University of Luzon

COLLEGE OF BUSINESS ADMINISTRATION

Chapter I

THE PROBLEM AND ITS BACKGROUND

Rationale

People today are too busy that most of the time cannot find

opportunities to spend their mealtime at home. A number of them just

look for a place where they can find the best quality of food and services

suited for their palatable taste and satisfaction to their ever-expected

needs and wants. In line with these thoughts, food operators started to

create plans and executing the idea to provide the best product and

services to customers that would not compromise the operational

efficiency of the business leading to customer satisfaction.

Customer satisfaction plays a pivotal role in success of every

business organization whether it is meant for a product or a service.

Every business needs not only to retain its current customers but also

to expand customer’s base significantly and it is possible only when

target customer is fully satisfied from company.

One of the biggest contemporary challenges of management in

service industries is providing and maintaining customer satisfaction.

Service quality and customer satisfaction have increasingly been

identified as key factors in the battle for competitive differentiation and

customer retention. Customers are the key way of running business

successful and the satisfied customers are the base of the business for

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

the growth in profitability and in the competitive business market.

From era and era, it has been considered that customer satisfaction is

the core element for every type of business. By this element companies

can make impressive goodwill, market and profit growth and

improvement in service quality as well.

The sector of restaurant business is one of the competitive sector

where they try different experiments in respect to meet the customer

satisfaction towards delivered services. The companies are highly

depended on their customer experience and engagement. In business

cycle customer satisfaction is the core part for the growth of

organization. The level of customer satisfaction in a various time phase

with various terms and conditions are changing. Better customer

satisfaction helps to maintain the profitability of company, goodwill of

company among the valuable customers. Moreover, the satisfied

customers are always loyal to the product and company. The company

always set the targets of growing the business in the competitive market

by providing the product and services as per the needs of customers.

In United States of America, the restaurant industry activity has

become a huge component of the U.S economy. The industry’s

economic health is now a leading indicator of the nation’s economic

health, and industry growth is a significant factor in the nation’s

economic outlook. Restaurant industry sales are growing, with

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

projected sales of $660.5 billion in 2013, up approximately 9% in two

years.

In South Korea, the country’s food service industry has

continued to improve over the past years due to the stronger

consumers’ purchasing power, influenced by today’s fast-paced

lifestyle. Food service players are increasing their network to cater to

more tourist who demand for more convenience.

In India, more Indians are slowly warming up to the idea of eating

in restaurants, and not just for special occasions. This is the result of

growing wages, urbanization and technology’s influence on

consumption habits, foodservice sales in this country of USD 1.3 billion

are growing at about 10% annually (making it one of the fastest-growing

in the world).

In the Philippines, consumers today do not have as much loyalty

as they once did because they are spoilt for choice. Due to increased

and stiff competition, surviving has become difficult and the only way

to last long in the game is to continue to be relevant.

For this reason, the researchers decided to choose restaurant

industry as the subject of the study and assess the customer

satisfaction of a particular restaurant in Dagupan City.

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

Theoretical Framework

Customer satisfaction has become important due to increased

competition, as it is consider very important factor in the determination

of bank's competitiveness. Satisfaction is a post purchase evaluative

judgment associated with a specific purchase decision. The customer

satisfaction is indispensable for the successful survival of any

organization. Continuous measurement of satisfaction level is

necessary in a systematic manner (Chakravarty et al.,2010).

Figure 1 below shows the theoretical framework of the study.

There are two variables discussed in this study, i.e. independent and

dependent variables. Customer satisfaction in restaurant industry

showing dependency on Promotion, Service quality, Customer

expectations, Brand, Physical Environment, Price, and Taste of the

product.

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

Huang (2011) promotions is different form of activities for

attracting and getting attention of customer to purchase the product or

service through personal selling, public relations, sales promotions and

advertising. According to Kurniawan (2010) promotion of product or

service helps in the best way to builds relationship with customers,

because everyone is looking for the best suitable deal for them.

Takeuchi (1983) quality is standard of something which

consumer measure against the other different things; quality can be

measured by giving grade, merit, attributes etc to the products or

services. Consumer can not differentiate between the quality and its

requirements. Service quality is evaluated when the out customer

compare his/her perception and expectation of service delivery

Gronroos (1984).

Zeithaml (1985) it is a scale with multiple items good validity and

reliability, many researchers use this instrument to understand and

find the service expectation and consumer’s perception for improving

the service quality. The expectation of a customer is an important

factor. The more service quality is near to customer expectation more

satisfaction and vise versa Ayse Ozfer Ozcelik (1988).

Kurniawan (2010) branding is one of the factors which has been

identified repeatedly customer choice in the selected product. Branding

has impact on purchase decision of consumers. The more a brand is

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

succeeded in their earlier period the more value for its brand can be

generated.

Lim (2010) Customer’s ultimate satisfaction may have significant

affect of atmosphere. Physical surroundings are helpful to create image

in the mind of customer and to influence their behavior. Physical

atmosphere of the restaurants have the significant impacts on the

customers satisfaction. Lightning, furnishing, sent, music and different

other atmospheric factors among them influence on customer

satisfaction.

Skindaras (2009) there are millions of products in this world

having different prices. Pricing a product is difficult thing to do. Prices

are set according to the value of the product. Price from marketing mix

Han (2009) state that one of the most flexible element that changed

quickly. In the literature of Khan (2011) marketing the most important

factor indicated for customer satisfaction is price, because most of the

customers estimate the value of the product or obtained service

through price.

Lim (2010) for the customer it is not necessary that a better

quality can be a better taste, if customer like the taste of food he/she

will be willing to pay for the it. Based on previous researches, in

customer satisfaction and taste, there is a significant correlation found

between them. Researchers found that Good taste of food has positive

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

influence on customer’s satisfaction and it also increase the customer’s

retention rate which is also depends upon customer’s satisfaction.

Therefore, restaurants focus is on taste of the food and services that

has influence on customer’s satisfaction.

Conceptual Framework

Most of the authors have and had gave the wide-ranging

definition about the customer satisfaction. From among those authors,

Kotler and Keller defines customer satisfaction as, ““person's feeling of

pleasure or disappointment which resulted from comparing a product's

perceived performance or outcome against his/her expectations”

(Kotler & Keller, 2012).

Customer satisfaction can be defined in terms of meeting the

expectations of the customers in terms of parameters associated with

satisfaction (Malik & Ghaffor, 2012). According to Johan; the customer

mind is a complex set of thoughts and ideas and cannot be fully

predictable by human being.

In the context of relationship marketing, customer satisfaction is

the way that leads to long term customer retention because un satisfied

customers have very high switching rate (Lin & Wu, 2011).

“Satisfaction can be regarded as a broad principle; support good

quality is a component of satisfaction” (Zeithaml & Bitner, 2003). Client

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

satisfaction is usually defined through Oliver’s (1997) conditions: that

it's this consumer’s fulfilment result. It's a ruling that a products or

services feature, or this products or services per se, comes with a

pleasurable level of intake linked fulfilment. In other words, it does not

take total level of wellbeing that has a service /product knowledge.

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

Input Process Output

1. Perception of the

customers in

retaining the

customer loyalty of

the current
Appraisal of the of the
subscribers in terms
perception of
of the following
Proposed Effective
customer loyalty
factors;
and Efficient
subscribers in Sta.
a. Convenience;
Alternative Courses
b. Expectations; Barbara, Pangasinan
of Action to retain
c. Customer Service;
customer loyalty of
d. Rewards;
current PLDT
e. Personal
subscribers in
Relationship;
Sta.Barbara,
f. Reputation and;
Pangasinan.
g. Community

Outreach?

2. Problems

encountered by the

subscribers in terms

of the factors of

customer loyalty in

Sta.Barbara,

Pangasinan?

Feedback

Figure 1
Paradigm of the Study

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

Statement of the Problem

This study seeks to analyze the customer satisfaction of Jam

Sweet Jam Restaurant in Dagupan City. Further, it attempted to

identify the constraints encountered in satisfying the customer. The

results of the study will be used as a basis of alternative measures to

improve the strategies and services of the company.

Thus, the study will answer the following problems;

1. What are the perception of the customers in retaining the

customer satisfaction of the current customers in terms of the

following factors;

a. Promotion;

b. Service Quality;

c. Customer Expectation;

d. Brand;

e. Physical environment;

f. Price; and

g. Taste?

2. What are the problems encountered by the customers in terms of

the factors of customer satisfaction of Jam Sweet Jam

Restaurant in Dagupan City?

3. What are the proposed measures in retaining the customer

satisfaction of Jam Sweet Jam Restaurant in Dagupan City?

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

Scope and Delimitation

This study will focus on to identifying the factors that affect

customer satisfaction of Jam Sweet Jam Restaurant and problems

encountered related to promotion, service quality, customer

expectation, brand, physical environment, price and taste.

The study will not take into consideration the organization and

management and the technical aspects of the business. Moreover, the

financial aspects will not be tackle due to confidentiality.

Significance of the Study

The demand of food and services are increasing specially in cities

like Dagupan. Apparently business ventures are also increasing, thus

competitors are arising. This study is bound to anticipate that the study

will benefit the overall business operation of Jam Sweet Jam at # 127

Guilig St, Downtown District, Dagupan City. This study will benefit the

following:

To The Proprietor of Jam Sweet Jam

This study will help the owner sustain continuous progress and

improvements of their business ventures when it comes to products

and services by identifying the factors that will help in customer

satisfaction.

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 University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

To Employees of Jam Sweet Jam

The findings will give the employees further information to be

effective and efficient by being knowledgeable of the current issues and

concerns of the business on the given aspects of the study.

To Customers

They will benefit and be guided on the continuous progress that

the restaurant will undergo0. They will also be given a more satisfying

experience from products and services offered by the restaurant.

To Restaurant and other Business Proprietors

This study will provide measures to enhance their businesses as

well as to those who would like to venture unto a new business for them

to be guided and plan decisively according to the aspects provided in

the study.

To Business Students

This study will enhance and improve their knowledge and skills

on how to manage and operate a particular venture.

To Future Researchers

The findings of this study will give students insight and

information that will help them cover critical researches or studies with

related topics regarding business operations.

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University of Luzon
COLLEGE OF BUSINESS ADMINISTRATION
Dagupan City

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