perceived quality and price: their impact on the satisfaction of restaurant customers

Perceived quality andprice: their impact on thesatisfaction ofrestaurant customers

Marta Pedraja Iglesias and

M. Jesus Yague Guillen

The authors

Marta Pedraja Iglesias is Assistant Professor in the School ofEconomics and Business Studies, University of Zaragoza,Zaragoza, Spain.M. Jesus Yague Guillen is a Professotr in the School ofEconomics and Business Studies, Autonoma University ofMadrid, Spain.

Keywords

Catering industry, Quality, Prices, Customer satisfaction, Spain

Abstract

The intensely competitive environment existing in the restaurantsector makes it vital that firms achieve customer satisfaction inorder to survive in the long term. Obtaining customersatisfaction means that customers repeat the experiencedservice and that they become an effective and efficientcommunication resource, at no cost to the firm. Prominentamong the antecedents that determine the level of customersatisfaction are perceived quality and total perceived price. Theresearch carried out shows that perceived quality has a directand positive impact on the level of customer satisfaction, while,contrary to what was expected, total perceived price does notinfluence that satisfaction.

Electronic access

The Emerald Research Register for this journal isavailable atwww.emeraldinsight.com/researchregister

The current issue and full text archive of this journal isavailable atwww.emeraldinsight.com/0959-6119.htm

Introduction

The purchase process followed by customers

involves carrying out five consecutive phases of

behaviour. First, the customer perceives the

product, thereby considering its availability,

quality, price and the marketing activities.

Subsequently, the customer estimates the

perceived value of the product through a weighting

of the expected benefits and the required sacrifices.

Third, the customer compares the perceived values

assigned to the available alternatives and then

makes a decision. This decision leads to the action

– purchasing or not purchasing the product – and

finally, after the purchase action, the customer

experiences a series of post-purchase behaviours,

which are reflected by the level of satisfaction/

dissatisfaction experienced.

In order for firms to reach their exchange

objective, it is necessary for them to know the

various aspects that influence this purchase

process. To do so, they must assure that the

perceived value of the products that they offer on

the market is greater than the perceived value of

the rest of the available alternatives. The

importance of the perceived value of the product

centres on the fact that it will determine the greater

or lesser willingness shown by consumers to

purchase the product, such that the greater the

perceived value, the greater the purchase intent

shown by consumers (Monroe, 1979; Monroe and

Krishnan, 1985; Dodds and Monroe, 1985).

The subsequent satisfaction/dissatisfaction that

the consumer experiences will have an influence on

purchase repetition, brand loyalty and on personal

communication about the product, given that a

positive and significant correlation between

satisfaction and these concepts has been

demonstrated (Parasuraman et al., 1991a, b;

Cronin and Taylor, 1992). Therefore, achieving

customer satisfaction will allow a firm to generate

advantages that allow it to exist and develop.

From a marketing perspective, service firms

produce various levels of output at the various

moments of the service production process. The

first level, which arises in the stage prior to

customer interaction with the service, is identified

with the delivery of value to the customer. The

next stage of the production process is the

consumption stage, where the customer then starts

to form a part of the process. It is here where the

output produced is identified with the customer

satisfaction that the firm is capable of generating.

Finally, the third stage follows consumption,

where the firm has the task of developing and

International Journal of Contemporary Hospitality Management

Volume 16 · Number 6 · 2004 · pp. 373-379

q Emerald Group Publishing Limited · ISSN 0959-6119

DOI 10.1108/09596110410550824

The authors would like to express their thanks for the

financial support received under the MCYT-FEDER

Research Project, BEC grant 2000-04546-C02-02.

373

maintaining the value created in the previous

stages. In this case, the third level of output would

be identified with a certain index of loyalty towards

the firm, which will provide the firm with future

action guides that are relevant to its continuity in

the market.

The study herein developed centres on an

analysis of the antecedents of the second level of

output generated in the service production

process, meaning on customer satisfaction. In

order to be able to determine the reasons for the

success or failure of a service in the market, it is

necessary to place oneself in the position of the

people who acquire the service, thereby studying

their perceptions and experiences. Therefore, an

analysis of the factors that have an impact on

customer satisfaction, and therefore on their

subsequent post-purchase behaviours, is vitally

important in order for firms to be able to survive in

the highly competitive markets of today’s

economies.

The service chosen is the one offered by

restaurants, and the main objective of the research

developed is to analyse the effect of two of the basic

antecedents of customer satisfaction: total

perceived price and perceived quality. After the

introduction herein presented, the proposed

model is set forth, thereby describing the

relationships existing between its constituent

variables. The estimation made of this model

allows us to establish a series of conclusions,

prominent among which is the fact that customer

satisfaction with the analysed service is not

significantly affected by the total perceived price of

the service.

Proposed model

As it was previously stated, perceived value

exercises a positive effect on customer satisfaction.

This satisfaction should play a fundamental role in

the survival of a firm, given that it should have a

positive impact on the subsequent behaviour of

customers, for example through purchase

repetition, customer loyalty and the personal

communication made by a customer.

However, even though the differences between

the concepts of perceived value and satisfaction

seem clear a priori, they are often used as

synonyms. This error is due basically to the

definitions of these concepts that we find. Thus,

perceived value is hereby defined as “the overall

evaluation that a consumer makes regarding the

utility of a product, based on the perceptions of

what is received and what is given. Even though

what is received and what is given vary among

consumers, value represents an exchange of the

give and receive components” (Zeithaml, 1988,

p. 14). And customer satisfaction is hereby defined

as “the cognitive state of the buyer about the

appropriateness or inappropriateness of the reward

received in exchange for the service

experienced”(Howard and Seth, 1969, p. 145).

The first definition indicates that perceived value is

derived from a comparison between the expected

benefits of a product and the sacrifices that a

consumer would have to make in order to assure

those benefits (Monroe and Krishnan, 1985). The

results of this comparison should affect the level of

customer satisfaction. Nevertheless, even though

individuals in both cases make a comparison

between rewards and costs, the concepts of

perceived value and satisfaction are not synonyms.

As regards perceived value, the give and receive

components are respectively represented by the

perceptions of quality and price (Dodds and

Monroe, 1985), meaning that these two concepts

are those that make up the very definition of

perceived value. Conversely, as regards

satisfaction, the perceptions of both quality and

price are, together with other factors, antecedents

of this satisfaction.

Together with this conceptual difference, we

must take into account that while the formation of

perceived value in the mind of the consumer does

not require prior experience, satisfaction does. A

consumer can perceive both quality and price, and

therefore value, without having had any prior

experience with the evaluated product. This lack of

prior experience is not possible when defining

satisfaction, given that in this case, we talk about

the “reward received in exchange for the service

experienced”. Therefore, a consumer requires

prior experience in order to be able to reflect upon

the reward/cost relationship or the balance

between what is received and what is given.

In spite of these differences, the fact that

services are simultaneously produced and

consumed makes it very difficult to separately

measure perceived value and customer

satisfaction. This, and given that we are aware of

the existing and aforementioned differences

between value and satisfaction, leads us to state the

model shown in Figure 1.

The reasoning that allows us to establish this

model, in which perceived value is not measured, is

based on consumer behaviour. When making their

purchase decisions, individuals go through the

following phases: recognition of the need; the

search for information on existing alternatives; the

evaluation of these alternatives; the purchase of the

best alternative; and behaviour after the purchase

according to the satisfaction experienced. It is in

the evaluation phase when customers assign the

values that they perceive to the various

Perceived quality and price: impact on restaurant customers’ satisfaction

Marta Pedraja Iglesias and M. Jesus Yague Guillen


Volume 16 · Number 6 · 2004 · 373-379

374

alternatives, thereby establishing a hierarchy

among them. Once evaluated, they will purchase

the alternative with the greatest perceived value

and will experience a certain level of satisfaction.

Therefore, when customer satisfaction with a

certain product is being measured, the value that

customers assign to that product is likewise being

collected indirectly, given that that product was the

one finally selected among all the evaluated

alternatives.

The proposed model in Figure 1 attempts to

analyse the effects exercised by two of the

antecedents of customer satisfaction, perceived

quality and total perceived price, whereby the

following hypothesis to be compared is set forth:

H1. The satisfaction experienced by a customer

is positively affected by perceived quality

and negatively affected by the total price

that the customer may perceive.

Customer satisfaction is a complete evaluation of

the accumulated purchase and consumption

experience, which reflects a comparison between

the sacrifice experienced and the perceived

rewards. The total costs that a consumer perceives

to be associated with the purchase process is

included within the sacrifice experienced. Costs

can be monetary – thus determined by the sale

price of the acquired product – or non-monetary,

given that in order for customers to obtain certain

benefits, they must use their available time, make

physical and mental efforts and even remedy

certain difficulties that can appear in the purchase

process. These two kinds of costs make up the total

perceived price associated with the acquisition

(Pedraja, 1998; Pedraja and Yague, 2002), which

perceived price should exercise a negative effect on

customer satisfaction.

Prominent among the possible rewards received

by customers when determining their satisfaction

levels are their perceptions about the quality

received. Perceived quality is hereby defined as

“the evaluation that a consumer makes about the

excellence or superiority of a product” (Zeithaml,

1988, p. 3). Therefore, it represents those

characteristics of the product that fulfil the

customer’s requirements and that best satisfy their

desires. Logically, this perception of the quality of

a service should positively affect the customer’s

level of satisfaction, given that the greater the

reward received, the better a customer’s overall

evaluation should be about the purchase and

consumption experience.

Methodology

The case chosen for analysing the proposed model

is the service offered by restaurant firms located in

a large city in the Northeast of Spain. This sector

has been selected mainly for one reason, the

important role that it plays in the Spanish

economy. Thus, the hotel and restaurant sector,

which includes various services such as lodging

and food and beverage services, represents

approximately 80 per cent of the Spanish Gross

Domestic Product corresponding to the service

sector, a fact that clearly demonstrates its

economic importance. Along with this fact, it

should be pointed out that the average annual

consumption per capita in this sector, at a national

level in Spain, is 414.33 euros, and it is higher

(519.29 euros) in the city analysed in this study

The empirical work carried out is based on the

construction of a database prepared as from a

survey taken during the months of May and June

1997. A non-probabilistic procedure was used for

the sampling. Considering the object of the study

herein proposed, the number of valid surveys was

156.

The model to be compared was estimated using

the EQS 4.02 statistical package.

Analysis and results

Characteristics of the sample

A slightly higher presence of women is observed

(60 per cent), and the mean age of the analysed

individuals is around 35 years old. The mean,

monthly income level is around 1,500 euros, and

themajority of the sample has studied at university.

Figure 1 Proposed empirical model




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Descriptive analysis

The analysed variables were measured through

ten-point interval scales, from 1 for “very low” to

10 for “very high”. In accordance with these scales,

the analysed individuals stated their opinion with

respect to the phrases shown in Table I.

The mean values obtained for the three

analysed variables are likewise higher than the

mean point of the scale used for their

measurement (5), wherefore there is a positive

skewing in all cases.

The high levels of satisfaction with the analysed

sector shown by the analysed individuals can be

highlighted, given that the mean score reaches the

value of 7.63 out of a total possible score of ten

points. Moreover, the mean values of the two

remaining variables – total perceived price and

perceived quality – likewise have values that are

greater than 5: 6.06 and 6.69, respectively. These

results are positive from the perspective of the

analysed sector if we consider the quality and

satisfaction variables, given that they seem to

clearly show that restaurant managers are

managing well as regards those variables.

However, the total perceived price is high, which

could mean a problem when managing restaurants

if it is subsequently shown that this variable

exercises a considerable effect on customer

satisfaction.

Before estimating the model, we analysed the

possible existence of significant differences

between the mean values of price and quality

according to the satisfaction levels shown by the

analysed individuals. Therefore, three groups were

formed[1] – group 1, group 2 and group 3 – which

represent, respectively, the individuals with low,

medium and high levels in each one of the

explanatory variables.

Once the groups were determined, the

respective measures of the central trend and

dispersion were obtained according to each one of

the explanatory variables. The results obtained,

with the respective comparisons of means

determined through the LSD test at 5 percent, are

shown in Table II.

The comparisons of means indicate the

existence of significant differences in the two

variables analysed. Thus, contrary to what was

initially expected, those individuals with a lower

level of total perceived price experienced an

average level of satisfaction slightly lower than

those who perceived the greatest total price. This

result seems to clearly show that the total perceived

price is not going to exercise a considerable effect

on customer satisfaction levels, which would have

considerable implications when managing

restaurants. Nevertheless, as it was expected, those

individuals who perceived low and medium quality

experienced a mean satisfaction below the mean of

those individuals who perceived high quality.

Therefore, it seems that a positive relationship

emerges between the perceived quality and the

satisfaction levels experienced by customers, as set

forth in the proposed hypothesis.

To finalise this descriptive analysis, the

existence of significant differences was analysed as

regards the mean levels of satisfaction, thereby

considering the different reasons that can lead to

acquiring the services offered by restaurants. This

comparison allows us to know those consumption

situations that generate greater levels of

satisfaction. Thus, the analysed reasons were

“leisure”, “family celebration”, “business” and

“time” (lack of time to go home and eat). The

comparisons of means made[2] show the existence

of significant differences for all reasons, except for

“Business.”

Thus, those individuals who tend to acquire the

services offered by restaurants due to reasons of a

“family celebration” show higher mean levels of

satisfaction (7.99) than those who tend to acquire

the services offered due to “leisure” (7.20) or

“time” (7.04). These results are logical if we

continue to keep in mind the process of consumer

purchase behaviour. Thus, if customers have to

select a restaurant for a family celebration, they

will carry out a greater information search than

they will as regards leisure or time. This greater

information search and subsequent evaluation of

the alternatives, assigning perceived value, should

lead them to a more suitable decision, and

therefore greater subsequent satisfaction.

Nevertheless, as regards the lack of time to go

home and eat (for example), consumers will make

their purchase decision in accordance with other

variables, such as the proximity to their place of

work, wherefore the number of evaluated

alternatives will be less, which will have an impact

on their subsequent purchase decision and on their

satisfaction levels.

Model estimation

In the empirical model shown in Figure 1, it has

been established that the satisfaction experienced

by a consumer with the service offered by

restaurants is affected by two variables: perceived

Table I Measurement of the variables

Variable Descriptor

Total perceived price General level of sacrifice, monetary or non-monetary,

that the analysed individuals generally associate with

the restaurants in their city

Perceived quality Level of quality that the analysed individuals believe

that the restaurants in their city have in general

Satisfaction Level of satisfaction of the analysed individuals in their

last experience with the analysed service




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quality and total perceived price. The maximum

likelihood estimation using EQS 4.02 results in the

standardised solution shown in Figure 2.

The determination coefficient obtained for the

stated structural relationship takes an acceptable

value, R2 ¼ 0:258, given that there are other

factors that have not been herein analysed but that

affect satisfaction. However, an analysis of the

standardised coefficients obtained leads to

partially rejecting the established hypothesis.

Thus, while the positive and significant effect

exercised by perceived quality on satisfaction is

verified (0.509), it is observed that the total

perceived price – even though it shows the sign

established in the hypothesis, does not exercise a

significant effect on the level of customer

satisfaction.

The results obtained allow us to point out that

the satisfaction obtained by restaurant customers

is increased by the level of quality that they

perceive from those restaurants, while the total

sacrifice (monetary and non-monetary) that they

perceive to be associated with the transaction does

not significantly affect their satisfaction.

Discussion and implications formanagement

For firms that operate in competitive markets,

achieving satisfaction for their customers is

particularly important if they want to survive in

those markets. Satisfied customers will repeat their

purchases, they will be more loyal to the firm and

they moreover will become the most efficient and

effective communication resource of the firm by

generating favourable communication.

In order to be able to generate this satisfaction,

firms must know the elements that affect it and

must study what the effect is. Perceived quality and

total perceived price are among the antecedents

that determine the level of customer satisfaction,

which a priori should be taken into account by the

analysed retail establishments when implementing

policies aimed at generating the satisfaction of

their customers.

In the analysed context, restaurant firms, it has

been observed that the quality perceived by

customers is revealed as an aspect of vital

importance when generating satisfaction. When

managing this variable, restaurants must take into

account that the services they offer are a special

class of product, and they must therefore be

treated as such. Thus, even though the service that

they offer is basically intangible, customers can

analyse the tangible elements that are necessary to

provide the service, such as the decoration of the

premises, the food, the drink, how comfortable the

seats are, etc. In this service, the establishment

plays an important role, but special relevance is

also taken on by abstractions such as “the food

quality”, “the quality of the customer service

provided by the staff”, etc. These aspects must be

analysed before establishing policies directed at

improving service quality, given that it is necessary

to know what the customers value when evaluating

the quality that they are being offered.

The fact that the service offered by restaurants is

produced and consumed simultaneously means

that customers are present for the entire time that

the service is provided. The relationship between

Figure 2 Standardised solution

Table II Comparisons of means with respect to the satisfaction variable

Total

G.1: low

level in the

explanatory

factor

G.2: medium

level in the

explanatory

factor

G.3: high

level in the

explanatory

factor

F ratio (prob.) LSD testMean SD Mean SD Mean SD Mean SD

Total perceived price 7.63 1.67 7.28 1.71 7.96 1.73 7.89 1.54 2.858 (0.060) G1-G3

Perceived quality 7.63 1.67 6.87 1.62 7.44 1.24 8.62 1.24 23.547 (0.000) G1-G3 G2-G3




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the restaurant staff and the clientele means that

there is a high potential for variability in the

service, given that service quality can vary from

one employee to another, from one customer to

another, etc. Although this initially may be seen by

managers as a problem, it is actually a business

opportunity, given that it is possible to provide

customised service to customers. Generally,

restaurants offer a wide variety of options from

which to choose, and it is possible for customers to

determine, for example, the manner in which they

want certain dishes to be cooked and served.

These personalisation possibilities mean that, in

order to be able to offer quality service, it is

fundamental that restaurant managers hire

qualified personnel and that the personnel

moreover be given the power to make decisions in

order to change certain service characteristics

requested by customers. These aspects are key in

order to be able to manage the perceived quality of

restaurants.

If restaurant managers obtain positive

evaluations of their quality by their customers, they

can have a direct and considerable impact on the

satisfaction of their customers and, therefore, on

the behaviours that those customers may carry out

in benefit to the firm. Thus, achieving customer

satisfaction allows increasing the levels of purchase

repetition and loyalty, and it allows increasing

positive communication among the individuals in a

customer’s immediate surroundings. In the service

sector, this communication is of vital importance,

and it moreover costs a firm nothing.

However, the total perceived price, which

reflects both the monetary cost and the non-

monetary cost associated with acquiring and

experiencing the service offered by restaurants,

does not emerge as an important aspect when

generating satisfaction for customers. This fact, at

first surprising, could be due to the fact that the

evaluation of price has already been made by the

customer when assigning the perceived value to the

service finally selected. In other words, the total

perceived price already exercises its role in a prior

phase within the purchase process, the stage

pertaining to the best alternative available. Thus,

the total price of a restaurant affects the phase

when customers choose among all the restaurants

considered as choice alternatives, but once

assumed, it does not subsequently affect customer

satisfaction after the service has been experienced.

This does not mean that the total sacrifice made in

order to experience the service offered by

restaurants is not an important management

variable. On the contrary, its role will be a

determinant in the selection process. Therefore,

restaurant managers must analyse how customers

form their price perceptions, and they must

attempt to transmit the signal that makes their

restaurant take on a greater perceived value. In this

sense, previous research (Pedraja and Yague,

2002) highlights that restaurant managers must

know the so-called internal reference price of their

potential customers, which can be measured

through the mean price that they expect to pay for

the service offered by their restaurants. If these

prices correspond to the sale price, this objective

signal is being perceived correctly. On the contrary,

a problem emerges, which should be analysed,

given that the positioning endeavoured through

prices is not being reached by setting a certain sale

price. Moreover, together with these monetary

costs, restaurant managers should analyse non-

monetary costs, which are associated mainly with

the information search activities and which

customers bear when making their purchase

decision.

In conclusion, the results herein obtained show

us that once a certain restaurant has been selected,

generating satisfaction falls directly upon the

quality that the establishment is capable of

providing through its personnel and its material

components.

In conjunction with this, it is also important to

know the reasons that lead customers to acquire

the services offered by restaurants. Among the

possible reasons for use that were analysed, it has

been observed that going to a restaurant for a

family celebration generates greater levels of

satisfaction than any other reason. As we have

already commented, customers perform a greater

information search when they wish to go to a

restaurant for a family celebration than when they

go to a restaurant for reasons of time. This does

not mean that the managers of restaurants that

have customers due to the proximity to their place

of work, study, etc., should not take into account

the satisfaction levels that are generated with their

service. Even though we could say that they have

“captive” customers, to a certain extent, this

situation could be changed by, for example, the

appearance of a new competitor. If the existing

restaurant has not been concerned about

generating the satisfaction of its customers, then

the customers will leave it if the new competitor is

capable of offering them greater quality and,

therefore, greater satisfaction.

The study herein made gives rise to future lines

of research centred basically on two aspects: on the

one hand, an analysis of the elements that make up

customer perceptions of quality and, on the other,

the relationships existing between customer

satisfaction, customer loyalty and personal

communication by customers.




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Notes

1 The individuals were divided according to their satisfactionlevels, thereby taking into account the mean value and thestandard deviation The grouping criterion was to add andsubtract an average of their standard deviation from themean.

2 The comparisons of means were made through the t-testat 5 per cent.

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Cronin, J.J. and Taylor, S. (1992), “Measuring service quality:a re-examination and extension”, Journal of Marketing,Vol. 56 No. 3, pp. 55-69.

Dodds, W. and Monroe, K. (1985), “The effect of brand and priceinformation on subjective products evaluations”, inHirschman, E.C. and Holbrook, M.B. (Eds), Advances inConsumer Research, Vol. 12, Association for ConsumerResearch, Provo, UT, pp. 85-90.

Howard, J.A. and Seth, J.N. (1969), The Theory of BuyerBehaviour, John Wiley & Sons, Inc., New York, NY.

Monroe, K. (1979), Pricing: Making Profitable Decisions,McGraw-Hill, New York, NY.

Monroe, K. and Krishnan, R. (1985), “The effect of price onsubjective product evaluations”, in Jacoby, J. and Olson, J.(Eds), Perceived Quality: How Consumers View Stores andMerchandise, Lexington Books, Lexington, MA, pp. 209-32.

Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1991a),“Perceived service quality as a customer basedperformance measure: an empirical examination oforganizational barriers using an extended service qualitymodel”, Human Resource Management, pp. 35-64.

Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1991b),“Understanding customer expectations of service”, SloanManagement Review, Spring, pp. 39-48.

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perceived quality and price: their impact on the satisfaction of restaurant customers

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