Research Proposal-Customer Satisfaction Towards Laura Arias in China Essay

Executive Summary Laura Arias is a well-known UK-based company that provides home furnishing of good quality but relatively lower prices compared with those of competitors, targeting middle- and low-income consumers. In early 2008, the company entered Chinese market and founded branches in some big cities, such as Beijing, Shanghai, Shenzhen, etc. However, many Chinese consumers show a low level of satisfaction towards the company. This research proposal is prepared to provide guide for formal research to investigate the customer satisfaction towards Laura Arias in China.

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Based on the research result, decision can be made as to how Laura Arias can improve the customer satisfaction for better sales in China. The structure of this research proposal will strictly follow what has suggested for a comprehensive proposal, and it will be stated in the following steps: First the background to the research problem towards what has happened in Laura Arias. The second section focuses on problem definition including management and research problem, and specific research objectives, based on the background.

Third, literature review relating to this research problem in terms of research objectives will be studied to help solve the problem. The fourth section aims to elaborate research design and methodology in order to provide guide to conduct this research, including specific design that will be used in this study, data collection method, questionnaire, sampling method, proposed data analysis, and so on. This section is closely followed by additional issues, such as time schedule, budget, and limitation. Table of Contents Executive Summary 1. Introduction 2. Background to the Research Problem 3. Problem Definition 3. Management Problem 3. 2 Research Problem 3. 3 Research objectives 4. Literature Review 4. 1 Customer Satisfaction and Dissatisfaction 4. 2 The Demand and Consumption Level of Chinese Consumers 5. Research Design and Methodology 5. 1 Research Design 5. 2 Methodology 5. 3 Sampling 5. 4 Data Analysis 6. Additional Issues 6. 1 Time Schedule 6. 2 Budget 6. 3 Limitations List of References Appendix 1: The Pre-designed Questionnaire Customer Satisfaction towards Laura Arias in China 1. Introduction This research proposal is prepared to provide guide for formal research to investigate the customer satisfaction towards Laura Arias in China.

Based on the research result, decision can be made as to how Laura Arias can improve the customer satisfaction for better sales in China. The structure of this research proposal will strictly follow what has suggested for a comprehensive proposal, and it will be stated in the following steps: First the background to the research problem towards what has happened in Laura Arias. The second section focuses on problem definition including management and research problem, and specific research objectives, based on the background.

Third, literature review relating to this research problem in terms of research objectives will be studied to help solve the problem. The fourth section aims to elaborate research design and methodology in order to provide guide to conduct this research, including specific design that will be used in this study, data collection method, questionnaire, sampling method, proposed data analysis, and so on. This section is closely followed by additional issues, such as time schedule, budget, and limitation. 2. Background to the Research Problem

Laura Arias is a well-known UK-based company that provides home furnishing of good quality but relatively lower prices compared with those of competitors, targeting middle- and low-income consumers. The company has many branches in the Occident. In early 2008, the company entered Chinese market and founded branches in some big cities, such as Beijing, Shanghai, Shenzhen, etc. However, it is found that pricing in Chinese market is difficult due to its relatively low level of economic development compared with the Occident.

The price which is cheap for the Occident seems still high for many Chinese consumers. In addition, there are friendly environment and cost-cutting effort towards a low price strategy that can be seen in the company, but consumers still complain that there are no free delivery and installation, and insufficient service staff. These complaints have been heard as of now, and it is believed that there may be some other complaints. In a word, many Chinese consumers show a low level of satisfaction towards the company. The revenue of the company in China only accounted for 5% of its total revenue in 2008.

However, China has been recognized as a huge potential market. Hence as to how to improve the customer satisfaction in China has been the key issue for Laura Arias. 3. Problem Definition Based on the background section, management and research problems, and research objectives are defined as follows: 3. 1 Management Problem According to the background to the research problem, management problem can be defined as follows: How can Laura Arias improve the customer satisfaction for better sales in China? 3. 2 Research Problem

What factors have caused the low level of Chinese customers’ satisfaction towards Laura Arias? 3. 3 Research objectives ?To identify the consumer demand in China. ?To identify the consumption level of Chinese consumers. ?To identify the factors causing the low sales in China. ?To identify the factors that influence the Chinese consumers’ dissatisfaction towards Laura Arias. 4. Literature Review 4. 1 Customer Satisfaction and Dissatisfaction Customer satisfaction has been increasingly paid significant attention to in today’s global competitive environment (Thompson, Strickland & Gamble 2005).

Improving customer satisfaction is a key strategy that today’s business must develop as dissatisfied customers can easily shift to competitor’s products or services (Allen & Rao 2000; Gitman & McDaniel 2002). According to Thomas (2000), a company has to balance customers’ expectation and perceived performance or outcomes in order to gain high level of customer satisfaction for the final purpose—maximizing long-term profitability. In addition, high level of customer satisfaction can lead to positive word of mouth, which in turn helps attract more new ustomer for the company (Grewal, Cline & Davies 2003). Hence it is critical for Laura Arias to find out factors that influence the Chinese consumers’ dissatisfaction towards it. In general, it can cost 5 or 6 times to induce a new customer than to retain a customer (Zelmer 2001). Customer dissatisfaction can be caused when customers’ perception is lower than their expectation (Oliver 1980). Customers who experienced dissatisfaction may refuse to purchase the products or service from a company again, which may lead to negative word of mouth.

Measuring customer satisfaction helps organizations to indicate how successful they are at providing products/services to cutomers (John 1999). According to Berry & Brodeur (1990-1998), ten ‘Quality Values’ can influence customer satisfaction behavior, which further expanded by Berry (2002) and defined as the ten domains of customer satisfaction, including quality, value, timeliness, efficiency, ease of access, environment, inter-departmental teamwork, front line service behaviors, commitment to the customer and innovation. This may be helpful to solve the last two research objective. 4. The Demand and Consumption Level of Chinese Consumers The consumption level of Chinese consumers in relation to the furniture demand can be decided by four factors: Stabilization of China’s politics and level of economic development, housing condition, level of family income, and level of education (Shanghai Furniture 2006). The average furniture consumption level in some key countries is introduced in the following table: CountryAverage Furniture Consumption level ($) Germany371 Italy307 American236 Japan225 France178 Korea97 Canada85 U. K80 Australia62 China5. 48 (Source: http://www. pjiaju. com/news. php? newsid=18&mode=news, 2006) The above table indicates that the average furniture consumption level in China is quite low. In addition, according to Business China (2004), the demand of Chinese consumers typically focuses on the middle- and low-end segments. Hence, the price level of Laura Arias seems still too high to many Chinese consumers although it is already cheap for the Occident due to the big difference of consumption level between China and the Occident, which has caused the low degree of customer satisfaction and sales of the company in China.

Although Laura Arias has successfully controlled cost by various efforts such as no delivery and installation, less service staff, and so on, Chinese consumers seem to demand such reduced services. The above information and analysis has actually solved the first two objectives (“To identify the consumer demand in China” and “To identify the consumption level of Chinese consumers”). 5. Research Design and Methodology 5. 1 Research Design Research design is necessary to provide a plan specifying the methods and procedures for collecting and analyzing the needed information, depending on the nature of the research problem (Zikmund 2003).

For this research problem, descriptive research design will be used. Descriptive research aims to collect primary data from a sample of individuals based on proper questionnaires or survey to provide a precise description of specific characteristics (Zikmund 2003). For this research problem, descriptive research design will be used to describe what factors have been causing the low sales in China, what factors have been influencing the Chinese consumers’ dissatisfaction towards Laura Arias, and the demand and consumption level of Chinese consumers (see the literature review).

Thereby it is appropriate to use descriptive research for this research as it determines the answers to who, what, when, where, and how questions (Zikmund 2003). This also why exploratory research and causal research are abandoned in this research as exploratory is conducted to clarify ambiguous problem only and causal research aims to identify cause-and-effect relationships (Zikmund 2003), which is unnecessary in this research. 5. 2 Methodology Secondary research is used for the first two research objectives, which has already been addressed. And primary research is used for the last two research objectives.

In this study, both telephone survey and online survey will be used to collect desired data. This is proper for descriptive research (Zikmund 2003). Telephone survey: Telephone survey has a great merit that it can often achieve a high response rate. According to Zikmund (2003), once the call is connected and answered, most respondents will choose to answer the questions required by the researchers. However, the questionnaire should be short as respondents may lose patience (Zikmund 2003). Hence the questionnaire for this study is designed with one page.

But telephone survey is usually more expensive and time-consuming as respondents need to spend time in listening to the questions and researchers have to spend time in recording the answers, and at the same time some respondents may refuse to participate in the survey or stop the survey before it can be completely finished. In addition, some respondents may refuse the survey due to the wrong time. Online survey: Online survey helps gain the outcome as soon as possible (Zikmund 2003). It is easy for respondents to answer the questions by just clicking on the screen.

In addition, the collected data can be analyzed automatically and electronically in a digital form. Moreover, the cost is relatively low and the distribution of large amount of questionnaire is also unnecessary. However, online survey may lead to the result of low rate of response. And some respondents may even answer and submit the questionnaire for more than one time. Also some potential respondents may do not have computers or cannot access to the online questionnaire. Hence telephone survey is used for this study as a complement only. Questionnaire will be designed within one page due to limited budget and time.

The questionnaire for online survey is attached in Appendix 1. Both scaled-response questions and close-ended questions will be designed (See Appendix 1). Likert rating scale is used based on five-point scale (See Appendix 1). For validation purpose, the researchers will pre-test the set survey questionnaires. This will be done by conducting an initial survey to 10 respondents from the company’s customer database. After this, the researchers will ask these 10 respondents for suggestions to improve the questionnaire to ensure that the survey-questionnaire is effective.

Automatically, these 10 respondents will no be included as respondents for the formal survey implementation. In the survey, ethical issues regarding the respondents must be considered. First, researchers should consider whether the participant has given willing and informed consent (Zikmund 2003). Hence this will be handled by presenting the purpose and process of the survey online on the first page of the questionnaire, and explaining the purpose of the survey first by the researchers if through telephone survey. In addition, confidentiality and anonymity will be assured to respondents.

Moreover, to further respect the respondents (Chinese consumers), the questionnaire will be designed in Chinese. 5. 3 Sampling Appropriate sampling is very helpful in doing research as it is often difficult to measure certain characteristics of all units of a population (Zikmund 2003). This method consists of target population, sampling frame, sampling method, sample size, etc. Target population: it refers to the entire group under study (Zikmund 2003). In this study, the target population can be all the customers of Laura Arias in China as of the time when sample selection begins.

The target population should be defined according to elements, units, extent and time (Zikmund 2003). Sampling frame: It refers to the list of elements from which the sample may be drawn (Zikmund 2003). In this study, the sampling frame is a list of all the customers of Laura Arias in China based on its customer database. Sampling method: A systematic sampling with 1 in 3 ratio based on the list of customer database will be used. Systematic sampling is a sampling procedure in which an initial starting point is selected by a random process, and then every nth number on the list is selected (Zikmund 2003).

Sample size: It is necessary to calculate the sample size since the probability sampling technique (systematic sampling) has been chosen. Assume the confidence coefficient is 95%, the relative precision is 0. 1, and estimate is 70%. Then the sampling size is estimated to be about 166. However, more sample units will be selected in order to ensure that response from the 166 units is achieved, and so 180 samples will be selected. 5. 4 Data Analysis After the needed data has been collected, it will be analyzed in order to obtain any useful result for decision making. First, the collected data will be cleaned.

Descriptive analysis will be used to transfer the raw data collected from telephone survey into a form, which is usually the first step in data analysis. As to the online survey, automatically data editing is used. To make the data usable, this information must be organized and summarized. Constructing a frequency distribution/table is one of the most common means of summarizing a set of data (Zikmund 2003), which will be used in this research. In addition, weighted mean will be based on the following equation: f1x1 + f2x2 + f3x3 + f4x4 + f5x5 x = ———————————————; xt here: f – weight given to each response x – number of responses xt – total number of responses The researchers will also use the Statistical Package for the Social Sciences (SPSS) for the statistical analysis in this study. SPSS is a powerful statistical software packages that covers a broad range of statistical procedures, which help summarize data, such as computing means and standard deviations, do t-tests, analysis of variance, examine relationships among variables, such as correlation, multiple regression, and graph results (Einstein & Abernethy, 2000). 6. Additional Issues 6. 1 Time Schedule

Based on information stated in the above sections, this research is estimated to take about 43 days to finish, see the detail as follows: Action PlanTime (days) Research team recruitment 5 Customer contact data collection 5 Sample selection 3 Survey implementation and data collection 20 Data analysis 7 Final report completion 3 Total: 43 days 6. 2 Budget The estimated budget is shown as follows based on the action plan: Action PlanCost (RMB) Research team recruitment 1,000 Customer contact data collection 500 Sample selection 500 Survey implementation and data collection 3,000

Data analysis 2,000 Final report completion 300 Total Costs 7,300 6. 3 Limitations There are initiations that exist in the telephone and online surveys despite their advantages and popularity. First, the telephone survey is usually more expensive and time-consuming, and at the same time some respondents may refuse to participate in the survey or stop the survey before it can be completely finished. Second, the online survey may lead to the result of low rate of response. And there may be the situation that some respondents may even answer and submit the questionnaire for more than one time.

Third, some potential respondents may do not have computers or cannot access to the online questionnaire, but they may hold different views to the questionnaire. Due to this, survey implementation and data collection may take longer time. List of References Aaker, GS & Lawley, M 2005. Marketing research, Pacific Rim edn, Australia. Allen, Derek & Rao, Tanniru R. 2000. Analysis of customer satisfaction data, Journal of Customer Relations, America Einstein, G. & Abernethy, K. 2000. SPSS Tutorial: statistical package for the social science, viewed May 23, 2009,

Gitman, Lawrence J. & McDaniel, Carl D 2002. The future of business, The Free Press, Malaysia, p. 23 Grewal, R. , Cline,T. W. & Davies, A. 2003. Early-entrant advantage, word-of-mouth communication, brand similarity, and the consumer decision-making process, Journal of Consumer Psychology, 13, p. 3 John, Joby 1999. Fundamentals of Customer-Focused Management: Competing Through Service, Journal of Consumer Behavior. Oliver, R. L. 1980. Satisfaction: a behavioral perspective on the consumer, McGraw Hill, America, p. 231 Shanghai Furniture 2006.

An analysis of average consumption level of furniture in several countries, viewed May 3, 2009, < http://www. jpjiaju. com/news. php? newsid=18&mode=news> Thompson, Arthur A. Jr, A. J. Strickland ? & John E. Gamble 2005, Crafting and Executing Strategy, The Quest for Competitive Advantage: CONCEPTS & CASES, 14th edn, Mc Graw Hill, America, p. 47. Thomas, Jerry 2000. Customer satisfaction and loyalty research, Journal of Customer Research, America Zikmund, William G. 2003. Business research methods, 7th edn, South-western, America, p. 54, p. 175, p. 184, p. 556 Appendix 1: The Pre-designed Questionnaire

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