qin and Prybutok Victor R. (2009) have examined the relationship among

service quality, perceived value and customer satisfaction in fast food restaurants. In the

study, the researchers have used exploratory factor analysis and confirmatory factor

analysis for assessing construct reliability and validity. Moreover, Structural equation

modelling was employed to estimate the relationship among service quality, customer

satisfaction, and behavioural intentions. The study reveals that service quality, perceived

value and food quality positively influenced customer satisfaction. The study also reveals

that service quality and perceived value are not the only criteria which will influence the

satisfaction of the customers but ergonomics of the food store, cleanliness, good

behaviour of the staff, food quality and local touch also plays a pivotal role in the overall

satisfaction of the customers.

Paravantis John, Bouranta Nancy and Chitiris Leonidas (2009) have evaluated the

effect of internal service quality on external service quality. The data was collected from

the restaurants of Piraeus city located in Greece. The researchers have used canonical

correlation analysis and factor analysis on the customer data. Factor analysis of external

service quality revealed six factors including product, organizational image, safety and

choice, empathy, reliability and responsiveness whereas, internal service quality factors

included professionalism and internet. Canonical correlation revealed that the internal

service quality dimensions of safety, reliability and internet exert a direct positive

influence on the external service quality dimensions of organizational image, empathy

and responsiveness. The study suggests that restaurants should focus on internal service

quality in order to improve external service quality.

Lockie Stewart, Lyons Kristen, Lawrence Geoffrey and Grice Janet (2004) have

analysed the effect of attitudinal, behavioural and motivational factors on the

consumption of organic food by the Australian customers. The researchers have used

path analysis and Structural equation modelling on the data collected from the Australian

restaurants. The study reveals that behavioural, motivational and attitudinal factors have

positive influence on the consumption of organic food by the Australian consumers.

Moreover, the study shows that behaviour of the customers related to recycling and to

lower pollution levels in addition to convenience in the purchase and preparation of food

has positive influence on the customers purchase decision and motivates them to

purchase organic food more frequently. Gender, education and the level of responsibility

taken by respondents for food provisioning within their households also had a positive

effect on the organic food purchase intentions. The study suggests that the restaurants

need to incorporate more food items bellowing to the category of organic foods.

Brady Michael K., J Christopher. Robertson and Cronin J.Joseph (2001) have

evaluated the effect of service quality and service value on consumers' behavioural

intentions. The data collected from North American and Latin American fast-

food consumers was subjected to multiple regression and descriptive statistics in order to

achieve the research objective. The study illustrates that when it comes to North

American consumers, their consumers' behavioural intentions is influenced more by

service quality. Whereas, when it comes to Latin American customers, their consumers'

behavioural intentions are influenced more by service value. Additionally, the

American consumers tend to place more emphasis on the tradeoff between what they

receive in the service encounter and what they have to give up to receive the benefits.

Ahmad Jamal, Peattie Sue and Peattie Ken (2012) have examined the consumers'

response to different sales promotions for packaged food products. The primary data for

the research was collected by in depth interviews with the customers who visit markets

regularly. The researchers have applied cluster analysis and descriptive statistics to

answer the research questions. The results of the study show that sales promotion

techniques like loyalty programmes, trade off up to 40 percent and point of sale displays

had positive and strong effect on the purchase decision of the customers whereas, price

pack deals, check out coupons and online interactive promotional games had very less

effect on the customers’ purchase decision. Furthermore, the study recommends that

packaged food retailers need to focus more on loyalty programmes, trade off up to 40

percent and displays at point of sales to increase the sale volume of their products.

Bell Robert A., Cassady Diana, Culp Jennifer and Alcalay Rina (2009) have

evaluated the food items advertised on television channels serving children and youth,

and have also compared the advertisements on English language channels with

advertisements on Spanish language channels. The researchers have observed

television food advertisements appearing on Saturday mornings and weekday afternoons.

A random sample of 1,130 advertisements appearing on 12 channels catering to children,

youth, black youth, and general audiences were analyzed. Moreover, each advertisement

was coded for the nature of the item promoted, the selling propositions used and any

nutritional claims made. The researchers have used Cross-tabulations using Fisher's exact

test to answer the research questions. The study illustrates that one-fifth of commercials

were for food and food advertisements were particularly prevalent on children's channels

on Saturday. Furthermore, 70 percent of food advertisements were for items high in sugar

or fat. More than one fourth of food advertisements were for fast-food restaurants, which

were common on MTV and Spanish-language channels. Advertisements for fruits and

vegetables were rare constituting only 1.7 percent of the total advertisements. One

nutrition-related public service announcement was found for every 63 food ads. The

study shows that food advertisements continue to promote less healthy items. The study

suggests that education and media literacy are the best strategies for mitigating the

adverse effects of advertising.

Yoon Jang Jung, Kim Woo Gon and Bonn A. Mark (2011) have observed Generation

Y consumers’ behavioural intentions towards green restaurants. The researchers have

used cluster analysis and descriptive statistics on the data collected from the University

students of South Eastern United states. The students were between 17 years to 30 years.

The result of the study reveals that Generation Y consumers’ liked green restaurants and

they preferred to visit green restaurants again as they considered it nature friendly,

beautiful, enticing and a unique place to be with friends. The study advocates that green

restaurants need to provide organic food as there is huge demand of organic food in the

Generation Y customers. Moreover, alternative energy sources like solar lights, solar

powered automatic movement sensor doors, solar beer dispensers and recycled furniture

need to be installed as these things allure the Generation .Y. Moreover, they are nature

friendly and economical to used and maintain in long run.

Lyndal Wellard, Colleen Glasson and Kathy Chapman (2012) have inspected the

nutritional composition of children’s meals from six fast food chains in Australia. The

researchers have compared the calorie, saturated fat, sugar and sodium content of all

meals against the fast food industry defined nutrient criteria for healthy meals and

children’s recommended daily nutritional requirements. The study found that the overall

children’s fast food meals are high in saturated fat, sugar and sodium. Only 16 percent

and 22 percent of meals met the industries nutrient criteria for children aged between 4 to

8 years and 9 to 13 years respectively. Additionally, the study reveals that 90 percent of

the meals exceeded 30 percent from the recommended upper limit for sodium

consumption for children aged between 4 to 8 years. Moreover, 72 percent of the fast

food meals exceeded 30 percent from the daily recommended energy level for 4 year old

children. Some meals also exceeded the recommended upper limit for daily saturated fats

for children aged between 4 to 8 years. The study advocates that there is an urgent need

for reformulation of children’s meals to improve their nutritional composition and

revision of the industries nutrient criteria to align with children’s dietary requirements.

Voon Boo Ho (2012) have analysed the influence of services cape, food quality and price

on the youths’ satisfaction related to the fast food restaurants. The researcher has

used multi attribute compositional model on the data collected from the young customers

visiting fast food restaurants. The results of the study reveal that price, food quality and

services capes are directly related to the youths’ satisfaction of fast food restaurants.

Moreover, the study shows that human service and price were the key determinants of the

satisfaction of customers. Additionally services cape plays a pivotal role in enticing the

young customers as they want exiting and contemporary ergonomics to satisfy their

social needs. The study also illustrates that taking friends out to a unique and exhilarating

place is considered virtuous among young customers. Therefore, the study suggests that

the fast food restaurants need to change their ergonomics every 2 to 3 years to maintain

the interest of the young customers and keep them attracted to the service unit.

Furthermore, the fast food restaurants need to provide better staff service and appropriate

price of the food items in order to increase the young customers’ satisfaction level.

Fischer Eileen, Gainer Brenda and Bristor Julia (1997) have evaluated whether the

gender of the service provider should be regarded as an element of the services cape.

Does the gender of the service provider influence the perception of the service quality in

the contexts of fast food restaurants? The researchers have used stated preference analysis

and descriptive statistics to answer the research questions. The researchers first thought

that the men might believe male service provider of higher quality and women may

believe female service provider of higher quality due to in group bias or homophile based

perceptions. However, the study exhibits that the customers do not associate gender with

the services cape as they are more inclined towards the service output. Hence, gender of

the service provider should not be regarded as an element of the services cape.

Lee Soojin, Kim Woo Gon and Kim Hyun Jeong (2006), have analysed the effect of

co-branding on loyalty and purchase pattern of the customers of fast food and family

restaurants. The data was collected from the customers of fast food and family restaurants

in Korea. Researchers have employed multiple regression, co-relation and descriptive

statistics on the data to achieve the objectives of the study. The study shows that co-

branding is an effective marketing tool which helps fast food and family restaurants to

build favourable behavioural and attitudinal customer loyalty. Moreover, the study

reveals that co-branding persuades the customers to purchase more frequently and

explicitly. The study found that although co-branding may be a successful strategy to

encourage more frequent visits by the customers but the strategy may not always lead to a

higher per customer profit margin.

Emma J. Boyland and Jason G. Halford (2011) have evaluated the effect of television

advertisements of food products on the food choices in children. The researchers have

used primary data from in-depth interviews conducted with the children and secondary

data from the medical establishments situated in the vicinity of the research area in

United Kingdom. The study reveals that despite government regulations, the children in

United Kingdom are exposed to considerable numbers of food advertisements on

television. Moreover, these advertisements are predominantly for foods high in fats, salt

and sugar which are marketed to children using promotional characters and fun themes.

Such advertisements have caused significant increase in the intake of food items which

are far beyond the permissible limit of healthy foods, particularly in overweight and

obese children. The study advocates that the government needs to take prompt action to

curb the exposure of children to these misleading advertisements on the television and

ensure that the laid down norms and rules are strictly complied with.

Culp Jennifer, Bell. A. Robert and Cassady Diana (2010) have observed the food

industries web sites which are targeting children to assess the strategies used by the food

companies in order to prolong children’s visits and foster their brand loyalty towards

their food products. The researchers have conducted a content analysis of the web sites

advertised on 2 children's networks that is, Cartoon Network and Nickelodeon. The study

examined a total of 290 web pages and 247 unique games on 19 internet sites. The study

reveals that games found on 81% of the web sites were supporting the most predominant

promotional strategy used by the companies. Moreover, all the games had at least 1 brand

identifier with logo being frequently used. Usually the web sites contained 1 healthful

message for every 45 exposures to brand identifiers. Additionally, the study found that

the companies are using the web sites to extend their television advertising to promote

brand loyalty among children. These sites almost exclusively promoted food items high

in sugar and fat. The study suggests that health professionals need to monitor food

industry marketing practices used in new media.

Ebster Claus, Wagner Udo and Valis Sabine (2006) have evaluated the effect of

suggestive selling on the purchase decision of fast food customers. The researchers have

used logistic regression and descriptive statistics on the data collected from the customers

of fast food restaurants. The study shows that in all the conditions suggestive selling lead

to the increase in sales turnover. Moreover, the study reveals that the demand for side

dish increased when used in conjunction with the main dish. The study suggests that in

order to increase the revenue and sales turnover, the restaurants need to train their staff to

provide suggestions to the customers when they are in the process of deciding the food

items from the menu list.

2.2 RESEARCH GAP AND RATIONALE OF THE STUDY

The literature review is an examination of the past researches that helps in identifying the

gap in the research which the proposed study attempts to address. The effective

evaluation of the related research work also provides valid rationale for conducting the

study. The above discussion on the literature review points out that consumer behaviour

in service encounters especially in context of the fast food and beverage industry is one

of the most important phenomenon that necessitates its relevance and greater attention

while incorporating a right mixture of success drivers. The discussed literature within the

domain of the scope of the study as well as the conceptualisations and understanding of

the analytical models signifies the relationship between brand loyalty, customer

satisfaction, service quality and pricing. Therefore, it can be assumed that customer

satisfaction, pricing, service quality and brand loyalty are mutually interrelated in context

to fast food service encounters. Hence, there is a need for careful investigation of these

dimensions within the preview of the fast food industry in India. Furthermore, the study

holds importance due to its empirical nature in the area of consumer behaviour pertaining

to the fast food industry, as a little has been done in this regards. This study is also a

contribution to the literature on consumer behaviour in service environments.

Additionally, it also has favourable implications for academicians, industry people and

students.

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Chapter – III

Research Design and Methodology

Chapter 3 Research Design and Methodology (61-73)

3.1 Objectives of the Study 61

3.2 Hypothesis of the Study 62

3.3 Scope of the Study 62

3.4 Data Sources 62

3.5 Sample Design 63

3.6 Instrument Development 63

3.6.1 Reliability and Validity 65

3.7 Statistical Tools and Techniques Used in the Study 65

3.7.1 Arithmetic Mean 65

3.7.2 Coefficient of Correlation 66

3.7.3 Regression Analysis 67

3.7.4 ANOVA 68

3.7.5 t-Test 69

3.8 Data Purification through Factor Analysis 71

3.8.1 Scree Test 71

3.9 Organisation of the Study 72

3.10 Limitations of the Study 73

3.11 Future Relevance of the Study 73

RESEARCH DESIGN AND METHODOLOGY

Research is a diligent, active and systematic process of inquiring in order to discover,

interpret and revive facts, events, behaviour or theories to make practical applications

intended for the benefit of the human society as a whole. Research methodology

encompasses the procedures undertaken by the researcher to complete the research in

order to attain the specified objectives laid down by the study. The research methodology

is of pivotal importance because it assists the researcher to identify the ways in which the

research can be conducted. Some important factors in research methodology include

validity of research data, research ethics and the reliability of the measured information.

Research design refers to the planning and organising of the activities which will enable

the researcher to obtain the relevant data, evidence and information as part of the research

project. Research design is of immense importance as it helps the researcher in smooth

and efficient sailing through the research project. Moreover, it facilitates in yielding

maximum information by putting in minimum efforts and also confers maximum

reliability of the results. Research design not only averts misleading conclusions through

the strenuous exercise but also helps the researcher to define precisely his aims and

objectives, population to be studied, the nature of the measurements and the way of

interpreting the results.

On the basis of review of literature and identified research gap as discussed in the

previous chapters an attempt through this study is made to study consumer behaviour in

fast food and beverage industry in terms of the following objectives.

3.1 OBJECTIVES OF THE STUDY

1. To examine the effect of service quality on customer satisfaction.

2. To study the effect of brand loyalty on customer satisfaction.

3. To study the satisfaction level of customers of KFC, Dominos, Pizza Hut

and Mc Donald.

http://www.tutorsindia.com/

4. To understand the relationship between pricing and customer satisfaction.

5. To study the effect of demographics on customer satisfaction.

3.2 HYPOTHESIS OF THE STUDY

H1: The more is the brand loyalty, the more is the customer satisfaction.

H2: Perceived service quality is directly proportional to customer satisfaction.

3.3 SCOPE OF THE STUDY

In terms of research the scope of the study refers to the parameters of the study within

which the study will be operating. In other words scope defines specific boundaries

where the objectives, knowledge, instructions or outcome of activities are found. This

also determines the accepted range of the study around which the method of investigation

should be centered. In the present context to understand the consumer behaviour in fast

food industry, the fast food companies like KFC, Mc Donald, Pizza Hut and Dominos

were studied. The area of the study comprises of National Capital Region (NCR) which is

the capital of India. The study focus on the effect of branding, pricing and service quality

on the customer satisfaction of the customers of the above mentioned fast food

companies. The scope also includes the effect of demographics on the customer

satisfaction. This work will help in understanding the behaviour of the customers of the

fast food restaurants to predict about their specific choices.

3.4 DATA SOURCES

The intention of the study is to observe consumer behaviour pertaining to the fast food

industry in National Capital Region. The study is based on the following dimensions;

customer satisfaction, service quality, brand loyalty, Pricing policy and demographics of

the customers. For the above mentioned reasons, the study is based on both primary data

as well as secondary data.

Primary Data:

The primary data was amassed by personally distributing the questionnaire to the

customers of the fast food restaurants i.e. McDonalds, KFC, Dominos and Pizza Hut

which are positioned in Delhi region. From each of the fast food restaurant chains

approximately 125 respondents were requested to fill the questionnaire by selecting the

alternate choices available in the questionnaire.

Secondary Data:

The secondary data has been taken in the form of various websites, doctoral thesis,

research papers, books and research articles related to the topic.

3.5 SAMPLE DESIGN

The sampling method used by the researcher in this study is stratified random sampling.

Where the data was collected from the customers of the fast food restaurant chains like

McDonalds, KFC, Dominos and Pizza Hut situated in Delhi region. From each of the fast

food restaurant chains approximately 125 respondents participated in the survey process.

After preliminary examinations it was revealed that out of 560 filled questionnaires, only

500 questionnaires were complete and valid for the analysis, which constituted 89.28

percent response rate for the study.

3.6 INSTRUMENT DEVELOPMENT

The questionnaire comprises of 5 sections wherein section 3 is structured whereas the

other sections 1, 2, 4 and 5 are self administered. The first part of questionnaire

addresses customer satisfaction. In order to study the satisfaction level of customers in

fast food industry, a 30 statement questionnaire was developed by the researcher, keeping

in view Customer Satisfaction Questionnaire (CSQ-8 and CSQ-30, C. Clifford Attkisson

1979), American Customer Satisfaction Index (ACSI, University of Michigan 1994),

along with the other factors considering scope of research in the study area. Apart from

the 30 identified items, one additional statement has been inducted as a measure of

overall customer satisfaction. Before factor analysis, there were 31 items. However, after

factor analysis 9 factors emerged which explained 79.84 percent of cumulative variance.

Second part of the questionnaire consists of the statements pertaining to the service

quality. To study the Perception of Service Quality of customers in relation to fast food

industry, a 5 statement SERVQUAL (A. Parasuraman, 1985) questionnaire was

implemented by the researcher. In addition to the statements of the questionnaire, an

additional last statement studies the satisfaction score of overall service quality.

Third part of the questionnaire addresses of the statements of pricing policy of fast food

restaurants. In order to study the effect of pricing policy of the restaurants on the

customers in fast food industry, a 7 statement questionnaire was developed by the

researcher keeping in mind previous researches such as Keller (2003) and Bucklin (1998)

and considerations in context to fast food industry. The last statement in the questionnaire

studies the overall score pertaining to the pricing policy. Fourth part contains brand

loyalty of customers towards the fast food restaurants. In order to study the brand loyalty

of customers in relation to fast food industry, a 5 statement questionnaire was developed

by the researcher keeping in view the previous researches such as Reichheld and Sasser

(1990), Lau (2006) and Bloemer and Kasper (1995) and factors in context to the fast food

industry. Moreover, in addition to the statements of the questionnaire, the last parameter

studies the overall brand loyalty of the customers towards their preferred restaurants’

brand. Fifth part is the last part of the questionnaire which contains the demographic

information pertaining to the respondents. The study aims to investigate the behaviour of

customers of fast food restaurants on five point Likert scale. Where for each item, 1

represents strongly disagree, 2 as disagree, 3 represents neither agree nor disagree, 4 for

agree and 5 represents strongly agree.

3.6.1 RELIABILITY AND VALIDITY

The data collected during survey has been tested for reliability and validity of its

construct. The overall as well as internal consistency of the instrument has been tested by

measuring the value of Cronbach’s Alpha. The reliability estimates (Cronbach’s Alpha)

for customer satisfaction was found to be .858 before factor analysis and .864 after factor

analysis. Moreover, the reliability estimates for the service quality is .904, for pricing

policy is .819 and for brand loyalty is .840. The results of the Cronbach’s alpha exceed

the lower limit of acceptability which is 0.60 (Hair et al., 1998). The required adequacy

of the data during factor analysis is revealed by high KMO value (0.826). Factor analysis

has also been executed to ascertain the construct validity of the data. The resultant nine

factors of customer satisfaction have high factor loading values that is, more than 0.5 and

explains about 79.84 percent of cumulative variance justifying its factorial validity. The

nine factors having higher Eigen values, which are more than 1 further validates the

construct.

3.7 STATISTICAL TOOLS AND TECHNIQUES USED IN THE

STUDY

The data collected was rationally ordered and subjected to Statistical Package for Social

Sciences (SPSS, version-17.0). The data was consequently subjected to various statistical

tests with the help of SPSS software. The statistical data has been presented in the form

of tables and graphs. The statistical techniques used are Arithmetic mean, standard

deviation, t-test, ANOVA, Regression, Correlation, Factor Analysis and Screen test.

3.7.1 ARITHMETIC MEAN

Arithmetic mean is derived by dividing the sum total of all observations by the total

number of observations. If the mean score value of the statements is high, it indicates

that the existence of the corresponding dimension is highly prevalent. On the contrary,

lower mean value indicates that the existence of corresponding dimensions is merely

influencing the decision-making process of the customers. Standard deviation helps the

researcher to evaluate the significance of the mean value. As the mean describes the

central location of the data, the standard deviation describes the spread of the same data

from the central location. The more is the spread, the less accurate is the value of mean.

Therefore, the more is the value of standard deviation, the less is the significance of the

mean value or vice-versa.

3.7.2 COEFFICIENT OF CORRELATION

Correlation is a statistical technique which helps the researcher to understand the

proximity between two variables in order to comprehend the relationship between them.

In other words, correlation is directed towards measuring the degree of association

between two variables and it refers to any broad class of statistical relationships involving

dependence between two variables. The higher is the value of correlation between the

variables, the more is the probability of one variable explaining the changes in the other

variable provided the significance value is less than 0.5. There are several correlation

coefficients, often denoted by ρ or r, measuring the degree of correlation. The most

common of these is the Pearson coefficient of correlation, which is sensitive only to a

linear relationship between two variables. Other correlation coefficients have been

developed to be more robust than the Pearson coefficient of correlation. Usually, in

simple correlation between two variables the researchers are looking for a linear

relationship. Correlation is always between -1.0 and +1.0. If the correlation is positive,

the variables are directly related to each other whereas if the correlation is negative, the

variables are inversely related to each other. In the present study, correlation has been

used to examine the relationship between customer satisfaction, brand loyalty, service

quality, demographics and pricing policy of the fast food restaurant chains. The

following formula has been used to calculate coefficient of correlation.

http://en.wikipedia.org/wiki/Pearson_product-moment_correlation_coefficient

http://en.wikipedia.org/wiki/Robust_statistics

Where,

r = Coefficient of correlation.

dx = Deviation of x series from an assumed mean.

dy = Deviation of y series from an assumed mean.

= Sum of the product of the deviation of x and y series from their

assumed mean.

= Sum of squares of x series from an assumed mean.

= Sum of squares of y series from an assumed mean.

3.7.3 REGRESSION ANALYSIS

The term "regression" was coined by Francis Galton in the nineteenth century to describe

a biological phenomenon. The earliest form of regression was the method of least

squares which was published by Legendre in 1805 and by Gauss in 1809. A regression is

a statistical analysis assessing the association between two variables. Regression analysis

is widely used for prediction and forecasting. Moreover, it is also used to understand

which among the independent variables are related to the dependent variable and it

explores the forms of these relationships. In restricted circumstances, regression analysis

can be used to infer causal relationships between the independent and dependent

variables. The formula for regression is as under;

y = a + bx

http://en.wikipedia.org/wiki/Francis_Galton

http://en.wikipedia.org/wiki/Method_of_least_squares

http://en.wikipedia.org/wiki/Method_of_least_squares

http://en.wikipedia.org/wiki/Adrien_Marie_Legendre

http://en.wikipedia.org/wiki/Carl_Friedrich_Gauss

http://en.wikipedia.org/wiki/Prediction

http://en.wikipedia.org/wiki/Forecasting

http://en.wikipedia.org/wiki/Causality

Where:

x and y are the variables.

b = The slope of the regression line

a = The intercept point of the regression line and the y axis.

N = Number of values or elements

X = First Score

Y = Second Score

ΣXY = Sum of the product of first and Second Scores

ΣX = Sum of First Scores

ΣY = Sum of Second Scores

ΣX2

= Sum of square of First Scores

3.7.4 ANOVA

Sir Ronald Fisher proposed a formal analysis of variance in 1918 and therefore, this

statistical test can be called as the inventor of contemporary ANOVA test. ANOVA is a

statistical test which analysis whether the means of several groups are equal. Therefore

generalising the t-test to more than two groups. Moreover, ANOVA reduces the

probability of type I error as compared to t-test.

The formula for one way ANOVA is

http://en.wikipedia.org/wiki/Variance

http://en.wikipedia.org/wiki/Mean

http://en.wikipedia.org/wiki/Student%27s_t-test#Independent_two-sample_t-test

http://en.wikipedia.org/wiki/Type_I_error

Formula for two way ANOVA is

F (for column)

F (for rows)

Where:

MSC = Mean sum of squares between columns.

MSE = Mean sum of squares of error.

MSR = Mean sum of squares between rows.

3.7.5 t- Test

The t-statistic was introduced by William Sealy Gosset in 1908, he was a chemist

working for a brewery company in Dublin known as the Guinness. Gosset devised the t-

test as an economical way to monitor the quality of stout being produced in the factory.

In 1908, he published his work associated with the t-test in Biometrika after which his

work was deeply appreciated and accepted by many other scientists. T-test is a test of the

null hypothesis which facilitates to know whether the means of two normally

distributed populations are equal or not.

Formula for One-sample t-test

In testing the null hypothesis that the population mean is equal to a specified value μ0, the

statistic used is:

http://en.wikipedia.org/wiki/T-statistic

http://en.wikipedia.org/wiki/William_Sealy_Gosset

http://en.wikipedia.org/wiki/Brewery

http://en.wikipedia.org/wiki/Dublin,_Ireland

http://en.wikipedia.org/wiki/Stout

http://en.wikipedia.org/wiki/Biometrika

http://en.wikipedia.org/wiki/Expected_value

http://en.wikipedia.org/wiki/Normal_distribution

http://en.wikipedia.org/wiki/Normal_distribution

Where:

= The sample mean

S = Sample standard deviation of the sample

n = Sample size.

The degrees of freedom used in this test is n − 1

Independent two-sample t-test

This test is also known as equal sample sizes or equal variance test. This test is only used

when both the two sample sizes (that is, the number, n, of participants of each group) are

equal and it can be assumed that the two distributions have the same variance.

The t statistic to test whether the means are different can be calculated as follows:

Where:

= Grand standard deviation

1 = Group one

2 = Group two.

n = The number of participants in each group.

Degrees of freedom for this test is 2n – 2

http://en.wikipedia.org/wiki/Standard_deviation#Estimation

http://en.wikipedia.org/wiki/Standard_deviation#Estimating_population_standard_deviation_from_sample_standard_deviation

http://en.wikipedia.org/wiki/Degrees_of_freedom_(statistics)

Dependent t-test for paired samples

This test is used when the samples are dependent that is, when there is only one sample

that has been tested twice (repeated measures) or when there are two samples that have

been matched or paired.

Where:

(XD) = The average

(sD) = Standard deviation

μ0 = Constant

n = Sample size

Degree of freedom used is n − 1.

3.8 DATA PURIFICATION THROUGH FACTOR ANALYSIS

Factor analysis is a statistical method used to describe variability among observed

correlated variables in terms of lower number of unobserved variables called factors. In

other words, Factor analysis is a method for investigating whether a number of variables

of interest are linearly related to a smaller number of unobservable factors or not.

Additionally, factor analysis is a technique in which the whole set of independent

relationships among all variables are examined and represented in terms of a few

underlining factors. This multivariate technique has been applied in the present study

with the help of SPSS (version-17). The study uses principal component analysis with a

varimax rotation. The sampling adequacy of factor analysis is determined by KMO. If

the KMO value is between 0.5 and 1.00, this indicates that the data is having enough

relationships among itself and the researcher can carry on with the factor analysis in order

to reveal these relationships in the form of factors.

http://en.wikipedia.org/wiki/Statistics

http://en.wikipedia.org/wiki/Variance

http://en.wikipedia.org/wiki/Variable_(mathematics)

3.8.1 SCREE TEST

The scree test was developed by Cattell. Scree is a term from geology meaning rubble at

the bottom of a cliff. In the scree test, if a factor is important it will have a large variance

and vice-versa. The scree test is a test for determining the number of factors to retain in a

factor analysis, the test involves the factors to be ordered according to their variance and

plotted against the respective factor numbers. Moreover, these are the important factors

which account for the bulk of the correlations in the matrix. It's called a scree test because

the graph looks a bit like where a cliff meets the plain. In the scree test, the researcher

observes where the important factors stop and the unimportant ones starts. The scree test

involves plotting the Eigen values in descending order of their magnitude against their

factor numbers and determining where they level off. The break between the steep slope

and a levelling off indicates the number of meaningful factors differentiated from the

random error.

3.9 ORGANISATION OF THE STUDY

The study has been completed in six chapters

Chapter - I

This chapter covers the introductory part of the study.

Chapter - II

This chapter consists of the review of literature pertaining to the study area.

Chapter - III

This chapter deals with the research design and methodology. This part of the

study discuses information regarding sample design, data source, developing

instrument, statistical tools used in the study, chapter plan, limitations of the study

and the future relevance of the study.

Chapter - IV

This chapter deals with the profiles of fast food companies like KFC, Dominos,

Pizza Hut and Mc Donald which are operating in India.

Chapter - V

This chapter is about analysis and interpretation of the results derived from

applying various relevant statistical tools and techniques to the data.

Chapter - VI

This is the last chapter of the study. It gives the summary of the research findings

and highlights the conclusion and suggestions emerging from the discussion.

3.10 LIMITATIONS OF THE STUDY

1. Low awareness level of customers regarding the various products and services

offered by other fast food companies might have influenced their responses.

2. The study is limited to KFC, Mc Donald, Pizza Hut and Dominos of Delhi

region only, but before generalizing the recommendations of the study,

various socio economical, cultural and geo political aspects of the other

regions have to be considered as well.

3. Sample size, cost and time limitations and the particularized nature of the

study has lead the researcher to restrict the scope of the study.

3.11 FUTURE RELEVANCE OF THE STUDY

The study is equally useful for students, academicians and the people related to the food

industry. Moreover, the scope of the study is open for the future research. The researcher

has made the following proposals for the same.

1. A separate study can be conducted to know the effect of pricing policy on

perceive service quality, demographics and brand loyalty in the fast food

industry.

2. A separate study can be conducted to know the effect of restaurant’s

ergonomics on the customer satisfaction of the patrons.

3. A study can be conducted to evaluate the effect of demographics on brand

loyalty of the patrons of the fast food industry.

Chapter – IV

Organisational Profile

Chapter 4: Organisational Profile (74-100)

4.1 Mc Donald 74

4.1.1 Introduction 74

4.1.2 Growth Patterns 75

4.1.3 Product Mix 77

4.1.4 Marketing Strategies 79

4.2 KFC (Kentucky Fried Chicken) 81


4.2.2 Growth patterns 83



4.3 Domino’s Pizza 88





4.4 Pizza Hut 94





ORGANISATIONAL PROFILE

This chapter reveals the central, indispensable information pertaining to the four

companies that is Mc Donald’s, KFC, Domino’s and Pizza Hut which are covered in the

scope of the study. The chapter enlightens the reader with a few interesting facts and

figures concerning the introduction, growth pattern, product mix and finally the

marketing mix of these business organisations. This chapter endeavors to facilitate the

acquaintance of the reader with the history, marketing approach, innovations and

management subterfuge pertaining to these four companies.

4.1.1 INTRODUCTION

In 1937, Patrick McDonald opened a fast food restaurant with the name "The Airdrome

restaurant" which was located besides the vicinity of the Monrovia Airport in the state of

California, USA. One of the enticing bargains of this fast food restaurant was the

availability of hamburgers at ten cents, and orange juice at five cents. Later, in 1940

Patrick McDonald’s two sons Maurice and Richard who are also known as Mac and Dick

not only moved the entire restaurant building from Monrovia to San Bernardino,

California, but also changed the name from the Airdrome to McDonald. Right from the

inception of new name tremendous efforts were made to maintain the quality of their

products coupled with delivery of excellent customer service. In the beginning, the

restaurant had large variety of food products but soon Maurice and Richard realized that

most of their profits are generated by the expeditious consumption of the hamburgers.

Consequently, the two brothers took tremendous heed in setting up their kitchens like an

4.1 MC DONALD’S

http://en.wikipedia.org/wiki/Monrovia,_California

http://en.wikipedia.org/wiki/Monrovia,_California

http://en.wikipedia.org/wiki/Richard_and_Maurice_McDonald

http://en.wikipedia.org/wiki/Richard_and_Maurice_McDonald

assembly line and to ensure maximum efficiency. This streamlined system encompassed

simple menus consisting of hamburgers, cheeseburgers, French fries, shakes, soft drinks,

and apple pies etc.

Later on, Ray Kroc who was a milkshake mixer salesman was left awestruck during a

sales visit in 1954 where he realized McDonald's extraordinary capacity and popularity.

After seeing the restaurant in operation, Kroc approached the McDonald brothers with a

proposition to franchise McDonald's restaurants outside California and Arizona with

himself as the first franchisee. With full excitement and enthusiasm, he returned to his

home outside of Chicago with legal rights to set up McDonald's restaurants throughout

the country except in the selective territories of California and Arizona where McDonald

brothers had already licensed a few restaurants. Kroc's first McDonald's restaurant was

opened in Des Plaines, Illinois near Chicago on April 15, 1955 and the same day Kroc

incorporated his company as McDonald's Systems Inc.

He was able to expand his business to great eminence because of a few successful

marketing strategies implied by him in pertinent manner. During 1963 Kroc's marketing

decision to advertise McDonald's hamburgers to families and children was a turning point

in the history of the company. After a long continuous research into this matter, Kroc was

still searching for a success driver which could entice the children. This conquest came to

an end when he met John Gibson and Oscar Goldstein in Washington DC who were

sponsoring children show on WRC-TV called Bozo the Clown which was a character

played by Willard Scott from 1959 till 1962. Later on, once the show was elegantly

completed Scott was hired to portray McDonald's new mascot named Ronald McDonald.

4.1.2 GROWTH PATTERNS

The management of McDonalds discerned from the inception of the business that

visibility of the product is of immense import especially, when it comes to purchase

behaviour of the customers. Advertising has always played a key role in the development

of the McDonald's Corporation. Moreover, Kroc aptly believed that advertising was a

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laudable investment that would come back with higher futuristic returns. Keeping this in

preview in 1962, the McDonald's advertising campaign namely “Look for the Golden

Arches” gave a big boost to the sales of the company. One year later after the launch of

this world famous Golden Arches logo, the company sold its first billionth hamburger.

Indeed, McDonald's advertisements have been some of the most identifiable

advertisements ever observed in the fast food market.

The growth in automobile industry and suburbanization in the United States of America

in the early 1960s contributed heavily towards the McDonald's swift successful growth.

Astonished by the encouraging market trend Kroc bought out the McDonald brothers in

1961 for $2.7 million USD, aiming at making McDonald's the number one fast food

chain in the country. Additionally, in order to generate money from the stock exchange,

the McDonald's Corporation went public in 1965. Common shares were offered at $22.50

USD per share and by the end of the first day’s trading, the price of the McDonald share

had augmented by $30.00 USD per share. The momentous growth rate of the company

can be judged from the fact that 100 shares purchased for $2,250 USD in 1965 were

worth $1.8 million USD by the end of 2003. Moreover, in 1985 McDonald's Corporation

became one of the 30 companies that make up the Dow Jones Industrial Average.

McDonald's success in the 1960s was in consequence of the company's skillful marketing

and flexible response to customer’s anecdotal demands. The year1968 brought nucleus

change in the core management of McDonald's when Fred L. Turner became the

company's new president and chief administrative officer while Kroc became chairman

and remained CEO until 1973. In the mean time, Turner was constantly looking for new

ways to perfect the McDonald's systems; he often spent a lot of time experimenting with

the different dimensions pertaining to the business. He subsequently determined the

maximum number of hamburgers and patties that could be stacked in a box without

squashing them.

This innovative thinking and determination to outperform the competition helped

McDonald’s top management to device and implement strategies which helped

McDonalds to emerge as market leader in spreading its outlets throughout the globe.

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With McDonald's opening its first restaurant in the United Kingdom at Woolwich in the

year 1974, although, it was the company's first restaurant in UK but it was also three

thousandth restaurant outlet worldwide. Following its expansion in 1975 the first

McDonald's outlet was opened in Hong Kong at Paterson Street, in Causeway Bay

situated in Hong Kong Island. By the year 1978, McDonald's opened its five thousandth

restaurant outlet in Kanagawa, Japan. Further in the year 1993, McDonald's for the first

time had the privilege of opening restaurants with their legendary golden arches in Saudi

Arabia. Later in the year 1979 after a long legal battle McDonald's managed to open its

first restaurant in Singapore and soon by 1980 the company claimed to have opened their

six thousandth restaurant outlet at Munich in Germany.

In order to mark its presence even more promptly, the company decided to sponsor the

1984 Summer Olympics. This not only made their presence felt stridently but also had a

positive impact on the company’s share prices. However, it came as a jolt for the share

holders of the company when in 2002 McDonald's posted its first quarterly losses which

was approximately $344 Million USD. In order to respond to the principal reason

responsible for this tremendous loss which was stiff competition emerging from other

fast-food restaurants, McDonald’s started offering higher quality of food items and

broadened their menu list by inculcating Real Fruit smoothies and the Angus Snack Wrap

in 2010 and Fruit & Maple Oatmeal in 2011. All these collective efforts assisted Mc

Donald’s to come out of its losses and once again reclaim its position as a market leader

in the fast food industry.

4.1.3 PRODUCT MIX

Product mix or product assortment refers to the total number of product lines a company

is offering to its valued customers. In order to stay ahead of the competition, Mc

Donald’s continuously keeps on innovating new products and simultaneously modifies

old products with the intention of harmonizing with the changing needs and requirements

of the customers. Few of the Mc Donald’s product line which is internationally accepted

are burgers, quarter pounders and snack wraps, chicken products, Mc Pizzas and

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beverages. In burgers, all beef patties are seasoned and consist primarily of salt and black

pepper. Big Mac hamburger was introduced in 1967 as McDonald's signature menu

items. Later came Quarter Pounder as McDonald's next signature menu items. Quarter

Pounder was inverted by Al Bernardin who was a franchise owner and former

McDonald's Vice President of the product development department, at Fremont,

California, in 1971. Snack Wrap was officially launched in 2006 and just after their

launch it became an instant hit among the customers. A few products in the non

hamburger and fries category which were successfully launched by Mc Donald’s are,

Chicken Mc Nuggets and the Egg Mc Muffin which became instantly popular among the

customers. In order to combat the ferocious competition given by Pizza manufacturing

units, Mc Donald’s also launched its own Pizza Known as Mc Pizza and to identify it as

part of the McDonald’s product mix, the pizza was branded with the “Mc” prefix.

Moreover, the product research facilitated in devising new technologies to enable quick

pizza manufacturing and maintain elevated stringent quality standards to match with the

McDonald’s image. This led to the development of new pizza ovens and recipes for the

product. Additionally, the consumer research provided positive reactions to the taste of

Mc Pizza. However, the Mc Pizza did not come out with flying colours in the initial

stages of its launch. The very fact that the brand was called Mc Pizza instigated a

problem associated with the company’s identity. Most consumers associated McDonald

with hamburgers and felt that pizza was a poor fit in the menu. Moreover, the packaging

of the product was a standard pizza box which protected the pizza, established the pizza

look for the consumer and fitted in the product mix of the company, but it could not

compete with other pizza chains as effectively as expected.

In order to concord with the taste and behaviour of the customers in addition to the

external environments Mc Donald’s have tailored Indian specific products, which can

further be bifurcated into vegetarian and non vegetarian categories. Some of the products

attuned by the company in vegetarian category to suit the Indian customers are Mc

Veggie, Mc Aloo Tikki, Paneer Salsa Wrap, Crispy Chinese, McCurry Pan and Pizza Mc

Puff. However, in non-vegetarian category Mc Donald’s have launched Chicken

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Maharaja Mac, McChicken Burger, Shahi Chicken Mc Curry, Wrap Chicken Mexican

and Fillet-O-Fish.

In order to further entice the customers and to wheedle out some more profits from them,

the company also offers beverages to the demanding customers. Some of the popular

beverage products offered by the company are Coke, S&D Coffee, Hot and iced tea,

Milkshakes, Beer of different brands are available at McDonald's situated in France,

Belgium, Germany, Spain, Portugal, Romania, Lithuania, Czech Republic, Italy and

Slovenia. McDonald's also offers milk, chocolate milk and apple juice most often as

replacements for fountain drinks in Happy Meals. Moreover, from 2009 McDonald's

outlets situated in New Zealand and Australia have begun to offer Frozen Coke as part of

their menu. All these superlative efforts have resulted in the escalation of the customer’s

satisfaction level and have eventually assisted in the rapid growth of the company.

4.1.4 MARKETING STRATEGIES

McDonald is well recognized for its innovative market positioning strategies and

certainly McDonald rapid growth is augmented due to its intelligent and smart business

ideas based on the dynamics of business environment and societal changes. The

restaurant which started in 1948 with just one outlet now has its footprints across the

globe and currently the chain operates over 31,000 restaurants worldwide, employing

more than 1.5 million people. McDonald’s expansion started in late 60’s with the focus to

appeal customers by presenting a nice clean place where they can enjoy family meals that

offer good value for money. The company eventually comprehended that it is difficult to

feed the typical American taste for a long time therefore, to simultaneously attract a large

number of customers, it must leave scope for inclusion of new flavours and incorporation

of vivid menu choices. As a result, one of the most innovative and enticing ideas which

was introduced by McDonald’s was the concept of Happy Meals. It is a combo meal

consisting of one food item coupled with a beverage and a free toy for the children,

which made McDonald’s restaurants the most demanding place for kids across the globe.

The concept of drive-thru service introduced by Mc Donald’s in 1975 was the second

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most interesting concept which marketed a brand new feel of comfort for travelling

customers. This concept gained so much of popularity that now it accounts for more than

half of the restaurant’s worldwide sales.

Taking into consideration the influx of different religious and ethnic groups in the market

McDonald’s concentrated on the customers’ tastes bellowing to Asian, European,

Hispanics and African backgrounds. The survey was conducted by McDonald, which

revealed that in order to satisfy the nutritional aspect of the food item offered to health

conscious customers, McDonald’s must introduce and market diverse fruit combinations

to suit the taste and health preferences of the customers. Another successful strategy

incorporated by the company was directed towards money generation from the sale of

beverages. The company started heavily advertising coffee drinks and free or subsidized

sweetened beverages. These advertisements emphasized the indulgent aspects of sweeter

drinks like mochas, to entice customers with certain specific likings.

McDonald's encouraged and maintained a munificent advertising campaign in order to

make an attempt to penetrate into the mind of the customers in a constructive way. The

company’s dexterity in utilizing the available media resource goes beyond the usual

media sort which includes television, radio and newspaper advertisements. Additionally,

the company made significant use of billboards, sculptures and slogans. The company

also sponsored sporting events right from small foot ball amusement matches to

Olympics and simultaneously corroborate its presence in the stadium by putting banners,

logos, and selling food items coupled with the distribution of use and throws glasses and

plates with their logo imprinted on it.

There have been many McDonald's advertising campaigns and slogans over the past few

years. At present McDonald's is using 23 different slogans to advertise its products in the

United States alone. One of the well known slogan of Mc Donald’s was “I am loving it”.

This slogan became part of an international branding campaign initiated by McDonald's

Corporation in 2003. This world renowned advertisement campaign was pioneered by

Heye & Partner who were working in McDonald's based in Unterhaching, near Munich

in Germany. In 2008, McDonald's underwent the first phase of their new image and

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slogan which was “What we are made off.” This was to promote McDonald's products

that are made of hygienic and nutritious value. In order to further foster a positive image

in the minds of the customers Mc Donald’s came up with new packaging procedures. In

November 2008, McDonald's introduced new packaging, eliminating the previous design

with new inspirational messages. McDonald's also updated their menu boards with darker

yet warmer color combinations, more realistic photos of the products and the drinks in

glasses.

Further, price as an important constituent of marketing mix plays a pivotal role in

customer decision making process. Its influence is further significant when it comes to

price sensitive economies like India. Taking into account the above mentioned

phenomenon Mc Donald’s underwent major changes in their menu, logistics and the

preparation techniques with the intention of reducing the cost without compromising with

the quality of the product. Mc Donald’s has launched many products at affordable prices

in India and some of the products and their prices are: Happy Meal for Rs 50, Combo

meal for Rs 30 to Rs 70, Mc Maharaja for Rs 50 and soft drinks for Rs 20. Some products

are priced keeping in mind lower middle class customers as well like Veg. Pizza Mc Puff

for just Rs 19 and famous Mc Aloo Tikki Burger with cheese for just Rs 29. This

exceptionally good pricing has made Mc Donald’s a favourite food spot not only for rich

and upper middle class customers but also for the lower middle class customers. Thus, it

can be concluded that Mc Donald’s has been successful in incorporating and practicing

strategic mix of marketing components which have resulted in making Mc Donald’s

strong brand equity.

4.2.1 INTRODUCTION

Kentucky Fried Chicken (KFC) was established by Colonel Harland Sanders in 1952 by

opening his first fast food restaurant in Louisville Kentucky, in United States. Sanders

initially served his fried chicken in the midst of the great depression at a petrol pump

which was owned by him and situated in North Corbin, Kentucky. The dining area of the

fast food restaurant was named Sanders Court & Café and it became instant hit among

the customers. It was so successful that in 1936 Kentucky Governor Ruby Laffoon,

granted Sanders the title of honorary Kentucky Colonel in recognition of his contribution

to the state's cuisine and creating employment for the local population. Observing such

marvelous response from the customers Sanders expanded his restaurant to 142 seats and

bought another motel across the street. Now Kentucky Fried Chicken (KFC) is the

world's largest fried chicken fast food restaurant chain with over 17,000 outlets in 105

countries and territories, their headquarter is situated in Louisville, Kentucky in the

United States.

Colonel Sanders sturdily believed that restaurant franchising will bring in new dexterous

minds and eventually increase the growth rate of the company in long run. Therefore, he

espoused the concept of franchising his restaurant outlets throughout the world. His first

"Kentucky Fried Chicken" franchise opened in Utah in 1950. As expected by colonel

Sanders, intelligent people started associating themselves with the company and one of

them who left a momentous mark on the history of the company was Dave Thomas. He

was a franchisee owner of KFC and in 1962 he created the rotating bucket sign that was

extensively used at almost all KFC locations. Thomas encouraged Sanders to appear in

4.2 KENTUCKY FRIED CHICKEN

(KFC)

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all of the KFC television commercials and also assisted him to simplify the company’s

menu from over 100 items to just a few, which concentrated on the fried chicken and

salads. Meanwhile, by the end of 1967 KFC had become the sixth largest restaurant chain

by volume in the United States of America and in 1968 it was listed on the New York

Stock Exchange. Thomas was observing these developments very closely. He had an eye

on the stock value of KFC shares. Instantaneously, he realized the direction of the stock

trend and sold his shares in 1969, becoming a millionaire in this process. With this huge

financial resource, he set out to conquer his dream of establishing his own fast food

restaurant chain and very soon he opened the Wendy's fast food restaurant chain. Another

person who left his mark on the KFC was Harman, who devised the company's first

training manual and product guide. He also played a pivotal role in conceiving the phrase

that became the company's slogan "It is finger licking good" and trademarked it.

Subsequently, it was in 1957 when he came up with the concept of 14 bundled pieces of

chicken, five rolls and a pint of gravy in a paper bucket to offer families for $3.50 USD.

This strategy enticed huge number of customers and helped the company to combat the

competition engendered by other non-vegetarian fast food restaurants. Throughout the

1970s and 1980s, KFC had mixed success in the US market as the company went through

a series of corporate owners who had little experience in the restaurant business.

Ironically, the following period after 1980s the core strategies and policies repeatedly

fluctuated resulting in inappropriate management of resources and dwindling the overall

efficiency of the company. However, once the company was taken up by the jubilant

foods, it witnessed healthy growth throughout the globe.


The world’s most popular chicken restaurant chain, Kentucky Fried Chicken widely

known as KFC, has modest origin. What started out as a small cooking operation at a gas

station in Corbin, Kentucky, is now a part of the Yum brand corporation which is the

world’s largest restaurant system consisting of more than 11,000 KFC outlets over 80

countries around the world. The inceptor of KFC, Harland Sanders was born in 1890 near

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Henryville, Indiana. He left his parental residence at the age of 12 years to work on the

farms. He went through diverse variety of professions including the job of painter,

streetcar conductor, insurance salesman and service station operator. He managed to open

his own gas station in Corbin, Kentucky in 1929, where he occasionally prepared meals

for his family and a few fortunate customers who happen to pass by at eating time. His

specialties were southern style dishes his mother had taught him country ham, homemade

biscuits, and of course, pan-fried chicken. He devised a secret recipe for his chicken and

that secret formula proved to be the key for the success of his restaurant business. In

1939, Sanders Court and Café won a designation by Duncan Hine’s adventures in good

eating, which eventually highlighted the Sanders restaurant on the map for travellers.

Sanders was convinced that his chicken recipe will be a winner and he took the initiative

to sell his chicken to other restaurant owners. He intend to sign up franchisees which

would pay him five cents for each piece of chicken sold which was prepared with his

secret recipe. This idea clicked numerous restaurant owners and the first Kentucky Fried

Chicken franchise was opened in 1952 by Sanders and Pete Harman in South Salt Lake,

Utah.

By the early 1960s, the Colonel’s chicken was sold in over 600 restaurants throughout the

US and Canada. England was the first country where Kentucky Fried Chicken opened

their maiden international restaurant in 1964. The same year under the constraints of

getting out of debt Sanders sold his company to a group of investors for $2 million USD.

He also signed on for an annual salary of $40,000 to act as the company spokesman.

Soon the company went public in 1966 and was listed on the New York Stock Exchange

(NYSE) in 1969. By 1970, KFC grew its operations to 3,400 fast food outlets. In 1971, it

merged with Heublein Inc., which was a specialty food and alcohol beverage company.

Heublein made substantial investments to upgrade and modernize the standards of the

KFC including the buildings ergonomics as red and white.

Preceding the Colonel’s death in 1980, the company underwent several mergers and

acquisitions. In 1982, Heublein was acquired by R.J. Reynolds and in 1986, the company

was bought by the Pepsi Company. Realizing the importance of franchise in expansion of

the business a lot of efforts coupled with resources were channelized to elevate the

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efficient working of the company. The corporation also established National Franchise

Advisory Council with the objective of improving the franchising contract system.

Additionally, to ensure better deal to franchises pertaining to company equipment and

supplies National Purchasing co-operation was incepted in 1979. These advisory councils

made KFC a more democratic organisation that valued input from its franchisees and

helped to maintain consistent operations as the company went through various ups and

downs in the business.

Although, the competition in the US was challenging, the international growth rate was

explosive for KFC, in the late 1980s and early 1990s. Asian countries where chicken was

popular and widely consumed proved immensely profitable market with sales growing at

30 percent per annum. In 1987, KFC was the first American fast-food chain that opened

in the People Republic of China and by 2007, there were more than 1,800 KFC outlets

operating in over 400 cities throughout the China. The similar encouraging growth

pattern was evident in India and other Asian countries as well. One of the driving

elements for this abrupt growth is the precise combination of the product mix coupled

with appropriate marketing strategies.

4.2.3 PRODUCT MIX

KFC Corporation primarily sells chicken in form of pieces, wraps, salads and

sandwiches. The company’s specialty is the fried chicken products which are served in

various forms and with vivid complementary gravies. Simultaneously, KFC also offers a

line of roasted chicken products, side dishes and desserts. KFC’s primary products are

pressure-fried pieces of chicken made with the original sanders recipe, the other chicken

offerings were extra crispy, cooked using a garlic marinade and the chicken is double

dipped in the flour before deep frying in a standard industrial type kitchen cooking

machine. Taking into account the exclusivity of the competition prevailing in the non-

vegetarian fast food sector, KFC channelized huge resources towards developing new

products which could harmonize with the market dynamics. Considering the awareness

among the customer pertaining to their own health, the company modified the preparation

technique and also devised products which cater this nutritional need of the customers.

Since the inception of the company Sanders and KFC used cotton seeds or corn oil for

frying their products. It was later on realized that this oil contains relatively high levels of

trans-fats, which increases the risk of heart disease. Therefore in 1980s, the company

began to switch to palm or soybean oil and by 2006, KFC announced that it would fry its

chicken only in trans-fat free oil.

KFC has many product lines like snacks, burgers, box meals, buckets, chicken and

crushers. The company uses different permutations and combinations of these products in

order to entice and retain the customers. A few popular products of the company are

snack box, Hot Wings (3 pieces), Boneless Chicken Strip (3 pieces), Chicken Zinger

Fries Meal worth, Zing Kong Box costing Rs. 179 and Large Bucket (12 pieces) worth.

The company also caters vegetarian customers by offering them products like vegetarian

snack and Vegetarian Zinger Meals. This vibrant combination of products enables the

restaurants to have high customer turnover. Additionally, sanders sturdily believed that

taste is the main driving force that motivates the customer to consume their products and

it is the unique taste of their products which leaves a positive long lasting experience in

the mind of the customers. Therefore, colonel sanders never shared his secret recipe with

anyone and treated it as a precious resource of the company. Sander’s original recipe of

11 herbs and spices remains a valuable trade secret of the company and one of the

benchmarks by which KFC differentiates its product from those of the competitors. The

spice mix used in the products is made at three different locations in the United States

and none of these segregate locations has the complete recipe. A copy of the recipe

signed by Sanders is kept in a vault in corporate headquarters along with 11 vials

containing the sample of the recipe's herbs and spices. This has helped the organisation

to maintain its uniqueness and market share to a great extent.

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KFC primarily serves non-vegetarian food items around the world and in order to

augment sales volume KFC is implementing vivid dexterous strategies. One of the

strategies implemented by KFC is the demographic segmentation coupled with

geographic segmentation. KFC has its outlets in many countries and sells its products

according to the geographic needs of the customers to ensure that the customers’ demand

of different products emerging from the heterogeneity of geographic needs is

appropriately satisfied. For example, in north India chicken related products of KFC

generate maximum revenue for the company where as on the other hand in south India

Vegetarian food items sell more than the chicken.

Another marketing strategy which KFC has implemented successfully is the selection of

the location while opening its outlets. In a market there are certain areas where the

customer traffic is more as compared to other locations. This provides an opportunity to

the business organisation to allure more customers and boost their overall sales. Keeping

in view the above mentioned strategy, KFC places itself close to schools, colleges,

cinemas and markets which have high density of potential customers, as a result of which

KFC outlets are visited by young customers who are in hurry and as a result every day

KFC enjoys a large number of footfall. Furthermore, the company also established its

outlets close to the vicinity of vegetarian and non-vegetarian population. For example

Muslim populated areas or near the Vicinity of Hindu temples.

However, the company cannot abscond from those market locations which do not enjoy

the privilege of high customer traffic because if these locations are not covered, they will

provide a safe ground for the competitors that can prove derogatory for KFC. Hence, the

company devised the strategy of home delivery services in order to exhibit their presence

and simultaneously cover these market areas as well. Depending upon the vicinity of the

business, the company offers free delivery service and occasionally charges minimal

amount for this excellent service. The company has implemented 30 minutes delivery

policy where if the product does not reach the customer in the specified time, the

customer will be financially compensated by the specific KFC branch. However, the

company pronounces that the customers can enjoy this service only if the delivery order

is more than minimum specified amount. Additionally, the company also provides

immaculate services to celebrate the birthdays, anniversary or other important occasion

associated with the customers at their residence or in KFC restaurants.

The core management of the KFC always cherished the importance of advertisement

activities and took it seriously right from the inception of the organisation. Early

television advertisements of KFC regularly portrayed Sanders licking his fingers and

communicating to the viewer about the marvelous taste his secret recipes add to the

products. The advertisement saw a good response from the customers and by the 1960s,

both the Colonel and the chain's striped bucket were well-known among the customers.

Despite the death of Colonel Sanders in 1980, he remained a key symbol in the

advertising and branding strategies of the company. Moreover, throughout the mid 1980s,

KFC was outsourcing its advertisement and sales promotion services to Will Vinton

Studios which was producing humorous and acclamatory advertisements in order to

entice the customers towards the KFC brand.

These advertisements most often featured a cartoon like chicken which illustrated the

poor quality of food provided by the competing food chains as a result of prolonged

freezing and in appropriate handling of the raw material and other negative aspects. In

1997, KFC entered the NASCAR Winston Cup Series which is a well acknowledged

and cherished motor sport in USA as a sponsor of the Chevrolet Brickyard 400.

Moreover, by the late 1990s the KFC advertisements began featuring an animated version

of the Colonel with a lively and enthusiastic attitude. He would often appear on TV and

start out saying "The Colonel here" and moved across the screen with a cane in hand. The

Colonel was often shown dancing, singing, and knocking on the TV screen as he spoke to

the viewer about the product. All these strategies added up to enhanced growth of the

organisation and helped the company to grow faster in this tremendously competitive

business environment.

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4.3.1 INTRODUCTION

Today Domino’s Pizza is the second largest franchised pizza chain in the world.

Approximately, 8,500 corporate and franchised stores are owned by the Domino’s which

are operational in 55 countries. However, surprisingly the inception of this renowned fast

food restaurant was very humble. In 1960, two brothers started Domino’s Pizza with

borrowed equity. Soon, Tom Monaghan the owner of the company comprehended the

potential of franchising and started franchising the Domino’s Pizza to other business

organisations in the USA. The operational locations of Domino’s Pizza grew quickly

from Ypsilanti, Michigan, USA where it was initially incepted to all sorts of diverse

places, countries and continents. Despite Domino's Pizza springing up at diverse

locations, the company was still sticking to its traditional working pattern. The companies

menu was been kept very simple and streamlined, the organisation sold only one type of

pizza crust which was named the regular pizza. Domino's Pizza base which is also known

as dough was bowed by tossing and pulling it into shape physically by the cook. No

specific technology was available to measure or standardize the circular base and the

density of the toppings sprung on the Pizza. Earlier the pizza menu included just two

sizes of dough that is small and big. However, under tremendous competition Domino’s

had to induct medium and extra large sized dough as well. Previously the company was

not offering side order that is some complimentary eatables with the main course. But

when it came to beverages the customer had the only option to order Coke. However,

confronted with competition and with the passage of time, Domino’s has adapted and

incorporated many virtuous changes in itself to improve the overall competitiveness of

the organisation. One of the prominent changes incorporated by the company was in

4.3 DOMINO’S PIZZA

http://en.wikipedia.org/wiki/Tom_Monaghan

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1992, when company introduced its first non-pizza item that is bread sticks to their menu

list and also offered some side dishes or eatables coupled with a variety of beverages.

Domino's Pizza entered the Indian food market in 1996 and by now there are nearly 274

outlets spread out in 55 cities of India. It is estimated that nearly 70 percent of the

company’s revenue is generated from home delivery service and around 30 percent is

generated over the counter sales. Additionally, the procurement of the raw materials like

wheat, baby corn, tomatoes and spices are bought in from Jalandhar and then sent to the

commissaries in refrigerated trucks. 4 commissaries of the company are located in Delhi,

Bangalore, Kolkata and Mumbai. Thus, successfully implementing a right mix of product

and its distribution strategies, Domino’s has been able to remain a cut above the

competition.


In 1960, Tom Monaghan and his brother James purchased a small pizza store

in Ypsilanti, Michigan, USA. The deal was struck at $975 USD and eight months later

James traded his part of the business to Tom in exchange of a used Volkswagen Beetle.

In 1965, after the deal was officially registered in the court, Monaghan became the sole

owner of the company and renamed the business to Domino's Pizza Inc. Soon he realized

that franchising can escalate the business growth rate by manifolds and initiated the

process of franchising which was rewarded in 1967 when the first Domino's Pizza

franchise store opened in Ypsilanti. The company logo was initially incepted to add a

new dot with the addition of every new store, but this idea quickly withered away as the

company experienced rapid growth and the space for putting dots in the logo was scarce.

However, the three dots represent those stores which were opened during the era of 1969.

As a result of the swift growth of the company by 1978, Domino’s was able to open its

two hundredth store.

In 1983, Domino's opened its first international store in Winnipeg, Manitoba, Canada and

the same year Domino's embarked its one thousandth outlet. Adding to this immaculate

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growth pattern in 1985, the company had the privilege to inaugurate their first restaurant

outlet in Luton, United Kingdom and after twelve years of hard work coupled with adroit

management enabled the company to open its one thousand and five hundredth restaurant

outlet globally in 1997. When the organisation mounted to such extent, Tom Monaghan

found it difficult to manage the business appropriately as he was confronted with family,

health and legal problems simultaneously. He realized that due to his inability to devote

the required time and energy towards the organisation the growth rate of the company

was suffering and this was the right time to withdraw and strike a good deal before the

company mislays its pace of development and its goodwill in the stock market is reduced.

In 1998, after 38 years of ownership, Domino's Pizza founder Tom Monaghan announced

his retirement and sold 93 percent of the company to Bain Capital Inc. for approximately

$1 billion USD and ceased being involved in the day-to-day operations of the

company. In 2003,

the industry trade publication “Pizza Today Magazine” reported that

Domino's Pizza was the most efficient pizza chain and gave it the title "Chain of the

Year". In 2006, Domino's opened its five thousandth restaurant outlet in Huntley, Illinois,

USA and simultaneously three thousandth international restaurant outlet in Panama City,

making a total of eight thousand restaurant outlets for the company. Additionally, the

same year the companies store situated in Tallaght, Dublin, Ireland, achieved a annual

turnover of $3 million USD and becoming the first outlet in Domino's history to touch

such a elevated amount. Moreover, by September 2006, the organisation was able to

successfully commence its eight thousand two hundred and thirty eighth stores which

resulted in the augmentation of the annual gross income by $1.4 billion USD.

In 2007, the core management of the company realized that by inducting internet based

services, the organisation could provide better individualized services to the customers

and therefore Domino's rolled out its first online and mobile ordering websites.

Furthermore, in 2008, Domino's introduced the Pizza tracker service which is an online

application that allows the customers to view the status of their order in a simulated real

time progress bar. This enabled the company to access customer related valuable data

quickly and proved as an effective tool in the hands of the lower management.

http://en.wikipedia.org/wiki/Bain_Capital

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http://en.wikipedia.org/wiki/Tallaght

http://en.wikipedia.org/wiki/Dublin

4.3.3 PRODUCT MIX

The ability to provide satisfactory products and services to the customers plays a pivotal

role in the success of any fast food restaurant. Therefore, the business organisations are

attentive to the changes in the vicinity of the business environment. Current Domino's

menu incorporates a variety of Italian American dishes where Pizza is the primary

product combined with traditional, specialty custom pizzas which are available in a

variety of crust styles and toppings. The other popular products offered by Domino’s

include pasta, bread bowls, oven baked sandwiches etc. Taking into consideration the

popularity of the non-vegetarian food, items the company has also included chicken side

dishes, breadsticks and salads coupled with beverages and desserts. However, Domino’s

has gone through a long way to enjoy such a vivid and effective menu which not only

entices the customers but also differentiates the company from the competition.

In the beginning, right from the Domino’s inception till early 1990s, the menu was kept

very simple in comparison to other fast food restaurants to ensure quick and efficient

delivery of the products. During this specified time period, Domino's menu consisted

solely of one pizza in two sizes that is 12-inch and 16-inch comprising of 11 different

options of toppings and Coke as the option for sweetened beverage. Brazen out by the

antagonistic competition which sprung out with the passage of time in the market

Domino’s was left with no other option except to make drastic changes in their product

mix.

The first menu expansion occurred in 1989 with the debut of Domino’s pan pizza and the

expenditure of launching this new product was approximately estimated at $25 million

USD, out of which $15 million USD was spent on new sheet metal pans with perforated

bottoms. Domino's started testing extra-large sized pizzas in early 1993, which were one

yard long and named "The Dominator Pizza". In an attempt to entice the non vegetarian

customers in 2002, Domino's launched spicy Buffalo and Chicken Kickers. This included

breaded, baked, white-meat fillets packaged in a custom designed box with two different

types of sauces.

http://en.wikipedia.org/wiki/Italian-American_cuisine

http://en.wikipedia.org/wiki/Pasta

http://en.wikipedia.org/wiki/Bread_bowl

http://en.wikipedia.org/wiki/Submarine_sandwich

The primary product line as Pizza, the company introduced its specialty pizzas which

were also known as the American legend line in 2009. These Pizzas were fostered with

40 percent superfluous cheese in comparison to the company's regular pizzas along with a

greater variety and combination of toppings. In 2009, Domino's commenced the selling

of bread bowl Pasta which is a lightly seasoned bread bowl baked with pasta inside and

Lava Crunch Cake dessert which comprises of a crunchy chocolate shell filled with warm

fudge. Subsequently in 2010, to differentiate its Pizza product line from the competition

and small business copying its products, Domino’s changed its pizza recipe from the

crust up and also assimilated significant changes in the dough, sauce and cheese used in

their pizzas in Indian subcontinent. Domino’s vibrant variety of products offering are

tailored to specific taste and appropriately priced. A few of these consumed products are:

regular pizza for Rs. 60, medium pizza costs Rs. 120, large pizza for Rs. 230 and popular

cheese burst pizza available at Rs. 190. In non-vegetarian category the company is

offering simple non vegetarian pizza priced at Rs. 95, medium non-vegetarian pizza for

Rs. 190, large pizza costing Rs. 330 and Cheese burst non vegetarian pizza for Rs. 260.

However, the prices of the product are very acceptable, but still in order to be frontward

of the competition the company has adapted immaculate integrated marketing

communication (IMC) strategies to achieve their business objectives.


The core management of the company comprehended that it needs to cover all the market

place in order to enhance their overall competence. The areas which were far away from

the restaurant outlets were covered by home delivery service. For the same reason, the

company projected a message through advertisements that if the delivery of their

products took longer than thirty minutes, the product would be discounted by $3 which

was nearly 50 percent of the total cost of the product. In order to further foster this

concept in the cognition of the young customers, the company projected a game based on

super hit cartoon movie known as “Teenage Mutant Ninja Turtles”. In this game, the

pizza delivery man has 30 seconds in which he has to overcome the obstacles in his path

to complete the delivery on time. If the pizza man is late, then the player looses the game

and if he wins he is promoted to the next level. This was an instant hit among the young

players and they were encouraged to increase their frequency of visit to their nearby

Domino’s restaurant. However, in 1993 Domino’s Pizza discontinued their policy of

providing discount of $3 if the Pizza was not delivered in 30 minutes and assimilated a

new policy of giving free product if not delivered in specific time. Additionally, the

company also stated a new policy advocating that if a customer is unhappy with the pizza

he or she can have a new pizza or a 100 percent refund.

By 1995, the company came to know that more than 70 percent of the young customers

bellowing to the age group of 15 years to 26 years are spending more than 10 hours per

week surfing on the internet and by 1996, the company realized the power of internet and

decided to use it as a powerful tool to navigate young customer traffic to their outlets. In

the same year, Domino’s Pizza website was launched the purpose of this website was not

just to educate the customers about the products, prices, locations of the restaurants,

discounts available of specific time but also to encourage the customers to energetically

participate in the promotional activities initiated by the company. One such highly

appreciated and popular promotional activity was the delivery of free pizza if the

customer is able to cut the token number given in the newspaper and bring it to the

company outlet with two more acquaintances who are willing to provide their emails to

the company. This innovative strategy was pretty successful in attracting huge number of

customers and provided the company with accurate and immensely useful data. Domino’s

has left a strong inexpugnable mark on the history of the fast food industry especially, the

pizza industry. The company has acquainted the pizza industry with many marvelous and

dexterous innovations which have not only played an imperative role in building up the

Pizza industry but also setting up new standards. The belt driven pizza oven and the

corrugated cardboard delivery boxes which are very effective in holding the heat inside

the pizza during the delivery time are a few of the inventions that are identified as success

driver for the Domino’s Pizza. Ever mindful of the fact that a cold pizza could give nasty

dining experience, the Domino’s pizza devised a new gadget known as the "Heat Wave"

which is a portable electrical bag system that works on lithium batteries to keep the pizza

hot during delivery making. Thus, as also pointed out by marketing experts, Domino’s is

well known for its innovative marketing strategies that have played a pivotal role in

making Domino’s a success story.

4.4.1 INTRODUCTION

The Pizza Hut was embarked in 1958 by two brothers Dan Carney and Frank Carney who

borrowed $600 USD to start the business in their hometown of Wichita, Kansas, USA.

They rented a small building at 503 South Bluff in downtown Wichita and purchased

second hand equipments to make pizzas. By observing and analyzing the fast food

business environment, the brothers realized that franchising is the hot formula which was

then been used by all successful business. So, they also decided to incorporate the same

strategy and a year later in 1959, Pizza Hut successfully opened its first franchise outlet

in Topeka, USA. In 1966, when the number of Pizza Hut franchisee grew to 145, a home

office or headquarters was established to coordinate the businesses from Wichita.

The maiden international Pizza Hut franchisee was instigated in Canada during 1988 and

soon after this development the organisation established International Pizza Hut

Franchise Holders Association (IPHFHA). The aim of this organisation was acquiring 40

percent of the company's franchise operations or 120 stores and merging them to the

outlets which were exclusively owned and run by Pizza Hut. This was a wrong decision

taken by the core management of the Pizza Hut and the attempt of acquiring the

franchises brought turmoil to the organisation’s chain structure. Varied accounting

systems used by the previous franchise owners had to be merged into one operating

system and this was a tedious process that took approximately eight months to complete.

In the meantime sales flattened and profits tumbled.

4.4 PIZZA HUT

In early 1970, Frank Carney realized that the company’s practice of relying on statistics

from its annual report to cultivate its business strategy was inadequate and a more

developed long-term business plan was necessary. In 1970, Pizza Hut inaugurated its first

outlets in Munich and Sydney located in Germany and Australia respectively.

Simultaneously, the same year republic of China witnessed the inaugural of five

hundredth Pizza Hut restaurant outlet in Nashville, Tennessee. Furthermore, in order to

expand the operations of the company in Italy, the Pizza Hut acquired large number of

business and observed an abrupt increase of 80 percent in the acquisition process.

In 1971, Pizza Hut became the world's largest pizza chain in concurrence to sales and

number of restaurants which were approximately one thousand at that time. Eventually,

in 1972, the Pizza Hut was listed in the New York Stock Exchange and by the end of the

same year, Pizza Hut instigated 4,10,000 shares in the stock exchange for the public.

Additionally, the company further proliferated by purchasing three restaurant divisions

that is Taco Kid, Next Door, and Flaming Steer. In addition, Pizza Hut acquired

Franchise Services Inc., which was earlier a restaurant supply company and J & G Food

Company, Inc., which was a distribution company concerning food. Pizza Hut

simultaneously added a second distribution center in Peoria, Illinois, USA and the same

year the company was able to generate 1 million USD in a week. Soon the Pizza Hut

expanded further by opening outlets in Japan and Great Britain. Three years later, the

chain had more than 100 restaurants outside the United States and a strong franchise

network consisting of two thousand units. The arduous collective efforts of the

employees and the management of the company were able to steer the organisation

through the ups and downs of the business successfully. However, in order to maintain

supremacy in the business, the company has channelized tremendous efforts and

resources to devise new strategies to continuously expand and grow in this competitive

global market.


This world rewound international fast food restaurant was established by two brothers

Dan Carney and Frank Carney in 1958 at their hometown of Wichita, Kansas, USA. Soon

after its inception they initiated the process of franchising in order to engender maximum

sales turnover. Moving on with the legacy in 1959, Pizza Hut successfully opened its first

franchise outlet in Topeka, USA. The franchise business did brilliantly well and by 1966,

the number of Pizza Hut franchisee exploded to 145 as a result of which the company

was compelled to establish headquarters to co-ordinate the businesses from Wichita. In

continuation with this exploratory growth pattern, Pizza Hut inaugurated its first outlet in

Germany and Australia in 1970 and successively the company observed the opening of

five hundredth Pizza store in the republic of China.

Under the proficient guidance of Steven Reinemund who was appointed as the president

and chief executive officer of Pizza Hut in 1984, the company experienced an

unprecedented growth rate for the pizza chain. Further, in 1986 Pizza Hut had the

privilege to inaugurate its five thousandth franchise unit in Dallas, Texas. In the same

year the company commenced a successful home delivery service in order to allure the

customers and encompass even those marketing territories which are not covered by the

restaurant outlets. Additionally, in 1987, Pizza Hut was able to successfully assimilate

Straw Hat Pizza Parlour which was one of its strongest competitors. By 1990s, the

frequency of delivery and carryout business of the Pizza Hut grew to such an extent that

it accounted for approximately 25 percent of the company's total sales turnover.

Concurrently, in 1990 Pizza Hut opened its first outlet in Moscow, USSR and this

Russian location quickly established itself as the Pizza Hut's highest customer volume

generation unit in the world.

In 1991, when McDonald's, introduced Mc Pizza on its menu list and concurrently

offered home delivery service to the customers. This invasion in the pizza industry

coupled with economic recession tested the marketing strategies of the Pizza Hut to the

limit and astoundingly Pizza Hut emerged as a victorious business organisation. In the

same year the company’s sales went up to ten percent worldwide making $5.3 billion

USD in sales turnover and the growing health awareness and the popularity of vegetarian

lifestyles had prompted many people to reconsider pizza as a nutritious alternative in

comparison to greasy fast food. The company deemed the changes in the thinking pattern

of the customers and responded to this transformation swiftly by devising new ways to

elevate the nutritious content in the food items associated with Pizza Hut. This prompt

response to the change in the market trend rewarded the company handsomely by

generating $1.2 billion USD in sales. Carrying on with the same strategy in 1995, Pizza

Hut was able to achieve an escalated income of $414 million USD which was 40 percent

more than the previous year. By 2001, the company was able to embark five hundredth

restaurant outlets employing over 20,000 employees in the United Kingdom and

consequently in 2006, White bread sold their share of the joint venture to Yum Brands

Inc. as a result of which Pizza Hut UK Ltd. was 100 percent owned by Yum Brands.

Additionally, in 2009, the company launched kids eat free offer in which a free two-

course kid’s meal was offered as a complimentary with every purchase of adult main

course. However, the company has realized that product mix plays a pivotal role in

enticing the customers and elevating the overall customer satisfaction level.

4.4.3 PRODUCT MIX

Pizza Hut comprehends the significance of right product mix in alluring the customers

towards its restaurants and simultaneously brazening out the competition prevailing in the

market place. As a result of which Pizza Hut frequently conducts experiments concerning

new products and discontinues less successful products. A few of these products include

the initially two foot by one foot square cut pizza which was known as Bigfoot in UK and

the 16 inch Big New Yorker in USA. This product acquired huge popularity because of

its unique size, Bigfoot was made with a sweet sauce and the combination of the Chicago

Dish Pizza and Sicilian pizza. Taking into account the escalating popularity of Sicilian

pizza, the company started offering Sicilian pizza to its customers separately from the

Bigfoot and in 2006, Sicilian pizza was launched with a different name which was

Lasagna Pizza. Other popular products offered by Pizza Hut are: the Cheesy Bites pizza

which is similar to the Stuffed Crust pizza except the crust has been divided into 28 bite

http://en.wikipedia.org/wiki/Chicago-style_pizza

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sized pieces that can be pulled apart. Another admired and thriving product of the

company is the Insider pizza which consists of a layer of cheese in between two layers

of dough. One more product which proved it worth was Double Deep pizza with double

the toppings and 50 percent more cheese coupled with the crust wrapped over the top to

hold in all the toppings from falling. This was a good innovation because frequently the

toppings of the pizza fall or slip away while it is being consumed by the customer which

is not only embracing for the customers but also forces them to use fork and knife which

many customers are not comfortable with. In 1985, Pizza Hut introduced the Priazzo

which was a two crusted Italian pie that resembled a deep-dish pizza. This product adage

swift popularity in the initial days of its launch and it had may other verities like Priazzo

Milano which consisted of a blend of Italian sausage, pepperoni, beef, pork fillings, a hint

of bacon, mozzarella and cheddar cheese. Priazzo Florentine made up of a light blend of

five cheeses with ham and a touch of spinach and last but not the least the Priazzo Roma

Pizza prepared with stuffed pepperoni, mushrooms, Italian sausage, pork filling, onions,

mozzarella and cheddar cheese, adding to the taste was the double crusted pie which was

topped with a layer of tomato sauce and melted cheese.

A few of the successfully launched products in the London are: Stuffed crust pizza, with

incorporates outermost edge wrapped around a cylinder of mozzarella cheese, Hand

Tossed Pizza known for its traditional pizzeria crusts Thin 'N Crispy pizza made up of a

thin crisp dough which was Pizza Hut's original style, Dippin Strips pizza a pizza cut into

small strips that can be dipped into a number of sauces and The Edge pizza where the

toppings nearly reach to the edge of the pizza. Taking into consideration the geographical

differences, the company has tailored their products to best suit the regional

requirements. A new, upscale concept was unveiled by the company in 2004, which was

known as the Pizza Hut Italian Bistro. Unveiled at fifty locations nationwide, the Bistro

was similar to a traditional Pizza Hut restaurant except the inclusion of new Italian

themed dishes such as penne pasta, chicken pomodoro, toasted sandwiches and other

foods. Additionally, Pizza Hut Bistros also serves the companies traditional pizzas and

sides dishes. All these stupendous efforts have resulted in the escalation of customer’s

satisfaction level and have eventually assisted in the rapid growth of the company.

http://en.wikipedia.org/wiki/Cheese

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http://en.wikipedia.org/wiki/Penne

However, the company understands the pivotal role of marketing in the sales generation

process and pays the required attention to it.


Dan Carney who incepted the Pizza Hut had firm belief that in the present cut throat

competition just by making good products will not do. Right marketing and promotion

strategies have to be coupled with the planned effort in order to achieve the

organisation’s financial objectives. Advertising played an increasingly influential role for

Pizza Hut to broaden the chain's public profile. Many unique advertisement campaigns

were run at both national and international level. One of the most successful

advertisements launched by Pizza Hut was concerning two celebrities Donald Trump and

his ex-wife Ivana Trump who were shown eating Pizza. In the end of this commercial

advertisement, Ivana Trump asks for the last slice of the pizza from Donald, to which

Donald replied, "Actually dear, you're only entitled to half", this advertisement was based

on the couple's recent divorce.

The advertising slogans imprint an image of the product in the mind of the customers.

That is why these slogans are carefully selected and amalgamated with the concerned

advertisement campaigns. Consequently, Pizza Hut is very ardent concerning the slogans

projected by their company hence the company keeps on changing the slogans in

accordance with the market conditions. Till 2007, Pizza Hut's main advertising

slogan was "Gather around the good stuff", and from 2008 to 2009 it was substituted by

"Now You Are Eating". Futher, from 2009 to 2012 the advertising slogan was changed to

"Your Favorites Your Pizza Hut." The current advertising slogan is "Make it great". Pizza

Hut does not have an official international mascot. However, the company had different

mascots at distinct times in diverse countries. The commercials in the United States

called 'The Pizza Head Show' sustained from 1993 to 1997 and were based loosely on

the Mr. Bill Shorts. The advertisements featured a slice of pizza with a face made out of

toppings called 'Pizza Head'. In the 1970s, Pizza Hut used the signature red roof with a

jolly man named "Pizza Hut Pete". Pete was on the bags, cups, balloons and hand puppets

http://en.wikipedia.org/wiki/Donald_Trump

http://en.wikipedia.org/wiki/Ivana_Trump

http://en.wikipedia.org/wiki/Advertising_slogan

http://en.wikipedia.org/wiki/Advertising_slogan

http://en.wikipedia.org/wiki/The_Pizza_Head_Show

http://en.wikipedia.org/wiki/Mr._Bill

for the kids. In Australia during the Mid 1990s, the advertising mascot was a delivery boy

named Dougie, with boyish good looks who upon delivering pizza to his father would

hear the catchphrase "Here's a tip be good to your mother". Subsequently, adding to the

impact of these advertisements the role of Dougie was played by a famous Australian

soap opera and police drama actor Diarmid Heidenreich.

In order to entice the customers who are running short of time and ache for quality

products, Pizza Hut introduced the Personal Pan Pizza, offering customers a guarantee

that their single serving pizzas would arrive steaming hot within five minutes. The aim

was to make a quick, affordable pizza which could replace meal at ideal lunchtime.

Further, to augment its profits, Pizza Hut introduced Pan Pizza throughout its network of

restaurant outlets. This pizza consists of a thicker crust made in deep pans and soon it

became popular among the customers. The success of new additions to Pizza Hut's menu

was facilitated by the marketing resources provided by Pepsi Co. as well. Pizza Hut and

Pepsi Co. entered into a contract which advocated that Pizza Hut will be selling Pepsi

products in their restaurant outlets for life time. This marketing strategy was very

successful and turned out to be a win-win situation for both the business organisations.

Additionally, to prove the technical supremacy in fast food production and research

activities, the Pizza Hut sponsored the first space pizza delivery to the International Space

Station (ISS) and imprinted their logo on the Russian Proton rocket which launched the

Russian Zvezda module in 2000. All these strategies added up to elevate the sales

turnover of the business organisation and helped Pizza Hut to grow expeditiously in this

incalculably competitive business environment. In this chapter the above mentioned

companies have almost similar product lines and operational principles. Therefore, these

companies have been incorporated in this study.

http://en.wikipedia.org/wiki/Diarmid_Heidenreich

http://en.wikipedia.org/wiki/International_Space_Station

http://en.wikipedia.org/wiki/International_Space_Station

http://en.wikipedia.org/wiki/Proton_(rocket)

http://en.wikipedia.org/wiki/Zvezda_(ISS_module)

Chapter – V

Analysis and Interpretation

Chapter 5: Analysis and Interpretation

5.1 Demographic Profile of the Respondents

5.2 Customer Satisfaction

5.2.1 Customer Satisfaction among the Selected

Organisations

5.2.2 Comparison of Customer Satisfaction Level of

Dominos, KFC, McDonalds and Pizza Hut.

5.2.3 Customer Satisfaction on the Basis of Demographics

5.2.4 Adequacy and Scale Purification

5.2.5 Factor Analysis of Customer Satisfaction

5.2.6 Scree Plot

5.2.7 Correlation Matrix between the Factors of Customer

Satisfaction

5.2.7.1 Statement Wise Customer Satisfaction Index

after Factor Analysis

5.2.8 Regression Analysis between Factors of Customers

Satisfaction and Overall Customers satisfaction

5.3 Service Quality

5.3.1 Statement Wise Service Quality Index

5.3.2 Statement Wise Service Quality Index after Factor

Analysis

5.3.3 Competitive Analysis of Service Quality among the

Selected Organisations

5.3.4 Correlation Matrix between the Dimensions of Service

Quality

5.3.5 Regression and Correlation Analysis between

Dimensions of Service Quality and Overall Satisfaction

with Service Quality

5.4 Pricing Policy

5.4.1 Statement wise Pricing Index

5.4.2 Competitive Analysis of Pricing among the Selected

Organisations

5.4.3 Correlation between Statements of Pricing

5.4.4 Regression Analysis between Statements of Pricing and

the Overall Pricing

5.4.5 Effect of Pricing on Customer Satisfaction

5.4.5.1 Correlation between Overall Pricing and Overall

Customer Satisfaction

5.4.5.2 Regression Equation between Overall Pricing

and Overall Customer Satisfaction

5.5 Brand Loyalty

5.5.1 Statement Wise Branding Index

5.5.2 Comparative Analysis of Brand Loyalty among the

Selected Organisations

5.5.3 Correlation between Statements of Branding

5.5.4 Regression and Correlation Analysis between Statements

of Branding and over all Brand Loyalty

5.6 Effect of brand loyalty on customer satisfaction

5.6.1 Correlation between Overall Brand Loyalty and Overall


5.6.2 Regression between Overall Brand Loyalty and Overall


5.7 Effect of Service Quality on Customer Satisfaction

5.7.1 Correlation between Overall Service Quality and Overall


5.7.2 Regression Equation between Overall Service Quality and

Overall Customer Satisfaction

5.8 Hypothesis Testing

5.8.1 Hypothesis Testing - 1

5.8.2 Hypothesis Testing - 2

ANALYSIS AND INTERPRETATION

In this chapter, the researcher has analysed and interpreted the relevant information

collected with the help of appropriate statistical tests. In order to understand the

demographics of the respondent mix, the researcher has used descriptive statistics namely

percentage, mean and standard deviation. To study the satisfaction level of customers of

Pizza Hut, Dominos, KFC and Mc Donald statistical tests applied includes mean,

standard deviation, t-test, ANOVA etc. Moreover, exploratory factor analysis has also

been used on the statements of the customer satisfaction for data reduction as well as to

explore the underlying factors involved while examining the customer satisfaction in fast

food industry. To understand the effect of pricing on customer satisfaction correlation

and regression tests has been used. Further, to study the effect of brand loyalty on

customer satisfaction descriptive statistics, correlation, and regression have been applied

on the relevant data. Moreover, in order to evaluate the effect of service quality on

customer satisfaction regression, correlation, and descriptive statistics have been used by

the researcher.

5.1 DEMOGRAPHIC PROFILE OF THE RESPONDENTS

Demographics play a pivotal role in understanding the mix of selected sample from the

universe. The demographic profile of the respondents is explained in the table 5.1, which

shows that out of 500 respondents, 325 are males and 175 are females, representing 65

and 35 percent respectively.

Table 5.1 Demographic Profile of the Respondents

S.No VARIABLES No. of Respondents Percentage (N = 500)

1

GENDER

Male 325 65

Female 175 35

2

MARITAL STATUS

Married 123 24.6

Unmarried 377 75.4

With respect to marital status 123 respondents are married whereas 377 respondents are

unmarried which represents 24.6 and 75.4 percent respectively. Majority of the

respondents belong to 22 - 27 years of age group which constitutes of 44.6 percent

followed by 16 - 21 age group constituting 38.4 percent of the total population. 41 years

and above constitutes 8 number of respondents which is the lowest, representing only 1.6

percent out of total sample size. As far as the house hold income is concerned maximum

respondent fall in the category of Rs 31,000 to Rs 40,000 per month income bracket

constituting 23.4 percent followed by 23 percent from Rs 51,000 to Rs 60,000 per month.

The least number of respondents were found in Rs 10,000 to Rs 20,000 per month

income bracket making only 9.0 percent of the total respondents. Descriptive statistics

reveals that out of 500 respondents, 266 are students making it as highest number of

occupational category representation from the variables of the total respondents followed

by corporate job which is 139 (27.8%), Government Job 79 (15.8%) and finally self

employed 56 (11.2%). Selected sample includes equal number of 125 respondents from

four selected fast food companies i.e. KFC, Mc Donald, Pizza Hut and Dominos.

S.No. VARIABLES No. of Respondents Percentage (N = 500)

3

AGE GOROUP

16 to 21 192 38.4

22 to 27 223 44.6

28 to 33 61 12.2

34 to 40 16 3.2

41 and above 8 1.6

4

HOUSE HOLD INCOME PER MONTH

10K to 20K 45 9

21K to 30K 79 15.8

31K to 40K 117 23.4

41K to 50K 77 15.4

51K to 60K 115 23

61k and above 67 13.4

5

OCCUPATION

Self employed 56 11.2

Student 226 45.2

Corporate Job 139 27.8

Government Job 79 15.8

5.2 CUSTOMER SATISFACTION

In order to study the satisfaction level of customers in fast food industry, a questionnaire

consisting 30 statements was developed by the researcher keeping in view Customer

Satisfaction Questionnaire (CSQ-8 and CSQ-30, C. Clifford Attkisson 1978), American

Satisfaction Customer Index (ASCI, University of Michigan 1994), along with the factors

considering scope of research in the study area. Apart from the 30 identified items, one

additional statement has been inducted as a measure of overall customer satisfaction.

Where for each statement the respondents used 5 point Likert scale, to express their

opinion related to the concerned statements. According to the Likert scale 1 represents

strongly disagree, 2 as disagree, 3 stands for neither agree nor disagree, 4 for agree and 5

represents strongly agree.

S No. Statement Mean Standard

Deviation

1 Staff members understand your needs. 3.945 0.232

2 The staff served you in appropriate time. 4.026 0.256

3 The staff was available when you wanted. 3.713 0.301

4 The staff was able to satisfy your query. 3.692 0.362

5 The products were delivered to you on time. 3.785 0.123

6 The employees had knowledge of the restaurant products. 3.711 0.323

7 The staff has enough knowledge of what they are doing 3.723 0.111

8 The product delivered to you was well packed. 3.918 0.102

9 The level of the quality of the product was as per your

expectations. 3.699 0.355

10 You feel that the way of the product servicing was good. 3.795 0.239

Table 5.2 Customer Satisfaction Index in Fast Food Industry

S No.

Statement

Mean

Standard

Deviation

11 The staff members conducted themselves in a professional

manner. 3.814 0.421

12 The staff listened to your complaints and gave prompt

resolutions. 3.861 0.329

13 The staff was courteous to you. 3.985 0.287

14 The level of the need fulfillment form the product or service

was in accordance with your expectations. 3.925 0.174

15 The staff was trust worthy and honest. 3.773 0.422

16 The staff told you the status of your order while it was in

progress. 3.941 0.441

17 The staff kept their promise given to you. 3.852 0.421

18 The staff collected money form you in an appropriate

manner. 3.865 0.388

19 Employees gave you any sales or advertising gifts or material. 2.847 0.149

20 You feel that the staff can resolve your complaint in time. 3.946 0.454

21 The staff communicated with you properly while giving bills. 3.854 0.495

22 Employees seem to understand how you feel. 3.922 0.211

23 You feel that employees are concerned about extra money

in form of tips. 3.824 0.398

24 You waited a short period of time to get help after you asked

for it. 3.939 0.478

25 You are satisfied with the quality of the product serviced. 3.943 0.501

26 You believe that the serving staff was well mannered. 3.842 0.345

27 The staff had good interaction with you while solving your

complaint. 3.914 0.521

28 If you want to get same service you will come back to the

same place. 3.811 0.321

29 How satisfied are you with the amount of help you have

received. 3.745 0.421

30 If a friend needs same service or product you will

recommend the same restaurant to him/ her as well. 3.712 0.359

31 You are overall satisfied with the services the restaurant is

providing. 3.779 0.247

Table 5.2 reveals the output of the information relate to the customer satisfaction level in

fast food industry. It is clear from the table that the satisfaction is found to be highest (

=4.026) with respect to servicing in appropriate time, hence the researcher can interpret

that the customers are highly satisfied with regards to this factor since, this is the only

variable which has recorded customer satisfaction more than 4 on 5 point scale.

Whereas, the second highest factor is Courteous staff ( =3.985), followed by Resolving

complaint in time ( =3.946), Understanding needs ( =3.945), Quality product serviced

( =3.943), Informing order status ( =3.941), Less waiting for help ( =3.939), Need

fulfillment and expectations ( =3.925), Employees understand you feelings ( =3.922),

Well packed delivery, ( =3.918), Interaction and solving complaint ( =3.914), The

statement with the least mean was Distribution of advertising material ( =2.847) which

is less than 3 on 5 point scale, as a result of which it can be interpreted that the selected

organisation under study does not have appropriate provision for distribution of

advertising material among the customers. The overall customer satisfaction stood at (

=3.779) with 0.247 standard deviation. The mean value of all other variables was

observed above the mid value (d=3) and less than 4 on 5 point scale which indicates that

customers are satisfied with respect to fast food industry.

5.2.1 CUSTOMER SATISFACTION AMONG THE SELECTED

ORGANISATIONS.

The table reveals that according to the customers of KFC, packed product delivery has

the highest value ( =4.214) where as employees’ concern in form of tips has the least

value ( =2.297). The overall customer satisfaction stood at ( =3.947). The mean value

of all other variables was observed above mid value (d=3) and less than 5 on 5 point

scale.

Table 5.2.1 Comparative Analysis of Customer Satisfaction among the Selected

Organisations

1= Strongly disagree, 2= Disagree, 3=Neither Agree nor Disagree, 4=Agree and 5=Strongly

Agree.

S No. Statement

MEAN

KFC Mc

Donald

Pizza

Hut

Domi

nos

1 Staff members understand your needs. 3.547 4.128 4.021 4.021

2 The staff served you in appropriate time. 3.126 4.593 4.321 4.358

3 The staff was available when you wanted. 3.654 4.098 4.395 4.235

4 The staff was able to satisfy your query. 3.647 3.654 3.654 3.987

5 The products were delivered to you on

time. 3.654 4.321 4.671 3.648

6 The employees had knowledge of the

restaurant products. 3.478 4.253 2.985 4.021

7 The staff has enough knowledge of what

they are doing 3.614 3.951 3.156 3.987

8 The product delivered to you was well

packed. 4.214 4.098 2.754 4.369

9 The level of the quality of the product was

as per your expectation. 3.741 4.214 4.328 4.597

10 You feel that the way of the product

servicing was good. 3.014 3.987 4.514 3.061

11 The staff members conducted themselves in

a professional manner. 3.951 4.321 4.231 3.852

12 The staff listened to your complaints and

gave prompt resolutions. 3.753 3.789 4.205 3.951

13 The staff was courteous to you. 3.652 3.694 4.328 4.159

14

The level of the need fulfillment form the

product or service was in accordance with

your expectations.

3.329 4.197 4.321 4.321

15 The staff was trust worthy and honest. 3.214 3.963 4.328 4.147

16 The staff told you the status of your order

while it was in progress. 3.458 3.017 4.578 4.369

17 The staff kept their promise given to you. 3.064 4.478 4.321 4.285

18 The staff collected money form you in an

appropriate manner. 3.078 3.988 3.654 3.645

19 Employees gave you any sales or advertising

gifts or material. 3.980 4.009 3.984 3.023

S No. Statement

MEAN

KFC Mc

Donald

Pizza

Hut

Domi

nos

20 You feel that the staff can resolve your

complaint in time. 3.078 4.170 4.325 3.985

21 The staff communicated with you properly

while giving bills. 4.098 3.904 4.021 4.253

22 Employees seem to understand how you

feel. 4.097 4.116 4.694 4.014

23 You feel that employees are concerned

about extra money in form of tips. 2.297 3.648 2.647 3.852

24 You waited a short period of time to get

help after you asked for it. 3.645 3.907 3.654 4.366

25 You are satisfied with the quality of the

product serviced. 3.547 4.049 3.987 4.324

26 You believe that the serving staff was well

mannered. 3.789 4.339 4.458 4.345

27 The staff had good interaction with you

while solving your complaint. 3.154 4.214 3.545 4.098

28 If you want to get same service you will

come back to the same place. 3.425 4.264 4.214 4.501

29 How satisfied are you with the amount of

help you have received. 3.678 3.910 4.369 4.330

30

If a friend needs same service or product

you will recommend the same restaurant to

him/ her as well.

3.987 4.077 4.210 3.648

31 You are overall satisfied with the services

the restaurant is providing. 3.947 4.312 4.037 4.298

1= Strongly disagree, 2= Disagree, 3=Neither Agree nor Disagree, 4=Agree

and 5=Strongly Agree.

This implies that customers of KFC are satisfied with its products and services. The

customers of Mc Donald have rated service time, with the highest value ( =4.593) and

informing the order status with the lowest value ( =3.071). The overall customer

satisfaction is ( =4.312) and all other variables mean value was observed above the mid

value (d=3) and less than 5 on 5 point scale, implying that customers are satisfied with

Mc Donald. Timely product delivery was rated the highest value ( =4.671) and

employees concern about tips was rated the lowest value ( =2.647) by the customers of

Pizza Hut. Moreover, except statements 6 and 8 the mean value of all other variables was

observed above the mid value (d=3) and less than 5 on 5 point scale. As the overall

customer satisfaction is ( =4.037), this implies that customers of Pizza Hut are satisfied.

Quality expectation of the product was rated as the highest value ( =4.597) and

providing sales or advertisement material was rated as the lowest value ( =3.023) by the

customers of Dominos. The overall customer satisfaction stood at ( =4.298). The mean

value of all other variables was observed above mid value (d=3) and less than 5 on 5

point scale, implying that the customers of Dominos are satisfied with it.

5.2.2 COMPARISON OF CUSTOMER SATISFACTION LEVEL OF

DOMINOS, KFC, MCDONALDS AND PIZZA HUT.

In order to understand the satisfaction level of the customers of Pizza Hut, Dominos,

KFC and Mc Donald the researcher has used ANOVA and descriptive statistics which is

explained in Table 5.2.2 (a) and Table 5.2.2 (b)

Table 5.2.2 (a) Satisfaction Level of the Customers of Pizza Hut, Domino’s, KFC and Mc

Donald’s

From the above table, it is evident that the highest customer satisfaction is of Mc Donald

( =4.312) followed by Dominos ( =4.298), Pizza Hut ( =4.037) and finally KFC (

=3.947) respectively. Moreover, as the value of standard deviation is less than 0.5 the

S. No. CHAIN Mean

Satisfaction

Standard

Deviation

Rank

1 Mc Donald 4.312 .257 1

2 Pizza Hut 4.037 .345 3

3 KFC 3.947 .319 4

4 Dominos 4.298 .294 2

researcher concludes that the values of the mean satisfaction have less dispersion

and are accurate.

Table 5.2.2 (b) explains that the significance value is less than 0.05 and the F value is

164.381 which is more than 1.

Table 5.2.2 (b) ANOVA Table

This implies that the calculated value of F is more than the tabulated value of F statistic.

Therefore, the researcher can assume that there is significant difference in variances of

groups and this difference is not caused by chance.

5.2.3 CUSTOMER SATISFACTION ON THE BASIS OF

DEMOGRAPHICS.

Table 5.2.3 reveals that male respondents are more surveyed than the female respondents

and the mean satisfaction score of male respondents ( = 4.121) is less than that of

female respondents ( = 4.347). Moreover, as the standard deviation of male and female

respondents are .241 and .306 respectively, which is less than 0.5, indicates that the mean

satisfaction value is accurate and has less dispersion. Furthermore, the accuracy of mean

satisfaction score is increased as the t-value of 1.981 is found significant at 5 percent

level.

ANOVA

Sum of Squares df Mean Square F Sig.

Between Groups 108.347 12 117.852 164.381 .000

Within Groups 37.521 45 78.657

Total 145.868 57


Agree.

* P ≤ 0.05, ** P ≤ 0.01

Considering marital status, the unmarried respondents are more as compared to married

respondents and the mean customer satisfaction value of unmarried customers

( = 4.473) is more than the value of married customers ( =4.211). Therefore, the

researcher concludes that the married customers are less satisfied as compared to

unmarried customers. Moreover, the standard deviation of married and unmarried

respondents are .385 and .210 respectively, because the standard deviation is less than 0.5

the mean satisfaction value is accurate. Additionally, as the t-value of 2.294 is significant

at 5 percent level, the accuracy of mean satisfaction score is enhanced. As far as the age

group is concerned, the average age of the respondents was found to be 27 years. Hence,

S. No VARIABLES N Mean

Satisfaction

Standard

Deviation

t- Test

Value

1

GENDER

Male 325 4.121 .241 1.981*

Female 175 4.347 .306

2

MARITAL STATUS

Married 123 4.211 .385 -2.294*

Unmarried 377 4.473 .210

3

AGE GOROUP

16 to 27 415 4.317 .318 2.683**

28 to 41 and above 58 4.184 .274

4

HOUSE HOLD INCOME PER MONTH

0 to 40K 241 4.215 .107 3.451**

41K and above 259 4.332 .302

5

OCCUPATION

Employed 274 4.321 .205 -2.495*

Unemployed 226 4.254 .197

Table 5.2.3 Customer Satisfaction on the Basis of Demographics

the researcher has formed two groups i.e. 16 years to 27 years as first group and 28 years

to 41 and above as the second group. The table illustrates that the first group has higher

number of respondents as compared to group two. Furthermore, the customers bellowing

to16 years to 27 years of age group are more satisfied ( = 4.317) in comparison to

customers bellowing to 28 years to 41 and above ( = 4.184). Moreover, the standard

deviation of group one and group two respondents are .318 and .274 respectively

indicating high accuracy of mean satisfaction score. Additionally, the t-value of 2.683 is

also significant at 1 percent level. The researcher found that the average household

income of the respondents was Rs 40,000 per month. Hence, the researcher has divided

the respondents into two groups. The first group consists of respondents having monthly

household income between Rs 0 to Rs 40,000. The other group is made up of respondents

having monthly household income between Rs 41,000 and above. The table reveals that

the customers bellowing to the second group are more satisfied ( =4.332) and are higher

in number as compared to the customers bellowing to the first group ( = 4.215).

Furthermore, the standard deviation of group one and group two respondents are .107 and

.302 respectively, which shows that the degree of dispersion is less and mean satisfaction

value has high accuracy at t-value of 3.451 which is significant at 1 percent level. The

above table reveals that the employed respondents are more as compared to unemployed

respondents and the mean customer satisfaction value of employed customers ( =4.321)

is more than the unemployed customers ( =4.254). Therefore, the researcher concludes

that the unemployed customers are less satisfied as compared to employed customers.

Moreover, the standard deviation of employed and unemployed respondents are .2.05 and

.197 respectively. Additionally, the accuracy level of mean satisfaction value is further

enhanced as the standard deviation value is less than 0.5. Furthermore, the accuracy of

mean satisfaction score is improved as the t-value of 2.495 is significant at 5 percent

level.

5.2.4 ADEQUACY AND SCALE PURIFICATION

Checking sampling adequacy and sphericity is essential before conducting Factor

Analysis. In order to analyse weather the data collected is fit for conducting Factor

Analysis or not, KMO (Kaiser Meyer Oklin) test was executed on the available data.

Table 5.2.4 KMO and Bartlett’s Test

KMO is calculated using correlation and partial correlation to test whether the variables

in our sample are adequate to correlate or not. This test proves that the data does not

have multicollinearity and hence can be subjected to factor analysis. As a rule of thumb,

the value of KMO should be more than 0.5 to proceed for factor analysis. Here the value

of KMO is 0.826, and therefore the researcher has concluded that there is no

multicollinearity in the data. Moreover, when the data will be subjected to factor analysis,

there will be no or little multiple loading in the rotated factor loading table. Hence, the

data is fit for factor analysis. Barlett's test of Spherity helps to know whether there are

considerable relationships between the variables. A p value less than 0.05 indicates that it

makes sense to continue with the factor analysis as there are considerable relationships

between the variables to be discovered by executing factor analysis.

5.2.5 FACTOR ANALYSIS OF CUSTOMER SATISFACTION

In order to better comprehend the process of customer satisfaction, Factor analysis was

conducted on the 30 statements of customer satisfaction questionnaire. The result of

which is determined in the Table 5.2.5. Considering the table, the first factor that is,

‘Solving problems appropriately’ which comprises of 6 statements and they are, listening

and giving prompt resolutions, staff resolving complaints in time, satisfied product

Adequacy 0.826

Barlett's Test of Spherity

Approx. Chi-square 196.102

df 250

Significance 0.0001

service quality, satisfied with help received, query satisfaction and good interaction while

solving complaints with factor loading values of .873, .668, .745, .685, .701 and .667

respectively. This factor explains 26.774% of 79.840% of cumulative variance.

Table 5.2.5 Factor Analysis of Customer Satisfaction Statements.

Name of the

factor Factor wise Dimensions

Mean

Satisfaction

Factor

loadin

g

Comm

unaliti

es

Eigens % of

Variance

Solving

problems

appropriately

(SPA)

The staff listened to your complaints

and gave prompt resolutions. 3.861 .873 .780

8.032

26.774

You feel that the staff can resolve

your complaint in time. 3.943 .668 .602

The staff had good interaction with

you while solving your complaint. 3.914 .667 .684

How satisfied are you with the

amount of help you have received. 3.745 .685 .580

The staff was able to satisfy your

query. 3.692 .701 .635

You are satisfied with the quality of

the product serviced. 3.946 .745 .617

Appropriate

Product

delivery

(APD)

The products were delivered to you

on time. 3.785 .844 .754

3.390

11.300

You feel that the way of the product

servicing was good. 3.795 .781 .655

The product delivered to you was

well packed. 3.918 .602 .721

The level of the need fulfilment form

the product or service was in

accordance with your expectations.

3.925 .655 .547

Well

mannered

staff

(WMS)

You believe that the serving staff

was well mannered. 3.842 .841 .685

2.599

8.662

The staff members conducted

themselves in a professional

manner.

3.814 .734 .629

Employees seem to understand how

you feel. 3.922 .629 .598

The staff was courteous to you.

3.985 .691 .604

Name of the

factor Factor wise Dimensions

Mean

Satisfaction

Factor

loadin

g

Comm

unaliti

es

Eigens % of

Variance

Timely

customer

service.

(TCS)

The staff served you in appropriate time. 4.026 .839 .709

2.555

8.518

The staff was available when you wanted. 3.713 .628 .614

The staff told you the status of your order

while it was in progress. 3.941 .677 .599

You waited a short period of time to get help

after you asked for it. 3.939 .633 .539

Confidence in

staff

(CIS)

The staff was trust worthy and honest. 3.737 .718 .598

1.973

6.578

The staff kept their promise given to you. 3.852 .641 .520

If you want to get same service you will

come back to the same place. 3.811 .622 .569

Monetary

transactions

with staff.

(MTS)

The staff collected money form you in an

appropriate manner. 3.865 .603 .588

1.698

5.661

The staff communicated with you properly

while giving bills. 3.852 .650 .525

You feel that employees are concerned

about extra money in form of tips. 3.824 .643 .539

Restaurant’s

promotional

activity.

(RPA)

Employees gave you any sales or advertising

gifts or material. 2.847 .728 .619

1.404

4.681

If a friend needs same service or product

you will recommend the same restaurant to

him/ her as well.

3.712 .561 .608

Understanding

of staff.

(UOS)

Staff members understand your needs. 3.945 .633 .599

1.253

4.175

The level of the quality of the product was as

per your expectation. 3.699 .656 .512

Appropriate

knowledge of

work.

(AKW)

The employees had knowledge of the

restaurant products. 3.711 .611 .622

1.048

3.493 The staff has enough knowledge of what

they are doing. 3.723 .619 .509

CUMULATIVE PERCENTAGE OF VARIANCE

79.840

The second factor which is, “Appropriate Product Delivery” comprising of 4 statements

which are, products delivered on time, good product servicing, need fulfilment form

product or service meeting your expectations and well packed product delivered. The

above mentioned statements has the factor loading values of .844, .781, .655 and .602

respectively. This factor explains 11.300% of 79.840% of cumulative variance.

The third factor is, “Well Mannered Staff” comprising of 4 statements which are, well

mannered serving staff, professional conduct, understanding customers feelings and

courteous, having factor loading values of .841, .734, .629 and .691 respectively. This

factor explains 8.662% of 79.840% of cumulative variance.

Fourth factor is, “Timely Customer Service” comprising of 4 statements and they are,

servicing in appropriate time, availability of staff, informing order status and quick help

available. The above mentioned statements have the factor loading values of .839, .628,

.677 and .633 respectively and 8.518% of 79.840% of cumulative variance is explains by

this factor.

“Confidence in the Staff” is the fifth factor comprising of 3 statements which are, trust

worthy and honest staff, keeping promise and same service same place representing

factor loading values of .718, .641 and .622 respectively. This factor explains 6.578% of

79.840% of cumulative variance.

The sixth factor is, “Monetary Transactions With the Staff” comprising of 3 statements

and they are, collecting money in correct manner, proper communicated while giving

bills and employees wants tips. The above mentioned statements have factor loading

values of .603, .650 and .643 respectively. This factor explains 5.661% of 79.840% of

cumulative variance.

Seventh factor is, “Restaurant’s Promotional Activity”. This factor comprises of 2

statements which are, giving advertising material and recommend same restaurant to

friend with .728 and .561 as the factor loading values respectively.

The eighth factor is, “Understands of Staff”. This factor comprises of 2 statements which

are, staff understanding your needs and product quality of met your expectation with

factor loading values of .633 and .656 respectively. This factor explains 4.175% of

79.840% of cumulative variance.

Finally, the last factor is, “Appropriate Knowledge of Work” Comprising of 2 statements

namely, knowledge of products and knowledge of what they are doing, having factor

loading value of .611 and .619 respectively. This factor explains 3.493% of 79.840% of

cumulative variance.

5.2.6 SCREE PLOT

The determination of the number of factors has additionally been done on the basis of

screen test. It is an alternative method which helps in determining how many factors

should be retained after factor analysis.

Figure 5.1 Scree Plot

Scree plot is a simple line plot which depicts Eigen values in descending order for

successive factors. Scree plot can be used to graphically determine the optimal number of

factors to be retained. When the data was systematically evaluated, SPSS was used to

simplify the data by reducing a large number of variables to smaller manageable figures

through a scree test plot. This test examines the graph of Eigen values which stops

factoring at the point where the values start making a straight line with the horizontal axis

of the graph. The findings are on the basis of data gathered from 30 variables within the

domain of customer satisfaction. In the scree plot test, the X axis represents the Eigen

values and Y axis represents the component numbers. The scree plot of customer

satisfaction shows clearly 9 factors before the beginning of the scree. Thus, further

conforming 9 factors.

5.2.7 CORRELATION MATRIX BETWEEN THE FACTORS OF

CUSTOMER SATISFACTION

The correlation matrix between the factors of customer satisfaction reveals that correlation

between AKW and TS is maximum (.361) and correlation between UOS and SPA is

minimum (.014).

Table 5.2.7 (a) Correlation between the Factors SPA, PD, WMS, TS, CIS, MTWS, PA,

UOS and AKOW

The above table shows that there is a positive but less degree of correlation between

selected variables and thus, these factors make a good questionnaire for accessing the

customer satisfaction in the fast food industry. Additionally, the table 5.3.7 (b) explains

the new questionnaire which was developed after implementing factor analysis, where for

each statement the respondents used 5 point Likert scale to express their opinion related

to the concerned statements. According to the Likert scale, 1 represents strongly disagree,

SPA APD WMS TCS CIS MTS RPA UOS AKW

SPA 1

APD .254 1

WMS .235 .347 1

TCS .340 .293 .189 1

CIS .021 .301 .265 .045 1

MTS .224 .254 .291 .314 .097 1

RPA .341 .325 .366 .087 .149 .290 1

UOS .014 .271 .196 .178 .245 .322 .087 1

AKW .145 .254 .355 .361 .054 .219 .149 .284 1

2 represents disagree, 3 represents neither agree nor disagree, 4 represents agree and 5

represents strongly agree.

5.2.7.1 STATEMENT WISE CUSTOMER SATISFACTION INDEX

AFTER FACTOR ANALYSIS.

Table 5.2.7 (b) elaborates the information related to the customer satisfaction of fast food

restaurants. The satisfaction was found highest with the problem solving ability of the

staff ( =4.615) having standard deviation of .145.

Table 5.2.7 (b) Statement Wise Customer Satisfaction Index after Factor Analysis

S No Statement Mean Standard

Deviation

1 You feel that the staff can solve your problems appropriately. 4.615 .145

2 You are satisfied with the product delivery by the staff. 4.244 .214

3 The staff was well mannered. 3.428 .365

4 The staff gave you timely service. 3.813 .412

5 You have confidence in the staff. 4.152 .256

6 You are satisfied with the monetary transactions with the staff. 4.137 .342

7 Promotional activity of the restaurant was good. 4.335 .355

8 You feel that the staff understands you well. 3.661 .384

9 The staff has appropriate knowledge of their work. 3.892 .447

10 Over all you are satisfied with the restaurant services. 4.363 .258

1= Strongly disagree, 2= Disagree, 3=Neither Agree nor Disagree, 4=Agree and 5=Strongly Agree.

This statement was followed by Confidence in the staff ( =4.335). Product delivery

( = 4.244), Promotional activity of the restaurants ( =4.152), Satisfaction with the

momentary transactions ( =4.137), Knowledge the staff had about their work

( =3.892). The timely service by the staff ( =3.813), followed by staff understanding

them well ( =3.661) and finally the behaviour of the staff towards the customer

( =3.428). The overall customer satisfaction was ( =4.363). The mean value of all

variables was found above mid value (d=3) and less than 4 on 5 point scale, which

indicates that customers are satisfied with respect to fast food industry.

5.2.8 REGRESSION ANALYSIS BETWEEN FACTORS OF

CUSTOMER SATISFACTION AND OVERALL CUSTOMERS

SATISFACTION

In this study, multiple correlation and multiple regression have been applied to the 9

factors of customer satisfaction and overall customer satisfaction in order to better

understand the influences they execute on each other. All the customer satisfaction

variables form V1 to V30 have been grouped into 9 major factors which are SPA, APD,

WMS, TCS, CIS, MTS, RPA, UOS and AKW. The regression model used in the analysis

is

OCS = α + β1 SPA + β2 APD + β3 WMS + β4 TCS + β5 CIS + β6 MTS+ β7 RPA.

+ β8 UOS + β9 AKW

Where OCS stands for overall customer satisfaction, α is intercept or constant, β

represents the slope of the line and SPA, APD, WMS, TCS, CIS, MTS, RPA, UOS and

AKW are the factors. In the study SPA, APD, WMS, TCS, CIS, MTS, RPA, UOS and

AKW have been taken as independent variables and overall customer satisfaction has

been taken as dependent variable.

Table 5.2.8 (a) Coefficient of Regression

The above table shows that all the variables have a positive value of coefficient of

regression. RPA executes maximum influence on OCS as the value of standardised

coefficient Beta is .495. WMS executes maximum influence on OCS as the value of

standardised coefficient Beta is .007. Moreover t-test shows that all the variables are

significant and hence can be used in the final regression equation.

OCS = 1.031 + .280 SPA + .080 APD + .007 WMS + .169 TCS + .200 CIS + .133 MTS +

.569 RPA + .040 UOS + .209 AKW

Coefficientsa

Model

Unstandardised Coefficients

Standardised

Coefficients

t Sig. B Std. Error Beta

1 (Constant) 1.031 .141 7.290 .000

SPA .280 .040 .250 6.956 .000

APD .080 .029 .089 2.755 .006

WMS .007 .047 .007 2.158 .024

TCS .169 .046 .161 3.678 .000

CIS .200 .023 .222 8.822 .000

MTS .133 .031 .133 4.329 .000

RPA .569 .049 .495 11.631 .000

UOS .040 .043 .033 2.930 .003

AKW .209 .051 .182 4.124 .000

a. Dependent Variable: OCS

The above equation reveals that a unit change in SPA will bring .280 change in the OCS.

Similarly, a unit change in APD, WMS, TCS, CIS, MTS, RPA, UOS and AKW will

account for .080, .007, .169, .200, .133, .569, .040 and .209 change in OCS respectively.

Table 5.2.8 (b) Multiple Correlation and Multiple Regression.

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

1 .896 .803 .799 .197

Table 5.2.8 (b) tells that the coefficient of multiple correlations between the overall

statement and the predictors which are also known as constant is .896. This indicates that

there is high correlation between the dependent and independent variables. The

coefficient of multiple determination has a high value of .803. This means that change in

independent variable predicts 80% change in dependent variable. Therefore, the

researcher can conclude that independent variables are very well represented by

Dependent variable. As the value of Standard error is less than 1.90, the researcher can

conclude that the data is reliable and has fewer deviations. Adjusted R2 represents the

modal fit, the closer the value of adjusted R2 to the value of R

2 the better is the modal. In

this case, the value of adjusted R2

is (0.799) very close to the value of R2 (0.803) hence,

the researcher can assume that this is a good modal and the dependent variable represents

the independent variables to a high extent. Moreover, as the value of R2 (0.83) is close to

the value of 1.0 hence, reducing the spread and fostering the belief of the researcher that

the modal is a good fit.

5.3 SERVICE QUALITY

To study the Perception of Service Quality of customers in relation to fast food industry,

a SERVQUAL (Parasuraman, A., Zeithaml, V.A. and Berry, L.L, 1985) questionnaire

comprising of 22 statements was implemented by the researcher. The Cronbach’s alpha

was found to be .904 which ensures that the questionnaire is a good instrument for the

research purpose. In addition to the questionnaire the last statement studies the overall

service quality satisfaction score. For each statement the respondents used 5 point Likert

scale to express their opinion related to the concerned statements. According to the Likert

scale 1 represents strongly disagree, 2 stands for disagree, 3 as neither agree nor disagree,

4 for agree and 5 represents strongly agree.

5.3.1 STATEMENT WISE SERVICE QUALITY INDEX

Table 5.3.1 depicts the information on the service quality of the customers in fast food

industry. This table helps to reveal the perception of the customer towards the service

quality. The table consists of 23 statements.

Table 5.3.1 Statement Wise Service Quality Index in Fast Food Industry

S. No Statement Mean Standard

Deviation

1 Employees of the company are professionally dressed. 4.112 .135

2 You are satisfied with the communication between you and

the company. 3.894 .054

3 The material associated with the service (promotion, service

tracking, documents, invoice etc) are visually appealing. 3.691 .347

4 You feel that when a company promises to do something by a

certain time, they will do it by that time. 3.584 .369

5 The physical facilities of the company are visually appealing. 3.858 .451

6 The furniture in the company is neat and clean. 4.297 .281

7 When you have a problem the company employees will show

Sincere interest in solving it. 4.515 .094

8 The company provides you right service the first time. 4.087 .478

9 The food items and the beverages provided to you are of

good Quality and tasty. 3.572 .265

10 The food items and beverages provided to you are fresh 3.873 .098

11 You are allowed to fill your beverage at least one time free. 3.451 .104

12 The employees of the restaurant instill confidence in you. 3.993 .621

13 You feel safe to have transactions with the restaurant. 3.854 .421

14 The employees of the restaurant give prompt service to you. 3.748 .298

15 The employees of the company give you individual attention. 3.629 .095

16 The restaurant has modern cooking machinery. 3.838 .159

17 The employees of the company are co-operative. 4.317 .357

18 The employees of the company are always willing to help you

with a smile. 4.273 .397

19 The employees of the restaurant will tell you exactly how

long it will Take to process your order. 3.227 .149

S. No. Statement Mean Standard

Deviation

20 The employees have knowledge to answer your questions. 3.524 .123

21 The restaurant has operation hours convenient to you. 4.145 .124

22 The employees are never too busy to respond to your

request. 3.772 .292

23 You are satisfied with the overall service quality of the

restaurant. 3.794 .312

The table illustrated that service quality was found highest with the employees sincere

interest in solving customers problems (X=4.515) followed by co-operation of the

employees towards the customers (X=4.317), neat and clean furniture (X=4.297),

willingness of the employees to help with a smile (X=4.273), convenient operations

hours (X=4.145), professional outfit of the employees (X=4.112), providing the right

service first time (X=4.087), instilling confidence (X=3.993), communication between

customers and staff (X=3.894), fresh food and beverages (X=3.873), visually appealing

physical facilities (X=3.858), safety of transaction (X=3.854), modern cooking

machinery (X=3.838), employees not busy to respond to customers request (X=3.772),

prompt service (X=3.748), the material associated with the service is visually appealing

(X=3.691), individual attention (X=3.629), keeping promise by the company (X=3.584),

good quality of food items (X=3.572), knowledge to answer questions of the customers

(X=3.524) and refilling beverage at least one time (X=3.451). The statement with the

least mean was the knowledge of order processing time (X=3.227). The overall

satisfaction with service quality stood at (X=3.7947) with .312 standard deviation, as the

value of standard deviation is small than .50, the researcher assumes that the weightage

given to the mean values is very high and ultimately this increasing the accuracy of the

interpretation.

5.3.2 STATEMENT WISE SERVICE QUALITY INDEX AFTER

FACTOR ANALYSIS.

Table 5.3.2 Statement Wise Service Quality Index after Factor Analysis


Table 5.3.2 illustrates the output of the service quality of the customers in fast food

industry. According to the table, the service quality was found highest with the

appearance of the infrastructure (tangibles) ( =4.325), followed by delivered promised

service (reliability) ( =4.29), prompt customer service (responsiveness) ( =4.102),

confidence in the service provided (assistance) ( =4.073) and lastly individual customer

attention (empathy) ( =3.985). The mean value of overall satisfaction with the service

quality of the restaurant was 4.381 and the standard deviation was .268, because the value

of standard deviation is smaller than 0.5, the researcher has concluded that the values of

mean carry high accuracy. The mean value of all variables was found above mid value

(d=3) and less than 5 on 5 point scale, which indicates that customers are satisfied with

respect to quality in fast food industry.

S No. Statement Mean Standard

Deviation

1 The infrastructure of the restaurant had good physical

appearance. 4.325 .285

2 Employees gave you prompt service. 4.102 .310

3 Service provided by employees instills confidence in you. 4.073 .347

4 Employees gave you individual attention. 3.985 .158

5 Employees delivered exactly same service as they promised you. 4.291 .251

6 You are satisfied with the overall service quality of the

restaurant. 4.381 .268

5.3.3 COMPARATIVE ANALYSIS OF SERVICE QUALITY

AMONG THE SELECTED ORGANISATIONS

The above table reveals that the physical appearance of infrastructure has been rated the

highest value ( =4.321) where as the delivery of promised service have been rated the

least value ( =3.654) by the customers of KFC.

Table 5.3.3 Comparative Analysis of Service Quality among the Selected Organisations


The overall satisfaction with regards to service quality stood at ( =4.341). The mean

value of all other variables was observed above mid value (d=3) and less than 5 on 5

point scale. This implies that customers of KFC are satisfied with its service quality. The

customers of Mc Donald have rated prompt service the highest value ( =4.682) and

individual employee attention with the lowest value ( =3.015). The overall satisfaction

with regards to service quality is rated at ( =4.254) and all other variables’ mean value

was observed above mid value (d=3) and less than 5 on 5 point scale, implying that

S No. Statement

MEAN

KFC Mc

Donald

Pizza

Hut Dominos

1 The infrastructure of the restaurant had

good physical appearance. 4.321 4.274 3.064 4.652

2 Employees gave you prompt service. 4.125 4.682 4.285 4.028

3 Service provided by employees instills

confidence in you. 4.322 4.312 4.754 4.377

4 Employees gave you individual attention. 4.074 3.015 4.190 4.250

5 Employees delivered exactly same

service as they promised you. 3.654 3.987 4.021 3.124

6 You are satisfied with the overall service

quality of the restaurant. 4.341 4.254 4.421 4.301

customers are satisfied with Mc Donald’s service quality. Service instils confidence, was

rated highest value ( =4.754) and appearance of infrastructure has been rated the lowest

value ( =3.064) by the customers of Pizza Hut. Moreover, the mean value of all other

variables was observed above mid value (d=3) and less than 5 on 5 point scale. As the

overall satisfaction with regards to service quality is ( =4.421), it implies that when it

comes to service quality, the customers of Pizza Hut are satisfied with it. The customers

of Dominos have rated the physical appearance of infrastructure the highest value (

=4.652) and delivery of promised service the lowest value ( =3.124). The overall

satisfaction with regards to service quality stood at ( =4.301). The mean value of all

other variables was observed above mid value (d=3) and less than 5 on 5 point scale

implying that the customers of Dominos are satisfied with its service quality.

5.3.4 CORRELATION MATRIX BETWEEN THE DIMENSIONS OF

SERVICE QUALITY

From table 5.3.4 it is evident that correlation between tangibles and reliability is

minimum (.086) and the correlation between empathy and reliability is maximum

(0.357).

Table 5.3.4 Correlation between the Factors Tangibles, Responsiveness, Assistance,

Empathy and Reliability

Tangibles Responsiveness Assistance Empathy Reliability

Tangibles 1

Responsiveness .352 1

Assistance .094 .315 1

Empathy .184 .261 .141 1

Reliability .086 .312 .209 .357 1

The above table shows that there is a positive but less degree of correlation between

selected variables. Thus, these factors make a good questionnaire for accessing the

service quality in fast food industry.

5.3.5 REGRESSION AND CORRELATION ANALYSIS BETWEEN

FACTORS OF SERVICE QUALITY AND OVERALL

SATISFACTION WITH SERVICE QUALITY

This study involves the application of multiple correlation and multiple regressions to the

5 factors of service quality with the overall service quality in order to better understand

the influences these factors execute on each other. The results are shown in the tables

5.3.5 (a). The regression model used in the analysis is:

OSQ = α + β1 tangibles + β2 responsiveness + β3 assistance + β4 empathy + β5

reliability

Where OSQ stands for overall service quality, α is intercept or constant, β represents the

slope of the line and tangibles, responsiveness, assistance, empathy and reliability are the

factors. In the study tangibles, responsiveness, assistance, empathy and reliability have

been taken as independent variables and overall service quality has been taken as

dependent variable.


The above table shows that all the variables have a positive value of coefficient of

regression. The maximum influence on OSQ is executed by tangibles as the value of

standardised coefficient Beta is .350. The minimum influence on OSQ is executed by

assistance as the value of standardised coefficient Beta is .097. Moreover t-test shows

that all the variables are significant at 5 percent level.

OSQ = 1.124 + .354 tangibles + .124 responsiveness + .097 assistance + .240 empathy +

.136 reliability

The above equation illustrates that a unit change in tangibles will bring .345 change in the

OSQ. Similarly, a unit change in responsiveness, assistance, empathy and reliability will

bring .124, .097, .240 and .136 change in OSQ respectively.

Coefficientsa

Model


Standardized

Coefficients


1 (Constant) 1.124 .236 8.324 .000

Tangibles .354 .325 .350 5.826 .000

Responsiveness .124 .452 .129 5.398 .000

Assistance .097 .219 .097 2.148 .031

Empathy .240 .021 .235 5.219 .000

Reliability .136 .258 .130 6.325 .000

a. Dependent Variable: OSQ

Table 5.3.5 (b) Multiple Regression.

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .913a .833 .827 .197

a. Predictors: (Constant), Q5, Q3, Q1, Q4, Q2

Table 5.3.5 (b) reveals that the coefficient of multiple correlations between the overall

service quality and the predictors which are also known as constant is .913. This indicates

that there is high correlation between the dependent and independent variables. Hence,

change in independent variables will bring considerable change in dependent variable.

The value of coefficient of multiple determination is .833. This means that the change in

independent variable predicts 83.30% change in dependent variable. Therefore, the

researcher has concluded that independent variables bring considerable change in the

dependent variable. The value of standard error is less than 1.90 hence, the researcher can

conclude that the data is reliable and has fewer deviations. As the value of R2

(0.833) is

close to 1.0 the researcher believes that the spread is less and the modal is a good fit.

5.4 PRICING POLICY

In order to study the effect of pricing policy of the restaurants on the customers in fast

food industry, a 7 statement questionnaire was developed by the researcher keeping in

mind the previous researches such as Keller (2003) and Bucklin (1998) and also keeping

in view the factors and considerations in context to fast food industry. The last statement

studies the overall score and in this questionnaire, for each statement the respondents

used 5 point Likert scale to express their opinion related to the concerned statements.

According to the Likert scale 1 represents strongly disagree, 2 represents disagree, 3 as

neither agree nor disagree, 4 for agree and 5 stands for strongly agree.

5.4.1 STATEMENT WISE PRICING INDEX

The following table reveals the arithmetic mean values pertaining to the pricing index.

Table 5.4.1 Statement Wise Pricing Index

S. No Statement Mean Standard

Deviation

1 You believe that the quality of the product offered

justifies the price of the product charged 3.479 .347

2 The company provides free gifts 3.716 .385

3 The company provides discount 4.258 .158

4

There is no difference between the quality of the food items

provided at discount price as compared to the food items

provided without discount 4.343 .258

5

You feel the services offered by the company delivers value

for your money 4.752 .014

6

Your decision to purchase is affected by the price of the

product or service to a great extant 4.215 .374

7

In comparison to competitors the price charged by the

company for service is genuine 3.584 .298

8 Over all you are satisfied with the pricing of the products and

the services of the restaurant 4.578 .214


Agree.

The table 5.4.1 depicts that the statement with the highest value is value for money

service (VMS) ( =4.752), followed by quality of discounted Vs un-discounted food

(DVU) ( =4.343), company provides discount (CPD) ( =4.258), price affecting

purchase (PAP) ( =4.125), providing free gifts (PFG) ( =3.716), genuine price charged

(GPC) ( =3.584) and quality justifies price (QJP) ( =3.479). The overall satisfaction

with the pricing of the products and services is ( =4.578) with standard deviation of

0.214. The mean value of all variables was found above mid value (d=3) and less than 5

on 5 point scale, which indicates that customers are satisfied with respect to pricing in

fast food industry.

5.4.2 COMPARATIVE ANALYSIS OF PRICING AMONG THE

SELECTED ORGANISATIONS.

In the following table the pricing mean satisfaction values pertaining to the fast food

companies like KFC, Mc Donald, Pizza Hut and Dominos has been compared.

According to the customers of KFC, the product’s quality justifies price is rated the

highest value ( =4.658) where as free gifts provided by the company has been rated the

least value ( =3.241).

Table 5.4.2 Comparative Analysis of Pricing among the Selected Organisations

S No. Statement

MEAN

KFC Mc

Donald

Pizza

Hut

Domino

s

1

You believe that the quality of the product

offered justifies the price of the product

charged

4.658 4.098 4.587 4.287

2 The company provides free gifts 3.241 4.621 3.047 4.032

3 The company provides discount 4.365 3.210 3.475 3.284

4

There is no difference between the quality

of the food items provided at discount

price as compared to the food items

provided without discount

3.458 4.287 4058 4.144

5

You feel the services offered by the

company delivers value for your money 3.215 4.521 4.378 4.073

6

Your decision to purchase is affected by

the price of the product or service to a

great extant 4.278 4.321 4.487 3.658

7

In comparison to competitors the price

charged by the company for service is

genuine 4.215 4.298 4.097 4.742

8

Over all you are satisfied with the pricing

of the products and the services of the

restaurant

4.239 4.451 4.251 4.517


The overall satisfaction related to price stood at ( =4.239). The mean value of all other

variables was observed above mid value (d=3) and less than 5 on 5 point scale, this

implies that customers are satisfied with the pricing policy of KFC. The customers of Mc

Donald have rated free gifts provided by the company the highest value ( =4.621) and

discounts provided by the company the lowest value ( =3.210). The overall satisfaction

with regards to the pricing stood at ( =4.451) and all other variables’ mean value was

observed above mid value (d=3) and less than 5 on 5 point scale, implying that customers

are satisfied with Mc Donald pricing policy. The product’s quality justifies price is rated

the highest value ( =4.587) where as providing free gifts has been rated the least value

( =3.047). Moreover, the mean value of all other variables was observed above mid

value (d=3) and less than 5 on 5 point scale.

As the overall satisfaction with regards to the pricing is ( =4.251) it implies that the

customers are satisfied with the pricing policy of Pizza Hut. Genuine price charged is

rated as the highest value ( =4.742) and discounts provided by the company was rated

as the lowest value ( =3.248) by the customers of Dominos. The overall customer

satisfaction with regards to pricing policy stood at ( =4.517). The mean value of all

other variables was observed above mid value (d=3) and less than 5 on 5 point scale,

entailing that as far as the pricing policy of Dominos is concerned the customers are

satisfied with it.

5.4.3 CORRELATION BETWEEN STATEMENTS OF PRICING.

From the table 5.4.3, it is evident that the correlation between the statements is less than

0.5 and therefore the researcher believes that the statements are representing data which

has less co-linearity and the statements constitute a good questionnaire.

Table 5.4.3 Correlation between Statements of Pricing

QJP PFG CPD DVU VMS PAP GPC

QJP 1

PFG .341 1

CPD .312 .094 1

DVU .254 .147 .207 1

VMS .231 .238 .064 .079 1

PAP .058 .342 .347 .218 .284 1

GPC .184 .285 .294 .364 .329 .259 1

The table shows that the correlation between PAP and statement QJP is the lowest (.058)

and the correlation between statement GPC and statement DVU is maximum (.364).

5.4.4 REGRESSION ANALYSIS BETWEEN STATEMENTS OF

PRICING AND THE OVERALL PRICING

In order to better understand the influences between the statements of pricing and the

overall pricing, the researcher has applied multiple regression and multiple correlation.

SPSS version 17 software has been used by the researcher to achieve this aim. The

researcher has subjected 7 statements and over all pricing to the above mentioned tests,

the results of which are explained in table 5.4.4 (a) and 5.4.4 (b)

The regression model used in the analysis is:

OPS = α + β1 QJP + β2 PFG + β3 CPD + β4 DVU + β5 VMS+ β6 PAP+ β7 GPC

Where, OPS stands for overall price satisfaction, α is intercept or constant, β represents

the slope of the line and QJP, PFG, CPD, DVU, VMS, PAP and GPC are the statements

of the pricing questionnaire. In the study QJP, PFG, CPD, DVU, VMS, PAP and GPC

have been taken as independent variables and overall price satisfaction has been taken as

dependent.


Table 5.4.4 (a) shows that all the variables have a positive value of coefficient of

regression. The maximum influence on OPS is executed by QJP because the value of

Coefficientsa

Model


Standardized

Coefficients


1 (Constant) 1.469 .250 9.325 .000

QJP .458 .124 .455 4.366 .000

PFG .136 .231 .135 8.845 .000

CPD .389 .274 .389 2.467 .009

DVU .074 .025 .075 6.218 .000

VMS .300 .239 .280 7.215 .000

PAP .147 .341 .142 2.390 .014

GPC .151 014 .150 4.852 .000

a. Dependent Variable: OPS

standardised coefficient Beta is 455. The minimum influence on OPS is executed by

DVU as the value of standardised coefficient Beta is .075. However, the t-test shows that

all the variables are significant.

OPS = 1.469 + .458 QJP + .136 PFG + .389 CPD + .074 DVU + .300 VMS + .147 PAP+

.151 GPC

The above equation reveals that a unit change in QJP will bring .458 change in the OPS.

Additionally, a unit change in PFG, CPD, DVU, VMS, PAP and GPC will produce .136,

.389, .074, .300, .147 and .151 change in OPS respectively.

Table 5.4.4 (b) Multiple Correlation and Multiple Regression

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

1 .946a .896 .891 .132

a. Predictors: (Constant), P5, P3, P7, P4, P2, P6, P1

Table 5.4.4 (b) reveals that the coefficient of multiple correlation between the overall

price satisfaction and the predictors which are also known as constant is .946. This proves

that there is high correlation between the independent and dependent variables. Hence,

change in independent variables will bring considerable change in dependent variable.

The value of coefficient of multiple determination is .896. This means that change in

independent variable predicts 89.60% change in dependent variable. Therefore, the

researcher has concluded that independent variables bring considerable change in the

dependent variable. As the value of standard error is less than 1.90, the researcher

believes that the data is reliable and the deviations are very few. As the value of R2

(0.896) is close to 1.0, the researcher concludes that the spread of the data is less and the

modal is a good fit.

5.4.5 EFFECT OF PRICING ON CUSTOMER SATISFACTION

To know the relationship between pricing and customer satisfaction, the researcher has

subjected over all pricing and overall customer satisfaction to correlation and regression

analysis. The results of which are mentioned in tables 5.4.5 (a) and 5.4.5 (b) respectively.

5.4.5 (a) CORRELATION BETWEEN OVERALL PRICING AND

OVERALL CUSTOMER SATISFACTION.

Table 5.4.5 (a) elaborates the correlation between overall pricing and overall customer

satisfaction

Table 5.4.5 (a) Correlation between Overall Pricing and Overall Customer Satisfaction

The coefficient of multiple correlation is 0.813 which implies that there is a high

correlation between the overall customer satisfaction and overall pricing. Moreover, the

correlation between overall pricing and overall customer satisfaction is negative and

inversely proportional.

Correlations

C10 P8

C10 Pearson Correlation -1 .813**

Sig. (1-tailed) .000

N 500 500

P8 Pearson Correlation .813** -1


N 500 500

** Correlation is significant at the 0.05 level (1-tailed).

*C10= Overall customer satisfaction, P8= Over all pricing.

5.4.5.2 REGRESSION EQUATION BETWEEN OVERALL

PRICING AND OVERALL CUSTOMER SATISFACTION.


OCS = α + β1 OP

OCS = 1.364 + .811 OP, where OCS stands for overall customer satisfaction, α is

intercept or constant, β represents the slope of the line and OP represents overall pricing.

Here overall pricing has been taken as independent variables and overall customer

satisfaction has been taken as dependent variable.

Table 5.4.5 (b) Coefficient of Regression

From the table 5.4.5 (b) it is evident that when overall price is increased by one unit, the

customer satisfaction increases by 0.811 which is statically significant at t- value of

4.287.

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients


1 (Constant) 1.364 .187 8.197 .000

OP .811 .324 .811 4.287 .000


Table 5.4.5 (c) Regression between Overall Pricing and Overall Customer Satisfaction

Table 5.4.5 (c) shows that the coefficient of multiple correlation is 0.813 which points out

high correlation between the variables, the value of coefficient of multiple determination

is 0.822 implying that, the change in independent variable will bring 82.2% change in the

dependent variable. As the value of R2 is very close to 1 the degree of dispersion is less

and hence the modal is a good fit.

5.5 BRAND LOYALTY

To study the brand loyalty of customers in relation to fast food industry, a 5 statement

questionnaire was developed by the researcher keeping in mind the previous researches

such as Reichheld (1993) and Bloemer and Kasper (1995) keeping in view factors and

considerations in context of fast food industry. In addition to the questionnaire, the last

parameter studies the overall brand loyalty of the customers towards the restaurant. 5

point Likert scale was used to express the opinion related to the concerned statements by

the respondents. According to the Likert scale 1 represents strongly disagree, 2 represents

disagree, 3 as neither agree nor disagree, 4 represents agree and 5 for strongly agree.

5.5.1 STATEMENT WISE BRANDING INDEX.

The following table illustrates the mean score value pertaining to branding. The table also

illustrates the value associated with each branding statement of the questionnaire.

Model R R Square Adjusted R Square

Std. Error of the

Estimate

1 .813 .822 .819 .207

Table 5.5.1 Statement Wise Branding Index

S.No. Statement Mean Standard

Deviation

1 You feel that you are satisfied with the last purchased brand 4.306 .258

2 You intend to repurchase the same restaurant’s brand

services 4.482 .347

3 You will recommend the restaurant brand to others, where

you went last time. 4.198 .421

4

If the brand price is increased in comparison to its

competitors’ brands you will still buy form the same

restaurant brand 3.982 .368

5

If the restaurant brand you buy form is not having any outlet

in the near vicinity you will travel long distance to buy form

your restaurant brand

3.264 .341

6

Over all you consider yourself to be loyal to this restaurant

brand 3.547 .241

1= Strongly disagree, 2= Disagree, 3 =Neither Agree nor Disagree, 4=Agree and 5=Strongly Agree.

From the table 5.5.1, the researcher found that the statement with the highest mean value

is intent to repurchase (IRP) ( =4.482), followed by satisfied last purchase (SLP)

( =4.306), recommending the brand (RTB) ( =4.198), insensitive to changing price

(ICP) ( =3.982) and willingness to travel (WTT) ( =3.264). The overall brand loyalty

was =3.547 with standard deviation of 0.24. The mean value of all variables was found

above mid value (d=3) and less than 5 on 5 point scale, which indicates that customers

are satisfied with respect to branding in fast food industry.

5.5.2 COMPARATIVE ANALYSIS OF BRAND LOYALTY AMONG

THE SELECTED ORGANISATIONS.

Table 5.5.2 reveals that the satisfaction with the last purchase has been rated the highest

value ( =4.782) where as travelling long distances to buy from your preferred restaurant

has been rated the least value ( =3.021) by the customers of KFC.

Table 5.5.2 Comparative Analysis of Brand Loyalty among the Selected Organisations

S No. Statement

MEAN

KFC Mc

Donald

Pizza

Hut Dominos

1 You feel that you are satisfied with the last

purchased brand 4.782 4.394 4.147 4.617

2 You intend to repurchase the same

restaurant’s brand services 3.658 4.641 4.871 4.456

3 You will recommend the restaurant brand to

others, where you went last time. 4.621 4.278 3.025 4.159

4

If the brand price is increased in comparison

to its competitors’ brands you will still buy

form the same restaurant brand 4.278 3.111 4.369 4.258

5

If the restaurant brand you buy form is not

having any outlet in the near vicinity you will

travel long distance to buy form your

restaurant brand

3.021 4.017 4.258 3.065

6 Over all you consider yourself to be loyal to

this restaurant brand 4.312 4.374 4.287 4.390

1= Strongly disagree, 2= Disagree, 3 =Neither Agree nor Disagree, 4=Agree and 5=Strongly Agree.

The overall satisfaction with regards to branding stood at ( =4.312). The mean value of

all other variables except variable 2 was observed above mid value (d=3) and less than 5

on 5 point scale, this implies that customers of KFC are branding loyal. The customers of

Mc Donald have rated repurchasing the same brand the highest value ( =4.641) and

insensitivity to price with the lowest value ( =3.111). The overall satisfaction with

regard to branding is rated at ( =4.374) and all other variables’ mean value was

observed above mid value (d=3) and less than 5 on 5 point scale implying that customers

of Mc Donald’s are loyal to its brand. Repurchasing the same brand service was rated the

highest value ( =4.871) and recommending brand to others has been rated the lowest

value ( =3.025) by the customers of Pizza Hut. Moreover, the mean value of all other

variables was observed above mid value (d=3) and less than 5 on 5 point scale. As the

overall satisfaction with regard to branding quality is ( =4.287). It entails that the

customers of Pizza Hut are loyal to their brand. The customers of Dominos have rated

the highest value to the last purchase ( =4.617) and travelling long distances to buy

from your preferred restaurant has been rated the least value ( =3.065) by the customers

of Domino’s. The overall satisfaction with regards to branding stood at ( =4.390). The

mean value of all other variables was observed above the mid value (d=3) and less than 5

on 5 point scale signifying that the customers of Domino’s are loyal to their brand.

5.5.3 CORRELATION BETWEEN STATEMENTS OF BRANDING.

According to the table 5.5.3 the highest correlation was found between IRP and SLR

(0.328) and the lowest correlation was found between ICP and SLR (0.127).

Table 5.5.3 Correlation between Statements of Branding

SLR IRP RTB ICP WTT

SLR 1

IRP .328 1

RTB .268 .294 1

ICP .127 .309 .274 1

WTT .310 .254 .249 .184 1

Moreover, the table shows that there is very less correlation between the statements of

pricing. This means that the statements have very less probability of co-linearity and the

statements are independent of each other. Therefore, the researcher believes that these

statements constitute a good questionnaire.

5.5.4 REGRESSION AND CORRELATION ANALYSIS BETWEEN

STATEMENTS OF BRANDING AND OVER ALL BRAND

LOYALTY

Multiple correlation and multiple regression have been applied to the 5 factors of

branding with respect to the overall brand loyalty in order to better understand the

influences these factors on each other. The results are depicted in the tables 5.5.4 (a) and

5.5.4 (b). The regression model used in the analysis is:

OBL = α + β1 SLR + β2 IRP + β3 RTB + β4 ICP + β5 WTT

Where, OBL stands for overall brand loyalty, α is intercept or constant, β represents the

slope of the line and SLR, IRP, RTB, ICP and WTT are the statements. SLR, IRP, RTB,

ICP and WTT have been taken as independent variables and overall brand loyalty has

been taken as dependent variable.

Table 5.5.4 (a) shows that all the variables have a positive value of coefficient of

regression. The maximum influence on OBS is executed by IRP because the value of

standardised coefficient Beta is 545. The minimum influence on OBS is executed by

WTT as the value of standardised coefficient Beta is .058. Moreover, the t-test shows

that all the variables are significant.

OBL = 1.193 + .369 SLR + .548 IRP + .297 RTB + .454 ICP + .058 WTT

The above equation reveals that a unit change in SLR will cause .369 change in OBL and

similarly, a unit change in IRP, RTB, ICP and WTT will cause .548, .297, .454 and .058

change in OBL respectively.

Table 5.5.4 (b) Multiple Correlation and Multiple Regression

Model R R Square Adjusted R Square Std. Error of the

Estimate

1 .895a .801 .794 .124

a. Predictors: (Constant), B3, B2, B4, B1, B5


Coefficientsa

Model


Standardised

Coefficients


1 (Constant) 1.193 .321 12.365 .000

SLR .369 .258 .360 6.254 .000

IRP .548 .141 .545 7.329 .000

RB .297 .298 .300 6.841 .000

ICP .454 .277 .460 2.654 .017

WTT .058 0.095 .058 3.470 .000

a. Dependent Variable: OBS

Table 5.5.4 (b) reveals that the coefficient of multiple correlations between the overall

brand loyalty and the predictors is .895. This indicates that there is very high correlation

between the dependent and independent variables. Hence, change in independent

variables will bring considerable change in dependent variable. The value of coefficient

of multiple determination is .801. This means that change in independent variable

predicts 80.10% change in dependent variable. Therefore, the researcher believes that

independent variables bring considerable change in the dependent variable. The value of

standard error is less than 1.90. Hence, the researcher can conclude that the data is

reliable and has fewer deviations. As the value of R2

(0.801) is close to 1.0, the spread is

less, making the modal is a good fit.

5.6 EFFECT OF BRAND LOYALTY ON CUSTOMER

SATISFACTION

In this study, the researcher has tried to understand the relationship between the brand

loyalty and customer satisfaction. For this purpose, the researcher has subjected the data

to correlation and regression analysis. The SPSS software produced the following results.

5.6.1 CORRELATION BETWEEN OVER ALL BRAND LOYALTY

AND OVERALL CUSTOMER SATISFACTION.

Table 5.6.1 reveals that the correlation between overall customer satisfaction and over all

brand loyalty is 0.908 which implies that there is significant positive and high

correlation.

Table 5.6.1 Correlation between Overall Brand Loyalty and Overall Customer

Satisfaction

Therefore, the correlation coefficient between customer satisfaction (DV) and brand

loyalty (IV) indicate that customer satisfaction is highly influenced by brand loyalty.

Moreover, because the correlation is positive so, the researcher can believe that Customer

satisfaction and brand loyalty are directly proportional to each other.

Correlations

C10 B6

C10 Pearson Correlation 1 .908**


N 500 500

B6 Pearson Correlation .908** 1


N 500 500


*C10= Overall customer satisfaction, B6= Over all brand loyalty

5.6.2 REGRESSION BETWEEN OVERALL BRAND LOYALTY

AND OVERALL CUSTOMER SATISFACTION.


OCS = α + β1 OBL

OCS = 1.174 + .910 OBL, where OCS stands for overall customer satisfaction, α is

intercept or constant, β represents the slope of the line and OBL represents overall brand

loyalty. Here, overall brand loyalty has been taken as independent variables and overall

customer satisfaction has been taken as dependent variable.


From the table 5.6.2 (a), it is evident that when Brand loyalty is increased by one unit, the

customer satisfaction increases by 0.910 which is statically significant at t- value of

3.654.

Coefficientsa

Model


Standardised

Coefficients


1 (Constant) 1.174 .314 8.324 .000

BL .910 .079 .910 3.654 .000


Table 5.6.2 (b) Regression between Brand Loyalty and Customer Satisfaction

The above table explains that the correlation between overall Customer satisfaction and

overall brand loyalty is very high, i.e .908. The coefficient of multiple determination is

.824 indicating that change in independent variable will bring 82.40% change in the

dependent variable. Moreover, as the value of R2 is close to 1 researcher can believe that

the degree of dispersion is less and the values are accurate, ultimately proving the fitness

of the modal.

5.7 EFFECT OF SERVICE QUALITY ON CUSTOMER

SATISFACTION

In order to better understand the relationship between service quality and customer

satisfaction, the researcher has used correlation and regression analysis. In section 5.7.1

correlation between service quality and customer satisfaction is analysed whereas, in

section 5.7.2 regression equation between overall service quality and overall customer

satisfaction has been analysed.

5.7.1 CORRELATION BETWEEN SERVICE QUALITY AND

CUSTOMER SATISFACTION.

Table 5.7.1 shows that there is positive and high correlation between the

overall customer satisfaction and over all service quality.


Estimate

1 .908 .824 .812 .142

Table 5.7.1 Correlation between Service Quality and Customer Satisfaction

This means that both are directly related to each other. Moreover, the researcher has used

one tailed significance because the hypotheses are directional. Because the values of

correlation is .912 and significance is less than 0.05, the researcher concludes that the

overall customer satisfaction and over all service quality are directly related to each other

and change in one variable will bring considerable change in the other variable.

5.7.2 REGRESSION EQUATION BETWEEN OVERALL SERVICE

QUALITY AND OVERALL CUSTOMER SATISFACTION.


OCS = α + β1 OSQ

OCS = 1.287 + .914 OSQ, where OCS stands for overall customer satisfaction, α is

intercept or constant, β represents the slope of the line and OSQ represents overall service

quality. Here, overall service quality has been taken as independent variables and overall

customer satisfaction has been taken as dependent variable.

Correlations

C10 Q6

C10 Pearson Correlation 1 .912**


N 500 500

Q6 Pearson Correlation .912** 1


N 500 500


*C10= Overall customer satisfaction, Q6= Over all service quality


From the table 5.7.2 (a) it is evident that when service quality is increased by one unit,

the customer satisfaction increases by 0.914 which is statically significant at t- value of

3.471.

Table 5.7.2 (b) Regression between Service Quality and Customer Satisfaction

Table 5.7.2 (b) shows the result of regression analysis between overall customer

satisfaction and over all service quality. At this juncture, over all service quality is

independent variable and overall customer satisfaction is dependent variable. From the

table, it is evident that the value of coefficient of correlation is 0.912 and the value of

coefficient of multiple determination is 0.833 which means that change in independent

variable will explain 83.30% change in the dependent variable. Hence, the researcher can

conclude that change in the independent variable will bring considerable change in the

dependent variable.

Coefficientsa

Model


Standardised

Coefficients


1 (Constant) 1.287 .298 7.584 .000

SQ .914 .167 .914 3.471 .000



Estimate

1 .912 .833 .815 .117

5.8 HYPOTHESIS TESTING

In this section of the data analysis and interpretation, the researcher has tested the validity

of the assumed hypothesis on the basis of the results revealed by the reverent tests.

5.8.1 HYPOTHESIS TESTING – H 1

H1: The more is the brand loyalty, the more is the customer satisfaction.

Table 5.6.1 illustrates that the correlation between overall brand loyalty and overall

customer satisfaction is high and significant at 1 percent level. The correlation coefficient

between overall brand loyalty and overall customer satisfaction indicates that customer

satisfaction is highly influenced by brand loyalty. Moreover, as the correlation is positive

1, the researcher believes that customer satisfaction and brand loyalty are directly

proportional to each other. Table 5.6.2 (b) reveals that the coefficient of multiple

determination is .824, indicating that change in independent variable (brand loyalty) will

bring 82.40% change in the dependent variable (customer satisfaction). Therefore,

change in brand loyalty is causing considerable positive change in customer satisfaction.

Hence, the hypothesis stands accepted.

5.8.2 HYPOTHESIS TESTING – H 2

H2: Perceived service quality is directly proportional to customer satisfaction.

Table 5.7.1 shows that the correlation between overall service quality and overall

customer satisfaction is high and significant at 1 percent level. The correlation coefficient

between overall perceived service quality and overall customer satisfaction indicates that

customer satisfaction is highly influenced by perceived service quality. Furthermore, as

the correlation is positive 1, the researcher deems that customer satisfaction and

perceived service quality are directly proportional to each other. Table 5.7.2 (b) reveals

the result of regression analysis between overall customer satisfaction and overall

perceived service quality. From the table, it is evident that the value of coefficient of

correlation is 0.912 and the value of coefficient of multiple determination is 0.833 which

means that change in independent variable (perceived service quality) will explain

83.30% change in the dependent variable (customer satisfaction). Therefore, change in

perceived service quality is causing considerable positive change in customer

satisfaction. Hence, the hypothesis stands accepted.

Chapter – VI

Findings and Suggestions

Chapter 6 Findings and Suggestions (151-162)

6.1 Findings of the Study 151

6.2 Suggestions 161

FINDINGS AND SUGGESTIONS

This chapter concludes the research work substantiated by the summary of the findings

associated with the study. Additionally, this chapter makes an attempt to insinuate a

range of suggestions in the milieu of the findings. The concept of consumer behaviour

has attracted huge attention both by academia and the industry especially in the service

industry due to its qualities associated with intangibility, perishability, variability and

inseparability from the fast food industry. Conventional education system and the

practice of consumer behaviour have been confronted by industry at many forums. This

has resulted in a gap between the academia and the industry, as a result of which, there is

an urgent need for further research work to bridge this widening gap and therefore,

approaches based on the consumer behaviour in fast food and beverage industry have

been acknowledged as a solution to the problem of archaic concepts and their diligence in

the vibrant modern era of developing global and technical business environment.

The fast food industry consumption pattern has gone through a series of paramount

transformations, as a result of which, the customers have become more conscious about

the options available in the market and their purchasing decision is inclined towards the

best possible option. Moreover, the belligerent competition has cornered the business

organisations working in the preview of fast food industry and left them with no other

option except to amend their ways of operations and embrace a new modal based on

quality vis –a vis competitive advantage. It has been realised that alterations are expected

in the pricing system, branding, quality regulations and the availability of the product in

conjugation with the dynamics of the market environment. Collective pricing,

personalised advertisements, total quality management (TQM), incorporation of

electronic communication systems, mobile restaurants, advertisements flying in air with

the help of gigantic helium balloons are a few of the jubilant strategies assimilated by the

business organisation operational in the fast food industry.

Moreover, in order to earn revenue and work effectively in close proximity with the

public outside the business organisation, it is imperative for the company to comprehend

the customers’ mind and their attributes. Consumer behaviour assists in this tedious task

and enables the business organisations to adapt strategies in conjugation with the major

individual determinants of consumer behaviour which in turn influences the way

consumers proceed through decision making process regarding products and services

offered by fast food restaurants. In India, there are numerous fast food vendors which

have evolved over many years to align themselves with the native demands and

requirements of the customers. These small, mobile and highly price competitive food

vendors confront big challenge for foreign fast food companies like McDonald, KFC,

Pizza Hut and Dominos which are new to the Indian food market and face numerous

legal and political resections. Therefore, to overcome these constraints and threats

understanding consumer behaviour in fast food and beverage industry is imperative.

Hence, the present study has been taken up to address these issues proficiently.

6.1 FINDINGS OF THE STUDY

The researcher has drawn certain logical conclusions on the basis of analysis and

interpretation of the data collected for the research. The summary of the major findings of

the study are conversed as under:

1) The respondents’ demographic profile reveals that 377 respondents are unmarried

and 123 respondents are married out of 500 respondents which represents 75.4

and 24.6 percent respectively. Bearing in mind the household income, it is

revealed that majority of the respondents belong to the group of Rs 31,000 to Rs

40,000 per month income bracket representing 23.4 percent, this is followed by

Rs 51,000 to Rs 60,000 per month making 23 percent, Rs 21,000 to Rs 30,000 per

month constituting 15.8 percent, Rs 41,000 to Rs 50,000 per month representing

15.4 percent, Rs 61,000 and above per month constituting 13.4 percent and in the

end from Rs 10,000 to Rs 20,000 per month representing 9 percent respectively.

Considering gender of the respondents, 175 are females and 325 are males

representing 35 and 65 percent of the total sample size respectively. Taking into

account the age group, it is found that mainstream of the respondents belong to

22 - 27 years of age group which constitutes 44.6 percent of the sample size, this

is followed by 16-21 years of age group representing 38.4 percent, 28-33 years of

age group indicating 12.2 percent, 24-40 years of age group comprising of 3.2

percent and above 41 years of age group signifying 1.6 percent of the total size of

the sample respectively. The selected sample includes equal number of

respondents form four selected fast food companies i.e. KFC, Mc Donald, Pizza

Hut and Dominos. The descriptive statistics reveals that out of 500 respondents,

226 are students representing 45.2 percent of the total sample size, making it as

the highest number of occupational category. This is followed by corporate job,

government job and self employed having 139, 79 and 56 respondents which

represents 27.8, 15.8 and 11.2 percent of the total population size respectively.

2) The mean values of the customer satisfaction shows that out of 30 statements one

has value between 2 to 3, which is Provision for the Distribution of Advertising

Material ( =2.847). There are 28 statements having values between 3 to 4. These

statements are, Courteous Staff ( =3.985), followed by Resolving Complaint in

Time ( =3.946), Understanding Needs ( =3.945), Quality Product Serviced (

=3.943), Informing Order Status ( =3.941), Less Waiting for Help ( =3.939),

Need Fulfillment and Expectations ( =3.925), Employees Understand your

Feelings ( =3.922), Well Packed Delivery, ( =3.918), Interaction and Solving

Complaint ( =3.914), Collecting Money Appropriately ( =3.865), Giving

Prompt Resolutions ( =3.861), Proper Communication during Billing

( =3.854), Keeping Promise ( =3.852), Well Mannered Staff ( =3.842),

Employees Concerned about Tips ( =3.824), Conducting in Professional Manner

( =3.814), Repeated Service Same Place ( =3.811), Good Product Servicing (

=3.795), On Time Delivery ( = 3.785), Trust Worthy ( =3.773), Help Received

( =3.745), Appropriate Knowledge ( =3.723), Availability of Staff ( =3.713),

Recommending Restaurant ( =3.712), Product Knowledge ( =3.711), Quality

Meet Expectation ( =3.699), Query Satisfying Ability ( =3.692) and one

statement has value between 4 to 5 which is Service in Appropriate Time

( =4.026) on 5 point scale.

3) Considering customer satisfaction among selected organisations, it was revealed

that the customers of KFC have rated Packed Product Delivery with the highest

satisfaction score of ( =4.214). However, they have rated Employees’ Concern

in Form of Tips the least value ( =2.297). The overall customer satisfaction was

( =3.947). The researcher discovered that the mean value of all other variables

was above mid value (d=3) and less than 5 on 5 point scale, conforming that KFC

is having satisfied customers. On the other hand, the customers of Mc Donald

have rated Service Time the highest value ( =4.593) and Informing the Order

Status the lowest value ( =3.071). Moreover, the overall customer satisfaction of

the customers of McDonald is ( =4.312) and all other variable’s mean value

was observed above mid value (d=3) and less than 5 on 5 point scale, implying

that customers are satisfied with Mc Donald. The customers of Pizza Hut rated

Timely Product Delivery the highest satisfaction score ( =4.671) and Employees

Concern about Tips the lowest satisfaction score ( =2.647). Additionally, by

excluding the statement number 8 and 6, the mean satisfaction value of rest of the

other statements was found above mid value (d=3) and less than 5 on 5 point

scale. The researcher came to the conclusion that the customers of Pizza Hut are

satisfied with it as the overall customer satisfaction score was found to be

( =4.037). The customers of Dominos have rated Quality Expectation of the

Product with the highest value of ( =4.597) and Providing Sales or

Advertisement Material with the lowest value of ( =3.023). Furthermore, the

overall customer satisfaction of the customers of Dominos was found to be (

=4.298) and the mean value of all other variables was observed above the mid

value (d=3) and less than 5 on 5 point scale, specifying that the customers of

Dominos are satisfied with it.

4) The results of comparison of customer satisfaction level of Pizza Hut, KFC, Mc

Donald and Dominos illustrates that Mc Donald stands at first position with

customer satisfaction score of ( =4.312) followed by Dominos

( =4.298), Pizza Hut ( =4.037) and finally KFC ( =3.947). Moreover, as the

value of standard deviation is less than 0.5, it indicates that the mean satisfaction

value has less dispersion, as a result of which the accuracy stratum of the mean

values are high. Furthermore, the ANOVA test reveals that the value of F is

164.381 and it is significant at 5 percent level. Moreover, as the value of F

statistic is more than 1 it implies that the calculated value of F is more than the

tabulated value of F. Therefore, the researcher assumes that there is significant

difference in the variances of the groups which is not caused by chance.

5) By taking into account the customer satisfaction on the basis of demographics, it

was found that the female respondents are less surveyed than the male

respondents and the mean satisfaction score of male respondents ( = 4.121) is

less than that of female respondents ( = 4.347). Additionally, as the value of

standard deviation of male and female is smaller than 0.5, the researcher assumes

that the mean satisfaction value has less spread and consequently is more

accurate. Moreover, as the t-value (t=1.981) is found to be significant at 5 percent

level, the reliability of mean satisfaction score is further enhanced by manifolds.

Considering the age group, the researcher found that the average age of the

respondents was 27 years and therefore the researcher has devised two groups i.e.

16 years to 27 years as group one and 28 years to 41 and above as group two. The

results demonstrate that the group one has higher number of respondents as

compared to group two. Furthermore, the customers bellowing to 28 years to 41

and above ( = 4.184) are less satisfied as compared to the customers bellowing

to16 years to 27 years of age group ( = 4.317). Additionally, the standard

deviation of group one and group two respondents are .318 and .274 respectively

and the t-value of 2.683 is significant at 1 percent level signifying high accuracy

of mean satisfaction score. As far as the marital status is concerned, the married

respondents are less as compared to the unmarried respondents and the mean

customer satisfaction value of unmarried customers ( = 4.473) is more than the

married customers ( =4.211). Therefore, the researcher concludes that the

married customers are less satisfied as compared to unmarried customers.

Moreover, the standard deviation of married and unmarried respondents are .385

and .210 respectively, because the standard deviation is less than 0.5 and the t-

value of 2.294 is significant at 5 percent level the researcher concludes that the

mean satisfaction value is reliable and accurate. The average household income of

the respondents was found to be Rs 40,000 per month. Thus, the researcher has

divided the respondents into two groups. The first group comprises of respondents

earning monthly house hold income between Rs 0 to Rs 40,000 and on the other

hand the second group consists of respondents having monthly house hold income

of Rs 41,000 and above. The study reveals that the customers bellowing to the

first group are less satisfied ( = 4.215) and are less in number as compared to the

customers bellowing to the second group ( =4.332). Moreover, as the standard

deviation of group one is .107 and group two is .302 which implies that the degree

of dispersion pertaining to the mean satisfaction value is less and the mean

satisfaction value is very accurate. Furthermore, the t-value of 3.451 is significant

at 1 percent level which speaks of the accuracy of the mean satisfaction value.

The study reveals that the employed respondents are more in number as compared

to the unemployed respondents and the mean customer satisfaction value of

employed customers ( = 4.321) is more than the unemployed customers

( =4.254). Hence, by taking into account the above mentioned conditions the

researcher concludes that the employed customers are more satisfied as compared

to the unemployed customers. Furthermore, the standard deviation of employed

and unemployed respondents are .2.05 and .197 respectively. As the standard

deviation is less than 0.5 and the t-value of 2.495 is significant at 5 percent level,

the mean satisfaction value is decidedly reliable and accurate.

6) The service quality mean values shows that out of 5 statements one has value

between 3 to 4 which is Confidence in the service provided ( =3.985) and 4

statements have value between 4 to 5 which are Appearance of the Infrastructure

( =4.325), followed by Delivered Promised Service ( =4.29), Prompt Customer

Service ( =4.102), and Individual Customer Attention ( =4.073).

7) The mean values of the pricing shows that out of 7 statements 3 statements have

values between 3 to 4, which are Providing Free Gifts ( =3.716), Quality

Justifies Price ( =3.584) and Genuine Price Charged ( =3.479). There are 4

statements having values between 4 to 5 and these are: Value for Money Service

( =4.752), followed by Quality of Discounted Vs Un-discounted Food

( =4.343), Company Provides Discount ( =4.258), and Price Affecting

Purchase ( =4.125).

8) Brand loyalty mean values shows that out of 5 statements 2 have values between

3 to 4 which are: Insensitive to Changing Price ( =3.982) and Willingness to

Travel ( =3.264). Moreover, there are 3 statements between 4 to 5 theses

statements are: Intent to Repurchase ( =4.482), followed by Satisfied Last

Purchase ( =4.306) and Recommending the Brand ( =4.198).

9) The 30 statements of customer satisfaction were reduced to 9 factors by

subjecting them to factor analysis. These 9 factors are named as, Solving

Problems Appropriately (SPA), Appropriate Product Delivery (APD), Well

Mannered Staff (WMS), Timely customer service (TCS), Confidence in staff

(CIS), Monetary transactions with staff (MTS), Restaurant’s promotional activity

(RPA), Understanding of staff (UOS) and Appropriate knowledge of work

(AKW).

10) The regression analysis between the overall customer satisfaction (OCS) and the 9

factors derived after factor analysis represented by acronyms SPA, APD, WMS,

TCS, CIS, MTS, RPA, UOS and AKW shows the relationship between them

through the equation as under

OCS = 1.031 + 0.280 SPA + 0.080 APD + 0.007 WMS + 0.169 TCS + 0.200 CIS

+ 0.133 MTS + 0.569 R PA + 0.040 UOS + 0.209 AKW

The above equation advocates that a unit change in SPA, APD, WMS, TCS, CIS,

MTS, RPA, UOS and AKW will bring 0.280, 0.080, 0.007, 0.169, 0.200, 0.133,

0.569, 0.040 and 0.209 changes in OCS respectively. Moreover, the regression

table result for coefficient of determination (R2) shows that unit change in factors

of customer satisfaction brings 80% change in OCS.

11) The regression analysis between the overall service quality (OSQ) and the 5

statements i.e. tangibility, responsiveness, assistance, empathy and reliability is

shown with the help of the following equation.

OSQ = 1.124 + 0.354 tangibility + 0.124 responsiveness + 0.097 assistance +

0.240 empathy + 0.136 reliability.

The above equation shows that a unit change in tangibility, responsiveness,

assistance, empathy and reliability will bring 0.354, 0.124, 0.097, 0.240 and 0.136

changes in OSQ respectively. Moreover, the coefficient of determination (R2) of

the regression equation shows that unit change in statements of service quality

will bring 83.30% change in OSQ.

12) The regression analysis between the overall pricing satisfaction (OPS) and the 7

statements of pricing which are represented by acronyms QJP, PFG, CPD, DVU,

VMS, PAP and GPC shows the relationship between them with the help of the

following equation

OPS = 1.469 + 0.458 QJP + 0.136 PFG + 0.389 CPD + 0.074 DVU + 0.300 VMS+

0.147 PAP+ 0.151 GPC

From the above mentioned equation, it is evident that a unit change in QJP, PFG,

CPD, DVU, VMS, PAP and GPC will bring 0.458, 0.136, 0.389, 0.074, 0.300,

0.147 and 0.151 changes in OPS respectively. Furthermore, from the coefficient

of determination (R2) of the regression equation, it is evident that unit change in

statements of pricing will bring 89.60% change in OPS index.

13) The regression analysis between the 5 statements of the brand loyalty which are

represented by acronyms SLR, IRP, RTB, ICP and WTT, and the overall brand

loyalty (OBL) is shown with the help of the following equation.

OBL = 1.193 + 0.369 SLR + 0.548 IRP + 0.297 RTB + 0.454 ICP + 0.058 WTT

The above equation shows that a unit change in SLR, IRP, RTB, ICP and WTT

will eventually bring 0.369, 0.548, 0.297, 0.454 and 0.058 changes in OBL

respectively. Moreover, the coefficient of determination (R2) of the regression

equation shows that unit change in statements of brand loyalty will bring 80.10%

change in OBL.

14) The correlation between overall customer satisfaction and over all brand loyalty

implies that there is significant, positive and high correlation between them.

Hence, the correlation coefficient between customer satisfaction and brand loyalty

indicates that customer satisfaction is highly influenced by brand loyalty.

Furthermore, the researcher believes that customer satisfaction and brand loyalty

are directly proportional to each other as the correlation between them is positive.

Moreover, the regression analysis between overall customer satisfaction (OCS)

and over all brand loyalty (OBL) is shown with the help of equation which is as

under.

OCS = 1.174 + 0.910 OBL

The equation above shows that unit change in OBL, will bring 0.910 change in

OCS. Moreover, the coefficient of determination (R2) of the regression equation

shows that unit change in OBL will bring 82.40% change in OCS. Therefore,

change in brand loyalty is causing considerable positive change in customer

satisfaction. Hence, the hypothesis (H1- The more is the brand loyalty, the more is

the customer satisfaction) stands accepted.

15) In the study, the correlation between overall service quality and overall customer

satisfaction shows that there is significant, positive and high correlation between

them. Therefore, the correlation coefficient between customer satisfaction and

overall service quality indicates that customer satisfaction is highly influenced by

service quality. Moreover, as the correlation between them is positive, the

researcher believes that customer satisfaction and brand loyalty are directly

proportional to each other. Furthermore, the regression analysis between overall

customer satisfaction (OCS) and overall service quality (OSQ) is shown with the

help of equation which is as under.

OCS = 1.287 + 0.914 OSQ

From the above equation, it is evident that, unit change in OSQ will bring 0.914

change in OCS. Moreover, the coefficient of determination (R2) of the regression

equation shows that unit change in service quality will bring 83.30% change in

OCS. Hence, the researcher can conclude that change in perceived service quality

is causing considerable positive change in customer satisfaction. Hence, the

second hypothesis (H2- Perceived service quality is directly proportional to

customer satisfaction) stands accepted.

16) In order to understand the relationship between pricing and customer satisfaction,

the researcher has subjected over all pricing and overall customer satisfaction to

correlation and regression analysis. The result of the correlations between overall

customer satisfaction and over all pricing shows that there is significant, high and

positive correlation between them. Moreover, the correlation coefficient between

customer satisfaction and over all pricing indicates that customer satisfaction is

highly influenced by pricing. In addition to the above statement, the researcher

also deems that customer satisfaction and pricing are directly proportional to each

other, as there is a positive correlation between them. Moreover, the regression

analysis between overall customer satisfaction (OCS) and over all pricing (OP) is

shown with the help of equation which is as under.

OCS = 1.364 + 0.811 OP

The above equation explicates that unit change in OP will bring 0.811 change in

OCS. Additionally, the coefficient of determination (R2) of the regression

equation shows that unit change in service quality will bring 82.2% change in

OCS.

6.2 SUGGESTIONS

1. It is revealed by the study that brand loyalty positively influences customer

satisfaction, therefore the companies need to adapt strategies to increase brand

loyalty.

2. The pricing of the fast food products need to be appropriate as pricing

inversely affects the customer satisfaction. For that reason, the fast food

companies could keep prices as low as possible.

3. The study highlights that behaviour of staff towards customers has got the

least satisfaction score. Therefore, the business organisations need to focus

their efforts to improve the behaviour of staff towards customers by providing

individualised training programmes and connected appraisal policy for the

employee.

4. The customer satisfaction is affected by the location and the ergonomics of the

restaurant outlet. Hence, the companies can open their outlets at the right

places and maintain good ergonomics.

5. Service quality directly affects the customer satisfaction. Hence, the

companies need to put in sincere efforts to increase and maintain high level of

service quality.

6. Findings reveal that customers of the age group between 22 - 27 years

constitute 44.6 percent of the overall customers. Therefore, the companies

need to focus more on this age group.

7. Students make 45.2 percent of the total customers and therefore the companies

need to concentrate more on the students oriented marketing strategies.

8. Having direct contract with the local farmers will reduce the delinquency

carried out by the middle men and also avail fresh raw material for the quick

service restaurants.

9. The fast food companies need to conduct regular audits and surveys in order

to enhance their abilities to deliver better services to their customers.

10. Companies in the fast food industry can reduce the service quality gap by the

induction of technology and tension reducing ergonomics.

11. As the study highlights that tasty but unhealthy food items confers more

financial gains to the business organisations as compared to less tasty but

healthy food items. The government need to ensure that the fast food

restaurants use healthy food items so that the health problems resulting from

unhealthy eating can be reduced to bear minimum.

12. The companies need to develop food items which are more tasty and healthy

for the customers.

13. The study reveals that individual attention got the least satisfaction score.

Therefore, the companies need to concentrate their efforts on providing more

individualised attention to the customers.

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Annexure

CONSUMER BEHAVIOUR IN FOOD AND BEVERAGE (F&B)

INDUSTRY: A CASE STUDY OF FAST FOOD INDUSTRY

Dear Respondent,

As part of my Ph.D research work in Jammu University. I am conducting a survey that

investigates aspects related to the Consumer Behavior in Fast Food and Beverage (F&B) industry.

This work will be submitted to the Jammu University in the form of a Ph.D thesis. If you are

interested the results can be made available to you. I will be thankful to you for your active

participation in the completion of this questionnaire. The information acquired from you in the

form of completely filled questionnaire will be kept confidential. Moreover, you are free to

withdraw your participation at any time. If you have any query or problem pertaining to the

questionnaire please contact me at [email protected].

Thanking you,

Sandeep Singh Chib (Researcher)

The Business School,

Department of Management Studies.

Jammu University, (J&K)

Which of the following fast food companies have you visited maximum times in last one

year? (Please tick one choice).

Mc Donald Pizza hut KFC Dominos KFC

You are requested to please tick one of the options listed at the end of each question

which are marked as 1,2,3,4 or 5 where:

1= Strongly disagree, 2= Disagree, 3= Neither Agree nor Disagree,

4= Agree and 5= Strongly Agree.

mailto:[email protected]

1. Staff members understand your needs. .

2. The staff served you in appropriate time. .

3. The staff was available when you wanted. .

4. The staff was able to satisfy your query. .

5. The products were delivered to you on time. .

6. The employees had knowledge of the restaurant products. .

7. The staff has enough knowledge of what they are doing .

8. The product delivered to you was well packed. .

9. The level of the quality of the product was as per your expectation. .

10. You feel that the way of the product servicing was good. .

11. The staff members conducted themselves in a professional manner .

12. The staff listened to your complaints and gave prompt resolutions .

13. The staff was courteous to you. .

14. The level of the need fulfillment form the product/service was

in accordance with your expectations. .

15. The staff was trust worthy and honest. .

16. The staff told you the status of your order while it was in progress. .

17. The staff kept their promise given to you. .

18. The staff collected money form you in an appropriate manner. .

19. Employees gave you any sales or advertising gifts or material. .

20. You feel that the staff can resolve your complaint in time. .

21. The staff communicated with you properly while giving bills. .

22. Employees seem to understand how you feel. .

23. You feel that employees are concerned about extra

money in form of tips. .

24. You waited a short period of time to get help after you asked for it. .

25. You are satisfied with the quality of the product serviced. . 26. You believe that the serving staff was well mannered. . 27. The staff had good interaction with you while solving your complaint . 28. If you want to get same service you will come back to the same place. . 29. How satisfied are you with the amount of help you have received. . 30. If a friend needs same service or product you will recommend the same restaurant to him/ her as well. .

31. You are overall satisfied with the services the restaurant is providing. .

Section 1: Consumer satisfaction 1 2 3 4 5

1. You believe that the quality of the product offered

justifies the price of the product charged. .

2. The company provides free gifts. .

3. The company provides discount. .

4. There is no difference between the quality of the food items provided at

discount price as compared with the food items provided without discount .

5. You feel the services offered by the company delivers

value for your money .

6. Your decision to purchase is affected by the price.

of the product or service to a great extant. .

7. in comparison to competitors the price charged by the company for

service is genuine. .

8. Over all you are satisfied with the pricing of the products and the

services of the restaurant.

1 2 3 4 5 1. Employees of the company are professionally dressed. .

2. You are satisfied with the communication between you and the company .

3. The material associated with the service

(promotion, service tracking, documents, invoice etc) are visually appealing .

4. You feel that when a company promises to do some

thing by a certain time, they will do it by that time. .

5. The physical facilities of the company are visually appealing. .

6. The furniture in the company is neat and clean. .

7. When you have a problem the company

employees will show Sincere interest in solving it. .

8. The company provides you right service the first time. .

9. The food items and the beverages provided to you are

of good Quality and tasty. .

Section 2: Pricing policy of the restaurant 1 2 3 4 5

Section 3: Service quality of the restaurant 1 2 3 4 5

Section 4: Brand Loyalty 1 2 3 4 5

1. You feel that you are satisfied with the last purchased brand .

2. You feel that you intend to repurchase the same restaurant’s brand service .

3. You will recommend the restaurant brand you bought last time

to others. .

4. If the brand price increased in comparison to its competitor’s

Brands you will still buy form the same restaurant brand .

5. If the restaurant brand you buy form is not having any outlet

in the near vicinity you will travel long distance to buy

form your restaurant brand .

6. Over all you consider yourself to be loyal to this restaurant brand .

1 2 3 4 5

10. The food items and beverages provided to you are fresh. .

11. You are allowed to fill your beverage at least one time free .

12. The employees of the restaurant instill confidence in you. .

13. You feel safe to have transactions with the restaurant. .

14. The employees of the restaurant give prompt service to you .

15. The employees of the company give you individual attention. .

16. The restaurant has modern cooking machinery. .

17. The employees of the company are co-operative. .

18. The employees of the company are always willing to help you with a smile .

19. The employees of the restaurant will tell you exactly

how long will it Take to process your order. .

20. The employees have knowledge to answer your questions. .

21. The restaurant has operation hours convenient to you. .

22. The employees are never too busy to respond to your request. .

23. You are satisfied with the overall service quality of the restaurant. .

Section 5: Demographics Please tick the box of your choice.

Gender:

Marital Status:

Age group:

10-15 . 16-21 . 22- 27 . 28-33 . 34-40 . Above 40 .

House hold income per month:

10k-20k . 21k-30k . 31k-40k . 41k-50k . 51k-60K . Above 60K .

Occupation:

Self employed .

Student . Corporate Job . Government Job .

Thanks, for the information you have shared with me.

Male . Female .

Married . Divorce . Unmarried . .

consumer behaviour in food and beverage...

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