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OPTIMISING CUSTOMER-ORIENTATION IN SMALL

BUSINESS THROUGH MARKETING-MIX FEED-


BACK RESULTS

Neetu Andotra Pooja

The strategy pursued by small businesses is supposed to be committed to creating


higher value for the consumer and improving entrepreneurial performance. It
is in this context the present research has been carried out, particularly to
assist entrepreneurs to devise an appropriate strategy for customer orientation
by focusing on the expressed needs, purchase behavioural pattern, and relevant
knowledge and ideas of the market about SSI products. The study analyses
that the socio-economic profile of respondents in a village viz., Barwal in Kathua
district of J&K has a fairly low correlation with marketing-mix variables. Also
key factors and service quality variables, contributing towards customer-
orientation have been identified. The results of the analysis but emphasis on
improving overall marketing-mix framework with special attention to quality
improvement, control in price variation, improving salesman services,
making intensive advertisement efforts, arranging exhibitions and offering
free gifts on purchase of SSI products.

INTRODUCTION

C
ustomer-orientation (CO) focuses on creating superior customer value
based on knowledge derived from customer and competitor analysis
(Day 1994; Kohli and Jaworski, 1990). It is positively related with
core business competency including brand image, technology and its
monitoring and new product service development, financial management,
human resource management, organizational communication etc. (Sin et
al., 2000; Stump, Athaide and Joshi, 2002). A firm can achieve distinct
market advantages by renewing its emphasis on customer value-creation
strategies by delivering superior quality products and services, improving
market intelligence generation, designing customized product and price.
Price-quality product strategies can significantly improve firm performance
but may have only a temporary effect on market share compared to long-
term impact on sale generated by distribution, advertising and promotion
(Srinivasan and Bass, 2000 Dobni and Luffman, 2003; Franses et al.,
2000).

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


2006 by Institute for International Management and Technology. All Rights Reserved.
182 Optimising Customer-Orientation

OBJECTIVES
Customer demand for the new product depends ,in part, on whether
customers know the new product and find it valuable (Aldrich & Fiol,
1994). Given that people are typically uncertainty averse (Kahneman &
Tversky, 1979), an entrepreneur needs to resolve some of the uncertainty
surrounding market demand by possessing knowledge about variables such
as demographic profile, buying motive, buying habits etc. before integrating
enabling technologies, managerial capability, and stakeholder support
necessary for full-scale exploitation of production facilities. Thus,
Objective 1: To assess the extent of interlinkage of respondents demographic
profile with the marketing mix of SSIs.
Customers are value maximisers (Kotler, 2001) and their satisfaction leads
to repeat sale, reduces the product obsolescence, encourages rational
business, build corporate image, ensures viability and thereby helps in
accelerating and sustaining firms survival (Lanning, 1998; Porter 1985).
Strong companies develop superior capabilities in managing core business
processes such as new product realization, inventory management, customer
acquisition and retention, regular remittance, customer service, separate
research and development cell (Kotler 2001; Madasamy and Xavier 2002).
Objective 2: To measure customer satisfaction with regard to marketing-
mix of SSIs.
Theoretical perspectives substantiated by empirical evidence suggests
production orientation based transaction cost economies (Coase, 1937),
pass a portion of the profit margin advantage on to customers in the form of
lower prices. A portion is also typically retained by the firm, which results
in economic rents and superior performance. The broad based exploratory
studies (Gronross, 1982; Parasuraman, Zeithaml and Berry, 1985) have
suggested that service quality stems from a comparison of what customers
feel a seller should offer (i.e. their expectations) with the sellers actual
service performance. Recent studies have established positive relationship
between service quality improvement and customer behavioural intentions
(Parasuraman et al., 1985, 2002).

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183 Andotra, Pooja

Objective 3: To assess the impact of price and quality on the demand for
SSI products.
As markets are becoming fiercely contested, the marketers are forced to
deploy innovative promotion mix to maintain and expand sales. In view of
sky rocketing promotional budgets, top U.S.A advertisers have shifted the
strategic focus of campaigns from long term image building to short-term
performance (Advertising Age, 1987). This shift of focus by the marketers
is labeled as feeding the discount promotion monster (Rapp and Collins
1990) and includes a variety of tools such as sampling, price package,
refunds, value packs, contests, premium, tie-ins and coupons based on
psychographic, demographic, behavioural traits and choice strategy of
customer (Blattberg and Scott, 1990).
Objective 4: To examine the correlates of socio-economic status of
respondents and promotional mix of SSIs.
Physical distribution is becoming customer oriented and aimed at bringing
instantly, costless, seamlessly and frictionless products to consumers
(Hvolby et al. 2001; Bowersox and Closs, 1996; Cooper et al., 1997).
Though constraint by absence of framework to establish a alliance among
supply chain partners, lack of trust inside and outside a company, lack of
tools to measure the effectiveness of a supply chain alliance etc. (Lambert
and Cooper 2000, Stern et al. 1996 Lancioni et al. 2000, Porter 2001),
consumer socio-demographic is vital in its design and flow.
Objective 5 : To investigate the effects of socio-demographic of respondents
on the physical distribution network of SSIs.

GENERATION OF SCALE FOR CUSTOMER ORIENTATION


The research findings have been drawn from the data gathered from 100
randomly selected customers of SSI products from the village Barwal of
Kathua district in India. As many as 47 statements falling within the domain
of customer-orientation purified through factor analysis using principal
component extraction and varimax Kaiser- Normalisation rotation method
which finally resulted into 34 items, grouped under 16 factors (3 product, 4
price, 3 promotion, and 6 distribution) of marketing-mix were pre-tested on
sample respondents. Three factors with Eigen value (> =1) greater than or

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184 Optimising Customer-Orientation

equal to one were extracted from the responses given by customers each in
product and promotion-mix, four factors in price-mix and six factors in
distribution-mix (Kakati and Dhar, 2002). Rest of the factors missed
minimum Eigen value fixed for the analysis. Variables with extremely low
communalities were deleted explaining loadings of less than (FL < 0.5)
and other with greater communalities were accepted indicating their strong
interconnectedness with other variables.
Table 1: Summary of Results Showing Factor Loadings and Variance
Explained From Scale Purification (Using Rotated Compound Method)
M arketing- F a c t o r -w ise dim e n s i o n Factor %
m ix variables loading V ariance
explained
Product First factor 23.65%
Products of SSI are worth buying. .85
P e r f o r m a n ce o f S S I p r o d u c t s i s g o o d . .79
SSI units are quite satisfactory. .75
On the whole SSI products are good. .60 18.57%
Second factor
S S I p r o d u c t s h a v e e s t a b l i s h e d t h e i r o w n i m a g e a n d identity. .76
Packing material used by SSI units is good. .73
Third factor
S S I p r o d u c t s a r e a ttractive. .74 14.7%
SSI units do not cause pollution problem .58
SSI products are of good quality in comparison even
w ith the national brands. .56
Total variance explained 56.92%
Price First fa c t o r 21.14%
Prices charged relate with the value delivered. .80
Price of SSI products match with their quality. .71
On the whole the aforesaid pricing issues in SSI products are well
m anaged. .69
SSI products are reasonably priced. .64
Second factor 15.58%
Retail price of SSI product is a l w a y s f i x e d . .83
Prices are not frequently changed. .67
Third factor 11.04%
SSI units offer seasonal and quantity discounts on their products. .76 10.87%
Fourth factor
SSI products are stable in price. .82 58.64%
Total variance explained
Promotion First factor 21.44%
SSI units participate effectively in exhibitions. .78
Needed advertisement of SSI products is available. .63
Information about SSI products and the company is accessible to you. .62 16.34%
Second factor
Personal selling e fforts of the salesm e n a r e q u i t e e f f e c t i v e . .82
Sales schemes announced by SSI units are quite motivating. .66 16.25%
Third factor
On the whole you get sufficient and satisfactory information before
purchase. .81
SSI products enjoy positive words of mouth. .64 54.03%
T o t a l v a r i a n c e e x plained
D istribution First factor 15.96%
The staff working with the dealers is customer friendly. .90
Stores provide better services. .82
Dealers behave nicely with the customers. .70
Second factor 15.83%
N ew and improved products of SSI are available at various sales outlets. .82
Products are available at the right time at the right place for the least cost. .88
Third factor 12.83%
Dealers happily pass on additional incentives offered by the SSI units. .79
Proper after sale se rvices are provided by SSI units. .74
Fourth factor 10.17%
Authorised dealers extend all possible services. .65
Fifth factor 9.26%
Products are also available with the wholesalers. .86
Sixth factor 9.08%
Products of SSI are difficult to locate at the market place .85
T o t a l v a r i a n c e e x p l a i n ed 73.14%

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185 Andotra, Pooja

Number of iterations = 50
After the varimax rotation, three factors accounted for 56.92 percent of the
total variance in the product-mix, four factors accounted for 58.64 percent
of the total variance in the price-mix, six factors of distribution-mix
accounted for highest variance of 73.14 percent whereas lowest variance
emerged at 54.03 percent with respect to promotion-mix (Table 1). Hence,
the average variance extracted ranged from 54 to 73 percent. The vast
majority of the loadings were in the range of (FL = 0.60) and up and no
item has loadings of less than (FL < 0.50). Other statistical tools viz.,
correlation, averages and chi-square test also provided sound basis for the
selection of sixteen factors.
RELIABILITY AND VALIDITY
To check the reliability of the study and ensuring internal consistency of all
the scale items, split half procedure of Cronbachs Alpha coefficient was
calculated. The total scale reliability was found to be (0.81). The reliability
coefficients obtained from two equal halves were found to be greater and
nearest to (0.50). The first half with reliability coefficient (0.87) met the
criteria as recommended by Nunnally and Bernstein (1994) but the value of
second half (0.48) was found to be less reliable necessitating further
improvement in scale items.

Table 2: Values of Kaiser Meyer Olkin Measure

Marketing-mix variables KMO Values Variance explained %


Product -mix 0.794 56.92
Price-mix 0.693 58.64
Promotion-mix 0.612 54.03
Distribution-mix 0.506 73.14

The values of Kaiser-Meyer-Olkin measure of sampling adequacy and


variance explained for four variables viz., product (.79), price (.69),
promotion (.61) and distribution-mix (.50) (Table 2) indicate construct
validity of the construct (Hair et al. 1995).

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186 Optimising Customer-Orientation

Table 3: Validity (Convergent) of Marketing-Mix Variables Using Karl


Pearsons Coefficient of Correlation

Marketing-mix variables Correlation coefficients


1. Product and Pricing-mix 0.33
2. Product and Promotion-mix 0.19
3. Product and Distribution-mix 0.03
4. Price and Promotion-mix 0.23
5. Price and Distribution-mix -0.172
6. Promotion and Distribution-mix 0.22
7. Mean satisfaction and Product-mix 0.59
8. Mean satisfaction and Price-mix 0.46
9. Mean satisfaction and Promotion- mix 0.14
10. Mean satisfaction and Distribution-mix 0.02
Overall customer orientation 1.199

Correlations greater than 0.30 are significant at p<0.05.


Tables 3 summarizes the status of convergent validity based on average
mean score of marketing-mix variables and overall mean satisfaction using
Pearsons correlation. Inter-item correlations provide important information
regarding internal consistency (Robinson et al., 1991). It can be observed
from Table 3 that overall mean suggests a positive and significant
relationship with the respective variables representing product (0.59), price
(0.46) and between product and pricing-mix (0.33) aspects. Correlation
values of price with promotion (r = 0.23) does not quite meet the set criteria
whereas price and distribution-mix suggest negative relationship (r = -
.172). Further promotion and distribution are again insignificantly correlated
(r = 0.220). On an average overall customer-orientation that arrived at
1.199 meets extensive convergent validity criteria with respect to other
marketing-mix variables.
RESULTS AND DISCUSSION

Interlinkage of Demographic Profile with the Consumption Behaviour


of Respondents
Exploratory consumer behaviour is consistently and substantially affected
by socio-demographics such as gender, age, education and income levels

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187 Andotra, Pooja

(Steenkamp and Burgess, 2002). They also influence consumer behaviour


and moderate the link between satisfaction and customer loyalty (Jones , et
al., 2001; Capraro, et al., 2003).
The extent of customer-orientation in SSIs operating in the industrial
estates of tehsil Kathua has been worked out by selecting the aforesaid
village and administering a questionnaire for eliciting responses based on 5
point Likert scale. The population of village Barwal numbering 2,904 and
502 households in 2001 rose to 2,921 and 753 respectively in 2003 (Gram
Panchayat Census, 2003-07).
The extent of customer- orientation from 62 males and 38 females
residing in the village was worked out by further dividing the respondents
into five variables and eighteen sub-variables.
Majority of customers were found to be housewives / ex-servicemen
(61%) followed by government employees (20%), businessmen (9%)
and agriculturists and servicemen constituted equal but lowest percentage
(5%) of sample population. Education-wise, majority of respondents
educated upto school-level (65%), followed by college level respondents
(24%), upto university level (8%) and illiterates (3%). Age-wise,
respondents in descending order were 37% of the age between 35 to 50
years, 31% of the respondents are aged between 20 to 35 years, 29%
have an age between 50 years and above, and 3% of the respondents are
below 20 years. Income-wise, 100% of the respondents belonged to the
income group of Rs 15,000 p.a. and above.
Mean customer orientation in terms of opinion from different
demographic segments of sample respondents has been summarized in Table
4. Literate males numbering 22 up to age group of 35 years have accorded
highest score to place effectiveness (4.04) followed by product adequacy
(3.86) and price reasonability (3.86) and lowest mean value went to
promotion optimality (3.59). Place effectiveness at mean score (4.17)
followed by product adequacy (3.92), price reasonability (3.92) and
promotion optimality at (3.86) was found among 39 literate males falling
above the age group of 35 years.

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188 Optimising Customer-Orientation

Table 4: Segment-Wise Socio-Economic Customer Orientation in


Village Barwal
Gender education age
Gender Mean Level Mean Group and Mean Segment-cum p Over all
and and number wise customer customer
number number orientation orientation

Product = 3.86
Upto 35 Price = 3.86
years (22) Promotion = 3.59
3.82 3.84
Distribution = 4.04
/
Literate 3.84
Product = 3.92
(61) \ Above 35
Price = 3.92
years (39) 4.06
Promotion = 3.86
3.97
Male / Distribution = 4.17
(62) 3.98
\ / Product = 4
Upto 35 Price = 4
Illiterates 4.50 years (1) 4.50
Promotion = 4
(1) \ Distribution = 4
4.00
Sample Above 35 --
--
respondents 3.95 years (-)
(100) --

Product = 4
Upto 35 Price = 4
/ years (12) 3.87 Promotion = 3.83
Distribution = 4
3.96
Literates 3.94
Female (35) \ Above 35
(38) Product = 3.83
years (23) 3.98 Price = 4.13
/
3.93 Promotion = 4
\ Distribution = 4
3.99
Illiterates
(3) Upto 35
/ ---
years (-) --
3.83
\
--
Product = 3.33
Above 35 Price = 4
years (3) 3.83 Promotion = 4
Distribution =4
3.83

Mean scores for all the four variables of marketing-mix were equal and
above average (4.00) as revealed by illiterate males falling up to age group
of 35 years. Promotion optimality was lowly scored at mean value (3.83),
whereas, highest and equal scores went to product adequacy (4.00), price
reasonability (4.00) and place effectiveness (4.00) as judged by literate
females numbering 12 falling up to the age group of 35 years. Literate
females numbering 23 falling above the age group of 35 years placed
price reasonability high at mean score (4.13), place effectiveness and
promotion optimality moderate at mean score (4.00) each and lowest
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189 Andotra, Pooja

mean value (3.83) went to the various aspects of product adequacy. Illiterate
females numbering 3 falling above the age level of 35 years provided
highest and equal scores (4.00 each) to price, promotion and place and the
lowest mean value went to the various aspects of product adequacy (3.33).
Thus, the forgoing tables suggest that the status of customer-orientation
has differed significantly according to professional, educational and income
levels of respondents. Overall mean customer orientation among both male
and female customers of SSIs arrived at 3.98 and 3.93 respectively. Males
accorded highest scores to place effectiveness (4.12) followed by product
adequacy (3.9), price reasonability (3.9) and promotional optimality
(3.77). Females accorded highest score to price reasonability (4.08)
followed by place effectiveness (4), promotion optimality (3.95) and
product adequacy (3.84).
Marketing-mix and Extent of Customer- Orientation
The significance of association between socio-economic profile of
consumers and marketing-mix variables measured with the help of statistical
technique of chi-square is given in the table 5. Since the calculated value
of chi-square is less than the table value at 5% level of significance thereby
indicating insignificant association between age, education and profession
and 4Ps of marketing-mix variables of SSIs.
Table 6 depicts thirty-three dimensions of customer-orientation segregated
into two orientation regions. The mean responses reflect high level of customer
orientation with regard to performance (3.99) and attractiveness (4.01) and
image, identity (3.51) and packing (3.94) under product category; reasonable
(3.79) and fixed prices (3.21) and infrequent change in prices (3.29) under
pricing domain; timely information on new and improved products (3.85)
under promotion mix and availability of products with wholesalers (3.79),
efficient and adequate customer services (3.99), convenience in locating
products (4.08) and cooperative and friendly dealers (4.08) in the domain
of distribution mix. These customers expressed least customer orientation
(co) in terms of inconvenient purchase schemes (1.84), infrequent and
ineffective (1.59) promotional communication, lack of sufficient and
informative advertisements (1.59) and personal selling efforts (2.42), and
lack of positive word of mouth (2.99) in the marketing -mix of SSI products.
Thus, there is a need to maintain the present level of effectiveness with
regard to product sale services which have generated above average score
and also more attention has to be given to those which obtained below
average mean values on 5-point Likert scale.

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190 Optimising Customer-Orientation

Table5: Chi-Square Values for Determining Significant Relationship


Between Socio-Economic Profile of Respondents and Strategical
Marketing-Mix Variables of SSI in Village Barwal
Socio-economic Calculated value Degrees of Table value at 5%
variables freedom level of
significance
Age 0.0185 9 16.9
Education 0.0864 9 16.9
Nature of 0.1187 12 21.0
profession

Table 6: Dimension-Wise Means Customer Orientation Falling Below


and Above Cut off Point of Three on Five Point Likert Scale
Below average (- 3 points) Above average (+ 3 points)

F3 = SSI products are of good quality in comparison F1 = Products of SSI are worth buying (4.02).
even with the national brands (2.71). F2 = Performance of SSI products is good (3.99).
F5= SSI units are quite satisfactory (3.91).
F4 = SSI units do not cause pollution problem F6 = SSI products are attractive (4.01).
(2.16). F7 = SSI products have established their own
image and identity (3.51).
F11 = SSI products are stable in price (2.5). F8 = Packing material used by SSI units is good
(3.94).
F13 = SSI units offer seasonal and quantity F9 = On the whole SSI products are good (3.98).
discounts on their products (2.55). F10 = SSI products are reasonably priced (3.79).
F12 = Price of SSI products match with their
F18 = SSI units participate effectively in quality (3.69).
exhibitions (1.53). F14 = Prices are not frequently changed (3.29).
F15 = Retail price of SSI product is always fixed
F19 = Information about SSI products and the (3.21).
company is accessible to you (1.59). F16 = Prices charged relate with the value delivered
(3.91).
F20 = Needed advertisement of SSI products is F17 = On the whole the aforesaid pricing issues in
available (1.59). SSI products are well managed (3.95).
F24 = On the whole you get sufficient and
F21 = Personal selling efforts of the salesmen are satisfactory information before purchase
quite effective (2.42). (3.85).
F25 = New and improved products of SSIs are
F22 = Sales schemes announced by SSI units are available at various sales outlets (3.96).
quite motivating (1.84). F26 = Stores provide better services (3.99).
F27 = Authorised dealers extend all possible
F23 = SSI products enjoy positive words of mouth services (3.86).
(2.99). F28 = Products are also available with the
wholesalers (3.73).
F29 = Products of SSI are difficult to locate at the
market place (3.13).
F30 = Dealers happily pass on additional incentives
offered by the SSI units (3.17).
F31 = Products are available at the right time at the
right place for the least cost (4.08).
F32 = Dealers behave nicely with the customers
(4.08).
F33 = The staff working with the dealers is customer
friendly (4.04).

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191 Andotra, Pooja

Exploratory consumption behaviour is surrounded by wide variety of


components such as risk-taking, innovativeness, variety seeking, culture,
income, etc. triggered by various stimuli (Baumgartner and Steenkamp,
1996). Purchase pattern of consumers seeking home economics is affected
by the monthly income, product awareness and knowledge, perceptions,
switching costs, and decision-making and information processing style
(Hauser and Wernerfelt, 1990; Payne et al., 1992). Consumers frequently
buy a product either at the time when there is need to buy or make bulk
purchase on getting their monthly pay. Price promotions such as quantity
discounts, coupons etc. enhance consumer price sensitivity and bulk
purchasing power and have a positive relationship between cumulative
satisfaction and usage level of a service (Mela, et al., 1997; Bolton and
Lemon, 1999). After sale services are directly linked to customer loyalty,
positive word of mouth, price premiums, repurchase intentions (Rust and
Oliver, 1994) which otherwise increase their ability of making frequent
bulk purchase as per their requirement.
The mean values of customer orientation with marketing-mix of SSIs
have been obtained in three different situations namely, when respondents
get their monthly pay or when there is requirement or when additional
income comes.The respondents purchase behaviour pattern exhibited highest
mean product-mix scores to purchase as per the requirement (4.02),
followed by purchase on receiving monthly pay (3.95) and purchase on
receiving additional income (3.50).
Price-Quality Mix
Change in the marketing-mix elements of all brands cause a consumer
transitional behaviour to fluctuate over time. Consumers choice probabilities
subsequently leads to brand switching which is the result of changes in the
marketing-mix variables viz., price variations, quality changes, special brand
characteristics and other occasions / reasons posing changes in the consumer
purchase behaviour pattern (Bucklin, et al., 1998). Taking price as a
significant evaluator of brand credibility, Zhou, et al., (2002), evaluated
that consumers mostly rely on price and brand to infer product quality
whereas others (Dodds, et al., 1991) provided contrary view on it having
negative impact on consumer purchase behaviour. In some researches,
product additional features are considered as significant non-price marketing
determinant of consumer brand switching decisions. Consumers who are

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192 Optimising Customer-Orientation

loyal to higher quality brands have been found to be less price-sensitive


than consumers who are loyal to lower quality brands (Krishnamurthi, et
al. 1992). Empirical evidence suggests that if price signals quality, brand
name information strengthens the use of price as a signal (Brucks and
Zeithaml, 1991). Consumer brand switching probabilities for quality, price
and additional features differ in terms of their demographic characteristics
including gender, education, profession etc. (Heilman and Bowman, 2002).
Table 7 depicts price-quality elasticity of demand for SSI products
based on the socio-economic dimensions of consumers in village Barwal.
Brands purchased by the consumers differed when the price was less or
quality was better or some additional features were found in the SSI
products. Jumbo cement and Realfood bread were the two main brands
purchased by the price-conscious customers (9 males and 4 females)
belonging to different educational levels. These were followed by Amar
cattle feed, Sifti ghee, Surya rusk, Air Pilot fans, Swad mustard oil, Supreme
water tank, Shahzada vanaspati, MFK iron plate, Moonlight rice, Kamal
basmati rice, Style and Godrej water tank, Shiva flour, OK plywood, Ujala
cattle feed, Bansri groundnuts, Diamond paints etc.
In the category of education, quality-conscious consumers numbering
53 males and 33 females preferred Surya rusk, Sifti desi ghee, Amar cattle
feed MFK iron plate, Realfood bread and Shahzada vanaspati ghee brands.
Brands rarely bought by the consumers included B.J papad / barian / noodles,
Dhanwal pipes, Britannia cricket bat, Kailash and Modern hosiery.

Table 7: Price-Quality Elasticity of Demand for SSI Products Based on


the Socio-Economic Dimensions of Respondents in Village Barwal
Gender Number Education Product purchased Brand purchased

1. Price is less
Male 5 Upto school Rusk, Bread, Cement, Surya, Realfood, Jumbo,
level Vanaspati ghee, Cattle Shahzada, Amar
feed
Male 3 College Bread, Desi ghee, Realfood, Sifti, Shahzada,
Vanaspati ghee, Cattle Amar, Jumbo
feed, Cement
Male 1 University Cattle feed, Mustard oil, Amar, Swad, Realfood, Jumbo
Bread, Cement
Female 2 Illiterate Desi ghee, Bread, Rusk, Sifti, Realfood, Surya, Jumbo,
Cement, Fan Air pilot
Female 2 School level Desi ghee, Bread, Rusk, Sifti, Realfood, Surya, Air
Fan, Cement pilot, Jumbo
Sub-total 13

2. Quality is better

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193 Andotra, Pooja
Gender Number Education Product purchased Brand purchased

2. Quality is better
Male 16 Upto school Cattle feed, Rusk, Cement, Amar and Ujala, Surya, RCI &
level Iron plate, Water tank, Jumbo, MFK, Style, Godrej &
Plywood, Basmati Rice Hindustan, OK & Shree, Ratna

Male 3 College Cattle feed, Rusk, Amar, Surya, Modern &OK,


Plywood, Iron plate, MFK, RCI, Jumbo & ACE,
Cement, Water tank, Sheetal, Kamal
Basmati Rice
Female 24 University Rusk, Bread, Cement, Surya, Realfood, Jumbo, OK,
Plywood, Water tank, Iron Godrej, MFK
plate
Female 4 Upto school Rusk, Bread, Iron plate, Surya, Realfood, MFK, Agro,
level Cattle feed, Basmati Rice, Amar & Ujala, Moonlight,
Plywood, Water tank Modern & OK, Style &
Hindustan
Female 4 College Bread, Water tank, Cattle Realfood, Style, Ujala, Surya,
feed, Rusk, Iron plate, MFK, D.O Brand (Ratna)
Basmati rice
Female 1 University Bread, Rusk, Iron plate, Realfood, Surya, MFK, Amar,
Cattle feed, Water tank, Style, OK
Plywood
Illiterate Desi ghee, Rusk, Bread, Sifti, Surya, Realfood, MFK,
Iron plate, Water tank, Sentex, Amar
Cattle feed
Sub-total 86
3. Additional features
Female College Desi ghee, Mustard oil, Sifti, Swad, Surya, Amar
Rusk, Cattle feed
Sub-total 1
Grand-total 100

One female consumer educated upto college level and included in the
category of feature-conscious consumers purchased Sifti desi ghee, Swad
mustard oil, Surya rusk and Amar cattle feed brands.
Customer satisfaction is a consequence of service quality having
differential effect over it being a better predictor of behaviour intentions in
the short-term (Dabholkar, 1995; Spreng and Mackoy, 1996). Further, Taylor
and Baker (1994) examined it as a moderating variables in the relationship
between service quality and repurchase intentions which are precisely
determined by perceived value and perceived quality since quality, value,
satisfaction directly affects customer loyalty, positive words of mouth,
price premiums and repurchase intentions (Athanassopoulos, Bernhardt
et al., 2000).

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


194 Optimising Customer-Orientation

To measure mean service quality satisfaction among the respondents


subdivided into income, occupation, age, level of education and gender, a
five point Likert scale ranging from strongly disagree to strongly agree
was used. Table 8 exhibits the results of SERVQUAL covering reliability,
responsiveness, assurance, empathy and tangibility aspects of 47 service
quality statements.
The mean SERVQUAL scores across all socio-economic dimensions
was highly placed on responsiveness (3.85), moderately expressed on
assurance (3.34), tangibility (3.36) and reliability (3.62) and least on
empathy (2.88).
Table 8: Mean Service Quality Satisfaction Based on Socio-Economic
Profile of SSI Customers in Village Barwal

Socio-economic Service Quality Dimensions


variables Reliability Responsiveness Assurance Empathy Tangibility Total
1.Gender
Male 3.64 3.85 3.37 2.88 3.36 3.42
Female 3.54 3.84 3.30 2.87 3.35 3.38
Average 3.62 3.85 3.34 2.88 3.36 3.41
2. Nature of profession
Agriculture 3.68 4.20 3.19 2.70 3.35 2.76
Business 3.67 4.11 3.52 2.97 3.37 3.52
Government 3.59 3.80 3.43 2.82 3.35 3.4
Service 3.36 3.40 2.84 2.66 3.30 3.11
Others 3.64 3.84 3.34 2.92 3.37 3.42
Average 3.62 3.85 3.34 2.88 3.36 3.41
3. Education
Illiterates 3.47 4.00 3.36 2.77 3.52 3.42
Upto school level 3.62 3.90 3.34 2.86 3.37 3.42
College level 3.67 3.75 3.35 2.95 3.41 3.42
University level 3.5 3.62 3.28 2.91 3.09 3.28
Average 3.62 3.85 3.34 2.88 3.36 3.41
4. Age
Under 20 yrs 3.53 4 3.22 2.79 3.31 3.37
20-35 yrs 3.54 3.65 3.28 2.98 2.91 3.25
Above 35 yrs 3.56 3.86 3.27 2.75 3.38 3.36
50 yrs and above 3.79 4.03 3.52 2.96 3.54 3.57
Average 3.62 3.85 3.34 2.88 3.36 3.41
Grand Average 3.62 3.85 3.34 2.88 3.36 3.41

Thus, it can be concluded that consumer purchase behaviour is influenced


by multiple factors but quality and price remained dominant.

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


195 Andotra, Pooja

Respondents Socio-Economic Status and Promotion-Mix


Ehrenberg, et al., (1994) examined that consumer promotions for established
brands have no noticeable effect on subsequent sales, brand choice and
brand loyalty while the researchers like Guadagni and Little (1983), Gupta
(1988) and Kamakura and Russell (1989) empirically investigated its short-
term effects. Promotional effectiveness has positive impact on exploratory
consumer behaviour of individuals belonging to different educational and
income groups while it has insignificant impact on gender and age
(Baumgartner and Steenkamp 1996; Winter, et al., 1998).
Table 9: Correlates of Promotion-Mix Statements and
Socio- Economic Variables
Socio-economic variables Gender Profession Education Age

Promotion mix
statements
1. Availability of new and improved product
information at retail outlets. .146 .049 -.028 -.021
2. Effective participation of SSIs in exhibitions. -.142 -.010 .056 -.035
3. Accessibility of SSI product and company
information. -.218 -.108 .200 -.111
4. Availability of needed SSI product
advertisement. -.187 -.013 .193 -.092
5. Effective personal selling efforts of salesmen. .088 .170 .009 .040
6. Motivating sales schemes announced by SSI
units -.082 .021 .156 .033
7. Non-descriptive product labeling. .235 .004 -.212 .069
8. Positive words of mouth for SSI products. .170 .032 .073 .056
9. Availability of satisfactory SSI information
before purchase. -.007 -.110 -.138 .178
10. Reliability of SSI wrapers and labels. -.197 -.241 .027 .087

Table 9 exhibits correlates of socio-economic status of respondents and


their responsiveness to promotional mix statements of SSIs in village Barwal.
The values of correlation do not correspond to the standard coefficient
(0.30) thereby indicating fairly low correlation between effective personal
selling efforts of salesman*, positive words of mouth for SSI products**,
Non descriptive product labeling*** and new and improved product
information at retail outlets**** with respect to gender (.088)* (.170)**
(.235)*** (.146)****, profession (.170)* (.032)** (.004)*** (.049)**** ,
education (.009)* (.073)** and age (.040)* (.056)** whereas other statements
such as effective SSIs participation in exhibitions (-.142)* (-.010)**,

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


196 Optimising Customer-Orientation

accessibility of SSI product and company information (-.218)* (-.108)**,


availability of needed SSI product advertisement (-.187)* (-.013)**,
availability of satisfactory SSI information before purchase (-.009)* (-
.110)**, and reliability of SSI wrappers and labels (-.197)* (-.241)**
were found to be negatively correlated.1
An overall analysis of the statements suggests promotional effectiveness
in terms of effective personal selling efforts of salesman, positive word
of mouth for SSI products, non-descriptive product labeling, effective
sales schemes of SSIs, new and improved product information at retail
outlets effective SSIs participation in exhibitions accessibility of SSI
product and company information, availability of needed SSI product
advertisement, availability of satisfactory SSI information before purchase
and reliability of SSI wrappers and labels by SSIs functioning in district
Kathua.
Socio-Demographic Status of Respondents and Distribution-Mix
Bolten and Lemon (1999) empirically demonstrated positive relationship
between cumulative satisfaction and service quality performance while
Smith, et al., (1999) and Tax et al., (1998) gave broader view by laying
emphasis that positive perceptions of justice or fairness in service recovery
contribute to customer satisfaction with complaint handling, proper packaging
and packing facilities which in return increase customer commitment and
trust (Roest and Pieters 1997). Donthu and Yoo (1998) empirically
investigated the effects of socio-demographics on service quality expectations
which are met / fulfilled through easy product availability, quick order
processing, complaint handling, and customer friendly dealers and
suppliers. These socio-economic variations in attitudes and preferences
are likely to evoke different customer responses to perceived distribution-
mix services.
The results of correlates of distribution-mix statements with all socio-
economic variables as evident from Table 10 were positive but statistically
insignificant not meeting the standard coefficient criteria (0.30) with respect
to promptness in processing orders by SSIs ,difficulty in locating SSI
products, proper after sale services and dealers happily passing on
additional incentives and negative responses with gender*, profession**
and education*** in terms of store services(-.070)* (-.165)** services
provided by authorized dealers (-.055)* (-.117)**, product availability

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


197 Andotra, Pooja

with the wholesalers (-.009)* (-.121)**, behaviour of dealers (-.228)* (-


.078)** and their staff with the customers (-.130)* (-.105)**,readily
available products with retailer(-.143)***, new product availability at
various sales outlets(-.225)***, acceptance of defective products by SSIs(-
.276)***, product distribution with proper packages(-.062)*** and product
availability at right time, place and for least cost(-.162)*** thereby
indicating improvements in the overall distribution-mix strategy of SSIs in
the Barwal village of Kathua district.2
Table10: Correlates of Distribution-Mix Statements and
Socio-Economic Variables
Socio-economic variables Gender Profession Education Age
Distribution -
Mix statements
1. Products are available as and when we
approach the retailer / factory. -.059 .059 -.143 .048
2. New and improved products of SSIs are
available at various sales outlets. -.019 .005 -.225 .062
3. Stores provide better services. -.070 -.165 .041 .072
4. Authorised dealers extend all possible services. -.055 -.117 .040 .174
5. Products are also available with the wholesalers. -.009 -.121 .016 .003
6. Promptness in processing orders by SSIs. .175 .031 .015 .184
7. Products of SSI are difficult to locate at
the market place. .220 .063 -.125 .119
8. Proper after sale services are provided
by SSI units. .107 .212 -.114 .081
9. SSI products are happily taken back
whenever found defective. -.009 .077 -.276 .219
10. Dealers happily pass on additional
incentives offered by the SSI units. .225 .156 -.025 -.098
11. SSI products are distributed with proper
packages to avoid spoilage. -.016 .161 -.062 .187
12. Products are available at the right time
at the right place for the least cost. -.142 .006 -.162 .183
13. Dealers behave nicely with the customers. -.228 -.078 .005 .188
14. The staff working with the dealers is
customer friendly. -.130 -.105 .021 .042

Correlations greater than 0.30 are significant at p<0.05.


STRATEGICAL MARKETING-MIX IMPLICATIONS FOR SSIs
Srinivasan and Bass (2000) demonstrated, theoretically and empirically
that marketing-mix variables have only a temporary effect on consumer
purchase of SSI products. Long-term impact of price promotions was

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


198 Optimising Customer-Orientation

evaluated on three components of brand sales namely category incidence,


brand choice and purchase quantity. Jedidi et al., (1999) gave contrary
view and found negative effect of promotions on brand equity while
advertising was found to have positive effect (Mela et al., 1997). Consumers
balance the value of product in terms of quality, price, quantity, utility,
special features and after-sale services. They compare brands price and
quantity with competitive brand in order to reach the acceptance range.
Many researchers like Triandis, et al., (1990) found weaker effects of
marketing-mix variables on consumer purchase behaviour leading to purchase
dissonance with SSI products. Similar purchase dissonance was observed
in suggestions offered by the respondents of village Barwal for SSI products.
In the product-mix suggestions, quality improvement was given highest
weightage (17.2%), followed by improvement in packing (3.4%), stoppage
of food adulteration (1.8%), non-duplication of brand names and
maintenance of proper product guarantee both at same level (1.2%),
while lowest ratings (1%) out of the total (25.2%) went to the control in
pollution by SSIs and improvement in taste and attractiveness of products.
Control in Price-variation and maintaining reasonable prices by SSIs
were given highest ranking at 13.2% and 3.8% respectively out of the total
(19%) and lowest percentage was found in the response given to the
statement of requirement of printing prices on each products (0.6%) in
the price-mix suggestions. Ineffective Services of sales people was given
lowest ratings (11.2%) out of the total (36.8%) while highest was given to
the requirement for intensive advertising (16%) in the promotion-mix
framework suggested by SSI customers. Distribution-mix framework
revealed only 0.2% response to the need for acceptance of defective
products and highest response rate went to the need for offering free gifts
along with products at 13.2% out of the total (18.8%) while moderate
response rate was found in the statements of ensuring reliability of
wrappers and labels and making products readily available at 1.6% and
2% respectively. Thus, from the overall suggested framework it can be
concluded that SSI units need to devise an appropriate strategy for improving
quality, control in price variation, intensive advertising, offering free
gifts, improving salespersons services and arranging product
exhibitions for improving overall customer orientation in their marketing-
mix operations, particularly at the retail level.

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


199 Andotra, Pooja

Beyond the theoretical significance of understanding impact of


promotion-mix on purchase behaviour of respondents, further research could
be investigated on various facets of Action Marketing based on systematic
understanding of consumer sensitivity. Knowledge about perception and
action of respondents to different promotion-mix is necessary in adoption
of non-discriminating attitude to promotion (Henderson 1987) and fruitfully
directing endeavours of SSI owners towards brand extension, line extension
and brand proliferation. The results of the study also emphasizes the
importance of assuming a simultaneous, multivariate analytical approach
to justify the efforts to improve quality, value, and satisfaction collectively
as a means of improving customer service perception. The research also
illuminates the need for additional research that considers the influence of
service value on consumer decision-making considering individuals
characteristics as risk aversion, involvement, and product category experience/
expertise and corporate profits. Further researches to enhance competitiveness
of SSIs could also be worked by altering economic structure through the
implementation of emerging electronic technologies such as Supply Chain
Management (SCM),Enterprise Resource Planning (ERP),Electronic Data
Interchange (EDI), Electronic Fund Transfer (EFT) and Customer
Relationship Management (CRM) in the different functional areas which
subsequently results into better partnership management with suppliers,
relationship management with customers, reduced procurement cycles,
effective innovation and time management solutions. Above all, feasibility
of applying manufacturing technologies which combine both scope and
scale capabilities required to be updated through systems, devices, and
stations (SDS) and integrated and managerial systems (IMS) could also be
considered. These will produce strategic impact on firms operating
environment such as reduced product development time; labour costs savings;
finance availability; a need for product change flexibility; environmental,
safety or health concerns; increased profitability or plant performance ; and
customer requirements. A large and multiple sample is likely to offer
comparatively better insights and enhance generalisibity of the findings.
NOTES
1. *, **, ***, **** signify correlation coefficients for first, second, third
and fourth statements, respectively (for promotion-mix).
2. *, **, *** signify correlation coefficients with respect to gender,
profession and education, respectively (for distribution-mix).

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


200 Optimising Customer-Orientation

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Neetu Andotra Ph.D., is Reader, Department of Commerce,


University of Jammu, Jammu.
Pooja, Department of Commerce, University of Jammu,
Jammu.

Journal of Services Research, Volume 6, Number 2 (October 2006 - March 2007)


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