Literature review - Part 9

Chapter 1 Introduction:

 

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1.1 Background

Today, avoiding fast food has become inevitable. Every person from kids to elderly has become affected with these grown-up trends in fast food industry. The most popular kind of fast foods are hamburgers, chips, falafel, noodles and soft drinks. These are usually seen in every house and family and becoming increasing unavoidable.

Fast food consumption is still becoming increasingly popular and has been in this industry for quite long. Fast food has been provided to travelers in the past but now trends have changed. It is now the most commonly seen food served in almost everywhere at entertainment places, outdoor eating, celebrations and gatherings. The traditional kind of cooking carried out in a house by a woman is now hardly seen anywhere.

Instead of cooking in house most families are now switching towards eating fast food. Fast food is mostly served in parties, functions, outdoor eating, picnics and other occasions. Its popularity is because of the delicious taste and flavor it has. It is also increasingly becoming popular among the kids.

In earlier days, women used to cook food in house and men used to earn for the family. Since the discovery of oil in Kuwait and recent advances, lifestyles of people have changed. Nowadays women are seen to work in outdoor environment equally as men do.  Women have now taken up the task of working in offices, banks, multinational companies, universities, almost everywhere with men. Due to this, working women cannot give much time and attention to her household activities. With simultaneous opening of huge number of restaurants and increasingly growing places for outdoor eating, families are now driving towards these places to enjoy food. In addition to this there is an ever growing trend of enjoying fast food along with shopping, at work, entertainment places, and other fun kind of activities. It is becoming even more popular among young generation. Fast food business has become very successful in Kuwait.  The fast-food outlets are now located in shopping centers, stores, office buildings, and schools.

This study will help in exploring the fast-food markets in Kuwait and identify its characteristics among Kuwaiti costumers. Also it will help in identifying the market share of the fast food brands, the key factors that affecting the fast food satisfaction, the degree of loyalty of customers to the fast food brands and highlighting the possible fast food market segments within.

GDP – per capita (PPP):

$21,600 (2006 est.)
GDP – composition by sector:

agriculture: 0.4%
industry: 48.3%
services: 51.3% (2006 est.)
With the rapidly increasing oil industry, the average Kuwaiti citizen realizes a disposable income of approximately 40% (Market: Africa/Mid-East 2004). GDP – per capita 21,600 (CIA fact book, 2006).  Much of this income has been directed to the consumption of fast food.  Within Kuwait, there are several fast food franchises.  These franchises include McDonalds, Burger King, Pizza Hut, Domino’s, Little Caesar’s, KFC, Any Shawarma place, Subway and Hardeez (Kuwaitism Fast Food Results, 2005).  Kandela (1999) proposed that the presence of these franchises has effectively and efficiently led to the over consumption of fast food products.  Though it is an established fact that fast food has many health hazards but still due to its ever growing popularity, it is one the most highly lucrative business for investors.  According to one estimate, Kuwaiti citizens spend an average of US $13.6 million per annum on the consumption fast food.  At this rate, an average restaurant can have a complete return on investment in less than three years (Oman Economic Review, 2007).  Surveys and research studies have shown that in fast food industry there are hardly any rules of Total Quality Management (TQM) implemented.  TQM, if implemented appropriately, will not only improve the quality of food served but can tremendously enhance the profitability this business.

 

1.2 Research Objectives:
The over all objective of the proposed research study is to investigate the Kuwaiti fast food market. The following research objectives form the scope of the research study:

 

What are the most important factors that determine customer satisfaction in fast food industry?
Obtain an understanding of the challenges that fast food industry is currently facing in general as well as particularly in Kuwait.
What are the factors that determine newly established fast food restaurant competitive advantage over rivals?
What are the forces that drive fast food restaurants to run this business in Kuwait?
How the diversified cultures affect the business (over 120 citizenships in Kuwait, Kuwait population is less than 3 million)?
And finally obtain an understanding of consumer habits
 

1.3 Research Methodology

 

Setting up the research objectives hence driving research hypotheses, questionnaire design, pilot study, questionnaire editing, the complete survey data collection, statistical analysis which includes the following

Descriptive statistics
Testing hypothesis
Gap analysis
Factor analysis exploratory
Confirmatory factor analysis
Structural equation modeling (path analysis) to study the effect of market determinants on customer satisfaction
1.4 Structure of the study

Chapter one is the Introductory Chapter which sets the scene for the Study that consist of three major parts the first is background and revolve around describing the emergence and the history of fast food in Kuwait, exploring the fast food business in Kuwait its strengths and weaknesses.

Also analyse the main factors that lead to the expanding of the fast food business and its relation to economy in Kuwait.

Chapter two ………..yet to come……………

 

 

Chapter 2.Literature review

Loyalty

It has been estimated that attracting new customer is three to five times more costly than retaining an existing customer (Orr, 1995; Fierman, 1994; O’Brien and Jones),

 

Surprisingly little has been written about consumer loyalty in spite of its importance in the increased competitiveness among the restaurant industry. loyalty have been defined in many ways and showed different views and understanding some based their definitions on attitude others based it on perception.

Loyalty is “a feeling of attachment to or affection for a company’s people, products, or services” Jones and Sosser (1995) and “True loyalty only exist when repeat patronage coexist with high relative attitude” Dick and Basa (1994). On the other hand those who have based their definition based on perception such as Berger and Mitchell (1989)who stated that the extent to which consumers is exposed to advertising increase their capability and self-assurance in processing information; this provides more opportunity for product-related amplification, resulting in product commitment whereas Newman and Werbel (1973) stated that loyal customers are those who re-bought a brand, considered only that brand, and did no brand-related information seeking. Oliver (1997) described loyalty as a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causes repetitive same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior. From all the above it can be seen that loyalty is how to keep a happy customer coming back, and the product that targeted the customer is trustworthy, reliable, dependable and worth coming back for.

 

The continuing academic and practitioners argument around the benefits of consumer loyalty has developed from how to measure and assess loyalty (e.g., Cunningham, 1956; Fader and Schmittlein, 1993; bhattacharya, 1997) to loyalty building and management (e.g, Reichheld and Teal, 1996; Baldinger and Rubinson, 1996; Aaker, 2002; Aaker and Joachimsthaler, 2002).

But others like (Kau Ah Keng, Mark Uncles, Andrew Ehrenberg and Neil Barnard) have created different patterns such as penetrations and purchase frequency, penetration growth, the share of product –category requirements, brand duplication of purchase etc.

 

Many of the researchers have emphasized on the relation between customer loyalty and customer satisfaction, a lot of what was written in this regard emphasized that relation, but many others have opposed such as Deming (1986, p, 141) was among the earliest to state that “it will not suffice to have customers that are merely satisfied” others have supported their view such as Jones and Sasser (1995, p, 91) stated that “merely satisfying customers that have the freedom to make choices is not enough to keep them royal”. Stewart (1997, p, 112) said “A satisfied customer isn’t enough” and said “satisfaction and loyalty move in tandem” is simply incorrect.

 

Consumer (buyer) Behavior

 

Understanding consumer behavior is vital for the survival of any organization in the service industry in general and fast food specifically.

Retail evolution mirrors changes in consumer behavior (Santesmases, 1996)

For marketing activities to be successful consumer behavior should be understood in the since what motivate them, interest them, how and when they shop, what they like and dislike. Customer satisfaction is taken so seriously in some businesses that bonuses is attached to it.

Understanding consumer behavior constitutes an integral part of the organization operations, growth, success and expansion. Schiffman (1993) stated that “dig deeper into the underlying factors affecting behavior in general, and to attempt to relate these findings to particular market situations”

 

Purchases can be made through individuals and can be made by groups Blackwell, Miniard and Engel (principles and practice – David jobber) of marketing describe five roles (buying centre): Interior, Influencer, Decider, Buyer, and User. The decision of buying is not an individual decision rather it is more than group of individuals decision. Identifying the buying centre is very important for marketing and segmentation (will be discussed later in the literature).

 

David Jobber (2004) stated that not all decision follow the same decision process and has identified three major influences that has an effect on the process; the buying situation and consist of three types of situations, Social influences and consists of four types of social influences and Personal influences and there are six influences on consumer influences behavior. This shows how difficult it is to provide customer satisfaction by observing and studying influences on customer and how difficult it is to provide customers with their need but on the other hand it provides useful tool to assist in marketing evaluation. Maybe what Hauge (1977) has stated in trying to understand the consumer behavior “the businessman can hope to understand the situations facing him only if he can analyze them clearly and state them simply? Simplified representations of reality – models – are his only hope of drawing out what is essential and what is inessential to particular problems in a complex modern business world”.

 

For proper strategically marketing planning it is important to develop models for enhancing the understanding of the consumer behavior. When the consumer evaluate a brand is based on the level of his involvement. There are many well known models to measure, evaluate and analyze buying behavior:

 

Fishein and ajzen model, David Jobber (2004) stated “attitude towards a brand is based upon a set of beliefs about the brand attributes (e.g. value for money, durability). This model suggests that the criteria of selection the related directly to the highest attribute perceived by the customer.

 

Ehrenberg and Goodhart model, David Jobber (2004) stated “According to this model, awareness precedes trial, which if satisfaction, leads to repeat purchase”

The minor consequence of the purchase doesn’t lead to further evaluation of other option.

The Nicosia model, Nicosia, F.M. (1968) stated that “The act of purchasing is only one component of a complex ongoing process- a process of many interactions amongst many variables”. The consumer receiving the message is interpret it in accordance with his needs and attributes. Loudon, 1988; Chisnall, 1992; Solomon, 1994 believe that “the evaluation process is over-rational and only applies to high-cost products”.

 

The Howard and Sheth model (1968) is a “black box”. This model identifies three variables. C. Vignali, E. Gomez, M. Vignali and T. Vranesevic (2001) which affect and influence the individual buying decisions: institutional environmental characteristics; social environmental characteristics; personal characteristics.

 

The Engel, Kollat and Blackwell model (1978) the model portrays a series of ongoing processes where products are sought and evaluated in terms of the competitive environment. C. Vignali, E. Gomez, M. Vignali and T. Vranesevic (2001)

The greatest weakness of this model is its simplicity; it is too mechanical and does not do justice to the complexities of human behavior Sterthal and Craig, 1982.

 

Market Segmentation

“Finding the most revealing way to segment a market is more an art than science. …Any useful segmentation scheme will be based around the needs of customers and should be effective in revealing new business opportunities” PETER DOYLE, Value Based Marketing. David Jobber (2004)

From the time when Wendell Smith in 1956 introduced the terms Product differentiation and market segmentation, marketing researches recognize differences between groups of consumers to be opportunities in the market, W. Fred van Raaij and Theo M.M. Verhallen (1994).

These terms have been introduced with different views or one could say with misunderstanding to the definition of these terms as noted by Dickson, P.R. and Ginter, J.L., (1987)” there is confusion in text books and articles about the definition of these terms”. This confusion

Consumer’s selection of brand or product had always varied as noted by Massy, W.F., Montgomery, D.B. and Morrison, D.G. (1970). This variety is what leads to identifying similar, submarkets. The objective of categorizing these groups of consumers is to classify similar requirements in order to serve them efficiently.

“Marketing theory indicates that customers demonstrate heterogeneity in their product and service requirements and buying behavior”. Assel and Roscoe, (1976); Blattberg and sen, (1976); Kalwani and Morrison, (1977); Wind, (1978).

 

Thus segmentation has been defined as “the subdivision of a market into distinct subset of customers, where any subset may conceivably be selected as a target to be reached with a distinct marketing mix (Kotler, 1980).

And what was indicated by (Frank, R., Massy, W, and Wind, Y (1972) “The practice originates from economic pricing theory which suggests that profits ca be maximized by setting prices which discriminate between segments”

 

Satisfying the customers require a lot of efforts and efficient utilization of organizations capabilities, as a result increased competition in the market place will lead to increased satisfaction among customers but their will always be areas not covered due to the huge diversity of customer needs and requirements that no one single organization can fulfill.

“Companies are more likely to achieve a match between their particular assets and the diversity of needs by concentrating efforts on customer groups with fairly homogeneous requirements” (Choffray and Lilien, 1978; Webster, (1991).

But what better way to obtain understanding in consumer behavior, needs and attribute than what segmentation provide and by dividing them into groups and subgroups of similar  characteristics. It also identifies opportunities or unserved segments. It also can lead to better allocation of resources and obtain competitive advantage over rivals.

“This understanding allows more carefully tuned marketing programs to be developed and a greater insight into the competitive situation to be achieved. Bonoma, T. V. and Shepiro, b.p.(1983); Franket al., (1972); Grada,( 1981); powers, (1991).

“by using expectations in segmentation, marketers can match quality to relevant expectation levels, ensuring the right quality goes to the right customer”( Johnson, Chethy, mathews, Brain P, 1997).

 

There are many challenges facing companies in their attempt to implement segmentation for several reasons such as poor understanding of the theory or unfamiliar with the segmentation process as well as the market understanding which is considered as one of the most obstacles especially in newly developed market or in growing markets. Kotler (1991) have provided a general advice in this regard

“Segment must be measurable, sustainable, accessible and actionable”.

 

Market concerns and challenges

In a rapidly changing world today, businesses enlarge are faced with challenges, organizations who meet these challenges, are expected to survive in the highly competitive market and sustain competitive advantage over rivals.

Among those challenges comes the IT which is very important to improve organizations performance., P. Pete Chong, Ye-sho Chen and Jason Chou-Hong Chen (2001)” Many organizations turn to IT in hope to gain upper hand”

Increased competition in the global arena is a major challenge that faces the fast food industry, and surviving this competition require businesses to increase their productivity reduce their costs in many ways such as cut backs.

Hammer and Champy (1993) “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed”

The most popular example is Taco Bell who removed levels of management and developed almost every job in the operational process.  Hammer and Champy (1993).

 

Global franchising is growing in the international arena, and faced with socio cultural issues in the form of local tastes and habits, legal future changes in laws and regulations, in the form of royalty taxes, contract laws, changes in the political environment and economic stability, franchise management and staffing in the form of qualified staff and professionalism of the food franchise industry and expansion in the different parts of the world.

 

Nigel Slack, Stuart Chambers, Robert Johnson; (2001) “stated that the ultimate test for any operations manager is whether he or she can develop an operation which meets the challenges that lie ahead for the organization”. There are numerous number of challenges have been identified and discussed in the literature and text books among those  Nigel Slack, Stuart Chambers, Robert Johnson; (2001) have identified five major challenges: Globalization, Environmental responsibility, Social responsibility, Technology, Knowledge management.

Globalization, the term the world became a small village and a smaller place to do business. Several organizations and businesses are selling their products and services through out the world.

Due to the huge variety of cultures through out the world have different observation on the nature of work, what is considered not acceptable in one part of the world is not accepted in the other part; not only from this perspective it also applies to the political and economical issues, in the form of the effect that the forces of globalization (large international organization) will have on nations. Another concern in this area is the different locations of the large companies it is obvious that many large companies have different branches around the world like, china, India etc.

 

Nigel Slack, Stuart Chambers, Robert Johnson; (2001) stated that “responsibility can be seen as the broad application of ethics in decision making”. A very good example of that ethical or religious value could vary from one country to another; some issues might be treated with suspicious in one place while in other places treated with good will.

Knowledge is what makes the differentiation between services provided or products sold, why Macdonald is one of the best fast food restaurants in the world? The collective management knowledge and experience in service that have been building through out the years is what makes Macdonald as the service pioneers.

Technology is changing rabidly that makes it vary unpredictable to view the effect on the future processes of the business.

One of the growing concerns to the fast food industry is the increased public awareness with regard to healthy food as apposed to the unhealthy fast food, high calories and cholesterol, especially when it comes to children health. It can be seen that fast food restaurants started to introduce healthy menus such as more salads and diet food.

 

 

 

Market share

One of the most important industrial sector indicators to measure organizations success or failure and it position in the market place is market share. Although the organization might have a good stake in the market its profit and performance could reflect the opposite although it’s perceived as a significant organizational objective. Nicholas O’Regan (2002)”Market share is often used to describe the position and success of a firm in an industrial sector while the impact of market share is not always reflected in a firm’s profitability or performance, many firms sees it as an important organizational goal” this agreed with the view presented by Mische, 2001, p. 13″ while market share is a desirable strategic objective, it doesn’t necessarily indicate high organizational performance”.

 

However other points of view have raised in this regard that contradicted to the previous opinions. Gale and Buzzell (1993) stated that “Large market share is both a reward for providing better value and a means of realizing lower costs. Under most circumstances, enterprises that have achieved a large share of the markets they serve are considerably more profitable than smaller-market share rivals. This connection between market share and profitability has been recognized by corporate executive and consultants, and it is clearly demonstrated in the results of our research over the past fifteen years” other writers have agreed on and supported this point view Armstrong and collopy, (1996); Buzzell et al., (1975) This is not surprising, as firms with market leaders status tend to derive profitability from their economies of scale capability as well as their established branding”.

 

There is another view in this regard such as what Kay (1993) suggested that “profitability and success are a result of market share and not caused by it”

 

This leads me to debate the relation between market share and success or failure, what influences it and what factors measure and identify it?

 

Nicholas O’Regan (2002) stated that market share is increased in number of ways: “by enhancing the perceived value of the products or by reducing the market price, or a combination of both measures” however the price reduction could have immediate reflect on market share but on the long term this could reflect on the financial stability of the company if this reduction is not applied carefully. Even if this reduction was successfully applied their might be great chance that other competitors match it. Other writers like Finlay (2000, p. 373) suggested that market share can be achieved by:

The firm has extra production or distribution capacity.
Present customers can be encouraged to purchase more.
Current markets are not saturated for the types of offer the firm is making
However reduced market share could result from reduced market price that leads to increased competition, lack of additional investment when it’s badly needed.  Finlay (2000, p. 373) has stated that:

·         There is no enough money available for the enhancement needed to retain market share.

·         The firm’s markets are being hit by cheap imports.

·         The firm’s reputation has suffered and cannot be reclaimed.

 

Again decline in market share is not always a negative sign this could be resulting from good management by discarded unprofitable market share Jacobson and Aaker (1985) stated that “decline in market share may actually be an indication of good management”.

 

Customer satisfaction

 

Nearly all Marketers accept the most common definition of quality service “meeting or exceeding customer expectations” (Kong and Mayo, 1993, p. 6). Customer’s value services provided based on their perceived awareness and therefore managers utilize these expectations to increase customer perception of the service to its maximum “to under-promise or over-deliver” (Peters, 1988). Customers with similar expectation will be identified and will be served more efficiently “might provide insight into possible markets segmentation strategy” (Pitt and Jeantrout. 1994, p. 172).

 

Evaluating consumer satisfaction is very difficult prior to the purchase process, therefore consumer satisfaction measurement takes place typically subsequent to the purchase of product or service, this is one of the obstacles that researcher find in their continues attempt to evaluate product or service prior to its introduction to the market.

The subject matter is not limited but goes beyond consumer first trial to subsequent visits to the service or product provider therefore Subsequent visits are considered the foundation of potential opportunities. “There is a contaminate effect when a customer is asked after the service episode about his or her prior expectations” (G. Ronald Gilbert et al., 2004). In contradiction to what was said earlier some researchers argue that “expectation needs to be measured before the service experience (Carmon, 1990). However it was argued that “because the prior service expectation may change during the actual service encounter and such revised expectation is a better gauge than those held prior to it”. (Danaher and Mattson, 1994; Weber, 1997). This view dosen’t contradict what was said by Crompton and Love (1995) who suggested “that the inclusion of expectations in an assessment instrument in the restaurant industry is likely to cause more problems than its worth” This problematic approach is the expectancy-disconfirmation approach this approach is used by the ACSI (American Customer Satisfaction Index) ECSI (The European Customer Satisfaction Index) this approach measures customer satisfaction versus what actually they experienced.  Other approaches such as Performance-only approach this approach is about measuring customer level of satisfaction following service experience this approach was found to have some advantages when it comes to the fast food industry, “there are some advantages to this perceived service approach, especially in the fast food industry” (G. Ronald Gilbert et al., 2004).

The Technical and functional dichotomy approaches, in this approach customer satisfaction is based on two elements the “What” and the “How”(Gwin and Lindgren, 1986; Lehtinen and Lehtinen, 1982; Nicholls et al., 1993; Oberoi and Hales, 1990).then comes the Service quality versus service satisfaction approach this approach focus on two service factors that are “interrelated; the transition-specific assessment and overall assessment” (bou-llusar et al., 2000; Cronin and Taylor, 1992, Rust and Oliver, 1994).

Finally the Attribute importance approach this approach measures the relation between attribute and service or product or service satisfaction.

The above discussed approaches are very complicated measurement tools to be implemented and therefore there is need to develop simpler approaches to evaluate the customer satisfaction.

 

Competitive advantage

Role of thump, sustain competitive advantage over rivals is the core of every organization existence, and survival. It is not something that will be completed or achieved on certain date rather it is a process of continuous and consistent development; it is a journey that will never be concluded.

The organization can gain competitive advantage through differentiation of their product offering.

The term competitive advantage is described in terms of the “attributes and resources of an organization that allow it to outperform others in the same industry or product market” (Christensen and fahey, 1984; Kay, 1994; Porter, 1980).

The term sustainable “considers the protection such attributes and resources have to offer over some usually undefined period of time into the future for the organization to maintain its competitiveness… it can be interpreted to mean endurable, defensible, bearable, tolerable, livable, supportable, passable, acceptable, justifiable, negotiable, and penetrable “. (Kazem Chaharbaghi, and Richard Lynch; 1999).

There are three sources of competitive advantage; “ownership based, proficiency based, and access based” (Porter, 1988), unique resources endowment (Barney, 1991), or reputation (Hall, 1992) by opportunity or rights to gain superior access to inputs and markets (Lieberman and Montgomry, 1988) by superior knowledge, competence, or capabilities in conducting and managing its business process (Nonaka, 1991; Prahalad and Hamel, 1990; Teece et al., 1997).

 

I will examine the character and source of competitive advantage in light of the above mentioned resources.

 

 

Note: The ensuring discussion draws from landis (1997)

 

Generic sources of competitive advantage

 

 

 

Ownership-based source of advantage “refers to any assets or factors under a firm’s possession from which a firm could gain an upper hand vis-à-vis its rivals in better serving customers”. (Hao Ma,. 1999) as above stated in landis figure it consist of two resources.

First acquire valuable assets (creation oriented), those assets like goodwill, the strength of your name and reputation, and stock level. “While it is relatively easy to adjust the flow instantaneously, it is difficult to change the stock level quickly, which usually requires a consistent pattern of in-flow of resources” (Dierickx and Cool, 1989).  a good example of that Coca-cola brand that have been building over the years “executives at Coca-cola like to say that if the place was god forbid, obliterated off the face from the earth they could walk right into the bank and borrow $100 billion and rebuild Coca-cola in a matter of months, just on the strength of the brand (Morris, 1996).

The other is Constrain rival’s options (preemption-oriented) the organization could gain advantage over rivals by obtain precious assets of the competitors and cause them to suffer. Theoretically this might be true, however the competitors reaction to this, may be in a defensive means. As a result increased spending that supersedes the benefits sought.

 

Access-based sources of advantage refers to the possibility that a firm enjoys competitive advantageous over rivals because it has more superior access to the factor markets, i.e. resources input” (Barney, 1986). And consist of two resources Build gateway to access (creation oriented) – this resource is accessing to the consumers in more suitable manner than rivals or competitors. However it could unintentionally harm the other brand by causing its sales to reduce which might contribute negatively to the bottom line.

And deny rival access (preemption-oriented) – by rejecting competitors from admittance to suitable opportunity, in a positive manner that will improve the position of the organization.

Proficiency-based source of advantage refers to the knowledge (Winter, 1987; Nonaka, 1991), competency (prahalad and Hamel, 1990), and capabilities (Stalk et al., 1992; Teece et al., 1997) of a firm which enable it to conduct its business processes more effectively and/or efficiently than do rivals(Hao Ma,. 1999). Which consist of Foster learning and build routine (creation oriented) – “a firm that constantly learns, accumulates and expand its knowledge base, intellectual capital” (Stewart, 1997) have the benefit of advantage over competitors for example Bill Gates, Canon, Wall-Mart. However knowledge it self is not enough as we live in uncertain world, decision and insights are at equal level with knowledge.

And discourage rival learning and imitating (preemption-oriented) – “a firm could gain advantage if it is effectively discourage rivals’ learning of new knowledge and imitation in acquiring new capabilities”(Hao Ma,. 1999). However it is very difficult for any organization to discourage rival from gaining knowledge if they are striving to enhance their knowledge, not to mention copying and steeling this knowledge as for example in china there is hardly any product that is not imitated as soon as it get released to the public.

 

Total quality management

 

The growing competitive environment, customer complexity and globalization every organization is exploring the market place to sustain a competitive advantage over rivals, and attempt to make and or increase profitability, in doing this many organizations in the fast food industry have made and continuously making tremendous efforts in re-engineering all aspects of their businesses.

There is an increased importance of the service sector in the international arena, and expected to increase in the future, TQM implementation is expected to be the deriving force towards the improvement of service quality.

TQM development has been made in different stages from its emergence in the 1950’s to its current practice and implementation.

“In general, TQM is looked on as a process-oriented philosophy of enhancing customer satisfaction through the production of higher quality goods and services.” (Mahmoud M. Yassin, Jafar Alavi, Murat Kunt and Thomas W. Zimmerer; 2004)

 

TQM implementation, In order to achieve a successful implementation of TQM I will discuss the following factors:

Quality strategy: it is very difficult for almost all organizations to know where it is destination, hence, the quality strategy importance lies around providing objective and methods for keeping the organization heading in the track.

Human resources: processes are functioned by groups of people not individuals this is why TQM is based on teams not individuals. “Due to the complexity of the problems companies now face, “teams” have become a necessity, rather than a choice”.  (Satish Mehra Joyce M. Hoffman Danilo Sirias, Vol. 21 No. 5/6, 2001, pp. 855-876).

Empowerment and ownership, empowerment advantage is cost related, it leads to cost reduction in the operation which contribute to the overall performance of the organization.” Employees’ empowerment has many advantages. First, the need for supervisors is reduced, which results in lower costs (Becker et al., 1994). The professionalism of the employees is vital in the service industry for example employees who have to communicate with customers “Indeed in the service management literature professional services are often defined as those in which front liners have high discretion levels” b(Silvestro et al., 1992). Although this theoretically might be true but in real life many organizations lack this quality people “It has been argued that front line staff are often the lowest skilled and qualified employees in a service organization” (Murdick et al., 1990)

Management structure (steering group): their role is directed towards the arrangement of the TQM plan implementation, initializing and monitoring. They send important messages as to the importance of the implementation, provide approvals for training needs. They also provide important information to employees for facilitating decision making process by employees. Culture is another factor of the management it could be looked at from different views, “Culture can be analyzed from the point of view of different countries abilities to adopt TQM practice” (Benson et al., 1991; Hammond, 1991; Holmes, 193).and the view business willingness “Also Business culture can be an indicator of the readiness of a firm to adopt a TQM philosophy”(Emery and Summers, 1994)

Quality tools: quality management without quality tools is very difficult to implement. There are many tools that can have a direct effect on quality such As quality related goals because if the focus is production without considering quality this will negatively impact the production.

Carson and Carson (1993) suggested that setting both quantity and quality goals to encourage improvements in both parameters”

Process-oriented approach, this approach is focused on improving the processes and this could be accomplished by reengineering (Fuchs, 1994) “suggests applying reengineering when processes at their peak level and only a breakthrough solution can increase their output”. However others have argued that service specs is required for successful implementation, it can be seen that the lack of specification is what has been condemned “indeed it has been argued that the lack of service specifications is a key failing in services”. (Levitt, 1972).

Supplier support:

It is agreed that customers could add to the business if their involvement was by providing undetected product on the write time and quantity “Japanese businesses have proved that supplier involvement is essential for increase in productivity and quality through process improvements”. (Deming, 1981-1982).  However many argues that productivity increases as a result of supplier involvement as above mentioned such as by reducing defective units, supply time, availability of spare parts. “It is believed that 50 percent of a company’s nonconformances are caused by defective purchased materials”. (Lascelles and Dales, 1989, p. 10).

Customer orientation

Many issues require the attention in the market place those issues revolve around customer satisfaction. One of the most important factors in the literature is customer focus; to achieve this customer needs, requirements, their immediate and future needs and their level of satisfaction should be given high priority, identified and developed. It is agreed that TQM is a customer oriented approach especially in the service industry. “the notion of service quality is arguably even more evasive than that of product quality due to the multiplicity of tangible and intangible elements and the subjectivity of customer” (Takeuchi and Quelch, 1983)

Another major point is Customer-oriented product development. “An improved product without customer preference(s) is not improved at all. It is important to have customer feedback all the time to improve, develop, and evaluate products or services.

 

Chapter 3. Research Methodology:

 

 

Ch. 3 Research Methodology.  You must justify the research approach you take especially for collecting the primary data.  So rather than state what you did, you have to justify the approach.  You must get hold of some marketing research texts and see what they say about secondary and primary research.  Secondary research is not to be omitted as much of your early chapters are based on secondary literature.  So you discuss the advantages / disadvantages, and general sources of information e.g. academic texts, company literature, etc.

Then you move on to primary research and you discuss the various research designs and the methods that come within these for collecting primary data.  Again, advantages / disadvantages.  Then you say which you chose and why these were suitable.

 

So if you’ve decided to undertake a survey using questionnaires and telephone interview, you have to say why you these methods were better than, say, face-to-face interviews. How were the respondents chosen?  Why a particular number?  How was the questionnaire put together?  What do you know about questionnaire design?

 

You need to imagine that you’re with the external examiner who has little idea of the study and you have to explain why you chose the approach you did.  And they might want to know if you’d examined other avenues before you went down this one.

 

Research Design:
The research study utilizes the survey research approach through a questionnaire. A pilot test was conducted to evaluate the validity and reliability of the questionnaire before running the final questionnaire. According to the result of the pilot test the questionnaire was edited and modified to improve its validity and reliability. Finally, a modified version of the questionnaire was distributed to collect the data.

Sampling Design and Procedures:
A random sample was selected to fill out the questionnaire. It is estimated to have approximately 500 responses to provide the needed statistical reliability of the study. This number was calculated utilizing the following formulas:

 

where:

v  n is the minimum sample size

v  Z = the z-value at 95% confidence interval

v  P = is the proportion of the population were the questionnaire is targeting.

v   ω is the difference between the estimated P and the actual values within the population.

The Z value at 95% confidence is equal to 1.96, P= .7 and ω=.085. By substituting these numbers in the equation we calculate that n= 447.

To ensure the achievement of the expected responses 600 questionnaires was distributed. The retained valid responses was lower than expected so another 200 questionnaires was distributed which increase the retained valid responses to 457 questionnaires.

To ensure a representative sample the questionnaires were distributed randomly in several colleges and high schools in Kuwait. Out of this 20% of the questionnaires (≈ 85 questionnaires) were distributed initially to run the pilot test.

 

Internal Validity:
To ensure the validity of the questionnaire, it was discussed with three of the teaching faculty of the MBA program ……………… The questionnaire was reviewed and modified by:

Supervisor: ……………………………….

Two major changes done to the initial design of the questionnaire as suggested by the reviewers:

§  Shortening the questions and the sentences to be more direct and clearer

§  Differentiating the questions font from the answers to make it easier for the responders.

Also some changes were suggested by Prof. C. P. Rao. Summarized in the following points:

§  Combining the degree of importance and the degree of satisfaction into one page

§  Changing the scale into numerical scale

§  Showing the meaning of the scale by a legend at the top of each group of the questions.

 

The changes can be seen be comparing the firs design to the second design of the questionnaires. (see appendix A)

 

Reliability:
The reliability of the questionnaire was tested utilizing the Cronbach’s Alpha. Cronbach’s Alpha is a statistical technique used to assess the reliability (the likelihood that the same data would be collected in repeated observations) of a test or scale used in a study. Alpha coefficient ranges in value from 0 to 1. The higher the score, the more reliable the generated scale is. Nunnaly (1978) has indicated 0.7 to be an acceptable reliability coefficient but lower thresholds are sometimes used in the literature.

The alpha coefficient was tested two times, one time for the pilot study and a second time for the final study. Both measures sowed an alpha coefficient higher than .9 which indicates a high degree of reliability of the questionnaire.

Pilot Study:
A pilot survey was conducted to evaluate the reliability of the questionnaire and assist the clarity of the questions to the respondents. The aim of this pilot test is to enhance the questions and replace any misleading or vague wording before distributing the final questionnaire. During the pilot study the distributors were asked to record any common confusion or muddle regarding answering any of the questions. A 150 questionnaire was distributed where only 87 valid responses were received back.

The Alpha test was utilized to evaluate the reliability of the questionnaire. The following is a summary of the results:

Reliability Coefficients

 

N of Cases =     76.0                    N of Items = 47

 

Alpha =    .9058

 

As shown in the result the alpha coefficient = .9058 which indicates a high reliability degree of the questionnaire.

In addition most of the questions were clear to the responders except for question 9 where the responders face difficulties in answering it. Therefore this question have been changed, the changes can be seen by the differences between the second and the third design of the questionnaire (see Appendix A).

In addition a first pass exploratory factor analysis was conducted to do any necessary modifications for the questionnaire before running the final study. The results showed that there are latent factors that dominating the answers of the questions. Since all the alpha coefficients for the factors are more than .6, then the questions will not be changed. These latent factors are primary and will be tested again after the final study.

After conducting the pilot test the final questionnaire was distributed ( the third design) to conduct the final analysis.

 

 

Analytical Procedures:
Given the adequate sample size, parametric statistical analysis methods will be utilized. The analysis will start with a summary statistical measurement to explore the data and provide a general idea of the responses.

An estimation of the market share of the fast food restaurants brands among the youth customers will be evaluated by the response to the 6th and 8th questions. A percentage measures will be calculated for each restaurant to represent its market share. Further more the degree of loyalty will be evaluated among the different demographic levels by comparing the responses to the 6th, 8th and 9th questions.

 

The segments among the youth customers will be evaluated be testing the differences between demographic levels according to the responses to the research questionnaire of why the youth customers are visiting the fast food restaurant. For that purpose cross-tabulation, T-test and ANOVA analysis will be utilized.

 

The degree of satisfaction will be evaluated by measuring the responses to the satisfaction questions and compare it to the expectations.  For that purpose T-test and ANOVA analysis will be utilized.

 

An exploratory factor analysis will be conducted to identify the constructs of the expectations and satisfactions. This step will provide us with an indication of the latent factors that drive the behavior of the youth customers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nice Beech, George Cairns, Hugh Livingstone, Cliff Lockyer, Haridimos Tsoukas, (2001), change Management, Strathclyde University (MPIO book-volume 1-pp.182-211.

 

 

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