Chapter 1: Introduction Research Background At present, various marketing tools are being used by hospitality industry which is constantly

augmenting with time. One can notice a frantic contention among hotels for implementing new marketing strategy where customer is the centre of attraction and imperative element for growth prospect. Research according to Mangold et al. (1999) has established the considerable effect of "word -of-mouth" (WOM) on customer 23 purchasing

behaviour. On the other hand, Maxham (1999) declared the significa nce of WOM in service industry as it aids vital information to the customers about a firm that oftentimes helps them to decide in supporting or degrading the firm. Traditional WOM communication is a primitive way of sharing thoughts, ideas and it has exist ed ever since people began to exchange information. Change is constant and as the time has changed, so has the nature of WOM. It has evolved from an insentient process to something that modern advertiser try to influence and use for business enhancement (Sernovitz, 2009) (1). Word -of-mouth as stated by Smith et al. (2007) has become significant to businesses as traditional marketing methods (television, radio, and direct mail etc.) are not as effective at reaching target customers as they once were. That is why in recent years there has been an increasing interest towards more cost effective, unconventional methods of marketing i.e. WOM (Keller, 2007). Mangold et al. (1999)(PROPOSAL) proposed that WOM is more dominant and significant in service industry than in the business sector as customers 11 have been perceived to rely on WOM to diminish the level of perceived risk and uncertainty which are often associated with

service purchase decisions. As per Allsop et al. (2007) the increasing lack of trust in marketing communication has left consumer to seek information from other sources as a result word-of-mouth become most consistent source of information as consumer gives more value to recommendations fro m friends. Marketer-initiated communication appears to be declining as consumer driven suggestions and recommendations of product increases the credibility of information and leaves more impact on purchase decision of customers (Keller, 2007). The influenc e of WOM marketing is nurturing and getting even stronger (Allsop et al., 2007). As per authors (Keller, 2007) research demonstrates that WOM communication consistently surpasses the image of product that was generated due to advertisements in magazines, television commercials and radio, because personal recommendation adds more value to the product thereby leaving much more impact on consumers. Thomas (2004) contended that retaining old customers and acquiring new ones is one of the primary goals of any co mpany, which easily can be achieved by marketing communication tool i.e. 'WOM' because authors (Villamueva et al., 2008) proposed that WOM communication can help to acquire new consumers. Today, WOM is no longer restricted to face -to-face communication. As per Ecceleston and Griseri (2008) online environment offers innumerable new opportunities for

businesses to influence the consumers' behaviour and opinions towards product. This relatively new phenomenon as stated by Keller (2007) is referred as online WOM (e-WOM) and it is a primary element of marketing practise due to great internet usage. The increasing number of people using internet indicates a potential market for companies to aim at (Pitta and Flower, 2005) and in conjunction with the growth of social media, several companies are now focusing on this area (Computer Economics Report, 2010). This represents that companies' interest in online WOM marketing has increased and will keep on growing as internet matures. (word of mouth in service industry has to be added) Hence, it is easy to comprehend that WOM plays a noteworthy role in service industry and service purchasing behaviour of customers. After seeing the significant impact of WOM in influencing consumer behaviour, several hospitality businesses f or rapid business expansion are shifting from traditional word of mouth to online word of mouth to cover large consumer market. Although a great deal of work has been done on effectiveness of WOM in popular literatures, however there has been a very limite d research carried out contrasting traditional/offline -WOM and electronic/online-WOM (e-WOM). This study is attempted to fill the research gap and is intended to do a comparison of offline WOM (traditional) with e- WOM (modern). It is going to evaluate the effectiveness if offline-WOM is more effective than e -WOM in influencing consumer purchase decision in service industry or vise -versa. The research is conducted on consumer purchase behaviour to select a restaurant to dine out in people from Sheffield. Th is study evaluates both market communication tool and examines the potency of traditional word -of-mouth in comparison with contemporary word -of-mouth (eWOM) on consumer behaviour in hospitality business. It will conclude with which of the marketing commun ication tools (offline-WOM or e-WOM) are more powerful in influencing consumer buying behaviour for selection of a restaurant in Sheffield. Research Aim To compare 7 traditional word-of-mouth (offline) effectiveness with electronic word-of-mouth (contemporary) on consumers behaviour to choose a restaurant in Sheffield Research Objectives 20 This research

is intended to investigate the impact of 'word-of-mouth' on consumer decision making behaviour to choose restaurants in Sheffield primarily. 24 In order to

achieve the research aim, the study will also explore the most encouraging factor (food quality, service quality, food price, restaurant atmosphere) that influences customer purchasing behaviour to choose the restaurant. The findings can aid restaurants in Sheffield to organise their market ing strategies in a better way to target consumers based on their 19 demographic characteristics (18-24, 25-

34, 35-44 and 45+) and refurbish it in 22

such a way that it amalgamates

with the current consumer trend for their business growth and enhancement. Henceforth, in pursuit of assessing the impact of word -of-mouth on consumer buying behaviour we have set few objectives to accomplish to reach our goal:

To

determine the most important factors (food qualit y, atmosphere, food price, service quality) that influence the decision of consumers to choose a restaurant to dine out. To explore different marketing approaches i.e. social medi a 7 (electronic

word-of-mouth) word-of-mouth (recommendations) and advertisements (television, newspaper, magazine) used by hospitality businesses to persuade customers. To 7 assess the impact of word of mouth (traditional)

and social media (contemporary) on purchasing decisions of customers based on their demographic characteristics. Research Methodology In order to obtain reliable and factual information about the study, the researcher chose to implement both primary and secondary methods of data collection. The research of this dissertation can be split into two parts and includes: The review of relevant literature in the field of study. It's a form of secondary research to gain insights into different aspects and knowledge around the to pic. It is comprised of findings from sources like articles, books and previous studies surrounding the examined topic. In second part, a primary research is undertaken and is based on data collected through questionnaire and interviews. Organisation of study This dissertation is organised around 5 chapters: Chapter 1: deals with research background, introduced 15 research aim and the objectives researcher has to accomplish

in order to reach aim accompanied with research methodology 15

and

organisation of study. Chapter 2: holds literature review around consumer behaviour and marketing strategies in hospitality business es. It also provides detailed discussion on word -of-mouth including social media. Finally it compares 7 traditional word-of-mouth with electronic word-ofmouth. Chapter 3: introduces methodology employed for primary research and includes questionnaire design, techniques and sampling method. Chapter 4: focuses

on findings and outcomes from the data collected. 14 Chapter 5: is the final

chapter which comprehensive concludes the research and makes recommendations, list down limitations and suggestion for 14 future research

work. Chapter 2: Literature ReviewIntroduction This chapter critically analyse and evaluate consumer buying behaviour towards selection of restaurant. All the major factors that affect consumer purchasing behaviour such as service quality, food price, food quality and atmosphere will be focused initially. In addition differe nt marketing strategies used by hospitality business to attract customers accompanied with factors like word of mouth, social media and advertisements will be discussed afterwards. The chapter can be divided into three sections. Firstly it will look upon consumer behaviour towards food price, quality, atmosphere and brand. Secondly it will discuss the implication of word of mouth, social media and advertisement in influencing customers buying behaviour. And the last section will deal with comparison of 7 traditional word of mouth with electronic word-of-mouth in influencing purchase behaviour of customers. Food Services Industry The food

service industry is comprised of attributes that distinguishes it 3 from other areas of service sector such as financial and professional services (John,

1999)-John and Pine. 3 It is closely connected with food choice and

quality, however at the same time it has closely been concerned to offer

rich meal experience to which many other factors like atmosphere, customer services etc. contribute. The food service industry has become extremely competitive because of t he rising demand and increasing 1 number of foodservice outlets to meet the demand. As the consumption of meals outside the home continues to rise, the restaurant industry is stated to be among the fastest growing industries in world. Kotler et al. (1998) proposed that with the rising competitiveness in restaurant industry and similarity of services or products offered by restaurants, it has become significantly important for restaurant

operators to identify the factors that determine the basis upon which customers choose between restaurants. Many Authors (Auty, 1992; Johns and Pine, 2002; W all and Berry, 2007) constructed that restaurant consumers use different criteria such as food quality, service quality, restaurant atmosphere, menu variety, dining experience and value for money when making restaurant decisions. 1 Criteria also vary according to the type of restaurant and dining occasion. According to Zeithaml (1981) it is essential for service providers to understand consumers' behaviour as how they choose or evaluate their offering s because service cannot be evaluated like physical goods due to its 1 distinctive characteristics and high

in experience quality. Therefore, customers find service evaluation to be more difficult than physical goods. Authors (Zeithaml, 1981; 1 Kotler et al.,

1998) suggest that the main characteristics thatdifferentiate service from

physical goods are: variability,intangibility, inseparability, lack of ownership and perishability. Intangibility According to Zeithaml (1981) 1 the

intangible quality of services is that services constituteperformance and

they often cannot be felt, seen, tasted or touched like physical goods.

Rammaniya (1998) asserted that consumers used both tangible and intangible factors when making restaurant choice decisions. The intangible factors as stated by authors (Auty, 1992) primarily are 1 food quality, service quality and value for money. The intangible attribute of 1 services makes these

factors difficult to assess prior to the actual purchase. As a

result, restaurant patrons often rely on tangible clues such as

restaurant atmosphere, facilities andinfrastructure to stimulate

and guide customers to form expectation about the restaurants (Wall and Berry,

2007). Variability Services as stated by Zeithaml and Bitner (2003) 1

are highly

variable as the performance of a given service maydiverge across service

providers, service employees,customers and service encounters. Burton (1990) studied that 1

heterogeneity of services makes

it complex for customers toform decision criteria towards one service

provider, or from one service provider to another. Restaurant operators on the other hand commonly face challenges in maintaining consistent

performance levels of food quality and service quality, for example, a

restaurant waitress may have offered excellent service until the diners at

one table make a vicious complaint due to which waitress could feel

pressured and provide poor service performance thereafter (Kotler et

al., 1998) Inseparability Zeithaml and Briner (2003) confirm that 1 most

services are not produced and consumed until after they are traded. The

production and consumption of a service experience is generally a

simultaneous process. A restaurant service has high level contact

between consumers and service employees.Thus, the skills and

performance of restaurant staff are significant to diners' perception of

restaurant experience. Perishability Services cannot be accumulated or stored.

Hoffman and Bateson (2001) proposed that service unlike 1 physical goods which can be stored and sold at later time, cease to exist if they

are not sold when they become available. For instance, if a consumer fails to turn 1 up for a reserved table in the restaurant, it will cause the

restaurateur to turn down the chance to serve other diners if the

restaurant is full (Kotler et al., 1998). Service providers as suggested by Hoffman and Bateson (2001) 1 find it difficult to

balance between the demand and supply ofservice because of unpredictable

nature of consumer behaviour. Restaurant attributes Restaurants can be generally divided into two types: fast -service and full service restaurants (Kim and Moon, 2009). Consumers hold dissimilar expectations and perceptions of their diverse dining experiences in different types of restaurants and they may also have dissimilar selection criteria for dining out based on restaurant type (Kim and Moon, 2009). Many authors emphasised upon restaurant selection criteria to be the prime attributes that consumer use in deciding the restaurant to dine out. Customers apply dissimilar criteria in a ssessing the attributes that affect their restaurant choice. There is a wide range of literature with reference to selection of restaurants. For example, Lewis (1981) regarded 21 food quality, price, menu variety,

atmosphere and convenience to be the prime factors which influence consumer selection behaviour. Jang and Namkung (2009) advised product quality, service quality and atmospherics as the chief restaurant attributes those affect perceived quality of restaurant experience. In addition authors further suggest that total dining experience in a restaurant is comprised of not only food itself, but also the environment or atmosphere (physical aspects) and the service provided. In previous studies (John and Pine, 2002; Lewis, 1981; Gregoire et al., 2005; Aunty, 2002; Pettijohn et al., 1997) variety of restaurant choice criteria were recognized, however there has been a partial research on restaurant choice criteria 1 based

on demographic characteristics of consumers. This studyin

order to achieve the aim of investigating the effectiveness of word of mouth, will also scrutinize the restaurant choice criteria for different 18 age group (18-24,

25-34, 35-44, 45+) customers mainly focusing on most prominent key factors which are common in most of the researches conduced such as food quality, atmosphere, food price, and s ervice quality. Consumer Restaurant Selection 9 Behaviour The study of consumer behaviour as stated by John

and Pine (2002) 9 deals with all the ways people may act in their role ascustomers; however in practise it tends to throw light upon behaviours

related to exploring, buying and using products and

services. Swarbrooke and Horner (2007) stated consumer behaviour is integral to all marketing activities that are performed to develop the product and service delivery. Schiffman et al. (2008: p3) describe 8 consumer behaviour as the "behaviour that consumer display in searching for, purchasing, using,

evaluating and disposing ofproduct and services that they expect will

satisfy their needs". Further in context authors asserted that

it 8 (consumer behaviour) primarily focuses on how individuals make

decisions to spend their available resources i.e. time, money and efforts. Consumer behaviour is stated to be very complex and multifaceted subject area that is difficult to understand because of complexity and diversity of why and how consumers behave (Shiffman and Kanuk, 2004) -(restaurant loyalty program -wei dissertation sample). Consumers are influenced by numerous factors related to behaviour such as by social influences like family, social classes and refer ence

group. Moreover consumer 3 may be treated as groups typically market

segments,recognized by geographic characteristics and presumed to have

common behaviour and attitude. Many authors (Aunty, 2002; Gregoire et al., 2005; Clarke and Wood, 1998) have studied restaurant features, declaring principal elements 3 to be the choice and food quality, service, food price, atmosphere,

location and convenience. Literatures in hospitality management and consumer behaviour have found that range of or variety of food offered (June and smith, 1987, cited in Clarke and Wood, 1998) and intangible features other than service in restaurant selection (Auty 1992; Lewis, 1981) are among the major elements of customer choice for restaurant. Apart from above listed elements "friendliness of staff" also emerged out to be one of generic reasons to choose restaurants as friendliness of staff initiate customer loyalty and repeat business (Clarke and Wood, 1998). On the other hands authors (Kim and Moon, 2009) stated consumer selection criteria also rest upon type of restaurant as customers hold different perception and expectation of their diverse dining experiences in a different restaurant type. Lewis (1981) categorized three typical restaurant types to be family/popular, atmosphere and gourmet restaurants and evaluated the principal restaurant choice attributes. Food 16 quality was found to be the most important factor in stimulating intention to select any restaurant. Whilst the price was the second imperative factor in family and atmosphere restaurants, menu variety appeared to be significant in gourmet restaurant. At the same time, there are 3 some authors who disagree about the relative importance of attributes such

as food quality and drink. JOHN PINE Pettijohn et al.

(1997) asserted quality, cleanliness and value to be the three

most significant attributes in the fast food restaurants, while atmosphere

and menu variety were moderately unimportant. These results indicated that customers' selection criteria for dining out are assorted and immeasurable. Factors

affecting consumers' behaviour to choose restaurant are not limited and cannot be well defined. This stu dy will now focus on most prominent key factors (food quality, service quality, food price and atmosphere) which are common in most of the researches to stimulate consumer purchase behaviour and selection criteria of restaurants. 1 Food Quality Food quality is considered to be the

mostsignificant attribute that influences restaurant decisions

innumerous studies on consumer restaurant selection behaviour (Sulek and Hensley, 2004; Lewis, 1981; Aunty 1992). Food taste is considered to be 1

the

most vital element of food attributes in quite a fewrestaurant studies (Josiam and Monteiro, 2004). The study conducted 12 by Sukalakamala and Boyce (2007) signified that customers of Thai restaurants regarded

authentic ingredients and unique tastes as the most imperative elements of

their authentic dining experience.

1 Kivela, Inbakaram and Reece

(2000) asserted menu variety as an important attribute of food quality in

determining customer satisfaction in theme restaurant. Auty (1992) in his

research concluded 1 that food type and food quality are the most frequently mentioned choice variable for dinning out in restaurants despite of the occasion. The 3 quality of the food and the variety or type of food was fundamental

determinants of restaurant choice and customer loyalty in the study conducted by Clarke and Wood (1996). Taking all the factors into account, the researcher accommodated "food quality" as one of the factors influencing restaurant decision behaviour of consumers in Sheffield. Food Price Food price as stated by Parsa and Njite (2004) 4 is one of the important variables that influence customerpurchase decision for dining out. 4

In restaurant context, price

is considered to be one of the two most important pieces of

information customers obtain in selecting food item from restaurant

menus, the other being product

description. Authors (Kotler, Maken and Bowen, 1999: p401) contended that among 17

4-Ps of marketing mix (price, product, place and

promotion),

4 price is the only revenue generating element. While

calculatingthe 4 maximum utility of a product prior to purchase decision, as perMonroe (1990), customers use product price

and nonmonetary sacrifices as the denominator and services and quality

of the goods as the numerator. Through this kind of evaluation of product, customers effectively use monetary and nonmonetary aspects to reach assess the 4 final value of a product. Hence price plays a crucial role in

restaurant operation (Parsa and Njite, 2004). Hauser and Shugan (1983) contended that 6 if all the options in a choice set apparently have same

level of benefits, then customers select the lowest priced alternative. Further in same context authors argue that 6 few purchase decisions are

simple as most choice options differ in terms of both price and perceived benefits, in such scenario consumer 6 may simply choose the alternative

that offers the highest level of perceived benefit. This indicates that price is one of the major determinants of consumer purchase decision of restaurant; hence

our research will also study the consumer behaviour of people in Sheffield towards food price in restaurants. 1 Service Quality Service quality is considered to be a salient factor of restaurant selection in numerous studies. As per Tucci and Talaga (2000) several 1

studies have presented inconsistent sets and

number of choice attributes of service quality in the restaurant such as physical environment and service staff behaviour. Wall and Berry (2007) signified service quality and 1 impressive employee behaviour could

help rise up customers'perception of dining experience.

2 Gourville and

Moon (2004) contended that in case of products, it is often not

the actual price of the products that determinethe consumer's perception of

price fairness, instead the price ofproducts in comparison to other stores. On

the other hand "service 2

typically have a higher proportion of experience

and credence properties than products, making service performance

more difficult to evaluate than product performance" (Boulding et al., 1993: p25) price over service. 2 Because of intangibility of services, customers seek tangible cues to form their expectations. Price as stated by Toncar et al. (2010) 2

is one tangible

cue though which customers form expectations. As a result the elements

of marketing play a more significantrole in service because customers are more sensitive to cues such as price. Parasuraman et al. (1985) formed a

base model for service according to which service 2 quality is a function of

service expectations and service delivery i.e. consumers

make evaluation of service quality based on a comparison between their

expectations and perceived outcome. In case if the perceived outcome meets or exceeds theirexpectation, customers think, they have

received high quality serviceand vice-versa in case if perceived expectations

are not met. In addition Boulding et al. (1993:p8) asserted that 2 "the higher

the service expectations in relation to actual performance, the greater

the degree of disconfirmation andlower the satisfaction" or perceived service quality. This indicates that service evaluation is considerably based on expectations consumers form towards product, which indicates that if expectations are met then customers tend to have positive attitude towards service quality and vice-versa in case expectations are not met. Hence it can be assumed that service quality cannot be measured equally by different customers because of diverse nature, attitude and expectations. Customers usually 1 expect restaurant service employees to be courteous, attentive and posses a good

knowledge of menu in order to be able to provide good dining experience. Taking all the standpoints made by numerous authors regarding service quality and its impact on consumer behaviour into account, we have considered 'service quality' to be one of the major determinants of consumer restaurant behaviour. Thus, this study will also examine the impact of service quality on consumer preference for restaurant selection in Sheffield . Restaurant Atmosphere According to Wall and Berry (2007) marketing literature has aided evidences of physical environment influencing consume behaviour. The 1 physical environment of restaurant such as restaurant atmosphere, dcor, ambience, furniture and other

facilities can have a great impact on dining experience (Sloan, 2004)

andbehaviour intention (Ryu and jang, 2007) of consumers. Jang and Namkung (2009) contended three fa ctors i.e. product quality, service quality and atmosphere as the key restaurant attributes that affect perceived quality of restaurant experience. Authors further stated that the total dining experience in a restaurant is not solely dependent on food itse lf, but also on restaurant atmosphere (physical aspects) and the services offered. Thus restaurant atmosphere is also one of the main determinant to impact customer restaurant decision to dine out, will be examined in this study among rest of the factors ( food quality, food price and service quality). The study will further look upon marketing strategies in hospitality industry Marketing in Hospitality 5 Marketing is not a science and there is no

single definition todescribe marketing (Simkin, 2000). Many authors have

given different definitions and descriptions of 10 marketing. "Marketing is the

management process responsible for identifying, anticipating and

satisfying customer requirements profitably" (the UK's Chartered

Institute of Marketing).

13 Kotler et al. (1999) defined marketing as

"managerial and social process wherein individuals and

groups attain what they desire or need through formulating and exchanging

products and values with others. Simkin (2000), stated that if the right opportunities are followed, potential customer being appropriately probed (needs and desires) with a marketing proposal its more likely going to give businesses a competitive edge and subsequently will increase market shares value. Henceforth 5 profitability will support a viable future prospect for a business. On the other hand, 5

if a business develops a product or

service that fails to catercustomer needs and takes no accountability on evolving marketing condition or competition, it will have an adverse affect on

business growth and development (Simkin, 2000). Craven and Piercy (1998) said that the 5 definitions of marketing count for little unless businesses do not develop a process and adhere to functioning procedures to actually "do"

marketing.