Course: MBA Module Title: Research Skills and Analysis.

Module Code: BM 6914 (Full Time) Professors name: Dr Nicole Gross Word count- 5655 (includes Appendices and References) Student Name: Rizwan Abubakar Date: Friday, Apr 15th 2013 Email- gizmoriz@gmail.com Student Number: 1753603

An analysis of the customer satisfaction and loyalty with electronic shopping: A case analysis of H&M

Introduction Background: The research topic as selected in doing a critical analysis is the customer satisfaction and loyalty associated with electronic shopping. The 21st century business environment conditions is highly complicated because of the advancement as achieved in the field of technology and rapid pace of globalisation as pursued by companies all across the world. The impact of technological advancement is significantly evident in respect to the business practices as carried out by companies, as technology has aided them significantly in performing their business processes in a most effective manner. This has provided them the opportunity to satisfy their customers, as businesses are continuously making use of e-commerce platform in providing products and services to their customers (Rogier, Stanford-Smith and Kidd, 1998). The e-commerce platform allows the businesses to provide their offerings to their customers at a higher level of convenience, as customers are not required to physically visit the stores in purchasing their necessities. They can make purchases of their requirements at the convenience of their home. This has contributed significantly towards satisfying customers to a higher level. However, along with the advantages of providing higher level of satisfaction to customers, there are certain loopholes that are associated with the e-commerce shopping. In this mode of shopping, there is higher level of risk as faced by customers in terms of security risk, product quality risk etc. As a result, businesses have both the opportunities as well as threats from integrating technology in their existing business processes (Botha, Bothma and Geldenhuys, 2008).

However, the main aim of the businesses still remains the same which has been to satisfy their customers and to achieve their loyalty towards the business, even though the format of doing business has considerably changed. Even in case of e-commerce mode of business, the concept of customer satisfaction and customer loyalty equally applies as that of traditional mode of doing business. In order to achieve success in the e-commerce mode, it becomes essential that the businesses should aim at satisfying their customers and try to win their loyalties so that they can be attracted to make purchase with the organisation on regular basis (Hill, Brierley and MacDougall, 2003). The only thing that differs in case of electronic commerce as against the traditional mode of doing business is that the approach that needs to be followed in satisfying customers and ultimately making them loyal is different. The efforts needed in satisfying customers and ultimately in earning their loyalty has become extremely difficult in case of e-commerce platform because of additional risks associated with it and also the significant level of opportunities available to customers in making a wide comparison of their requirements at the convenience of sitting at their home. Thus, the concept of customer satisfaction and customer loyalty has different levels of meaning in the context of e-commerce as against the traditional mode of business (Romano, 2006). As a result, this research seeks to analyse the concept of customer satisfaction and customer loyalty as applicable in the context of e-commerce platform. The research is mainly focused towards analysing customer satisfaction and customer loyalty with online shopping and it is particularly assessed through a case analysis of Hennes & Mauritz (H&M) which is a fashion retailer for men, women, youth and children. Apart from this, the product category of H&M includes clothes cosmetics, accessories, and home textile products. The company has

around 2800 retail stores across the world and it offers its products and services online to its customers (H&M, 2013). Hence, H&M is regarded as the most suitable case organisation with respect to analysing the customer satisfaction and loyalty with its online business. Rationale for Choosing this Topic: This topic on analysing the customer satisfaction and loyalty in case of e-commerce has been selected because technology has become a crucial part of almost all kinds of businesses. They are applying technology in performing their majority of the business functions including the selling of their offerings to their final consumers. The role of technology has become crucial to businesses and they cannot even consider of performing their business processes without technology. Amidst such important role of technology, businesses have not only to provide their customers with their products and services offerings, but they are also required to satisfy them and make them loyal. The approach needed in managing relationships with customers is different in electronic shopping and as such, a study on analysing the relationships that needs to be maintained in order to achieve higher level of customer satisfaction and loyalty is crucial. This research seeks to analyse the customer satisfaction and loyalty in case of electronic shopping so that businesses can be provided with appropriate strategy in order to satisfy their customers in the e-business concept. The findings of the research will therefore be highly effective to businesses that are considering for integrating technology in their existing business processes and also to the organisations that are already performing their business processes over technological platform. It would specify about the strategies that need to be considered in satisfying customers over the ebusiness platform and to make them loyal towards the organisation.

Recipient of the Research: The main recipients of the research are the businesses that are currently performing their business practices over internet or e-commerce platform and also the businesses that are planning to apply the e-commerce mode into their existing mode of doing business. This is mainly because, the given research seeks to analyse the customer satisfaction and customer loyalty in case of electronic shopping, and as a result, the findings would mainly be relevant to organisations that are considering the application of technology or already performing e-commerce business. My Suitability to the Research Topic: As a researcher, I am quite suitable to this research topic because it aims at analysing the e-commerce aspect of business which is likely to be faced by every professional that is pursuing a management degree in university. After joining professional organisation, I will definitely encounter this situation where I will be asked to devise strategies in satisfying customers over e-commerce mode. Technology is gaining rapid attention of businesses and the increasing role of technology would lead to a situation whereby every business would conduct their core business practices over technology. As a result, it is likely to face a situation to deal over e-commerce platform. Thus, by conducting this research, I will be able to gain a deep insight about the ways of satisfying customers, which would help me in performing my professional career effectively. In India online shopping is rapidly growing as new entrants are trying to have their share in the market. After finishing MBA and going back to India Ill have the potential for further research. Literature Review This section focuses on the findings gained by the past researcher concerning the similar topic so that an analysis of their findings would provide an opportunity in performing the given

research in a most effective manner. Since, this research focuses on customer satisfaction and customer loyalty in case of electronic shopping, it becomes essential to evaluate the findings as gained by the past scholars concerning e-shopping. The main focus area of this literature review is on analysing the concept of customer satisfaction, customer loyalty, and various aspects related to customer satisfaction and customer loyalty in case of e-commerce. In addition to this, various kinds of risks as faced by businesses from e-commerce will also be analysed and based on the findings as gained by the part researchers, it would be possible for the researcher to carry out this research in a most effective manner. According to Sugandhi (2003), customer satisfaction is an important prerequisite for businesses to survive in the 21st century business environment, as the continuation of the business depends on the extent to which its customers are satisfied. Traditionally businesses were focused on the concept of achieving higher level of production, as it was felt that whatever is produced will be sold. But the situation has changed significantly, and the focus of majority of the business in the 21st century is to predict the demand and expectations of their customers and develop products accordingly as per their demand and requirement. This shift in the focus from production to customer signifies the importance of satisfying customers, as majority of the businesses seeks to adopt every possible practice in satisfying their customers (Sugandhi, 2003). According to Andreson, Fornell and Lehmann (1994) customer satisfaction can be determined by customers expectation. Customer expectation includes information about quality and quantity of services from reliable sources such as word of mouth, newspaper and general media (Anderson, Fornell and Lehmann 1994). In addition to the previous experience, the customer expectation includes prediction of the future performance. Customer use previous experience and non-experiential information to predict the company or brand ability to deliver

the expected quality in the future (Anderson, Fornell and Lehmann 1994).Hence expectations cover both past and predicted experience and have positive effect on customer satisfaction generally. According to Patterson, Johnson and Spreng (1997), the customer satisfaction is a totally different concept from that of customer loyalty. The concept of customer satisfaction and customer loyalty is believed to be same by many of the researchers. However, there exists a major difference between both these concepts. As for instance, a satisfied customer will automatically become a loyal customer of the organisation as believed by them, but this is not true. A customer can be satisfied with the products and services of the organisation or he may even be delighted, but it is not essential that the customer is loyal to the organisation. Customer satisfaction is concerned with the past and it is related to the positive experiences as enjoyed by the customers with the organisation in the past, but customer loyalty is concerned with future. It is related to the attachments of the customer with the organisation over a longer period of time (Patterson, Johnson and Spreng, 1997). According to Best (2005), customer loyalty is a psychological commitment that a customer has towards a specific brand or company. Customer loyalty index can be used to measure customer loyalty (Best, 2005). Customer will only recommend a product when he or she is fully satisfied and trust the quality and worth of the product and service. In other word, customer satisfaction, customer recommendation and customer retention are seen as components of customer loyalty (Best 2005). Johnson, Gustafsson, Andreasson, Lervik and Cha (2001), opined that customer loyalty is an emotional predisposition that inspires the customer to make repeat purchase from a certain product or service provider. Customer satisfaction is a result of customer loyalty and decreased in customer complain.

Szwarc (2005) emphasised that although customer satisfaction and customer loyalty are different concept and a satisfied customer cannot be considered as loyal customer of the organisation, but it cannot be denied that a satisfied customer is an important prerequisite in becoming a loyal customer of the organisation. However, the main concern of organisations is to satisfy the customer through undertaking every possible measure and with the introduction of technology, advanced tools such as Customer Relationship Management (CRM), Total Quality Management (TQM) etc are utilised by business with a view to satisfy their customer and achieve their loyalty towards their organisation (Szwarc, 2005). According to Andreson, Fornell and Lehmann (1994), the customer satisfaction and loyalty are equally applicable in respect to electronic business which is basically the process of consuming products and services online through internet. With the advancement in the field of technology, businesses have started offering their products and services online and this is mainly done through designing websites. Companies use to design their websites in a manner that provides them the opportunity to list all the products and services within their websites and customer can easily visit their website online and make purchases easily. The electronic commerce has increased the level of convenience to customers in making purchases of their necessities, as they can purchase everything online at their convenience from any location. However, the advantage of higher level of convenience with e-commerce is accompanied by certain drawbacks as well, as the financial risk is higher in case of e-commerce, customer does not have the opportunity to touch or feel the product which they can be physically visiting the store etc. (Andreson, Fornell and Lehmann, 1994). According to Stricker (2008), although technology has allowed for e-shopping to customers, yet the goal of satisfying customers remain the same for the organisation, as they

need to satisfy their online customers in order to ensure their survival. The concept of customer satisfaction and customer loyalty are still applicable in case of online business and the important ways through which organisations seeks to satisfy their online customers are by way of offering them wide variety of products online, faster services, higher level of assurance about the security of their personal information etc. Apart from this, the traditional aspects of customer satisfaction such as price and quality are also equally important in case of e-commerce (Stricker, 2008). Apart from the concept of customer satisfaction and loyalty and their role in case of ecommerce, another major area that has direct relevance over customer satisfaction and loyalty is the risk associated with e-commerce. According to Jacoby and Kaplan (1972), there are six risk associated to shopping which includes; physical, social, product, convenience, financial, and privacy risk. For the purpose of this study the product, financial and privacy risk will be discussed in details. Product Risk: Peter and Tarpey, 1975 defined product risk as the failure of a product meeting the original requirement. The inability of an online customer to be able to physically examine a product may lead to product risk in an online shopping (Garbarino and Strahilevitz, 2004). Product features may not be displayed as they may be in physical due to lack or inconsistency of infrastructure required for enabling online shopping. However increase the uncertainty in customer when making decision about online shopping. Bhatnagar, Misra ad Rao, (2000) suggested that online shopping intension may be affected by uncertainty in product. Financial risk: Jacoby and Kaplan (1972) defined financial risk as the monetary lost from a buying. If customer expectation is not met by a product purchase online, customer tend to suffer for monetary lost. The primary concern of an online shopper is the credit card fraud. There has

been high increase in the report of financial lost in the online transactions, as reported by Caterinicchia (2005). Competitive price is the major benefit of online shopping, some customer find it reluctant to buy online due to the extra expenses such as shipping cost. Privacy Risk: Garbarino and Strahilevitz (2004) defined privacy risk as the likelihood of having personal information released as a result of online shopping. Chapells survey (2005) found out that 69% of US online shopper would limit their online buying because they feel their personal information is not safe. Another survey on US online shopper also found that 84% of US online shopper feel that online retailer dont really protect their personal information and 76% will want to know how they can protect their personal information themselves when shopping online (TRUSTe, 2005). Online shopper may refuse to realise the personal information required for online operation because they do not know how secure their personal information will be and they do not have control over it. Research Questions The research questions that will be answered through conducting this research work are: Q1: What is the concept of customer satisfaction and customer loyalty in the context of electronic shopping and what is the connection between these two concepts? Rationale: This is the main basic question to the given research as it seeks to analyse the concept of customer satisfaction and loyalty in the context of electronic shopping. The answer to this research question will form the starting point to the researcher in carrying out this research in a most effective manner. Q2: What are the factors that influence customer satisfaction and loyalty?

Rationale: This question is useful in the sense that it allows for identifying the factors that are likely to play a crucial role in influencing the levels of customer satisfaction and loyalty. The answer to this research question is the core objective behind performing this research. Q3: What are the risks related to electronic shopping (product, financial and privacy risks? Rationale: This question would help in identifying the risks associated with e-commerce and the extent to which it acts as a hurdle in the process of successfully performing e-commerce. Q4: What is the effect of electronic shopping orientation on customer satisfaction and loyalty in case of H&M? Rationale: This question helps in identifying the extent to which the customer satisfaction and customer loyalty are achieved by H&M in respect to the electronic shopping facility as provided by it to its customers. Proposed Research Methodology Introduction: Research methodology is an important section of the research that highlights about the methods followed by the researcher in performing the collection of data to reach the research aim in a most effective manner. According to Walsh and Wigens (2003), research methodology is a detailed plan that highlights the different activities that are essential in performing the entire process of data collection effectively. It is defined as a blueprint regarding the various steps to be followed in performing the entire process of data collection. As indicated by Leedy (1999), it is essential that there should be systematic approach in solving the research problem so that the solutions as obtained to the research problem have higher accuracy and validity.

An effective research methodology is quite useful in performing the data analysis and interpretation and thereby, a better solution to the problem can be reached. The research methodology is defined by Remenyi et al (1998) as a procedural framework regarding the entire data collection. The successful conduct of the research work necessitates the researcher to do proper planning with respect to the entire methodology to be followed in performing the data collection. Research methods are wider than the research methodology as indicated by Welman and Kruger (2001). The best utilization of the research methods can become possible provided the researcher is quite clear about the logic behind using the methods and techniques utilized for the purpose of data collection and its analysis. The role of research methodology is quite significant in the context of the given research on customer satisfaction and loyalty in case of electronic shopping and as such, the researcher will adopt a sequential process in performing the collection of relevant data pertaining to this research. The research strategy that will be followed in the context of given research will be based on the layers of Research Onion which begins with the identification of research philosophy, research approaches, research strategies and choices, time horizons, and techniques and procedures. These aspects are indicated in the graph for Saunders Research Onion as indicated below:

Research Philosophy: Research philosophy is an over-arching term that is related to the development of knowledge and the nature of that knowledge. The researcher can perform the selection of research philosophies from the three available philosophies such as realism, interpretivism and positivism. The research philosophy that will be quite appropriate in the context of given research on the impact of customer satisfaction and loyalty in electronic shopping is that is positivism because the researcher is required to take a positive approach in performing the collection of data about customer satisfaction and loyalty level in case of ecommerce. Research Approach: Research approach indicates the approach followed by the researcher in performing the collection of data. It sets out the direction for the research as asserted by Steinberg (2006). The research approaches as available to researcher for selection are mainly of two major types including the inductive research approach and deductive research approach. In case of inductive research approach, the researcher follow a specific research approach whereby the researcher makes an understanding of the research topic first which is followed by the

development of hypothesis from the data. . Contrary to this, deductive research approach as defined by Berg and Latin (2007) is completely opposite in relation to the inductive research approach. The basic notion in case of deductive research approach is that the data collection process proceeds from the general ideal about the topic to the collection of specific information in relation to the topic. The given research on the customer satisfaction and customer loyalty in case of electronic-business will apply deductive research approach. This approach will help the researcher in collecting data pertaining to the customer satisfaction and loyalty in case of ecommerce business and this in turn has allowed for the collection of specific data in relation to H&M. As the deductive research approach allows the researcher to collect general information about the research topic which is followed by the specific collection of data, this research approach is quite suitable, as the given research is mainly based on analysing the customer satisfaction and loyalty level in the context of H&M. Thus, general information about the satisfaction and loyalty level in case of e-commerce business has allowed researcher in generalizing the findings in the context of H&M which in turn has resulted into better conclusion to the research aim. Research Methods: The selection of research methods as per Vogt (1993) can be performed from the two available research methods including the qualitative research method and the quantitative research method. Qualitative data as indicated by Miles and Huberman (1984) is non numeric data that primarily deals with words, images or sounds. The information collected through the application of qualitative research method is highly subjective in nature and it is quite useful in performing the collection of in-depth data. Contrary to this, quantitative data is defined as the numerical data whereby figures are involved in the data collection process and the

collected quantitative data are subjected to quantitative analysis through diagrams and charts. The application of a particular research method depends upon the nature of the research, as some researches require in-depth data while others may only necessitate the quantitative data (Mujis, 2010). The given research on customer satisfaction and loyalty in case of e-commerce mainly utilizes a mixed combination of research methods whereby both the qualitative as well as quantitative data collection is performed. The application of mixed methodology is highly suitable in the context of the given research in the sense that it will allow the researcher in performing the collection of both the subjective as well as objective data and this in turn has allowed for better analysis of the customer satisfaction level and their loyalty in terms of ecommerce business at H&M. The in-depth data as well as quantitative data necessary to perform the analysis of customer satisfaction and loyalty level at H&M has been collected effectively through the application of mixed research methodology approach. Data Collection Methods: Data collection methods as suggested by Scruggs and Mastropieri (2006) are mainly of two major types such as primary data and secondary data. In case of primary data collection method, the researcher performs the collection of data from respondents directly where as in secondary data collection methods, data is collected from already available secondary sources. The given research on the customer satisfaction and loyalty in case of ecommerce mainly utilizes both the primary data as well as secondary data. The primary data is mainly utilised in the form of semi structured survey with the customers of H&M and the survey will mainly performed online.

The online semi structured survey is mainly considered because the researcher seeks to analysis the customer satisfaction and loyalty level in case of e-commerce and as such, the respondents are better accessed online. The survey is performed by including questions based on their satisfaction level with the online purchases as made by them with H&M and their responses in turn are utilized in order to evaluate their satisfaction with H&M. Apart from this, the secondary data is collected through performing a rigorous analysis of the existing literature with special emphasis on online books and journals related to the customer satisfaction and loyalty in e-commerce. In these ways, appropriate data relevant to the research work has been collected. Tools used in Data Collection: In performing the collection of data, there are certain tools that have been considered in the given research. As for instance, the important tools utilized in performing the collection of data are analyzed as follows: Sampling: Sampling according to Taylor (2006) is defined as small proportion of a large population that possesses all the characteristics of the entire population. Sample selection is highly important in performing a research work, as a wrong sample selection would mislead the findings of entire research. The major benefit of sampling in case of research work is that it reduces the burden of assessing a large volume of information and thereby enables the researcher to complete the research work on timely basis. The sampling strategy that has been considered appropriate in this research work is simple random sampling whereby the customers of H&M are selected on random basis. Apart from the selection of sampling strategy, the sample considered appropriate in performing the semi-structured survey is a sample of 100 customers of H&M. Questionnaire: This is another important tool that has been utilized in performing the collection of data concerning the customer satisfaction and their loyalty with online purchase at

H&M. An appropriate questionnaire comprising of questions on the customer satisfaction and loyalty is framed and the questionnaire comprises of both the open ended questions as well as closed ended questions. Since, the researcher aimed at performing the semi-structured survey to collect both the in-depth data and the quantitative data, the questions comprising of both the open ended question and the closed ended questions were included within the questionnaire. The questions within the questionnaire are based on the customer satisfaction and loyalty at H&M so that the research aim can be accomplished in a most effective manner. Data Analysis: The collected data needs to be analysed in order to reach an appropriate conclusion about the research work. The data collected would be subjective as well as objective type and as such, the data analysis technique that will be applied in analysing the quantitative data is through diagrams and charts, whereas the subjective data collected would be analysed through thematic analysis whereby themes concerning the customer satisfaction would be derived and they are compared for data collected from the literature review and primary data. Plan Practical Efforts Needed: The practical efforts that will be required is to visit the H&M stores and to request the managers to provide their customers information such as their email address so that they can be targeted efficiently. Possible Difficulties in the Research Process: The main possible difficulty that might arise in the research process is with respect to the collection of customer details from the H&M stores. If the manager would refuse to provide the customers data, then it would create problems in performing the research.

There will not be any personal bias because the researcher would himself perform the collection of data. Ethical Implication: For accomplishing the research work in a most effective manner, Jonker and Pennink (2010) considers it highly essential that there should be adequate consideration being made for ethical aspects in successfully conducting a research work. In the given research on customer satisfaction and loyalty in case of electronic business at H&M, all the ethical guidelines as provided by the university are followed in the process of collecting data. There have been adequate provisions being made for maintaining the anonymity of the respondents and also the confidentiality of the data provided by them. The respondents are assured that the information provided by them is solely used for the academic purpose and there is no such intention of using such data for any other purposes. They are given assurance that the data provided by them regarding their customers will be utilized solely for the academic research purpose and there will not be any indication of utilizing them for any other purpose. Overall, ethical considerations are given prime importance in the successful conduct of the study. Time Allocation
Activity Searching for secondary data Reading secondary data Creating data collection instruments Administrating data collection instruments Analyzing primary data Writing the early drafts Start Date 15 April 1st May 7th May 20th May 1st July 16th July Finish Date 30 April 5th May 15th May 30th June 15th July 31st Aug

Analyzing comments on drafts by supervisor Revisions of drafts Printing and binding

10Th Sep 16th Sep 1st Oct

15th Sep 30th Sep 5th Oct

Appendix Questions asked to the Customers of H&M Questions about Demographic Information 1) Please indicate your gender Male Female

2) Your age group 15-23 years 24-30 years 31-40 years 40 years and above

Q1: Online shopping is an important medium of shopping these days as people can easily buy their requirements at their convenience from any location. Do you agree with this? 1 Agree 5 Strongly Disagree Q2: How do you find the online service response at H&M? 1 Very Fast 2: Medium 3: Slow 2 Strongly Agree 3 Neutral 4 Disagree

Q3: Do H&M provide any special discounts or promotional offers for online purchases? Provide examples 1 Yes 2 No 3 Dont know

Q4: Since H&M deals in fast fashion clothing for men, women, teenagers and children, does it provide adequate range of clothes for all the categories online? 1 Yes 2 No 3 Cant Say

Q5: Do the actual products as offered by H&M in online purchases matches with the details as provided in their website?

1 Yes

2 No

3 Cant Say

Q6: How is your satisfaction level in making online purchases for clothing at H&M? 1 Very good 2 Good 3 Bad 4 Extremely Bad

Q7: How regularly you do online shopping for fast fashion clothes at H&M? 1 Once in a month every six months 2 Twice in a month 3 More than 2 times in a month 4 Once in

Q8: Have you ever recommended your friends, colleagues or relatives about the fashion clothes as provided online at H&M? 1 Yes 2 No 3 Cant Say

Q9: How did you find the pricing and quality of the fashion clothing products as offered online at H&M? 1 Good quality and reasonable price 2 Good quality and high price reasonable price 4 Bad quality and high price 3 Bad quality and

Q10: How would you rate the corporate image of H&M in terms of online fashion clothing brand within UK? 1 Strong 2 Medium 3 Weak

Q11: Are you satisfied with the fashion brands in clothing as offered by H&M online? 1 Yes 2 No 3 Cant Say

Q12: While making the online purchases for clothing, do you compare the products as offered by other major retailers as against H&M before making any purchasing decision? 1 Always 2 Never 3 Sometimes

Q13: Have you ever made any decision for not purchasing the fashionable clothes online at H&M? Please explain the reason? 1 Yes 2 No

. Q14: Have you ever made any decision to not to purchase online with H&M because of the privacy risk associated with online purchases? 1 Yes 2 No

Q15: Does H&M provide all its products and services online as compared to the physical purchases as made by personally visiting their stores? 1 Yes 2 No 3 Cant Say

Q16: How would you rate the overall services as offered online by H&M? Please explain in brief about your satisfaction level with purchases as made at H&M.

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