Uppsala University Adam Eweida Department of Business Studies Simon Sverkel Tutor: David Sörhammar
Understanding consumer preference in the flower
Institution: Department of Business Studies, Uppsala University Level: Bachelor Thesis in Business Administration, 15 ECTS
Authors: Adam Eweida Simon Sverkel
Karlsgatan 9A Flogstav.152
Västerås, 722 14 Uppsala, 752 72
+46-736 10 54 02 +46-736 59 92 44
Tutor: David Sörhammar, PhD
Title: Understanding consumer preference in the flower industry
Purpose: The problem that has been addressed in the following thesis is the lack of data concerning customer perceptions and expectations of services provided to them by companies in the floral industry. We have through this study attempted to offer an insight into the Swedish floral industry and hope that this research will provide for the required data to better understand the expectations of flower shoppers. The information gathered will moreover help companies improve their services so as to ensure greater satisfaction and an increase in the value of their products.
Research question: Is there currently a gap between customer expectations and customer perceptions of flowers sold in retail supermarkets? If there is, how can these problems be addressed by the management?
Methodology: The thesis is based on a study conducted with the case company, Rydells, who is a moderate sized flower distributor in Sweden. A questionnaire was also directed towards retail shoppers. The information gathered is used as primary data in the study. A number of secondary sources were also used such as books, websites, articles, magazines and business dictionaries. The secondary sources were mainly used not for data collection but to help develop policies for better management.
Conclusions: The conclusion is a basic summary of the thesis where
recommendations made on the basis of the research conducted are presented to the case company. The recommendations are made to ensure regular contact of the company with the consumers and also the need of the company to read the changing trends and take them into account when making new policies so as to be sensitive to the needs of the customer.
Table of contents
1. INTRODUCTION ... 5
1.1BACKGROUND ... 5
1.2PURPOSE ... 6
1.3RESEARCH QUESTION... 6
2. THEORY... 7
2.1GAPS MODEL ... 7
2.1.1 Gap 5 ... 9
2.2SERVQUAL ... 9
2.2.1 Applying SERVQUAL ... 10
2.2.2 Limitations ... 10
2.2.3 Theoretical critique ... 11
2.3ADDITIONAL SERVICE CONCEPTS ... 12
3. METHODOLOGY ... 13
3.1EMPIRICAL APPROACH ... 13
3.2RESEARCH DESIGN... 14
3.3CASE STUDY ... 14
3.3.1 Limitations ... 15
3.4DATA SOURCES ... 15
3.4.1Primary information ... 15
126.96.36.199 Delimitations ... 16
188.8.131.52 Loss of Data... 16
3.4.2 Secondary information ... 17
3.5DESIGNING THE QUESTIONNAIRE ... 17
184.108.40.206 Calculating SERVQUAL ... 18
3.5SOURCE EVALUATION ... 19
4. EMPIRICAL FRAMEWORK ... 20
4.1FLOWER INDUSTRY IN EUROPE ... 20
4.2INFLUENCE OF SUPERMARKETS ... 20
4.3COMPANY BACKGROUND ... 21
4.3.1. Restructuring of external marketing ... 21
4.4CONSUMER MARKET ... 22
4.4.1 Finding summary of consumer market ... 22
5. ANALYSIS OF RESULTS ... 28
5.1 Managerial View ... 29
5.2 Consumer view ... 30
6. CONCLUSION AND SUGGESTIONS ... 33
6.1RECOMMENDATIONS FOR THE COMPANY ... 33
6.2OWN THOUGHTS ABOUT STUDY ... 35
6.3RECOMMENDATIONS FOR FUTURE STUDIES... 36
7. LIST OF REFERENCES: ... 37
7.1ARTICLES ... 37
7.2LITERATURE ... 37
7.3ELECTRONIC SOURCES ... 38
7.4INTERVIEWS ... 38
8. APPENDICES ... 39
8.1APPENDIX ITHE SEVEN CRITERIA OF GOOD PERCEIVED SERVICE QUALITY ... 39
8.2APPENDIX IIRYDELLS INTERVIEW ... 39
8.3APPENDIX IIIDEMOGRAPHIC QUESTIONNAIRE ... 40
8.4APPENDIX IVCUSTOMER EXPECTATIONS ... 41
8.5APPENDIX VCUSTOMER EXPERIENCE... 42
8.6APPENDIX VIWEIGHTED DIMENSIONS ... 43
List of Figures Figure 1 The Gaps model of service quality……….. 8
Figure 2 Service quality dimensions+servicescape……… 12
Figure 3 Gender of respondents ……… 23
Figure 4 Age of respondents ……… 23
Figure 5 Preferred service dimensions of respondents ……… 25
List of Tables Table 1 Service dimensions with corresponding number of questions ……… 17
Table 2 Male average weighted SERVQUAL score ………. 24
Table 3 Female average weighted SERVQUAL score ………. 25
Table 4 Reliability-women……… 26
Table 5 Tangibility-women. . ……….. 26
Table 6 Responsiveness-women. ………. 26
Table 7 Assurance-women………. 27
Table 8 Tangibility-men………. 27
Table 9 Assurance-men……….. 27
Table 10 Reliability-men……… 28
Table 11 Responsiveness-men………28
Table 12 Average gap scores ……… 31
Table 13 Total male gap scores………. 32
Table 14 Total female gap scores……….. 32
1. Introduction 1.1Background
A company does not function isolated in the market but instead has to work while acting, affecting and being affected by a number of other factors, such as competition, suppliers, customers, and demand change. This holds true for everyone, from suppliers and distributors to customers and governmental agencies. There are two types of relationships that a company has to maintain, internal and external, and both of these combined help evaluate the value of the company. Both are equally important for the company but it is the external marketing that provides the „face‟ of the company and thus needs to be as well presented as possible as the customers relate to this. This is what forms the image of the company in the market and what the customers evaluate and relate to. They relate to the product and services provided, but there are other factors that also influence them, such as the word of mouth, past experiences and personal needs. (Grönroos 2007 p. 114)
Any company interacting with end-user customers needs to develop a clear and distinct marketing message that communicates the company‟s standpoint as well as how customers can benefit from its products and services. It is vital for any company to have sound relationships based on trust and understanding with its clients and customers in order to understand their expectations. (Parasuraman et.al 1991) Companies need to find a way of ensuring that they have the information regarding the requirements of different customer groups. Mostly, small to medium sized companies do not have the resources to maintain such databases and thus there is lack of information on the requirements of the customers. This study tries to rectify this, by doing a case study of a medium sized company and its customers.
The most important factor that any service enterprise has to consider is the expectations of the consumers, which will help them ensure better servicing. This is, however, not an easy task as it requires a lot of time and resource input. This would require companies to be in constant touch with the consumers for their feedback on services provided, and ask for their suggestions for changes that can be brought about. The instance where the company interacts with the consumer is known as the moment of truth. (Grönroos, 2007, p.73) The company has to ensure that accurate information is gathered at such encounters and then communicated back to the management to keep up with the changing expectations of the consumer.
The purpose of the thesis is to gather information concerning the expectations and the perceptions of floral shoppers in a retail environment. The intention of the study is to gather, observe, and analyze data collected during the course of the thesis and present the findings as to how consumers value different aspects of various service dimensions. The findings will ultimately benefit the case company and lay the foundations for future databases and analysis.
A study will be conducted to see if there exists a gap between customer expectations and the perceived service and see if there exists a gap between the two which is known as the perception gap (Parasuraman, et al, 1988). A questionnaire will be formed to help the study, and on the basis of the data gathered, different groups can be identified. The research will reveal some similarities in consumer preferences based on the variables of age, gender, and preferences.
The case company, Rydells, was chosen as it is a dynamic actor in the Swedish floral industry. The company recently repositioned itself in the marketplace in order to actively target the final customer instead of the clients with whom it was used to dealing with.
(Rydells, 2009) This has left the company at a crossroads; it wishes to target and create a strong bond with end user customers yet lack the knowledge about customer expectations.
The main problem that the study addresses is that there is no data on consumer needs in the Swedish floral industry although it is constantly growing. The study will help identify what leads to the gap between the customers‟ expectations and perceptions of the service delivery process and how this can be reduced with changes in management policies. The thesis helps in serving this purpose as customers will be categorized according to their age and gender and then their perceptions and expectations will be analyzed, thus discovering if a gap exists or not and if it does then how one can bring about the required changes.
1.3 Research question
Is there currently a gap between customer expectations and customer perceptions of flowers sold in retail supermarkets? If there is, how can these problems be addressed by management?
This chapter presents the two main theoretical concepts used in the thesis. The theories chosen are very much service oriented in nature and will lay the foundation for the entire thesis.
Other service concepts are also highlighted in this section to complement the primary theoretical concepts.
The service sector makes up an increasing portion of national income. (Oxford dictionary of business, 2003, p.462) In 2003, the United States had a 77% GDP rate on employment services while the UK had a 73% GDP rate. (Grönroos, 2007, p. 2) Companies constantly try to add value to their business concepts by adding services or service upgrades to meet the needs of their customers. “The service can be described as a value-creating act which adds support to companies everyday activities and processes” (Grönroos 2007 preface vii).
Companies that deal with physical products are not limited only to basic purchasing and selling of their products but instead can improve their enterprises by including added services to distinguish them from the competition.
The thesis also examines several other service concepts developed by various authors, such as Booms & Bitner (1981), Grönroos (2007) who emphasized having motivated service-oriented employees, ensuring a desirable servicescape or the area in which the service is offered, and the moment of truth or service encounter. Managers need to fully understand these service concepts in order to accurately adjust the companies‟ service offering with the customers‟
expectations. Grönroos (2007, p. 89) summarizes seven criteria of good perceived service quality that managers should take into consideration when operating in a service-oriented environment. (appendix I) These points can be made into a checklist for managers to see the progress the company is making in terms of service quality.
2.1 Gaps Model
The first model which will be used is the Gaps Model developed by Parasuraman et al. (1985) It is intended to be applied when analyzing sources of quality problems and for helping management understand how to improve quality. The Model illustrates how service quality emerges. (Fig.1) The upper part of the Model concerns the phenomena related to the customer, and the lower part addresses the phenomena related to the service provider. The
expected service is a function of the customer‟s past experiences, personal needs and of word of mouth communication. It is also affected by the market communication activities of the firm. The perceived service is the outcome of a series of internal decisions and activities.
Management perceptions of customer expectations guide decisions about service quality specifications to be followed by the organization, when service delivery takes place. The customer experiences the service delivery and production process as an outcome-related quality component. Marketing communication can be expected to influence the perceived service as well as the expected service. (Parasuraman et. al 1985)
The structure demonstrates the steps that have to be addressed when analyzing and planning service quality. The gap between expected and perceived service is a function of the other gaps that may have occurred in the process.
Fig 1 the Gaps model of service quality Parasuraman et al. 1985
2.1.1 Gap 5
The main gap that is analyzed is Gap 5 in the Parasuraman model. This gap represents the difference between the customers experienced service and the service expected by the customer. (Grönroos 2007, p.118) Firms will face negative consequences if they are not careful with this gap. Results include negative product quality, negative word of mouth, bad publicity, and loss of business. (Grönroos 2007, p.118) Companies must conduct proper market research and gain a vast understanding of their target market. If the gap is positive it may also mean that there exists a difference of quality. If the gap is of perceived quality it points out the failure of management of understanding the needs and expectations of the consumer. The gap analysis is simple and easy to follow and it helps in identify the reasons for a gap, and if followed properly it helps the suppliers to provide services in accordance to the needs of the people thus ensuring bridging of the gap. (Grönroos 2007, p.118-119)
Service quality is and has always been something hard to measure as well as evaluate. Unlike goods, where the quality can be measured objectively by indicators, such as durability and the number of defects, (Crosby 1979 & Garvin 1983) service quality is an abstract and elusive construct due to four characteristics unique to services; intangibility, heterogeneity, perishability, and inseparability of product and consumption (Parasuraman et al. 1985). Due to the lack of an objective measuring system, an appropriate way of dealing with the quality of a service is to measure the perceptions of customers‟ view on quality. It was not until the 1980‟s that different models and instruments were created for this purpose. Parasuraman et al.
(1988), developed SERVQUAL and it has become one of the most frequently used instruments for measuring customers‟ experiences with service encounters. This model will be used as the second theoretical concept of the thesis as the model makes it possible for businesses to find their weak spots with the services they provide thus enabling them to concentrate their efforts on improving quality in the right areas.
“The conceptual foundation for the SERVQUAL scale was derived from the works of a handful of researchers who have examined the meaning of service quality (Sasser, et al., 1978; Grönroos 1982; Lehtinen and Lehtinen 1982) and from a comprehensive qualitative research study that defined service quality and illuminated the dimensions along which
consumers perceive and evaluate service quality (Parasuraman, et al. 1985)”, (Berry et al.
2.2.1 Applying SERVQUAL
As the company chosen for investigation is a hybrid mix, as are most of the other companies in the floral industry, offering both goods and services, some emphasis needs to be placed on the product as well as the service offered as an increased value. Among the original ten dimensions presented by the authors in the original service quality dimensions, which included tangibles, reliability, responsiveness, communication, credibility, security, competence, courtesy, understanding/knowing the customer, and access (Parasuraman, et al., 1985), four where chosen to be used for this case study. These include: Tangibles (items that can be classified as “goods” such as equipment and the appearance of the personnel), Reliability (If the company is able to deliver on its service promises), Assurance (the ability of employees to generate trust and acceptance towards the business entity and to assure customers of the goods and services offered) and Responsiveness (the ability of the company to handle service encounters effectively and offer excellent customer service).
The score obtained through SERVQUAL is a reliable indication of each of the dimensions of service quality. Service providers can obtain an indication of the level of quality of their service provision, and highlight areas requiring improvement.
The most common fifth and final service dimension which is not included in the questionnaire is empathy. Empathy is the individualized care that companies offer their customers.
(Parasuraman et al. 1988) This may be an important dimension to service providers such as doctors, lawyers, or even tailors but less relevant to a company producing a range of products distributed to a wide audience of customers. We have, for this reason, decided to focus on the other four main service dimensions. The main reason for this is due primarily to the fact that the case company does not offer individualized attention to its customers. This would simply be too costly and require considerable changes in human resource policy. The alternative for the thesis was to merge the questions into the other four dimensions of service quality and disregard empathy as a dimension. The results will still be touching on the other dimensions.
2.2.3 Theoretical critique
SERVQUAL has had a big impact on business and academic communities. Even though there have been some theoretical and operational concerns which should be considered by the users of this instrument, the two most serious of these issues concern the face validity and construct validity. (Brown, 2007, p. 448) Face validity is defined as to the extent of which a scale appears to measure what it is supposed to measure. Construct validity means that a measure assesses the magnitude and direction of all of the characteristics and only the characteristics of the construct it is meant to assess. (Buttle, 1996, p.17)
The SERVQUAL scale should be carefully applied and customized depending on the area of research. Grönroos (2007, p87-88) outlines the problems that managers face when attempting to compare customer expectations and experiences. These problems are summarized in the following three points:
1. If expectations are measured after the service experience or at the same time as the experiences occur, which they for practical reasons often are, then what is measured is not really expectation but something that has been biased by experiences.
2. It does not necessarily make sense to measure expectations prior to the service experience either, because the expectations that customers have beforehand are perhaps not the expectations with which they will compare their experiences. The customer‟s experiences of the service process may change his expectations, and altered expectations are ones which the experiences should be compared to determine the actual perception of a customer.
3. Measuring expectations is not a sound way of proceeding in any case, because experiences are perceptions of reality, and inherent in these perceptions are prior expectations. Consequently, if first, one way or the other, expectations are measured and then experiences are measured, then experiences are measured twice.
If applied correctly, the SERVQUAL tool will offer a starting point for managers to see what potential gaps exist in the service delivery process. These lists generated by managers need to be short and offer a comprehensive list of aspects of good service quality. (Grönroos, 2007, p.89)
2.3 Additional service concepts
Grönroos (2007) highlights the importance of having motivated employees that can communicate the company‟s strategy and values to the end customers. By creating and sustaining a strong service culture, as well as by motivating employees for customer service encounters the company can prepare its employees for “part-time marketing” responsibilities.
Well motivated and service oriented employees are considered “part time marketers”
(Grönroos, 2007, p.455)
The servicescape is the physical place where the service encounter takes place. The concept of the servicescape was developed by Booms and Bitner (1981) who define it as "the environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service." (Booms and Bitner, 1981, p. 36)
Fig.2 Service Quality Dimensions + servicescape Grönroos (2007)
Grönroos (2007, p.75) addresses the issue of servicescape in the subchapter “additional dimensions”. Although the servicescape element was not incorporated in the original quality dimensions, the authors of the thesis included it in order to highlight the importance of where the service encounter takes place. By having a well designed servicescape, customers will
Technical quality of the outcome:
Functional quality of the process:
leave the service encounter in a state of satisfaction and with a positive image of the service provider. (Bitner, 1992, p.57-71)
The service encounter or moment of truth is when the customer comes in contact with the service provider. This encounter could take place at an actual location, via phone, or online.
This is the moment of opportunity (Grönroos, 2007, p. 81) as the service company must demonstrate to the customer what they can offer them. If this encounter is a success, customers will leave contented, but if a quality problem occurs, the moment of opportunity is lost and the company must create a new moment of opportunity to sell its services.
Thus, there are important entities in helping the company understand the needs of the consumer and also in improving the quality of services provided by the company with the tools available to them. The theories chosen for the thesis offer an insight to how management can improve on the service delivery aspect of their businesses. Both the Gaps model by Parasuraman et al. (1985), as well as the SERVQUAL measure both complement each other and were developed to assess customer perceptions of service quality in service and retail businesses, Parasuraman et al. (1988)
After choosing the appropriate theoretical foundations, this chapter explains how the paper was written. A method study is a critical examination of existing and proposed ways of carrying out work, with the objective of seeking methods that are more effective, more efficient, or cheaper. (Oxford dictionary of business, 2003, p 330)
3.1 Empirical approach
The thesis is written based on the quantitative research strategy approach. Quantitative data is based on meanings derived from numbers. It requires collection of results in numerical and standardized data. Findings are presented with the use of diagrams and statistics. (Saunders et al., 2007, p. 406) Quantitative data ranges from simple counts such as the frequency of occurrence to more complex data such as scores, prices, or rental costs. (Saunders et al., 2007, p. 406)
The thesis follows this empirical strategy because it is simple to follow and also allows for the results of the study to be incorporated in a more analytical manner through diagrams and tables.
An exploratory study is a valuable tool for finding out: “what is happening; to seek new insights; to ask questions and to assess phenomena in a new light.” (Robson, 2002 p.59) The study allows the researcher to take a neutral and unbiased look at what is happening within the organization.
This method will allow the thesis to investigate customer expectations and their perceptions.
The exploratory method is used by gathering and analyzing data at different stages throughout the project. An interview with the management of the case company as well as a survey directed towards retail shoppers are in line with the method chosen. Other literary information has also been gathered throughout the thesis. There are three principal ways of conducting exploratory research: by conducting focus group interviews, interviewing exporters on the subject, and a methodical search of the literature available on the subject. (Saunders et al., 2007, p.133)
3.3 Case study
A case study is a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real-like context using multiple sources of evidence. (Robson 2002 p.178) The case study is meant to offer a deeper understanding of the topic at hand and gives the reader a chance to connect theory to a contemporary situation, and helps in studying the market in a more resourceful manner.
In the thesis, the case company chosen is a medium sized flower distributor called Rydells.
The company functions mainly in the central parts of the country and has a strong hold in the market. Rydells was chosen as it is catering to the consumer market and offers a basic product but distinguishes itself by providing added service. The company “attempts to achieve success through offering excellent product selection and customer service.” (Rydells 2009)
Rydells will be used as an example of the problems medium sized distributors face when trying to understand customer preferences.
By only conducting a single case study as compared to a multiple case study, we were unable to verify the findings of the first case study. Marshall & Rossman, (1999) argued that multiple case studies can provide a much richer and more vivid picture of the phenomena under study, than other, more analytical methods. The thesis is thus limited in nature and although it provides attempts to produce a simple database, it does not cover the whole industry. But, it does help provide a foundation for future studies and gives a generalized picture of the needs of the consumers.
Also as Rydells has over 130 clients throughout central Sweden, it will be impossible to examine all its retail stores. Instead, we have decided to test our problem specification on one of the largest retail supermarkets in Sweden and a medium sized flower distributor to answer our problem specification. The drawback of only conducting one market research is that it offers only a concise stream of information about the target market that is being examined.
Further research on customer expectations will build on these preliminary results.
3.4 Data Sources
Primary data is collected by the researchers to get a firsthand look at the cause and effect of the research question. This form of data is more consistent with the research objectives (Ghauri & Gronhaug, 2005, p.82)
as more detailed information can be gathered from the sources.
One form of primary data was a semi-structured interview with the sales manager of the case company. The interview was conducted on April 4th, 2009 in Västerås, Sweden, with the sales manager of Rydells, Anders Carlsson (appendix I). Mr. Carlsson also happens to be a member on the board of directors owning a share in the company. The advantage of this interview was that certain topics, such as customer preferences and company information and policy were addressed. This information gave us as researchers some background information on the flower industry in Sweden and the rest of Europe but more importantly exposed the
fact that Rydells currently does not have sufficient information about its target customers in the market. This helped define the research question which addresses the closing of the perception gap of consumer expectations and perceptions.
The other main source of primary data came in the form of a questionnaire that was produced and directed towards customers purchasing flowers at local supermarkets. The survey was undertaken on May 19, 2009, at an Ica Maxi retail supermarket in Uppsala, Sweden.
Customers were asked to first fill in a form concerning their expectations then another for their experience. Based on this information, a gap score was developed. This is the difference between what customers expect and what they perceive about the service provider. The maximum gap score is 7 and the minimum value is -7 based on SERVQUAL (Parasuraman et al. 1988). Results concerning demographics such as age and gender, along with experienced and perceived service quality of the respondents has been collected and examined in the thesis. This information is valuable as it might not be available in secondary sources such as a census.(Ghauri & Gronhaug, 2005, p.82) The results of the questionnaire will attempt to answer the research question of whether or not a gap currently exists between customer expectations and customer perceptions and what can be done to solve the problem(s) of the existing gap.
Since there were no respondents between the ages of 0-18, the category was removed from the summary of results to give a clearer picture of the rest of the respondents.
220.127.116.11 Loss of Data
Although a lot of effort was put into developing and conducting the questionnaire as well as offering a free bouquet of roses to the customers involved, a lot of potential respondents declined to participate in the survey. There were also a few cases of respondents starting the survey then due to time difficulties were unable to complete the survey. These problems were overcome simply by asking other customers to participate and removing the incomplete and problematic cases.
3.4.2 Secondary information
Secondary data is data that has been previously collected and presented in a particular source.
This information is available to researchers and can be used to answer the research question.
The main advantage of secondary data is that it is less costly and more time efficient than gathering primary data. The downside of secondary data is that it has already been collected in the past and might have achieved a different purpose than that of our research and also that perceptions might have changed and the data is not in tune with the current trends. (Ghauri &
Gronhaug, 2005, p.82)
Secondary sources used for the thesis were in the form of books, websites, articles, business dictionaries, and business magazines. This information has been used to strengthen the quality of the thesis as well as complement the primary data collected.
3.5 Designing the questionnaire
The gap analysis tool is intended to be used for analyzing sources of quality problems and for giving a better understanding of how service quality can be improved. This makes it a relevant tool for managers to better develop their service offering. SERVQUAL, which can be considered both a theoretical concept as well as a methodological concept, is used in this thesis to determine the gap between what is expected of customers and what is experienced.
In the original Parasuraman article that describes the model, 22 questions were used for analyzing the service gaps.
In this paper, these questions are used as a foundation when creating suitable questions for the company that is being investigated. Out of the original 22 questions by Parasuraman et. al (1988), eleven were used for perceived quality and eleven for the expected quality. These eleven questions were divided into the four chosen service dimensions; tangibility, responsiveness, reliability, and assurance. Keeping the nature of the industry and the case company in mind, the questions were divided as following:
Service Dimension No. Of questions
Table 1 Service dimensions with corresponding number of questions
The first five questions where designated to the service dimension tangibility (appendix IV&V). Tangibility was observed as the most important dimension due to that fact that the case company is dealing with an actual product and the arena where this product is sold needs to be thoroughly addressed. Tangibles are items that can be classified as “goods” such as equipment and the appearance of the personnel.
The following two questions were selected for responsiveness (appendix IV&V).
Responsiveness is the ability of the company to handle service encounters effectively and offer excellent customer service. Questions concerning the company‟s performance of service encounters were directed towards the retail shoppers.
The next two questions were related to the reliability of the case company. Questions were designed in order to determine how successful the company has been in delivering on its promises.(appendix IV&V)
The final two questions in the survey were connected to the assurance dimension. (appendix IV&V) The survey wanted to determine how comfortable shoppers were with the floral products in the supermarket and how they viewed the case company.
Following the formulation of the eleven questions corresponding to the appropriate service dimensions, general features of the four service dimensions were included in the survey.
These four statements were intended to be rated out of 100 points by customers. The objective of this was to establish a weighted average to the questions. These weighted averages or importance of service dimensions are presented in appendix VI and the results are included in figure 5.
18.104.22.168 Calculating SERVQUAL
The thesis regards SERVQUAL both as a theoretical concept as well as a methodological tool that can be used for gathering data. This section will explain how SERVQUAL can be used to calculate the gaps in the service delivery process.
The SERVQUAL tool is comprised of two parts; the customers‟ expectations (E) and the performance of the company (P). The first part measures the customers‟ expectations about firms in general within the service category that is being investigated. The other part measures the perceptions about the particular company whose service quality is being analyzed. The scale has seven-steps ranging from “Strongly Agree” (7) to “Strongly Disagree” (1).
Outlined below is the methodology that has to be followed for carrying out a SERVQUAL survey:
1. Select the company whose service quality that is going to be assessed. By using the questionnaire the score for each of the expectation (E) and the corresponding perception (P) statements is obtained. The Gap Score for each of the statements is then calculated by subtracting the perception from the expectation score.
2. The average Gap Score for each dimension of service quality is then obtained by assessing the Gap Scores for each of the statements that constitute the dimension. This is done by dividing the sum by the number of statements, thus making up the dimension.
3. The averages calculated in the second step are then summed up and divided by the numbers of dimensions used in the survey. This gives the average SERVQUAL score. This score is the unweighted measure of service quality for the area being measured.
4. In order to get the weighted score, the allocated weights for each of the dimensions of service quality used in the SERVQUAL scale are calculated. The sum of the weights should add up to 100.
5. Calculate the weighted average SERVQUAL score for each of the dimensions of service quality used by multiplying the averages calculated in the second step with the weighted scores calculate in the fourth step.
Finally, sum the scores calculated in the fifth step to obtain the weighted SERVQUAL score of service quality dimensions for the area being measured.
3.5 Source evaluation
To ensure that the thesis is neutral, one has to be skeptical about the data collected. Although the questionnaire was prepared keeping the interview with the case company in mind, it was not influenced by it and was based mainly on helping in researching the requirements of the consumers and then in identifying their expectations and their experiences.
4. Empirical Framework
This chapter of the thesis formally introduces the case company as well as highlights the influence of supermarkets as distribution channels of floral products. The chapter also contains the results of the questionnaire where customers have been categorized according to gender and age as well as their preferences based on the service dimensions of Parasuraman et. al (1988)
4.1 Flower Industry in Europe
The international trade of cut flowers is a very lucrative and dynamic industry worth hundreds of billions of Euros (Flower Council, 2009). The most traded floral product worldwide is the rose. (The Economist, 2009) In 2008 international sales of roses accounted for €802 million, a slight increase of 0.9% from 2007. (The Economist, 2009) The Netherlands is the main exporter of flowers accounting for over 65% of world exports while Germany is the main importer of flowers at 40% followed by the United States at 12%. (International Labour Organization, 2009)
The Swedish plant and flower industry was estimated at around €700 million in 2004, (Rydells 2009). Sweden was ranked second after Norway in consumption per capita of flowers at €80 in 2004. (Rydells 2009) Rydells had sales of roughly SEK 180 million or around €16.5 million in 2008. This indicates the role of Rydells is that of a relatively moderate actor in the flower market, making up about 2% of total national sales.
4.2 Influence of Supermarkets
Flowers and plants are retailed through many different channels in the consumer market. The most traditional ways are through florists, supermarkets, garden centers, markets, street vendors, and even online sales via the internet. The market share of each retail channel depends on the country of operation. The rise in market share of supermarkets can clearly be seen. This is shown through the case company, Rydells, which is growing at around 5%
increased sales every year. (Rydells interview 2009)
Supermarket retailers throughout Europe are looking to buy floral products directly from producers in order to save on intermediary costs. This has positive aspects but also negative repercussions. The obvious advantage is that supermarkets shorten the supply chain, thereby interacting directly with producers and guaranteeing high quality products. On the negative
side, supermarkets might not have the adequate knowledge about the flower industry or the manpower to operate the business from farm to shelf. In these instances, local flower distributors are hired to take care of the flower business in return for the supermarket receiving a smaller part of the profits. (Rydells interview 2009)
4.3 Company Background
Rydells was founded in 1912 by John Rydell who was managing a garden for commercial purposes The flower business became exceedingly successful from the start, and since then, the company has shifted to exclusively growing flowers and plants. (Rydells, 2009)
Today Rydells is a flower distributor specializing in the sale of flowers in various supermarket chains in the Mälardalen province, including the regions of Stockholm, Uppsala, and Västerås as well as Östergötaland, and Gotland. The flowers are mainly grown by Rydells in Vallentuna, by local farmers. Other plants and flowers are bought through auctions in the Netherlands. Roughly 11 million flowers are sold annually with a turnover of 180 million SEK. (Rydells website 2009)
4.3.1. Restructuring of external marketing
In the beginning of 2008, Rydells decided to re-position itself in the Swedish flower market by redesigning its external marketing strategy. This re-positioning took place over a period of twelve months with the help of a Swedish based advertising company called Röjning.
(Röjning, 2009) Rydells acquired the expertise it needed to push its brand forward and effectively transformed its image. Rydells alongside the advertising firm focused on several key issues that they felt were lacking and hindering the development progress. The areas of change included many aspects of external marketing such as the development of a new logo, more exclusive product line, new website design, new packaging, etc. (Rydells interview 2009)
All of the areas that underwent transformation have now been clearly branded with the new Rydells logo. The projected outcome of this marketing strategy is to generate awareness for the Rydells brand and make sure the customer can differentiate between Rydells and the local supermarket brand and understand that these are two separate entities. The company desires to be much more customer oriented and offer its products and services directly to the consumer market. (Rydells interview 2009)
Local flower stores
S Blommor Dutch suppliers
Via auction system of flowers
Locally owned greenhouse suppliers
Gustavslund Foreign suppliers
Rose imports from Kenya
Orchid imports from latin america
4.4 Consumer market
Rydells main target market is retail shoppers. This is due to the fact that Rydells does not have a physical store that customers can walk into. Instead the company sells its products via supermarkets that are considered the intermediary between them and their customers. More than 90% of all flower purchases are spontaneous purchases with no prior planning. (Rydells interview, 2009) This phenomenon is something that the company is aware of and because of that, flower departments are often located in the beginning of the store to attract the customers‟ attention. Market research conducted by Rydells shows that customers are much more willing to buy a plant or flower at the beginning of their shopping experience rather than at the end when their carts and baskets are already full. Customers become more price sensitive as they progress through the store. (Rydells, 2009)
Rydells currently does not have a database of its customers, as no technology is applied for this purpose. Therefore Rydells does not take the products that are suitable for each group into consideration; instead they rely heavily on sales statistics from previous years when planning for future purchases and holidays throughout the year. (Rydells interview 2009)
The thesis attempts to gather information concerning customers‟ preferences regarding floral products and services. This information will then be presented to the case company in order for it to align its products and services to better meet the demands and expectations of its customers.
4.4.1 Finding summary of consumer market
Since the company does not have adequate information about its customer groups, a very important factor is how the end customers view Rydells. This can be a challenging task as customers who go shopping at a retail supermarket might not be aware that independent distributors deliver fresh products daily to these retail markets. Therefore, creating a unique brand symbolizing superior quality will take time and effort from the company‟s side as well as listening to what customers expect in terms of service.
A survey was carried out in order to understand how customers view flower departments in a retail environment. Thirty people participated in the questionnaire and adequately offered a general pattern in consumer behavior. The survey was conducted at a large retail superstore called Ica. Ica is the largest retail supermarket chain in Sweden and is a very trusted and
respectable Swedish brand with a solid customer group. (Ica 2009) The location in Uppsala was identified as a suitable site to ask shoppers about their purchasing habits of flowers and what they expect in terms of products and services due to the fact that Rydells has a strong presence there and that it is well visited throughout the week.
Upon collecting all the respondents‟ answers, customers were categorized into age and gender. This was done in order to see possible trends in customer perceptions and customers experienced service. It was also a logical way to breakdown the respondents and helped examine smaller groups more closely. The following tables represent the demographics of the respondents including gender and age.
Fig. 3 Gender of respondents Fig. 4 Age of respondents
In terms of gender, the respondents were 46.7% men and 53.3% women. The largest group which participated in the survey was the 19 to 30 age group. They accounted for almost half of all respondents at 46.7%. The second largest group was 56 years and up which was 26.7%
followed by 20% respondents between the ages 46 and 55. The smallest group of respondents accounted for 6.7% and was between 31 and 45 years of age. The survey did not attract any respondents in the age group 0-18 years and were therefore not taken into consideration.
0-18 (0%) 19-30 (46.7%) 31-45 (6.7%) 46-55 (20%) 56-up (26.7%)
A lot of the respondents who participated in the questionnaire did not actually know what or who Rydells is. This shows that the case company has a lot of work to do in terms of really penetrating the market with its brand name and logo in order to achieve a reputable image.
Overall, the survey showed that men respondents have slightly larger gaps than women. Table 1 summarizes the average weighted gap scores for men and table 2 summarizes the same results for women. All the values for both men and women were either negative or zero, showing that customer expectations currently exceed the perceived service they are experiencing. This should be an indication for any service oriented company that there needs to be come kind of improvements to the service delivery process in order to close up these negative values. The average gap scores range from -0.92 to -1.47 revealing that all service dimensions have the potential to be improved upon. The following two tables represent the average male and female weighted SERVQUAL scores.
Men 19-30 years 31-45 years 46-55 years 56-over Average Male Gap Score Tangibility
-1,34 -2,17 -0,81 -0,44 -1,19
-1,5 -1,84 -1,25 -1,13 -1,43
-1,44 -1,56 -0,33 -0,83 -1,04
-2,34 -1,83 -1,38 0 -1,39
-1,66 -1,85 -0,94 -0,6 -1,26
Table 2 Male average weighted SERVQUAL scores
Women 19-30 31-45 46-55 56-over
Average Female Gap
-0,06 -1,94 -1,94 -0,13 -1,02
-0,25 -1,5 -1,75 -1,25 -1,19
-0,25 -2 -0,42 -1 -0,92
-0,63 -2 -2,5 -0,75 -1,47
Total Gap Score
-0,3 -1,86 -1,65 -0,78 -1,15
Table 3 Female average weighted SERVQUAL scores
Upon examination, both men and women had quite similar gap scores regardless of what service dimensions they felt were most important. A negative gap value of -1.26 for men and a negative value of -1.15 for women were observed. This information will optimistically act as a starting point for the case company and offer the ground work for future market research and data collection. When asked about which service dimension they thought was the most relevant, shoppers revealed differing information based on gender. The following graph illustrates which service dimensions customers valued the most based on gender:
Fig. 5 Preferred service dimensions of respondents 0
5 10 15 20 25 30 35
Tangibility Reliability Respnsivness Assurance
In order to get a more detailed look at how customers rated the service dimensions of Parasuraman et. al 1988, each dimension has been evaluated and presented below based on the gender of the consumers. The study first examines how women felt in relation to the dimensions followed by the male respondents.
Women 19-30 31-45 46-55 56-over
Average gap score
Reliability -0,25 -2 -0,42 -1 -0,92
Table 4 Reliability-Women
Women rate reliability of the service provider as most important. They feel that a service provider should perform the promised service in a professional manner. The average female gap score for this dimension had the lowest value out of all other dimensions. This is a positive result as female customers feel that reliability is very important while at the same time they feel that the company is doing an adequate job on this dimension.
Women 19-30 31-45 46-55 56-over
Average gap score Tangibility
-0,06 -1,94 -1,94 -0,13 -1,02
Table 5 Tangibility-Women
Tangibility was rated the second best performing service dimension by women. They feel that the department itself should be modern and the products reflective of how they would be presented in their own homes. They expect to find high quality; durable products at competitive prices when buying flowers from a retail supermarket.
Women 19-30 31-45 46-55 56-over
Average gap score
Responsiveness -0,25 -1,5 -1,75 -1,25 -1,19
Table 6 Responsiveness-Women
Responsiveness came in third place for female consumers. As responsiveness measures the willingness employees have to help customers, this dimension had a larger gap due to the
unmanned flower departments and the inconvenience customers have when they have an inquiry and no employees are present at that time to help them.
Women 19-30 31-45 46-55 56-over
Average gap score
Assurance -0,63 -2 -2,5 -0,75 -1,47
Table 7 Assurance-Women
Assurance from the service provider is last on the list for women. This is quite understandable since there are no employees to employ trust and confidence in the minds of the shoppers. If assurance and responsiveness are to improve, Rydells needs to reconsider its human resource policy.
When asked identical questions, men responded quite differently, having different priorities.
The following data highlights which service dimensions male consumers felt were best represented and which were most lacking.
Men 19-30 years 31-45 years 46-55 years 56-over
Average gap score
Tangibility -1,34 -2,17 -0,81 -0,44 -1,19
Table 8 Tangibility-Men
Men consider tangibility the most important service dimension. Both the department and actual products need to be presentable and esthetically pleasing. The average gap score of -1.19 for male consumers was slightly higher than the value of -1.02 for female shoppers.
Men 19-30 years 31-45 years 46-55 years 56-over
Average gap score
Assurance -2,34 -1,83 -1,38 0 -1,39
Table 9 Assurance-Men
Assurance is rated second most important by men. They feel the need to be reassured and offered advice about floral products at the time of purchase. This is due to the fact that some customers were uncertain about how to care for their flowers and plants and worried that the product would wither quite quickly due to their inexperience in flower handling. Both men and women had quite large gap scores (-1.39&-1.47) for assurance.