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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 customer23 purchasing
behaviour. On the other hand, Maxham (1999) declared the significance 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 customers11 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 inmagazines, 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
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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 (e-
WOM) on consumer behaviour in hospitality business. It will conclude with which of
the marketing communication tools (offline-WOM or e-WOM) are more powerful in
influencing consumer buying behaviour for selection of a restaurant in Sheffield.
Research Aim To compare7 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-
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34, 35-44 and 45+) and refurbish it in22 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 a7 (electronic
word-of-mouth) word-of-mouth (recommendations) and advertisements
(television, newspaper, magazine) used by hospitality businesses to persuade
customers. To7 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,
introduced15 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
compares7 traditional word-of-mouth with electronic word-of-
mouth. Chapter 3: introduces methodology employed for primary research and
includes questionnaire design, techniques and sampling method. Chapter 4: focuses
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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 of7 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 the 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
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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 of1 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
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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 that1 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
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restaurant experience. Perishability Services cannot be accumulated or stored.
Hoffman and Bateson (2001) proposed that service unlike1 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, ifa consumer fails
to turn1 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 ofunpredictable
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 assessing 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
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on demographic characteristics ofconsumers. 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
Selection9 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
it8 (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
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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
elements3 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 ofstaff" 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.
Food16 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
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affecting consumers' behaviour to choose restaurant are not limited and cannot be
well defined. This study 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 conducted12 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 concluded1 that food type and food quality are the most frequently
mentioned choice variable for dinning out in restaurants despite of the occasion.
The3 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 researcheraccommodated "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
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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
among17 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
ofthe goods as the numerator. Through this kind of evaluation of product,
customers effectively use monetary and nonmonetary aspects to reach assess
the4 final value of a product. Hence price plays a crucial role in
restaurant operation (Parsa and Njite, 2004). Hauser and Shugan (1983)
contended that6 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 consumer6 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
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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 ofthe products that determinethe consumer's perception of
price fairness, instead the price ofproducts in comparison to other stores. On
the other hand "service2 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
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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
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facilities can have a great impact on dining experience (Sloan, 2004)
andbehaviour intention (Ryu andjang, 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 of10 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.
Henceforth5 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
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business growth and development (Simkin, 2000). Craven and Piercy (1998) said
that the5 definitions of marketing count for little unless businesses do not
develop a process and adhere to functioning procedures to actually "do"
marketing.