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Dissertation 150417

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Dissertation 150417

Chapter 1: Introduction

All industries are focusing on service quality. There are several quality assurance programs that have been implemented in industries at all levels because the importance of service cannot be underestimated. In fashion the fashion for garments goes out of style just when the seasons changes, the designs the colours and the cuts all change in 3 to 4 months and when it gets difficult to keep up with the changes in fashion most of the customers lose interest because it is expensive to change a wardrobe every time the fashion changes. With such a major challenge facing the fashion industry the only way that the customers can be retained is with a high quality of service level which keeps the customers engaged and involved in the changes of fashion therefore making it simpler to retain the customers in the industry.

Service can be defined as the need of a business to provide the quality of service in terms of catering to the needs of customers in a courteous way to help them take a buying decision which will result in the sale of the products. For the consumer products industry, service is the most important area as it develops the type of relationship that can help a business to retain customers over years together ensuring repeat sales from customers.

Background

Customer retention is essential for improving sales and profitability of the organization. Quality of customer services is the main element that influences the customer satisfaction levels and which plays a prominent role in retaining potential customers (Ibojo and Odunlami, 2015). Rude attitude of staffs, poor services, etc. reduces customer satisfaction and increases customer turnover. This study critically evaluates the impact of service quality on customer retention by evaluating the case of Primark, UK.

The Rationale of the study

Many research studies identified the direct association between service quality of the organization and customer retention. Being a leading fashion retailer, Primark offers amazing trendy clothes at amazingly low prices and this aids the company to attract large number of customers (Russell, 2015). However, Pursglove (2013) notes that, untidy clothing racks and disinterested and rude attitude of staffs, etc. results to customer dissatisfaction and is responsible for high customer turnover for the business.

The researched issue that is being considered in this study is the influence that service quality has on helping the business to retain their customer base.

This is considered to be a major issue in Primark because despite having affordable prices and wide variety of selections on the clothes line the repeat sales from customers is low which means that the level of customer turnover is higher than the business has realized and this is what is impacting the bottom-line of the business.

It is an issue that needs to be studied because it is affecting the profitability of Primark as a business. The study help to understand the issues that the customers have with Primark service levels and why they do not return for repeat sales. The levels of dissatisfaction can be understood and the required changes within the business can be made that will help the business to retain the customers who have shopped in Primark and also increase the sales revenue through referrals from the retained customers.

The Research Aims and Objectives

 

The aim of the study is to understand the levels of service quality changes that impact the retention of customers in the retail fashion industry in U.K. This study focuses on the service levels and the scope of customer retention for Primark.

The main objectives of the study are to understand the significance of the quality of service levels in the fashion industry and in Primark in U.K. The service determinants that will be studied are listed below:

Ø Reliability

Ø Responsiveness

Ø Access

Ø Courtesy

Ø Competence

Ø Communication

Ø Credibility

Ø Security

Ø Tangibles

Ø Customer Insight

The secondary objective of the study is to attempt to identify the factors that influence the retention of customers in the fashion industry and where Primark is going wrong in their service levels.

The tertiary level objectives are to understand the impact of service quality on Primark customers in order to retain them for repeat sales and to make a few suggestions to Primark to change the type of service that is being offered to a type which will have a positive impact on the customers and increase the sales revenues of the fashion house.

Research Questions

 

What factors have a positive impact of the retention of customers?

Is the service level of Primark sufficient to retain its customer base?

What are the challenges that Primark faces when trying to retain their customer base?

Hypothesis (o): Service qualities of not affect the retention of customers negatively as customers come for the variety that are available not for the service.

Hypothesis(1):The reasons that customers come to shop at a particular retail outlet is because the staff are courteous, the display is appealing and there is a neat and clean look that makes it easier for shopper to buy what they want if they do not have to hunt for it.

Chapter 2: Literature Review

A review of literature is being done to understand the importance of service quality in the fashion industry and to relate it to Primark in the U.K. The definition of service is the act of being able to deliver what a customer wants in the shortest possible delivery time in order to improve the satisfaction level of the customer it increase customer loyalty among the customer base of a business.

Service can be defined as a form of activity that involves financial transactions that is intangible and it involves the ownership of a product that is consumed by a customer base. The consumption of the service is at the point of sale. The main components of a service are the financial transaction involved and the products that the customer buys. (Investor Words,2017)

Service quality

As per Yuen and Chan (2010), the difference between quality of services expected by the customers and actual services offered by the companies is called service quality. Employees’ attitude towards customers, store atmosphere, offers and pricing strategies, quality of products, etc. influences the quality of customer services.

Service quality is the perception of expectation of a service and the actual performance of the service. The perceived expectation cab taken as (E) and the actual performance can be taken as (P). This provides the service level equation:

SQ-P*E                                                                                                                      (1)

The origin of the quality of services is based on the Expectancy- Disconfirmation-paradigm. What this paradigm states is that any business that has a high level of service quality will either meet the expectations of the customer for the money that the customer is paying or it will go beyond the expectations of the customer. While providing a high quality of service every business needs to remain economically viable and competitive.

What earlier research studies have also shown is that the increased levels of service quality have also increased the profitability of the business and has stabilized the long term economic position of the business to keep it competitive in the industry.

There are many ways of improving service quality but the method that yields thebest results which are visible is the improvements made in theoperational processes of a business.This helps to identify the issues in a systematic way which decreases the tine of understanding what the issues are, putting into place measurements that will indicate the actualperformance levels of the business and also improve the awareness of service for customers within the organization in order to improve the retention levels of customers within the business. When customer are happy with the service levels they are satisfied customers which  help tore gain the position of the business and also increase the inflow of revenue for the business. Unless the service levels of a business are high in the fashion industry with the number of fashion houses that are there it would become difficult for any retail outlet to service without exceptional service quality. Service quality also helps a business to command the price they want (Shanka,2012).

Dimension of service quality

There are several factors that affect the service expectations of a customer. Some of the factors are:

Ø Recommendations

Ø The need to buy the garments past experience in Primark

Ø Past experiences with the clothes that have been bought in Primark

The type of service that is expected and the type of service that is received leaves a gap. This gap needs to be identified and field in order to meet the service level requirements to make the business run. When the gaps are negative it runs down the service levels and causes dissatisfaction of customers. There are ten determinants that influenced this gap and these determinants that have been found in the course of the study are:

Ø Reliability

Ø Responsiveness

Ø Access

Ø Courtesy

Ø Competence

Ø Communication

Ø Credibility

Ø Security

Ø Tangibles

Ø Customer Insight

A further analysis of the determinants reduced the number to 5 determinants in the Rater Model. These were shortened to

Ø Tangibles

Ø Reliability

Ø Responsiveness

Ø Service – Assurances

Ø Empathy

Improvements can be made inseveral areas these could be in the business processes the service design, the service delivery processes the service facilities or even the service products. The most important improvement that has been found is the improvement of the service environment within a business that has a major impact on customers (Galetto,2017).

Customer Retention

 

Strategies and practices adopted by the firms to reduce customer switch over and to increase customer engagement in the companies is called customer retention. Retention of potential customers improve the sales and profitability of the organization (Khan and Fasih, 2014).

Customer retention involves the activities that are completed by businesses to avoid customers from going to competitors for their needs. All the customer retention programs that are undertaken are to be able to increase the customer database and to increase the faith of the customers in the products of a business. Customer retention takes place when the customer first steps into the retail outlet and the length of the relationship depends upon the service levels and the trust levels that are built up between the business sand the customers.

According to studies conducted by Bain & Company, if the retention percentage of customers is increased by 5% it increases the level of profits by 25% and if the customers are retained in long relationships the profits could increase by 95%, When customers can beretained then repeat customers sales is around 60% to 70%. The statistics show that customer retention is important since most of the businesses are finding that by retaining customers the profitability of customers is also increasing. The findings show that by suing customer retention strategies it is possible to improve profitability and business prospects (Galletto,2017).

Some of the actionable customer retention strategies that are being used n businesses and have shown results are provided below

Setting the customer expectations early to a lower limit than the business can actually provide so there is no uncertainty about providing the level that has been promised to the customer.

In the fashion it has been seen that the advice on fashion what suits an individual buyer needs to be given to the customer, this builds trust and customer loyalty. The advice needs to be honest.

Relationship building with customers especially in a fragile industry like fashion should not be based on business but on trust and developing customer confidence.

The services thatarereplaced should be preventive measure to ensure that the levels

Of service are not lower than the expected by the customer and not higher than what the business can actually deliver to the cutworms. This will go a long way indelivering the servicelevels that can be given by a business and will go along way in retaining the customers.

Socialmedia should beused to engage the customers into communities to make suggestions and provide information of what they and to remain loyal to a retail house of fashion.These can be analysedand the requirements incorporated into the business which will whether the earnestness of Primark as a retailfashionhouse to deliver service and to provide its customers with what the

The business can also use brand ambassadors and the goodexperiences of customswhichcan be advertise to increase the visibility of the business whichin turn will increase the inflow of customers and this will help them to gain repeatcustomers from the first impression of the service that they receive in Primark.

Personalised services also increase the customer experience and this is what actually helps a business to be retain customers and have customers that are loyal and will refer other customers to Primark.

Customer retention to be managed manually is a bigchallenge theretentionrate of the customers can be automated which will provide how many of the total customer base in Primark are being retained on a long term basis. The formula that is used to calculate the retention rate is:

Retention rate = ((CE-CN)/CS))100. CE                                                            (2)

This is the number of customers at the end of the period C9n) that are acquired over a period and Cs is the number of customers at the start of the retention program. Calculating the retention rate is impotent as it shows the number of  customers who do not return and the number of customs at the end period that stay with the business which is what service quality and the expenditure on the service quality is all about to make profits in business.

Main factors influencing customer retention Brand image: The reputation of the brand in the society influence the buying decision of the customers. Poor brand image enhances the chances for customer turnover.

Store atmosphere: Cleanliness and attractiveness of store atmosphere influence customer retention decision. Untidy store atmosphere reduces customer retention.

Employees’ attitude: Employees friendly attitude positively influence customer retention whereas rude and disinterested character of staffs results to customer dissatisfaction and turnover (Ariff, et al., 2013).

Offers and pricing: Low price and attractive offers have key role in influencing customer retention.

Quality of products and services: Products and service quality improve loyalty of customers and it improves customer engagement. Poor product quality and customer services negatively affect customer purchase decision.

Impact of service quality on customer retention

 

Due to high competition in the fashion retail sector, most of the retailers offer high quality products at reasonable price. Moreover, the companies provide effective training and motivation for its employees for offering high quality services to customers and thereby to retain potential customers (Ibojo and Odunlami, 2015). However, over job stress and demotivation in workplace results to disinterested and rude attitude of staffs towards customers. Moreover, over focus on profit maximization reduces the quality of products and services provides by the firms. Thus which in turn negatively affect customer retention (Yuen and Chan, 2010)

Conceptual framework

The conceptual framework shows the details and the components of the service quality that is planned for Primark to use. It has the details of the environment of the environment of the store where the service programs need to be initiated.

The literature reviewshows clearly that the details of the service levels is significant to all businesses and that it is essential to maintain high levels of service for the business  toretain customers without which the profitability of the store will be at stake. Having a wide variety of stock from which the customers can choose is not sufficient to retain customers the customers can get the same stock elsewhere but what is important is the  level of service that the business scan provide to customers in order to develop the relationship that will lead to customers loyalty.

Chapter 3: Research Methodology

The research methodology that will be used is the onion design which will be developed stage wise on the secondary data that will be collected. The study has been based on secondary data since the level of accuracy is important in this industry. Primark is one of the well-known businesses that has a wide variety and has a pricing differentiation to meet competition in the industry therefore, to be able to find an appropriate design that will improve the service levels in the service environment the design of the study has been based on secondary data. The study will be a qualitative study which will involve a survey of the type of service levels that the customer need from Primark. Once the data is collected from the customers the data integrity and validity will be determined after which the analysis of the data will be done.

Research Philosophy

 

 

 

 

Research philosophy is mainly classified as positivism, realism and interpretivist. Positivism analyses the research issues objectively whereas interpretivist offers subjective explanation. Realism is based on the reality from the individual mind (Pruzan, 2016). The present study will follow positivism as it assist the researcher to critically assess the role of service quality for retaining customers. Objective nature of positivism will aid to conduct the study on the basis of existing research findings and the study will not influenced by personal feelings or opinions of the researcher. Positivism will assist the researcher to frame a conceptual framework for the study on the basis of literature review findings.

Research approach

 

Inductive and deductive approaches are the two research approaches. Deductive approach assess the research issues on the basis of existing theories whereas inductive approach is effective for making a general conclusion on the basis of research findings (Kothari, 2013). For undertaking the present study, deductive approach will be used as it is highly associated with positivism. Deductive approach will aid to identify the key factors influencing customer retention and main strategies used by Primark for retaining potential customers.

Data collection methods

 

Data collection methods are two types: Primary and secondary methods. Primary method is used for collecting data from the people related to the research issues. Secondary method is used for collecting information from already published studies and researches (Kumar, 2010). Secondary data collection method will be used in the present study. The research will review various books, articles, journals, Primark’s websites, annual reports, etc. for collecting secondary data. This method assist the researcher to grab large amount of information about the effectiveness and issues associated with service quality of Primark and its impact on customer retention decision; within a short period of time. The researcher will review minimum of 13 individual cases for carry out the case study of Primark. For evaluating the collected secondary information, the researcher will use descriptive analysis method.

The research team will be selected and trained and the details of the research study will be communicated to them. The purpose of the training that will be provided is to ensure that every team members are aware of the need to be objective during the course of the study and to maintain the requirements of participant protocol during the course of the study. The regulations and the ethical committee requirements will be communicated to the team members.

The security of the participants and the team members will be maintained and every participant will be free to back out of the study even after giving their informed consent. The data that is collected will be kept confidential and will only be released with the participant’s name when the consent of the participant is obtained.

Scope of the Research

The scope of the research will extend as far and the levels of service quality within the organization, the service environment in which the changes have to be made and the type of service model that needs to be put into place to make the changes visible and the results of the changes positive.

Research limitaton

 

 

Present study is fully based on secondary data findings and thus reliability of the study will be minimum. The study is fully based on the case of Primark and this will create barrier for the researcher to make a general conclusion on the research issue. Lack of reliable previous studies related to research issue will also create constrain for gathering necessary secondary information.



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