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A Study on Customer Satisfaction in FMCG Sector with Select

Hypermarkets in Riyadh City Kingdom of Saudi Arabia.

Dr. MOHAMMAD SALEH MIRALAM

Associate Professor Department of Marketing, College of Business
University of Jeddah Jeddah, Kingdom of Saudi Arabia.
Email: mmiralam@uj.edu.sa

Dr. MAQSOOD HUSSAIN JUNNAIDI

Assistant Professor, Department of Marketing College of Business
University of Jeddah, Jeddah, Kingdom of Saudi Arabia.
Email: mhjunnaidi@uj.edu.sa

Dr. SAYED MOIZUDDIN

Associate professor & Head Department of Business Management
ABE UK qualification APTECH Education, Riyadh, Kingdom of Saudi Arabia.
Email: tosyedmoizuddin@gmail.com

Abstract
A study on Customer Satisfaction in the FMCG sector with select Hypermarkets in Riyadh city was
conducted with primary research. Customers and consumers have always perceived the level of satisfaction
in FMCG in retail sectors; this study covers attributes of satisfaction related to Service quality, pricing
policies, location, and Physical facilities. Under this study, a survey was conducted with a selection of four
big supermarkets in the Riyadh region. The first objective of this research to understand the factors of
customer satisfaction in the FMCG sector. This study is an attempt to analyse what the influencing factors
on customer satisfaction are. The second objective of this research is to analyse which factors are affecting
customer satisfaction. In order to achieve strong results methodology adopted from the secondary and
primary source, and the primary source of information has been collected from the sample respondents
with the help of a structured questionnaire. For this, data were collected by taking 128 sample respondents.
The study has certain limitations i-The present study of customer satisfaction on FMCG sectors with select
hypermarkets in Riyadh region with 128 respondents only. ii- The research has done in the FMCG retail
sector & data was gathered from four different select FMCG retail companies in Riyadh city. After
analysis, this study concludes that excellent products & services, they need to attain a high level of
customer’s satisfaction. In a practically identify the poor product quality and services, as well as poor
physical facilities, connect to poor customer satisfaction, in order to reach competitive advantage in
FMCG retail sector customer satisfaction is highest acceptable and need continuous improvement.

Keywords: Customer Satisfaction, Service Quality, Service Facility, FMCG.

Introduction

This study aims to identify and analyze how customers are experiencing quality, and satisfaction in the
Fast-moving consumer goods (FMCG) retail market. It shows that satisfaction does not automatically lead

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to loyalty. The price is a ruling attribute that makes the customer chase discounts, no matter who provides
it. Results show that both psychological and economical attributions influence customers’ satisfaction. The
study reveals that organizations have the fantasy that their customers are totally satisfied. Customer
satisfaction is generally viewed as a psychological reaction of the customer and an evaluation of emotions.
Fast-Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold
quickly and at relatively low cost. Though the profit margin made on FMCG products is relatively small
(more so for retailers than the producers/suppliers), they are generally sold in large quantities; thus, the
cumulative profit on such products can be substantial. FMCG is probably the most classic case of low
margin and high-volume business. In commerce, a hypermarket is a superstore combining a supermarket
and a department store. The result is an expansive retail facility carrying a wide range of products under
one roof, including full groceries lines and general merchandise. In theory, hypermarkets allow customers
to satisfy all their routine shopping needs in one trip. Hence this research study to bring the satisfaction and
customer trust on the business of FMCG sector with selected hypermarkets in Riyadh city KSA. The
purpose of writing this paper is to talk about the most critical factors or variables, which contribute more to
developing customer satisfaction in the FMCG sector. The satisfaction of customers is verified by the
actions of its customers, customer can be very much satisfied and not yet to be loyal.

The 21st century is a new period dominated by service, along with the progress of economic globalization
and the high-speedy development of social economy in the word, the human life quality has made progress
continuously and all countries industries has expanded rapidly too. As one of the mainstay industries, the
FMCG industry also has grown largely. Apart from that, the competition among the Retail industry has
become increasingly keen. Today, the nature of competition in retail industry has changed notably. In order
to survive in the market, the most basic standard for an enterprise is to satisfy the customers. Those
companies that can please the customers’ satisfaction in retail area and win their loyalty, they get the
market superiority.

Literature Review
Blanchard and Galloway (1994) Customer satisfaction is a measure of how supplied products and services
of a company meets or exceeds customer expectations. In other words, degree to which offered products
and services meet or surpass the customer expectations is termed as customer satisfaction. Now more
companies are struggling, not just for achieving customer satisfaction but for also making customers delight
because companies believe customer loyalty can be increased through extra value.

Akbar and Parvez (2009) defined customer satisfaction as a reaction which result from a method of
assessing what has been received against what was expected, including needs and wants related with the
purchase and purchase decision itself. Customer satisfaction points towards the emotion of
disappointment/happiness a customer feels once he or she evaluates the certain product perceived effects
with the effects he or she expects (Juan & Yan, 2007).

Research by Rasmey and Sohi (1997) contend that customer satisfaction and customer loyalty are
correlated. Some other researchers showed that customer satisfaction plays vital role in enhancing and
maintaining long-term relationship among companies and their customers, customer satisfaction is reveled
to be the improved predictor of customer satisfactions.

Haq and Amin (2009); Kuuisk (2007) suggested that there is a direct connection among loyalty and
satisfaction, satisfied customer happen to loyal and dissatisfied customer switches to another vendor.
Customer satisfaction can act as a connection between customer participation and loyalty.

According to Luarn and Lin (2003) found that brands which make its consumers
happy/satisfied/demonstrative get rapid larger attitudinal commitment and behavioral (purchase) loyalty.
Likewise, author emphasizes that customer satisfaction mediate consumer learning from past experience

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and enlightens main post purchase behaviors, which include word of mouth, complaining, product usage
and repurchase intention and suggested that repurchase intention and post purchase complaint are
significantly influenced by web customer satisfaction. Some authors identify satisfaction as how the
customer is overall satisfied by provider’s services. It reveals how the service quality is being perceived.
Satisfaction does not imply necessary Loyalty, but generally affects it.

Chirico and Presti, (2008): Singh (2006) defined “satisfaction as: a person’s feeling of pleasure or
disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his
or her expectations”. Satisfaction shows what is the approach of customers towards provider of services, or
a moving reaction towards distinction flanked by what customers foresee and what they obtain, regarding
the accomplishment of a few requirements, ambition or wish.

A study done by PIRC (2008) showed that for customer satisfaction, there is an overall consensus about
their influence on customer loyalty; however, the proposed effect is sometimes empirically supported and
other times the effect is not found.

According to Hallowell (1996) satisfaction of customers, their loyalty and productivity are interlinked. He
presented it in the form of this model: satisfactory customers move into the category of loyal customers and
that eventually leads toward profitability. Another study suggests customer satisfaction and loyalty are
positively related to each other. It is also suggested that customer preservation rate, market share and
profits can be improved through boosting up the satisfaction level of customers.

Feinberg, Sheffler, Meoli and Rummel (1989) considered the social stimulation provided by malls, finding
that the mall served as an outlet for social behavior. Further examination of this issue was made by Lotz,
East lick and Shim (2000),who studied the similarities and differences between mall entertainment seekers
and mall shoppers. Their results supported hypotheses that there are different motivations for individuals
who visit a mall for entertainment activities versus those who visit for shopping purposes.

Roy (1994) in his study considered several characteristics of shoppers - such as functional shopping
motivation, deal proneness, recreational shopping motivation, age, income and family size, to be a
significant influence on mall shopping frequency.

Burns and Warren (1995) opined that since the store mix and product offerings of many regional shopping
malls are very similar, often the primary discriminator between many of these centers is merely location.
Making the choice to shop at a regional shopping mall other than the one nearest to one’s place of
residence, therefore, does not appear to be a logical choice in many instances. Such behavior, however,
appears to be relatively common. It would appear; therefore, that regional shopping mall choice may not
always be based solely on the offerings and location of the available shopping alternatives. Customer
loyalty is more critical in Fast Moving Consumer Goods (FMCG) companies because consumers shift
rapidly from one product to another (Khan, Shahzad, Habib, & Qadir, 2016). The challenging task in the
current arena is to make customers loyal to ensure the long-term survival and profitability of the firm.
Managers of these companies therefore look for the ways to attract the potential customers and to retain the
existing customers. Customer loyalty remains an important and ever discussing topic in the literature with
lot of proposed moderating, mediating, and independent variables. The purpose of writing this paper is to
talk about the most critical factors or variables, which contribute more in developing customer satisfaction
in FMCG sector.

Research Questions
this research associated exclusive on customer satisfaction on FMCG product in retail sector, to understand
customer satisfaction on FMCG products which factors are influence them, more specifically, the objective
of this research can be summarized into two different parts.

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the objective of the study,

 To understand the factors influencing customers satisfaction.

 To analyze which factors are more affecting on customers satisfaction.

The first objective of this research to understand the factors of customer satisfaction in the FMCG sector.
This study is an attempt to analyze what are the influencing factors on customer satisfaction.

The second objective of this research is to analyze which factors are affecting customer satisfaction. The
discussion of the influencing factors and affecting customer satisfaction are provided strong results which
can be more adaptable in practically in FMCG sectors.

high-speed achieve the objective of this research, two questions are addressed as follows
1. Concept of customer satisfaction and what are the factors influencing them in the FMCG sector?
2. What are the factors more affecting customer satisfaction in the FMCG sector?

Research Methodology
The methodology is a very important aspect of any research or investigation. It enables the researcher to
look out the problems in a systematic, meaningful and worthful results, the methodologies adopted in this
research. 1.Source of data 2. Sampling procedure 3. Sampling size 5. Limitation of the study.

Source of Data

The data for the present research has been collected mainly from a primary and secondary source, through a
structured questionnaire. The main sources of primary data from customers from selected hyper malls in
Riyadh. The data for secondary sources are collected from:

Reputed journals, articles, business magazines, periodicals, web site. In this research, simple random
sampling techniques were adopted, and at present available of the population in that author selected 128
customers, to view of the respondent's opinion on customer satisfaction.

Select Area of the Study

The study covered the customers of Four popular FMCG retail companies in Riyadh, KSA for the
investigation of customer’s satisfaction in selected companies in the Riyadh region were selected.

Sampling Technique

This study is applied research to understand the current problem of the companies and to get a strong result
based on the survey method. The information has been collected from the sample respondents with the help
of a structured questionnaire. For this, data were collected by taking 128 sample respondents.

Table No 1: Determination of sample size in the Riyadh region

Selected Companies Respondents Percentage of the Respondents
Lulu hypermarket 32 25.00
Al othaim mall 32 25.00
Nesto hyper market 32 25.00
Hyper Panda 32 25.00
Total 128 100.00
Source: own elaboration

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Statistical Tools

The collected respondent’s valuable data framed into tabulation and tabulation data were formulated using
the statistical tools of simple percentage analysis.

Results
The collected data from the respondents were analyzed using the appropriate statistical tools mentioned in
the research methodology. The objective-wise analysis presents in two categories and their interpretations
are presented below.

Table No 2: Demographic Profile of the Respondents

Respondents
Demographic Percentage of
Al Hyper
profile Total Lulu Nesto respondents
othaim Panda
Gender of the Respondents
Male 90 25 23 22 20 70.31
Female 38 07 9 10 12 29.69
Age
Below 20 years 12 4 6 1 1 9.38
20-30 years 35 8 8 14 5 27.34
30-40 years 48 12 8 8 20 37.50
40-50 years 24 6 7 6 5 18.75
50 and above 9 2 3 3 1 7.03
Occupation
Student 24 6 7 7 4 18.75
Service 48 18 8 9 13 37.50
Business 32 10 9 6 7 25.00
Others 24 5 6 7 6 18.75
Monthly Income of the Respondents
Less than 5,000 38 8 10 7 13 29.69
5,000 to 10,000 46 18 13 8 7 35.94
10,000 to 15,000 24 4 5 6 9 18.75
15,000 above 20 3 8 7 2 15.62
Education of the Respondents
Primary 4 2 0 1 1 3.13
Secondary 7 2 2 2 1 5.47
Graduate
68 32 18 10 8 53.13
(Bachelors)
Post graduate
43 16 8 12 7 33.59
(Masters)
PhD 6 3 1 2 0 4.68
Source: Questionnaire

Demographic Profile

 The above table reveals that existing customers of different FMCG retail companies, they are 70.31%
of the respondents are found male & 29.69% are female.
 The analysis of demographic profile, most of the respondents belong to 32 – 40 age group & next
majority of the group belongs to 20 – 30 age groups followed others.

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 The majority of the respondents are graduates which are 68 and postgraduates 43 respondents, it means
the data collected from educated people and all respondent’s information pursue with an understanding
of customer satisfaction.
 Furthermore, most of the respondents occupationally belong to the service sector & found 32
respondents belong to self-business.
 As per the survey, 36% respondent’s monthly income fall between 5000 – 10,000 SAR, next 30%
respondent’s income belongs to less than 5000 SAR, n= 68 (53%) of the respondents are graduates &
next to n= 43 (34%) of the respondents are postgraduates.

Table No 3: View on Customers Satisfaction on Employees Perspective

Opinion Lulu Panda Othaim Nesto
Respondents Respondents Respondents Respondents
Employee communication 18 (56.25%) 17 (53.13%) 9 (28.13%) 11 (34.38)
Employees attention/response 8 (25%) 7 (21.88%) 8 (25%) 9 (28.13%)
Good services 4 (12.5%) 6(18.75%) 7 (21.88%) 8 (25%)
Quick billing 2 (6.25%) 2 (15.63%) 6(18.75%) 4 (12.5%)
Total 32 (100%) 32 (100%) 32 (100%) 32 (100%)
Source: Questionnaire

The above table depicts the respondents view regarding selected companies’ employee’s behaviour,
generally, as a customer came to know about employee behaviour in FMCG retail sector are mainly from
four sources which are placed in the above table. The maximum respondents that are 56.25% from Lulu
and 53.13% from panda are respectively followed by other, are expecting employee must be communicated
respectively, further respondent’s responses are noted that they are expecting existing employee must give
attention and response to the customers at the time of buying goods from the retail area. The second
observation from the above table notice that most of the respondents are expecting from the existing
employees they should give more attention and response at the time of selecting and buying goods. Further
other areas need to improve such as quick billing and good services.

As per the above observation, the author suggested to all FMCG selected companies to trained existing
employees to handled and give effective services.

Table No 4: View on Customers Satisfaction on Physical Facility Prospective

Rating 4 3 2 1 Total Mean
Very important Somewhat Not score value
important Important important
Physical facilities
Employees 32 27 21 40 114 4.07
Floor space 48 28 13 18 107 3.82
Billing counters 57 26 23 20 126 4.5
Waiting space 53 33 25 21 132 4.71
Basic amenities 48 22 26 23 119 4.25
Air cooling 47 36 12 18 113 4.04
Interior decoration 38 45 34 10 127 4.54
Sitting arrangement 49 19 22 16 106 3.78
Placement of signboard 52 29 25 16 122 4.36
Broachers 59 28 24 8 119 4.25
Parking facilities 53 23 26 19 121 4.32
Source: Questionnaire

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Table No 5: View on Customers Satisfaction on Service Quality Perspective

Opinion Lulu Panda Othaim Nesto
Respondents Respondents Respondents Respondents
Reliable service 8 (25%) 9 (28.13%) 7 (21.86%) 8 (25%)
Responsiveness (quick service) 10 (31.25%) 8 (25%) 6 (18.75%) 8 (25%)
Assurance (trust and confidence) 8 (25%) 7 (21.86%) 4 (12.5%) 6 (18.75%)
Empathy (individual attention) 3 (9.38%) 5 (15.63%) 7 (21.86%) 4 (12.5%)
Tangible (physical facilities) 3 (9.38%) 3 (9.38%) 8 (25%) 6 (18.75%)
Total 32 (100%) 32 (100%) 32 (100%) 32 (100%)
Source: Questionnaire

Views of Customer Satisfaction on Service Quality

The above table shows the views of the respondents concerning the various service quality dimensions
offered by their FMCG retail companies. For this study, five very important dimensions have been
included. According to the views of the customers, customers give top priority to responsiveness which is
quick services expecting from FMCG retail sector. It is further noticed from the table that reliability &
assurance the second priority from the customers.

In view of the above-stated facts, the FMCG retailer sector needs to consider individual attention to each
customer & should concentrate to improve physical facilities. By these ways, FMCG retail providers can
improve, service quality & satisfied with existing customers.

Recommendations
i- The FMCG retail companies should design & develop products & services keeping in a view the
requirement of customers, particularly low income of the customers.
ii- FMCG companies should control various cost at the time of producing goods & services. These can
lead to the best competitive price, which can improve customer’s satisfaction.
iii- The old & least preferred products & services should be upgrade or re-design to suit customer’s
requirements & needs.
iv- The FMCG retail companies should give equal importance to all customers so that the customer will
not feel that they are forcing to buy a particular product & service.
v- The FMCG retail sector should take necessary steps to increase existing physical facilities, which can
lead to indirect customer’s satisfaction.
vi- The FMCG retail sector should open more branches in rural & semi-urban areas to give excellent
customer services.
vii- FMCG retail companies should increase the number of billing counters for better customer service.
viii- The training & orientation programs should be provided to employees to increase their efficiency to
serve customers in an excellent way.
ix- The FMCG retail sectors take necessary steps to increase the space to facilitate the existing customers.
x- FMCG retail sectors should be connected with E-commerce to increase revenue and as well as
customers satisfaction.

Conclusions
In order to provide excellent products & services, they need to attain a high level of customer’s satisfaction.
In a practically identify the poor product quality and services, as well as poor physical facilities, connect to
be a competitive market. Additionally, analyzing the influencing factors on customer satisfaction is not the
only method to discover the complete level of satisfaction. Therefore, other future research could be
conducted through other characteristics, for example through analyzing the customers’ satisfaction on real
demands and expectations.
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Limitations
The study has certain limitations

i- The present study of customer satisfaction in FMCG sectors with select hypermarkets.
ii- The research has done in the FMCG retail sector & data was gathered from four different select FMCG
retail companies in Riyadh city.
iii- The results of this study could be applied up to some extent in the FMCG retail sector but cannot be
generalized for the other industry or sector.
iv- Data was collected for this study is based on structure questionnaires & questions covers service
quality, physical facilities, employee prospective only.
v- The limitation of the study is provided on current literature review.
vi- This study research work cover based on 128-sample size only.
vii- This study used limited statistical methods such as percentage & mean only.

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