Impact of Service Quality on Customer Loyalty

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This assignment explores the relationship between service quality and customer loyalty in the airline industry. It delves into relevant literature, including studies on service quality dimensions, customer satisfaction, and loyalty factors. The assignment likely involves a research methodology (e.g., surveys, interviews) to gather data and analyze its impact on customer behavior towards airlines. Findings will be presented, potentially highlighting key drivers of customer loyalty in the airline sector.
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Running head: IMPROVING CUSTOMER SATISFACTION AT AVENUE NISSAN WITH A
FOCUS ON SERVICE DEPARTMENT
Improving customer satisfaction at Avenue Nissan with a focus on Service department
Name of the Student:
Name of the University:
Author Note:
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IMPROVING CUSTOMER SATISFACTION AT AVENUE NISSAN WITH A FOCUS ON
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Executive summary
The automobile industry is facing tremendous competition nowadays and in order to gain
competitive advantage over the others, it is necessary for the companies to emphasize upon it
service quality along with the quality of the products. Avenue Nissan is an automotive franchise
dealership that is located in midtown Toronto. A major issue faced by the store has been
insufficient number of service representatives as a result of high rate of employee turnover. The
report deals with the improving customer satisfaction at Avenue Nissan with a focus on service
department. The researcher has used qualitative research data in order to find the causes behind
the lower level of satisfaction among the customers and the ways by which the issues can be
solved.
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Acknowledgement
The research conducted by me has been one of the enriching experiences of my life. This
research helped me in gaining enhancing experience by providing me the understanding to
skilfully carry out the research. The research helped me in overcoming the drawbacks by facing
them skilfully. However, this would not have been possible with the help and encouragement I
received from my professor. I also received the encouragement from my peers and all the people
who helped me carry out the research. I would like to thank my supervisor
_______________________________ for the constant support and encouragement to carry out
the research. It would not be right if I do not thank my academic guides who have constantly
assisted me in the research. I would also like to thank by friends who helped and encouraged me
for the research. Finally, I would like to thanks the customers who participated in the survey that
was conducted to gain primary data. Last but not the least I would like to thank the managers
who gave me their precious time to carry out the interview. The support of all these people has
been enhancing and inspiring throughout the research process.
Heartfelt thanks and warmest wishes,
Yours Sincerely,
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IMPROVING CUSTOMER SATISFACTION AT AVENUE NISSAN WITH A FOCUS ON
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Table of Contents
Chapter 1..........................................................................................................................................5
Introduction......................................................................................................................................5
1.1 Background............................................................................................................................5
1.2 Purpose of the project............................................................................................................5
1.3 Aims and objectives...............................................................................................................5
1.4 Research questions.................................................................................................................6
1.5 Summary:...............................................................................................................................6
Chapter 2..........................................................................................................................................7
Literature review..............................................................................................................................7
2.1 Meaning of customer satisfaction:.........................................................................................7
2.2 Factors influencing customer satisfaction.............................................................................7
2.3 Importance of customer satisfaction......................................................................................8
2.4 Concept of service department..............................................................................................8
2.5 Importance of service department.........................................................................................9
2.6 Impact of service department on customer satisfaction.........................................................9
2.7 Dimensions of service quality...............................................................................................9
2.8 Service quality models.........................................................................................................10
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2.8.1 Oliver’s satisfaction quality model:..................................................................................10
Figure 1: Oliver’s Satisfaction Quality Model......................................................................11
2.8.2 Service quality and customer satisfaction (SQCS) model................................................11
Figure 2: Service quality and Customer Satisfaction (SQCS) Model...................................12
2.9 Summary..............................................................................................................................12
Chapter 3........................................................................................................................................14
Research methodology...................................................................................................................14
3.1 Introduction:........................................................................................................................14
3.2 Types of investigation:........................................................................................................14
3.3 Justification of the chosen type of investigation..................................................................14
3.4 Data collection methods......................................................................................................14
3.5 Justification of the chosen data collection method..............................................................15
3.6 Data analysis plan................................................................................................................15
3.7 Accessibility issue...............................................................................................................16
3.8 Ethical issues.......................................................................................................................16
3.9 Research limitations.............................................................................................................16
3.10 Summary............................................................................................................................16
4. Findings and analysis:................................................................................................................18
4.1 Secondary data findings and analysis..................................................................................18
4.2 Interview findings and analysis...........................................................................................19
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Chapter 5........................................................................................................................................23
Conclusion and recommendation..................................................................................................23
Conclusion:....................................................................................................................................23
Recommendations:....................................................................................................................23
References:....................................................................................................................................24
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List of figures
Figure 1: Oliver’s Satisfaction Quality Model..............................................................................13
Figure 2: Service quality and Customer Satisfaction (SQCS) Model...........................................14
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Chapter 1
Introduction
1.1 Background
Avenue Nissan is an automotive franchise dealership that is located in midtown Toronto
since 1981. Automotive dealerships in North America typically operates with four major
departments: New Vehicle Sales, Pre-owned Vehicle Sales, Service and Parts. It offers sales and
services of Nissan vehicles to consumers.
For the past 35 years, Avenue Nissan has gone through three ownerships. Customer
retention has fluctuated over the years due to the turnover of employee. Customer satisfaction
with the last regime ownership has damaged the store reputation.
1.2 Purpose of the project
The purpose of the research is to analyze the impact of the efficiency of service
department of Avenue Nissan on customer satisfaction. The researcher has analyzed the impact
of service quality by finding the relationship between service quality and the level of customer
satisfaction.
1.3 Aims and objectives
The major aims of the research are as follows:
To understand the impact of service quality on the customer satisfaction
To determine the ways of improving customer satisfaction at Avenue Nissan with a
focus on service department
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To determine the necessary changes that are required to improve the customer
satisfaction at Avenue Nissan
1.4 Research questions
The following are the research questions for this research proposal:
What are the methods by which customer satisfaction at Avenue Nissan can be improved
with a focus on service department
How does the service department at Avenue Nissan work and what are the necessary
changes required?
1.5 Summary:
The introduction part of the dissertation introduced Avenue Nissan as an automotive
franchise dealership located in Toronto. This part mentioned the purpose of the dissertation along
with the aims and objectives. At last, this part mentioned the research questions.
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Chapter 2
Literature review
2.1 Meaning of customer satisfaction:
Customer satisfaction refers to the amount of positive outcomes derived by a consumer
on using a product or service. It is the positive experience of a customer that is derived when the
expectations of a customer meets the actual benefits derived from the use of a product or service.
Jahanshani et al. (2014), termed customer satisfaction as a person experience of a customer,
which varies from one person to another on the basis of their needs, wants and expectations.
Therefore, customer satisfaction can be referred to as the amount of fulfillment derived by a
customer after purchasing and using a product or service. When a customer is satisfied, the
product or service is referred to as value for money as the price paid by the customer is
equivalent to the satisfaction derived by the customer (Orel & Kara 2014).
2.2 Factors influencing customer satisfaction:
There are various factors that influence the customer satisfaction. According to Bansal &
Taylor (2015), the customer satisfaction is highly dependent upon the quality of products and
services and their price. There are different types of customers who have different needs and
expectations. In case of a customer who is more concerned about the quality, the customer is
satisfied when the quality of the goods and services meet his or her expectations. Such a
customer is even ready to purchase a product or service at a higher price when it is of good
quality. In case of a price sensitive customer, the price of a product or service becomes a more
important factor while determining the level of satisfaction. The lower the price, the higher is the
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satisfaction derived by such customers. Such customers do not emphasize upon the quality of the
goods and services instead, they emphasize upon the price of the products or services. The
customers who emphasize more upon the brand and goodwill of a company tend to derive
satisfaction on purchasing goods and services from some reputed company. The satisfaction of a
customer is also dependent upon the word-of-mouth. In such a case, a customer derived
satisfaction when he or she hears positive review of the products or services purchased by him or
her. On the contrary, if such a customer hears negative review post purchase, he or she tends to
become dissatisfied. The efficiency of the organizations in providing services and handling
customer grievances also determines the level of customer satisfaction (Delcourt et al. 2013).
2.3 Importance of customer satisfaction:
According to Yoon et al (2016), customer satisfaction is essential for the long-term
growth and survival of an organization. An organization can survive in the long- run only when
its customers are satisfied. The satisfied customers tend to become the loyal customers in the
long-run and get involved in repeated purchases. It is necessary for the organizations to satisfy
their customers to retain their customers and increase the new customers in the highly
competitive environment. It is necessary to satisfy a customer in order to prevent the customers
from shifting to some other brand or organization. Therefore, customer satisfaction is the key to
the success of an organization in the long-run.
2.4 Concept of service department:
Service department refers to the department that comprises of individuals who are
responsible for providing the necessary services to the customers and handling the customer
grievances. The companies under product industry as well as the service industry have their own
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service departments that is responsible for providing products and services to the customers
within the due time, maintaining good relationships with them, maintaining the customers and
handling their grievances (Sengupta, Balaji & Krishnan 2015).
2.5 Importance of service department:
According to Kaguara (2016), service department is essential for establishing cordial
relationships with the customers and retaining them. The quality of the service provided to the
customers is highly dependent upon the efficiency of the individuals employed in the service
department. These employees are responsible for providing prompt solutions to the problems
faced by the customers. Therefore, it is essential for the service departments to be careful and
emphatic while handling the grievances of the customers.
2.6 Impact of service department on customer satisfaction:
Nowadays, the satisfaction of the customers is not just limited to the purchase of the
products but is also dependent upon the after-sale services provided by the companies. In case of
a car manufacturing company, the satisfaction of the customers is not just dependent upon the
quality and price of the cars but also the quick and prompt services provided by the company.
Therefore, the efficiency and the effectiveness of the service department affects the level of
satisfaction of the customers (Mok, Sparks & Kadampully 2013).
2.7 Dimensions of service quality:
There are several dimensions of service quality, which involve reliability, responsiveness,
assurance, empathy and tangibles. Reliability refers to providing the service within the promised
time duration with accuracy. Responsiveness refers to the willingness to provide assistance to the
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customers promptly. Assurance refers to the conveying of trust and confidence to the customers.
Empathy refers to the ability to be approachable. It indicated that the service department
employees must be patient with their customers and must be a good listener. Tangibles refers to
the physical goods that are provided to the customers along with the services. It is the
responsibility of the service department to ensure that the goods provided are appropriate as per
the expectations of the customers (Lovelock & Patterson 2015).
2.8 Service quality models
2.8.1 Oliver’s satisfaction quality model:
The model was developed by Oliver and its explains the impact of quality of services
upon the level of customer satisfaction. According to Azzopardi & Nash (2013), the model
depicts that the service quality is measured by distinguishing between the expectations related to
the quality and the actual satisfaction. Service quality is determined from the disconfirmation and
satisfaction of desires do not have any relationship with the satisfaction until it is linked with the
quality.
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Figure 1: Oliver’s Satisfaction Quality Model
(Source: Blut et al. 2015)
The figure 1 shows the Oliver’s Satisfaction Quality Model. This model explains that
there is an inverse relationship between the expectations and service quality however; perceived
performance aids in establishing a positive relationship between the expectations and satisfaction
in terms of perceived service quality. Therefore, organizations need to reduce the expectations of
the customers so that they can deliver better than the customer’s expectations, which would
indirectly increase the customer satisfaction.
2.8.2 Service quality and customer satisfaction (SQCS) model:
This model explains the relationship between the quality of service provided and the level
of customer satisfaction. According to Hussain, Al Nasser & Hussain (2015), the level of
customer satisfaction is is dependent upon both situational and personal factors. Situational
factor refers to the word of mouth both positive and negative that results in the generation of
opinion regarding a particular product, service or a brand. Personal factors refer to the needs and
wants of the customers that affect their desire and expectations.
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Figure 2: Service quality and Customer Satisfaction (SQCS) Model
(Source: Hapsari et al. 2017)
The above figure depicts that the customer expectations include the expected service
quality and the perceived service quality and when the customer expectations match the actual
performance, it gives rise to customer satisfaction. According to Izogo & Ogba (2015), when a
customer is satisfied, he or she tends to repurchase a product or service from a particular brand
however, dissatisfaction results in switching intentions.
2.9 Summary:
This part of the dissertation included the literature review wherein the researcher learnt
the meaning of customer satisfaction and the factors that determine customer satisfaction. There
is a positive relationship between the services provided by the service department and the level
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of customer satisfaction. Therefore, the organizations must ensure customer satisfaction in order
to survive in the long-run.
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Chapter 3
Research methodology
3.1 Introduction:
Research methodology refers to the area, which assists the researcher to define the
suitable method that is required to be used for acquiring the entire requirements of the research.
Methodology helps in obtaining a better knowledge of the topic with the use of appropriate
research methods (Mackey & Gass 2015).
3.2 Types of investigation:
There are mainly three types of investigation, namely:
Exploratory
Descriptive
Hypothesis
3.3 Justification of the chosen type of investigation:
In this research study, the researcher has chosen descriptive type of investigation as the
researcher has analyzed the topic with the help of the information that is already available. This
has enabled the researcher to get a detailed idea of the concept of customer satisfaction and the
relationship between the customer satisfaction and service department at Avenue Nissan. This
has enabled the researcher to recommend the suitable steps to be taken by the company in order
to improve customer satisfaction.
3.4 Data collection methods:
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There are mainly two types of data collection methods. The two types of data collection
methods are primary and secondary. The primary data includes the interviews and surveys that
are to be conducted by the researcher (Taylor, Bogdan & DeVault 2015). On the other hand, the
secondary data refers to the data obtained from the several secondary sources such as books,
journals, articles and internet sources.
3.5 Justification of the chosen data collection method:
The researcher has chosen secondary data collection method for this particular research
study. The researcher shall obtain the necessary information related to the topic from the
journals, books, articles and available internet sources. The researcher has also conducted
interviews with the employees in the service department of Avenue Nissan and their customers.
Most of the data show the impact of improving customer satisfaction at Avenue Nissan with a
focus on service department. The researcher shall provide the analysis of the data along with the
recommendations that might be required later on.
3.6 Data analysis plan:
There are two types of analysis, which are:
Quantitative Data Analysis
Qualitative Data Analysis
In this particular research study, the researcher has chosen qualitative data analysis plan as
the research does not involve any mathematical calculations. The data has been collected in
accordance with the literature review. Interviews have also been conducted on the employees in
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the service department of Avenue Nissan and the customers their customers to know the
customer satisfaction at Avenue Nissan with a focus on service department.
3.7 Accessibility issue:
While conducting the research, the researcher has faced several obstacles while accessing
the required data (Flick 2015). These accessibility issues have been taken into consideration
while conducting the research. In case of qualitative research, the researcher has conducted
interviews on obtaining permission from the head of the service department. However, the time
of interview had to be changed several times due to the inconvenience of the employees.
3.8 Ethical issues:
The researcher has ensured that the restrictions as per the Data Protection Act, 1998 were
maintained. The researcher has ensured the privacy of the unpublished work (Silverman 2016).
The researcher has ensured that the interview questions do not hurt the emotions of the
interviewees. The researcher has also ensured that there has been no undue pressure created on
the interviewees.
3.9 Research limitations:
In the research, the major issue of the researcher is insufficiency of time and budget. The
inadequate time and the insufficient budget have been the limitations of this research.
3.10 Summary:
This chapter mentioned the research methodology adopted by the researcher for
conducting the research study. The data collection method and the type of investigation chosen
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by the researcher has been mentioned in this chapter. The accessibility issues and the research
limitations faced by the researcher have also been mentioned in this chapter.
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4. Findings and analysis:
4.1 Secondary data findings and analysis
According to Cusumano, Kahl &Suarez (2015), the customer satisfaction refers to the
amount of positive outcomes derived by a consumer on using a product or service. It is the
positive experience of a customer that is derived when the expectations of a customer meets the
actual benefits derived from the use of a product or service. In case of Avenue Nissan, the
company offers excellent customer services that includes booking service appointment online,
proper trained service representatives, use of latest diagnostic equipments, new tires, change of
express oil and many more.
On the contrary, according to Oakland (2014), Avenue Nissan at Toronto has received
several negative feedbacks of its customers which have been a result of its delayed service time
and failure to meet the expectations of the customers. The company has often failed to deliver
services within appropriate time durations that has resulted into poor level of customer
satisfaction. The company has failed in maintaining its service quality while ensuring the
delivery of services within a shorter period of time. This has resulted in the loss of 17% of the
customers, who have shifted to the other competing brands.
Therefore, according to Chen, Su & Ro (2017), it is necessary to maintain customer
satisfaction in order to retain the customers and prevent them from switching to some other
brands. In case of a car manufacturing company, the satisfaction of the customers is not just
dependent upon the quality and price of the cars but also the quick and prompt services provided
by the company. Therefore, the efficiency and the effectiveness of the service department affects
the level of satisfaction of the customers.
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4.2 Interview findings and analysis
Employee’s perspective
Q1. How does the service department at Avenue Nissan work?
As per the employees in the service department of Avenue Nissan, the service department
at Avenue Nissan provides the following services:
Online service appointment scheduling
Convenient check-in and drop off of the customer’s Nissan, which include an overnight
key drop box
Factory trained service technicians that know Nissan best and can help the customers in
the best possible way
Service bays that feature modern diagnostic equipment and tools
Nissan service and repairs completed with genuine OEM Nissan parts and accessories
Express oil change
New tires for the Nissan cars purchased by the customers
As per the employees in the service department of Avenue Nissan, the service department
provides excellent services to its customers in terms of diagnosing the problem, fixing, repairing
and servicing the Nissan cars of the customers. The company provides provisions to the
customers to schedule service appointments with the Nissan service advisors for which the
company provides an service appointment scheduling tool. The company provides comfortable
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and luxurious waiting rooms to the customers who arrive for their service appointment. The
room offers free wifi, TV, free coffee and several other comforts to its customers. The
satisfaction and convenience of the customers is what the company emphasizes upon.
Q2. What are the methods by which customer satisfaction at Avenue Nissan can be improved
with a focus on service department?
As per the employees in the service department of Avenue Nissan, the service department
at Avenue Nissan can improve the customer satisfaction by providing faster services and easy
availability of the service representatives. A major issue faced by Avenue Nissan in Toronto is
the lack of sufficient service representatives due to high rate of employee turnover. The customer
service at Avenue Nissan can be improved by increasing the number of efficient service
representatives, who shall posses excellent communication skills that would enable them to build
strong relationships with the customers. The service representatives shall set the customer
expectation early so as to provide them satisfactory services. The service department can
improve the customer satisfaction by emphasizing upon email and remaining connected with the
employees in order to convert them into loyal customers.
Customer’s perspective
Q1. How efficiently does the service department at Avenue Nissan work?
As per the customers of Avenue Nissan, a majority of them were satisfied with the
services provided by the service department at Avenue Nissan, Toronto. The customers were
satisfied with the prompt service of the service representatives. The customers were happy with
the proper system of scheduling service appointments and getting proper service within the said
duration. The customers were satisfied with the rooms provided to them while their vehicles
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were serviced. Therefore, it can be inferred that a majority of the customers were satisfied with
the overall service provided by the company.
On the contrary, there were a few customers, who were dissatisfied with the services of
Avenue Nissan as they did not receive prompt service from the service representatives. These
customers complained about the system of scheduling service appointments as they had to get an
appointment and wait for a long time when they required urgent service. These customers
complained about the lack of adequate number of service representatives available at the centre
to cater to their needs. As per these customers, the major reason behind their dissatisfaction was
the delay in the service provided to them.
Q2. What are the methods by which customer satisfaction at Avenue Nissan can be improved
with a focus on service department?
As per the customers of Avenue Nissan, the methods by which their satisfaction can be
improved involved more prompt service. A majority of the customers interviewed stated that
their satisfaction can be increased when the company offers them more prompt services. The
customers mentioned that they required instant services in case of emergencies. Additionally,
they mentioned that the service provided by the service department was satisfactory in normal
situations however; in case of emergency conditions, the company failed to meet the
expectations of the customers. They mentioned that the number of sales representatives were
insufficient to meet the requirements of a large number of customers. The new customers of
Nissan complained that they were not properly guided by the Nissan employees over the phone.
Therefore, the customer satisfaction can be improved by improving the services provided to the
customers in case of emergency situations and hiring more service representatives to handle the
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grievances of the customers and finding a solution to their issues. In case of a car manufacturing
company, the satisfaction of the customers is not just dependent upon the quality and price of the
cars but also the quick and prompt services provided by the company.
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Chapter 5
Conclusion and recommendation
Conclusion:
It can be concluded from the research that customer satisfaction is the amount of
fulfillment derived by a customer after purchasing and using a product or service. When a
customer is satisfied, the product or service is referred to as value for money as the price paid by
the customer is equivalent to the satisfaction derived by the customer. In case of a car
manufacturing company, the satisfaction of the customers is not just dependent upon the quality
and price of the cars but also the quick and prompt services provided by the company. Avenue
Nissan has been successful in satisfying its customers however; there have been a few customers
who have been dissatisfied with the services provided by the company. Customer satisfaction is
essential for the success of an enterprise and its long-term survival.
Recommendations:
From the above findings and analysis, it can be recommended that Avenue Nissan,
Toronto must emphasize more upon increasing the customer satisfaction in order to retain the
customers and gain a competitive advantage over the competitors. The company must employ
additional staff in its service department to ensure that they are able to cater to the needs of all
the customers especially in case of emergencies. A sufficient number of efficient employees in
the service department shall increase the goodwill of the organization by creating more satisfied
and loyal customers.
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Hapsari, R, Hapsari, R, Clemes, M.D, Clemes, M.D, Dean, D & Dean, D 2017, The impact of
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loyalty. International Journal of Quality and Service Sciences, 9(1), pp.21-40.
Hussain, R, Al Nasser, A & Hussain, Y.K 2015, Service quality and customer satisfaction of a
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Izogo, E.E & Ogba, I.E 2015, Service quality, customer satisfaction and loyalty in automobile
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IMPROVING CUSTOMER SATISFACTION AT AVENUE NISSAN WITH A FOCUS ON
SERVICE DEPARTMENT
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