Many supermarkets are now placing much effort on improving service quality because customer service is now regarded as important as marketing's "4Ps" (Price, Place, Product and Promotion) in the quest for a competitive advantage. Since Coles has improved its service quality by increasing the performance level of the twelve determinants of service quality over its competitors and then increase sales, service quality improvement is a tool for competitive advantage in supermarkets.
This report has the following objectives:
* to find out some methods used to improve service quality in order to gain a competitive advantage,
* to find out current customer expectations and perceptions of service quality in supermarkets,
* to determine the relationship between service quality and customer satisfaction, and;
* to present some implications from the research and to make some recommendations for supermarkets which desire to improve service quality and thus gain a competitive advantage.
This report has reviewed the literature of customer service, service quality, customer satisfaction and competitive advantage. This report has also carried out a preliminary study using two focus groups and a self-completion questionnaire which was conducted in order to gauge current customer perceptions of the service quality of two major supermarkets, Coles and Woolworths. These groups were small in size (ten and five persons respectively) and thus the findings of this study must be interpreted with caution.
Despite these limitations, a number of recommendations can nonetheless be presented. A supermarket can improve its service quality by closing what Berry has termed five service gaps. In order to close Gap 1 (the difference between customer expectations and management perceptions), a supermarket should carry out a market research of customer expectations, increase the interaction between top managers and customers and increase upward communication. In the study, the inclusion of the twelve determinants of service quality should be considered in service packages because there appeared to be a significant positive relationship between each determinant of service quality and the level of customer satisfaction. In order to close Gap 2 (the difference between management perceptions and quality specifications), a supermarket should carry out Total Quality Management (TQM), obtain a top management commitment to improve service quality, and develop service goals and service standards. In order to close Gap 3 (the difference between quality specifications and service delivery), a supermarket should improve the ability and willingness of employees to perform the service specified by management. The ability of employees can be improved by supplying adequate technology and equipment, establishing a middle management level which can delegate top management's authority to frontline employees quickly, as well as training employees. The willingness of employees can be improved by using teamwork, reducing role conflicts, creating and sustaining a service culture and rewarding service excellence. Also, the employment of more mature people should be considered so as to create norms of respecting customers. In order to close Gap 4 (the difference between service delivery and external communications), a supermarket should deliver the promised service. Once these four gaps are closed, Gap 5 (the difference between customer expectations and customer perceptions) will be closed and customers are satisfied. In addition, a supermarket should consider putting more efforts into serving young male customers because the cases of Coles and Woolworths showed that young male customers appeared to be less satisfied than other customers. Finally, supermarkets should consider dividing customers into different segments according to their service needs in order to respond quickly to a particular segment's needs.