CHAPTER ONE 1.

0 Introduction This chapter gives the background of the study on the effects of product strategy on customer satisfaction. Its in this chapter that the study will be introduced, the background and the problem of study. The researcher introduces research objectives and research questions. 1.1 Background to the Study

Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy (Hayes, 1992). . Measuring customer satisfaction: Organizations need to retain existing customers while targeting non-customers; Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. Customer satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other factors the customer, such as other products against which the customer can compare the organization's products (Hayes, 1992). Work done by Parasuraman, Zeithaml and Berry (Leonard L) between 1985 and 1988 delivered SERVQUAL which provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance. This provides the researcher with a satisfaction gap which is semi-quantitative in nature. Cronin and Taylor extended the disconfirmation theory by combining the gap described by Parasuraman, Zeithaml and 1

Berry as two different measures (perception and expectation) into a single measurement of performance relative to expectation. The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale. The customer is asked to evaluate each statement in terms of their perception and expectation of performance of the service being measured. In order to stay competitive and remain profitable, businesses have to focus on the quality of their customer service. Companies that invest time, energy and money into developing and nurturing quality so customers can have a satisfactory experience are going to be more profitable and better likely to experience more sustained growth over the long-term. Companies who ignore their customer service approaches will quickly find themselves losing out to their competitors. To avoid falling into this pitfall, it is of value for companies to develop business strategies to improve customer service delivery. This shouldn't be a one time deal, but rather part of a long-term strategy that is immersed in the company's organizational philosophy. Even a company that has good customer service should engage in ongoing evaluation to ensure their customers are happy with products or services they've bought. Satisfaction is paramount because customers, even though they may have had a good experience, who don't walk away completely pleased with their purchase may not be a repeat customer (Hayes, 1992). Customer satisfaction strategies can range from simple to complex; from pricey to free. Not all strategies have to be expensive, with proper training and organizational approaches established many of the strategies won't cost you a cent. Companies need to develop their business model with strong customer service in mind. Today's markets are customer driven, and customers who are not satisfied with their purchasing experience, are not going to return. Businesses no longer have the luxury of providing basic customer service; they must go above and beyond in order to remain on a competitive level. The bottom line is important to stakeholders; however, eventually the profitability line is going to drop unless monies are invested into customer service initiatives. Sometimes in 2

order to succeed, a business has to invest in order to gain; customer service is one of those areas. There are many benefits to investing in business strategies to improve customer satisfaction; the effort usually pays off. 1.2 Statement of the Problem

The purpose of a business is to create and keep a customer. If a business successfully creates and keeps customers in a cost-effective way, it will make a profit while continuing to survive and thrive. If, for any reason, a business fails to attract or sustain a sufficient number of customers, it will experience losses. Too many losses will lead to the demise of the enterprise. According to Dun and Bradstreet, the single, most important reason for the failure of businesses in America is lack of sales. And, of course, this refers to resales as well as initial sales. So the hotels job is to create and keep a customer. Hotel businesses in Eldoret Municipality have become a competitive one and needs extra effort in order to remain in business. Sirikwa hotel has of the late been experiencing customer declines and the situation is getting worse. 1.3 Main Objective.

The main objective of the study was to evaluate and address the effects of product strategy on customer satisfaction. 1.4 i. ii. iii. iv. 1.5 i. Specific Objectives To find out issues related to product strategy within the hotel industry. To determine effective product strategy applicable at Sirikwa hotel. To identify the effects of product strategy on customer satisfaction. To investigate possible ways of promoting product strategy on customer satisfaction. Research Questions What are the issues related to product strategy within the hotel industry? 3

The following research questions were used in the study:

ii. iii. iv.

1.6

What are the effective product strategies applicable at Sirikwa hotel? What are the effects of product strategy on customer satisfaction? What are the possible ways of promoting product strategy on customer satisfaction? Significance of the Study

The study will provide contribution to the existing knowledge on the effects of product strategy on customer satisfaction. Today, it would be difficult to find a company that doesn't proudly claim to be a customer-oriented, customer-focused, or even-customer driven enterprise. But look closer at how these companies put their assertions into practice, and often you discover an array of notions and assumptions that range from superficial and incomplete to misguided. Some examples of customer satisfaction illusion include: believing that by conducting market surveys and focus groups you know all there is to know about your customers; believing that investing in awareness programs for employees and putting customers' pictures on the cover of your annual report is enough to achieve customer satisfaction and believing that the job of CEO is done by giving his or her direct phone number to some valued customers. All these approaches are well intentioned, but all of them offer, at best, partial solutions to their customer satisfaction, and all, as a result, fall short. There is nothing wrong with the notion of customer satisfaction per se. The problem comes with its pursuit, which if fraught with peril. Most plans to improve customer satisfaction stand on two shaky and dangerous assumptions. What they create is an illusion the customer satisfaction trap. Too often, measurement of customer satisfaction is misleading they tell you very little about where you are, and they can't show you where to go. The study will help to boost hotels product strategies and thus increase the number of customers. 1.7 1.7.1 Scope and Limitation of the Study Scope of the Study

The study was limited to Sirikwa Hotel in Eldoret Municipality. The study used only two research instruments: the questionnaire and interview schedules. The target population was 4

limited to 20 people a more comprehensive finding could have been found by using the whole target population but some of the respondents were unavailable and resource could not allow. The study was done in the month of May 2010. 1.7.2 Limitation of the Study

The respondents were suspicions of the study and it took a lot of effort to convince them of the importance of the study. The financial constraint was a limitation. Some respondents took long to answer the questionnaire forcing the researcher to extend the study period. 1.8 Conceptual Framework.

The conceptual framework of the effective product strategy on customer satisfaction was taken as the independent variable and can be broken down into Quality of products, Research on the customers needs and effective pricing strategies. The dependent variables were taken to be the effects of product strategy which taken to be Customer satisfaction. Figure 1.1 shows the relationship between the variables: Figures 1.1 Conceptual Framework Independent Variable i. Quality of products offered ii. Research on Customers needs iii. Effective pricing Customer Satisfaction Dependent Variable

Source: Author, data 2010 CHAPTER TWO: LITERATURE REVIEW 2.0 Introduction This Chapter mainly reveals the secondary data complied by several scholars in the field of effects of product strategy on customer satisfaction. The data supports the objectives of the study giving the objectives relevancy this chapter is broken down to easy reading and 5

enriching the information thereafter. The literature is serialized for easier location of relevant areas and a summary given the importance of the study. 2.1 Product Strategy

A product is anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a want or a need. Products include more than tangible goods. Broadly defined, products include physical objects, services, events, persons, places, organisations, ideas, or mixes of entities. Thus, throughout this text, product broadly includes any or all of these entities. Because of their importance in the world economy, special attention is given to services and in this case, the hotel industry has got more to deal within services strategy. Services are a form of product that consist of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in ownership of anything. Examples are banking, hotel, tax preparation and home repair services. Product Strategy is perhaps the most important function of any business. It must take in account the capabilities in terms of engineering, of production, of distribution (sales) existing in the company or of time to acquire them (by hiring or by mergers). It must evaluate the customers expectations at the time of delivery. It must guestimate the competition (including new entrants) probable moves to enter the same market. In the case of the hotel industry, service strategy is more applicable than product strategy.

2.1.1

Importance of Service Quality Assessment in the hotel industry

Service quality is generally understood as the gap between consumers' expectations about a service and their subsequent perception of service performance (Hayes, 1992). Most service organizations today realize that delivering excellent service is important to the success of their business, and hotel industry is no exception. Interest in service quality 6

research has been ongoing for more than two decades (Hayes, 1992), resulted in having a literature rich of various studies dealing with this crucial issue from different dimensions. Indeed, the improvement of product and service quality has been widely discussed in the literature as an appropriate competitive strategy for achieving sustainable competitive advantage. This requires management to continuously examine current processes against the demands of customers in the marketplace and then update their operations in line with market requirements (Hayes, 1992). Improving service quality will intensify customers' satisfaction. The importance of service quality to the success of business is best concluded in this sound statement: Excellent service is a profit strategy because it results in more new customers, more business with existing customers, fewer lost customers, more insulation from price competition, and fewer mistakes requiring reperformance of services (Hayes, 1992). To achieve the fruits of improvements in quality it has to be investigated with an understanding of its competitive implications. The importance of service quality necessitates examining service quality in the context of strategic management of firms. This led many firms to pursue service quality as a way to differentiate themselves from their competitors, thus gaining competitive advantage. However, the issue of how the implementation of quality strategies might lead to the attainment of one's firm competitive advantage is perhaps inadequately covered in the service marketing literature (Kincaid, 2003). Implementation of service quality strategies relies, to a large extent, on the role of middle managers. Kincaid, (2003) ensure the importance of middle managers in the implementation of service quality programs by claiming that 'the characteristics of successful quality implementations is that the support of middle managers is gained'. 2.1.2 Service quality and hotel industry

Service quality has become a focus for many hotel industry researchers (Kincaid, 2003). The combined effect of the worldwide economic recession, technological advancement, and globalization have increased the competitive pressures on hotel organizations All these pressures led the hotels to be more concerned about service quality ethic. On the other 7

hand, how consumers perceive the quality of products and services and how those perceptions influence their buying decisions is a vital issue for marketing managers. This is because service quality is an influential factor in attracting repeat business for a hotel (Kincaid, 2003). A number of researchers have examined the quality of services offered in the hotel industry through the relative importance of various attributes to customers. Such attributes act as determinant factors for hotel selection and preference and for customers' judgement upon service quality. This study she stated that 'it has been noted that consumers use a variety of cues to form an overall evaluation of the quality of products and services. These cues used by consumers relate to perceived product/service attributes or features'. The same was assured by (Kincaid, 2003) Dealing with the same issue, some studies found that even though products and services have many attributes, consumers tend to base their judgement of the quality on few attributes or sometimes on just one. Saleh and Ryan (1992) surveyed 145 guests of a Canadian hotel and found that, for guests, quality is mainly judged through the interior and exterior aesthetics of the hotel, then comes range of facilities provided. Hughes, (2003) studied the mature travelers market segment by interviewing 222 members of the Alumni Association of the Pennsylvania State University (median age = 59). The findings of that study revealed that for mature travelers, the most influential factors of service quality are dietary menus, early dining hours, the availability of medical facilities, and more legible print and signage. Hughes, (2003) conducted a study on Days Inn customers at 51 hotels in the USA. The study revealed a number of influential attributes that were separated into two general groups: those related to employees' efficiency and attitude and those related to guests' perception of hotel ambience and room comfort. Hill, (1996) conducted a study through which he measured the gaps between U.S.A. hotel management and guests' expectations and perceptions. He recruited a sample of 116 customers and 23 managers. The findings of that study revealed eight service quality gaps. Among other findings, that study found a significant correlation (r =.69, p < 0.01) between 8

satisfaction scores and quality scores. Gummesson, (2002) conducted a study on 210 businesswomen travelers and found that for this market segment, security is the major concern (e.g. peepholes, security chains, training front office staff not to announce the guest's room number). Gummesson, (2002) surveyed 13 hotels in the U.S.A., called them champions, and concluded that these hotels (Champions) managed to improve their businesses through adopting service excellence philosophy. These champions managed to enhance service quality to customers through various initiatives such as: creating a service culture, building an empowered service-delivery system, facilitating a customer listening orientation, and developing responsive service guarantee. According to this study, the service quality programs cannot be successful unless employers are willing to take whatever actions to ensure guest satisfaction. A number of studies found that definition of service quality in the airline industry varies depending on the purpose of the travel. One of the attributes playing a major role in the customers' perception of service quality is the employee performance. For instance, Gummesson, (2002) reported that in forming their perception of the service provision, customers relied on attributes related to employee cues such as courtesy, competence, responsiveness and interpersonal skills. The importance of employee courtesy was also reported by Gummesson, (2002) These studies and others assume the positive relationship between employee performance and consumer perception of service quality.

2.1.3

Marketing research (MR) in Hotel industry.

The task of marketing research provides management with relevant, accurate, reliable, valid, and current information. Competitive marketing environment and the ever-increasing costs attributed to poor decision making require that marketing research provide sound information. Sound decisions are not based on gut feeling, intuition, or even pure judgment (Peppers, 1999).

Marketing managers make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs. They make decisions about potential opportunities, target market selection, market segmentation, planning and implementing marketing programs, marketing performance, and control. These decisions are complicated by interactions between the controllable marketing variables of product, pricing, promotion, and distribution. Further complications are added by uncontrollable environmental factors such as general economic conditions, technology, public policies and laws, political environment, competition, and social and cultural changes. Another factor in this mix is the complexity of consumers (Peppers, 1999). Marketing research helps the marketing manager link the marketing variables with the environment and the consumers. It helps remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, consumers' response to marketing programs cannot be predicted reliably or accurately. Ongoing marketing research programs provide information on controllable and non-controllable factors and consumers; this information enhances the effectiveness of decisions made by marketing managers (Peppers, 1999). Traditionally, marketing researchers were responsible for providing the relevant information and marketing decisions were made by the managers. However, the roles are changing and marketing researchers are becoming more involved in decision making, whereas marketing managers are becoming more involved with research. The role of marketing research in managerial decision making is explained further using the framework of the DECIDE model (Plog, 2004): D - Define the marketing problem; E - Enumerate the controllable and uncontrollable decision factors; C - Collect relevant information; I - Identify the best alternative; D Develop and implement a marketing plan and E - Evaluate the decision and the decision process.

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The DECIDE model conceptualizes managerial decision making as a series of six steps. The decision process begins by precisely defining the problem or opportunity, along with the objectives and constraints. Next, the possible decision factors that make up the alternative courses of action (controllable factors) and uncertainties (uncontrollable factors) are enumerated. Then, relevant information on the alternatives and possible outcomes is collected. The next step is to select the best alternative based on chosen criteria or measures of success. Then a detailed plan to implement the alternative selected is developed and put into effect. Last, the outcome of the decision and the decision process itself are evaluated (Plog, 2004). 2.1.4 Marketing research characteristics

First, marketing research is systematic. Thus systematic planning is required at all the stages of the marketing research process. The procedures followed at each stage are methodologically sound, well documented, and, as much as possible, planned in advance. Marketing research uses the scientific method in that data are collected and analyzed to test prior notions or hypotheses (Bjerre, 2002). Marketing research is objective. It attempts to provide accurate information that reflects a true state of affairs. It should be conducted impartially. While research is always influenced by the researcher's research philosophy, it should be free from the personal or political biases of the researcher or the management. Research which is motivated by personal or political gain involves a breach of professional standards. Such research is deliberately biased so as to result in predetermined findings. The motto of every researcher should be, Find it and tell it like it is. The objective nature of marketing research underscores the importance of ethical considerations, which are discussed later in the chapter (Bjerre, 2002). Marketing research involves the identification, collection, analysis, and dissemination of information. Each phase of this process is important. We identify or define the marketing research problem or opportunity and then determine what information is needed to investigate it., and inferences are drawn. Finally, the findings, implications and 11

recommendations are provided in a format that allows the information to be used for management decision making and to be acted upon directly. It should be emphasized that marketing research is conducted to assist management in decision making and is not: a means or an end in itself. The next section elaborates on this definition by classifying different types of marketing research (Bjerre, 2002). 2.1.5 Comparison with other forms of business research

Market research is broader in scope and examines all aspects of a business environment. It asks questions about competitors, market structure, government regulations, economic trends, technological advances, and numerous other factors that make up the business environment (see environmental scanning). Sometimes the term refers more particularly to the financial analysis of companies, industries, or sectors. In this case, financial analysts usually carry out the research and provide the results to investment advisors and potential investors (Gummesson, 2002). Product research - This looks at what products can be produced with available technology, and what new product innovations near-future technology can develop (see new product development). Advertising research - is a specialized form of marketing research conducted to improve the efficacy of advertising. Copy testing, also known as pre-testing, is a form of customized research that predicts in-market performance of an ad before it airs, by analyzing audience levels of attention, brand linkage, motivation, entertainment, and communication, as well as breaking down the ads flow of attention and flow of emotion. Pre-testing is also used on ads still in rough (ripomatic or animatic) form (Gummesson, 2002). 2.1.6 Classification of marketing research Organizations engage in marketing research for two reasons: (1) to identify and (2) solve marketing problems. This distinction serves as a basis for classifying marketing research into problem identification research and problem solving research. Problem identification research is undertaken to help identify problems which are, perhaps, not apparent on the surface and yet exist or are likely to company image, market characteristics, sales analysis, short-range forecasting, long range forecasting, and business trends research. Research of 12

this type provides information about the marketing environment and helps diagnose a problem. For example, the findings of problem solving research are used in making decisions which will solve specific marketing problems (Kotler, 2004). The Stanford Research Institute, on the other hand, conducts an annual survey of consumers that is used to classify persons into homogeneous groups for segmentation purposes. The National Purchase Diary panel (NPD) maintains the largest diary panel in the United States. Standardized services are research studies conducted for different client firms but in a standard way. For example, procedures for measuring advertising effectiveness have been standardized so that the results can be compared across studies and evaluative norms can be established. The Starch Readership Survey is the most widely used service for evaluating print advertisements; another well-known service is the Gallup and Robinson Magazine Impact Studies. These services are also sold on a syndicated basis (Kotler, 2004). Customized services offer a wide variety of marketing research services customized to suit a client's specific needs. Each marketing research project is treated uniquely. Limitedservice suppliers specialize in one or a few phases of the marketing research project. Services offered by such suppliers are classified as field services, coding and data entry, data analysis, analytical services, and branded products. Field services collect data through mail, personal, or telephone interviewing, and firms that specialize in interviewing are called field service organizations. These organizations may range from small proprietary organizations which operate locally to large multinational organizations with WATS line interviewing facilities. Some organizations maintain extensive interviewing facilities across the country for interviewing shoppers in malls (Kotler, 2004). Coding and data entry services include editing completed questionnaires, developing a coding scheme, and transcribing the data on to diskettes or magnetic tapes for input into the computer. NRC Data Systems provides such services (Kotler, 2004). Analytical services include designing and pretesting questionnaires, determining the best means of collecting data, designing sampling plans, and other aspects of the research design. Some complex 13

marketing research projects require knowledge of sophisticated procedures, including specialized experimental designs, and analytical techniques such as conjoint analysis and multidimensional scaling. This kind of expertise can be obtained from firms and consultants specializing in analytical services (Peppers, 1999). Data analysis services are offered by firms, also known as tab houses, that specialize in computer analysis of quantitative data such as those obtained in large surveys. Initially most data analysis firms supplied only tabulations (frequency counts) and cross tabulations (frequency counts that describe two or more variables simultaneously). With the proliferation of software, many firms now have the capability to analyze their own data, but, data analysis firms are still in demand (Peppers, 1999). Branded marketing research products and services are specialized data collection and analysis procedures developed to address specific types of marketing research problems. These procedures are patented, given brand names, and marketed like any other branded product (Peppers, 1999). 2.1.7 Types of marketing research used in the hotel industry.

Marketing research techniques come in many forms, including: Ad Tracking periodic or continuous in-market research to monitor a brands performance using measures such as brand awareness, brand preference, and product usage. Advertising Research used to predict copy testing or track the efficacy of advertisements for any medium, measured by the ads ability to get attention, communicate the message, build the brands image, and motivate the consumer to purchase the product or service. (Young, 2005) Brand equity research - how favorably do consumers view the brand? Brand association research - what do consumers associate with the brand? Brand attribute research - what are the key traits that describe the brand promise? Brand name testing - what do consumers feel about the names of the products? Commercial eye tracking research - examine 14

advertisements, package designs, websites, etc. by analyzing visual behavior of the consumer. Concept testing - to test the acceptance of a concept by target consumers. Cool hunting - to make observations and predictions in changes of new or existing cultural trends in areas such as fashion, music, films, television, youth culture and lifestyle. Buyer decision processes research - to determine what motivates people to buy and what decision-making process they use Copy testing predicts in-market performance of an ad before it airs by analyzing audience levels of attention, brand linkage, motivation, entertainment, and communication, as well as breaking down the ads flow of attention and flow of emotion. Customer satisfaction research - quantitative or qualitative studies that yields an understanding of a customer's of satisfaction with a transaction (Peppers, 1999). Demand estimation - to determine the approximate level of demand for the product Distribution channel audits - to assess distributors and retailers attitudes toward a product, brand, or company. Internet strategic intelligence - searching for customer opinions in the Internet: chats, forums, web pages, blogs... where people express freely about their experiences with products, becoming strong opinion formers Marketing effectiveness and analytics - Building models and measuring results to determine the effectiveness of individual marketing activities. Mystery Consumer or Mystery shopping - An employee or representative of the market research firm anonymously contacts a salesperson and indicates he or she is shopping for a product. The shopper then records the entire experience. This method is often used for quality control or for researching competitors' products. Positioning research - how does the target market see the brand relative to competitors? what does the brand stand for; Price elasticity testing - to determine how sensitive customers are to price changes; Sales forecasting - to determine the expected level of sales given the level of demand; With respect to other factors like Advertising expenditure, sales promotion etc; Segmentation research - to determine the demographic, psychographic, and

15

behavioural characteristics of potential buyers; and Online panel - a group of individual who accepted to respond to marketing research online. Store audit - to measure the sales of a product or product line at a statistically selected store sample in order to determine market share, or to determine whether a retail store provides adequate service. Test marketing - a small-scale product launch used to determine the likely acceptance of the product when it is introduced into a wider market (Peppers, 1999). Viral Marketing Research - refers to marketing research designed to estimate the probability that specific communications will be transmitted throughout an individuals Social Network. Estimates of Social Networking Potential (SNP) are combined with estimates of selling effectiveness to estimate ROI on specific combinations of messages and media. All of these forms of marketing research can be classified as either problemidentification research or as problem-solving research (Peppers, 1999). There are two main sources of data - primary and secondary. Primary research is conducted from scratch. It is original and collected to solve the problem in hand. Secondary research already exists since it has been collected for other purposes. It is conducted on data published previously and usually by someone else. Secondary research costs far less than primary research, but seldom comes in a form that exactly meets the needs of the researcher. A similar distinction exists between exploratory research and conclusive research. Exploratory research provides insights into and comprehension of an issue or situation. It should draw definitive conclusions only with extreme caution. Conclusive research draws conclusions: the results of the study can be generalized to the whole population (Peppers, 1999). Exploratory research is conducted to explore a problem to get some basic idea about the solution at the preliminary stages of research. It may serve as the input to conclusive research. Exploratory research information is collected by focus group interviews, reviewing literature or books, discussing with experts, etc. This is unstructured and qualitative in nature. If a secondary source of data is unable to serve the purpose, a 16

convenience sample of small size can be collected. Conclusive research is conducted to draw some conclusion about the problem. It is essentially, structured and quantitative research, and the output of this research is the input to management information systems (MIS) (Bjerre, 2002). Exploratory research is also conducted to simplify the findings of the conclusive or descriptive research, if the findings are very hard to interpret for the marketing managers. 2.1.8 Commonly used marketing research terms

Market research techniques resemble those used in political polling and social science research. Meta-analysis (also called the Schmidt-Hunter technique) refers to a statistical method of combining data from multiple studies or from several types of studies. Conceptualization means the process of converting vague mental images into definable concepts. Operationalization is the process of converting concepts into specific observable behaviors that a researcher can measure. Precision refers to the exactness of any given measure. Reliability refers to the likelihood that a given operationalized construct will yield the same results if re-measured. Validity refers to the extent to which a measure provides data that captures the meaning of the operationalized construct as defined in the study. It asks, Are we measuring what we intended to measure? Applied research sets out to prove a specific hypothesis of value to the clients paying for the research. For example, a cigarette company might commission research that attempts to show that cigarettes are good for one's health. Many researchers have ethical misgivings about doing applied research (Bjerre, 2002). Sugging (from SUG, for selling under the guise of market research) forms a sales technique in which sales people pretend to conduct marketing research, but with the real purpose of obtaining buyer motivation and buyer decision-making information to be used in a subsequent sales call. Frugging comprises the practice of soliciting funds under the pretense of being a research organization. 2.2 Product Strategy applicable in the hotel industry. 17

In a recent worldwide survey of firms from a variety of industries, 81 percent of companies reported conducting strategic planning. Furthermore, executives reported a higher level of satisfaction with strategic planning than with most other management tools. The increasing popularity of strategic planning in recent times can be attributed to accelerating changes in industries and economies and increasing global competition, as well as the rapid development of strategic-planning methods that executives find useful. Firms that engage in strategic planning tend to have higher performance than those that do not. For example, a recent study of hotels in the United Kingdom found that business performance was positively associated with the thoroughness, sophistication, participation, and formality of strategic-planning processes (Hughes, 2003). Strategic analysis, that is, the systematic investigation of a firm and its environment, is the foundation of the strategic management process. A recent example demonstrates how strategic analysis can help guide business strategy. Jack in the Box recently announced plans to open 100 to 150 restaurants combined with convenience stores over the next five years. The stores will feature full-size restaurants and also sell gasoline and other typical convenience store items such as bread and milk. How did Jack in the Box arrive at this decision? According to the company's CEO, Bob Nugent, an analysis of the conveniencestore market indicated that there was plenty of opportunity, primarily because no individual company dominates. The largest player in the convenience-store industry, 7-Eleven, Inc., controls slightly over 4 percent of the market. Compare this to fast foods, where McDonald's controls 43 percent of the market and Jack in the Box a mere 4.6 percent. Nugent also justifies his decision on the basis of research which indicates that a convenience-store customer is twice as likely to eat fast food as a non-convenience-store customer. Strategic analysis can provide excellent information on which to base long-range decisions such as this one (Hughes, 2003). Knowledge is one of the most important competitive weapons your firm can possess. As the Jack in the Box example illustrates, detailed knowledge about your firm and its 18

environment can be used to generate new ideas for business strategies and to evaluate the feasibility of ideas before they are actually implemented. Strategic analysis also allows your firm's managers to become more aware of the company's strengths and weaknesses and to understand the reasons behind successes and failures. Knowledge about the competitive environment can help you anticipate and plan for changes and predict how competitors or other stakeholders such as customers or suppliers will respond to new strategies or other organizational activities. Strategic analysis can also open up channels of communication between high-level managers and subordinates, allowing them to share ideas and perspectives. This participative process can help subordinates accept changes more readily after decisions are made (Hughes, 2003). 2.2.1 Strategic Analysis as a Foundation for Strategic Management

Exhibit 1 provides a basic model of the strategic management process. Although strategic management should be ongoing, a logical place to start the process is with strategic analysis. You can use knowledge gained from strategic analysis to generate and evaluate ideas that result in an overall direction for your firm. Strategic direction is manifest in the firm's mission, vision, and values. Your strategic direction, combined with the knowledge gained from strategic analysis, can then be used to develop competitive strategies, as well as plans for implementing them. Goal setting should occur at some point, and a logical place to do it is during implementation planning. At the appropriate times, goals are compared against results such as satisfaction levels of customers, shareholders, employees, and other stakeholders, as well as quantitative performance measures such as income and sales. These outcomes become feedback that is incorporated into strategic analysis, as the cycle continues (Kotler, 2004). The focus of this article is on the research components of strategic management, as outlined in Exhibit 2. At the center of the model, internal analysis of financial, human, physical, knowledge and learning, and general organizational resources can help managers determine a firm's potential or realized sources of competitive advantage. Also critical is a thorough review of what may be referred to as the task environment or the operating environment, so called because it contains stakeholders such as customers and suppliers 19

with whom the firm regularly deals. The broad environment constitutes the context in which the firm and its industry operate. The environment's components include societal influences and trends, economic factors, technological advances, political and legal influences and trends, and major innovations in industries other than those in which the firm is already operating. Major innovations in other industries often represent opportunities for innovation in the home industry (Kotler, 2004). One should differentiate between the broad environment and the task environment, because each typically requires different types of strategies. In general, strategies for dealing with the task environment can be more proactive than strategies for responding to the broad environment. For instance, a single firm typically has little influence on general trends in the economy or society as a whole. Consequently, it is more reasonable to predict and adapt to broad trends rather than considering ways to change them. On the other hand, most firms can have substantial influence on stakeholders in their task environments, such as customers or competitors. Consequently, strategies for dealing with these stakeholders can be proactive. For example, a firm might form an alliance to create a better relationship with a difficult competitor or participate in a local charitable event to foster a more favorable climate in a particular local community. The primary objective of this article is to raise awareness of the various aspects of strategic analysis that should be incorporated into strategic planning in hospitality firms. While almost all large firms participate in a process they refer to as strategic planning, I believe that few firms conduct complete strategic analysis. Leaving our any part of the analysis limits its effectiveness (Kotler, 2004). 2.2.2 The Broad Environment

In this section I review some of the advantages of evaluating each component of the broad environment and explain how this information can be used to create competitive advantages. Some of the essential questions that should be answered about the broad environment (Hill, 1996). 2.2.3 Societal Trends and Influences 20

One should begin strategic analysis by identifying societal trends and influences to look for opportunities. For example, the aging of the baby-boom generation represents an opportunity for hotel. companies to become involved in operating residential villages for retirees--usually in conjunction with support services (e.g., ranging from recreation to food service to nursing care). Marriott, well aware of this trend, has made considerable investments in housing for individuals who believe that they may want to use some form of assisted living as they age (Hill, 1996). Awareness of societal values can also help you avoid problems associated with being labeled as a bad corporate citizen. As Joseph Neubauer, CEO of ARAMARK Worldwide, put it: It takes a lifetime to build a reputation and only a short time to lose it all. Denny's made a fundamental error by ignoring public attitudes about discrimination, for instance, and drew public approbation as a result (Hill, 1996). 2.2.4 Economic Factors

Economic factors are particularly critical to the success of firms in the hospitality industry. Thus, your firm should gather economic information and incorporate it into the strategicplanning processes. The first step in gathering economic information is determining which factors to track. Exhibit 3 contains a list of factors that are worth considering. Careful observation over time will help executives determine which factors have the greatest effects on operations in a particular business, industry region, or country. Economic information for advanced economies is reported regularly and made available to the public. In developing nations, on the other hand, information may be unreliable and infrequent. Firms that are active in nations without reliable reporting systems may need to buy economic information from a research firm or hire consultants to gather or process needed data (Hill, 1996). Since strategic management deals with planning for the future, it is especially important to anticipate likely economic changes. By anticipating changes in the economy one can devise strategies for dealing with those changes. For example, a hotel company may adjust its pricing strategy or its marketing strategy on the basis of anticipated consumer demand. Private investment and consulting firms often provide economic information and forecasts 21

in their newsletters. Economic information, including measures such as the gross domestic product, is more readily available than information about other aspects of the broad environment. Consequently, one has little excuse for not including economic factors in the planning processes (Hill, 1996). 2.2.5 Technological Advances

The key to using technology is to consider, in a deliberate way, which technological advances might be applicable to your operation, while nor becoming distracted with irrelevant developments. Managers should be asked to stay alert for advances that might be applicable within the firm. They should be rewarded when an idea is used to guide strategy or improve operations (Kincaid, 2003) . In hospitality businesses, technological emphasis should rest on the way services are produced and delivered. It would be incorrect, however, to assume that manufacturing technologies do not apply to the hospitality industry. Consider, for example, the effect of computer technology on hotels' or airlines' distribution. Certainly, Sabre and similar GDS reservation systems revolutionized the industry even before the internet blossomed. GDSs remain active, while the web has fundamentally changed the way many people make reservations for hotels, airlines, and car rentals (Kincaid, 2003). Current technology has made it much less expensive to implement a wide range of service procedures. Rather than use file cards (as occurred in an earlier day), hotels can maintain customer profiles on computer. Ritz-Canton, for instance, tracks the tastes and preferences of its regular visitors. Ritz-Carlton properties use their guest database to good advantage by arranging for express check-in for regular guests, who need only to call and say when they plan to arrive. All is in readiness when they drive up to the curb. The technology to track this sort of information was not affordable even a few years ago--and the size of the market made manual operations infeasible (Kincaid, 2003). Hotel companies can also use technology for data mining, the intensive search for and compilation of information found in databases, as explained in a companion article in this issue of Cornell Quarterly. In another example, Wingate Inns drew attention to its debut as 22

a chain a few years ago by installing free high-speed internet conn ections in every room. That differentiation strategy helped Wingate to expand rapidly by appealing to valueconscious business travelers who, at that time, were known to patronize such wellestablished operations as Hampton and Courtyard (Kincaid, 2003). 2.2.6 Political and Legal Trends and Influences

Assessment of the political and regulatory environment is vital to planning for the future, as demonstrated by the effects of deregulation on U.S. airlines (and other common carriers). Although restaurants and hotels have never had to face as overwhelming a change in competitive environments as the airlines did after deregulation, government actions still resonate with these industries. The 1991 war in the Persian Gulf caused a sudden retrenchment in travel that left many hotels empty until that brief U.S.-led war ended and travelers again ventured forth. Also, some government leaders are more protectionist than others, which has a direct effect on such things as tariffs and foreign trade. In general, it is a good idea to keep track of the attitude of political leaders with regard to business factors, as well as any indication with regard to their attitudes about particular industries. With regard to foreign investments, it is important to evaluate the stability of the government regime, as well as its attitude toward foreign investors (Hughes, 2003). 2.2.6 Major Innovations and Trends in Other Industries

As a final category, you should also track major innovations and trends in industries other than the ones in which you are currently operating. Competitive advantages seldom come from imitating the innovations of other firms in the same industry. Following the initial example of Choice Hotels, most hotel companies now operate a spectrum of brands, each one usually using a different, but associated, brand name. Although operating in several hotel tiers may still be an idea worth pursuing, at this point it does less to create competitive advantage than to match the competition. On the other hand, a company that is the first to successfully apply an innovation from another industry usually enjoys a firstmover advantage that competitors are sometimes hard pressed to imitate. While it is true that most hotel-industry innovations can easily be copied, examples of ideas that sprang directly from innovations and trends in other industries include locating hotels in large 23

shopping malls, locating branded fast-food re staurants in gas-station convenience stores, offering personal video screens for every seat of an aircraft, and locating business-service centers inside hotels (Peppers, 1999). Having completed an analysis of the broad environment, one must examine the task environment. The broad environment forms the context in which the firm, its industry, and other external stakeholders exist. In contrast, the task environment includes external stakeholders with which the organization interacts on a fairly regular basis, particularly customers and suppliers. 2.2.7 External Stakeholders

Michael Porter proposed that the nature of competition in an industry can be defined by the market power of customers and suppliers, the level of inter-firm rivalry, and the strength of substitutes and entry barriers. Although this so-called five forces model has stood the test of time, its practical limitations are also apparent. For example, although Porter's fiveforces approach helps to define competition through customers, suppliers, competitors, substitutes, and entry barriers, it does not include an evaluation of other important stakeholders that have a bearing on industry and firm performance, such as unions, financial institutions, the media, and local communities. Also, the model does not incorporate political factors. Starting with Porter's five forces, Exhibit 4 contains a more complete description of the task environment (Peppers, 1999). Strategists gather information about external stakeholders for a variety of purposes, many of them self evident. If you manage a hotel firm, for instance, it makes sense to track frequent guests' preferences to meet their needs more effectively. Also, you should study competitors to look for innovations in products, services, processes, and strategies. In fact, excellent ideas can come from virtually any stakeholder. The hotel and restaurant industries are clearly adept at this aspect of observing the task environment (Peppers, 1999). An important analysis is one that assesses competitive influence, which stems from economic power and political power. Powerful stakeholders with great competitive 24

influence require more attention in the strategic-planning process than do those with less influence. The more powerful the stakeholder the greater the influence on the strategies you select and the more you should try to anticipate that entity's reactions to any changes you might consider. Powerful stakeholders are attractive candidates for partnerships. The end of this section includes a table that presents tactics which your firm can consider to form partnerships with a variety of stakeholders (Peppers, 1999). 2.2.8 Economic Power

The influence of external stakeholders on a firm's ability to compete is partially a result of the economic power that those stakeholders possess. As Porter pointed out, economic power gives a stakeholder the ability to extract profits or other advantages at the expense of the subject firm (Plog, 2004). Customer and supplier power. A firm with few customers runs the risk of considerable revenue loss should a single customer depart. Such a situation gives a customer economic power. In general, customers are relatively powerful if they are few or if they make large purchases. By the same token, suppliers tend to have great economic power if there axe only a few suppliers that provide the precise type of good or service that is needed. They are also powerful if there is a high level of differentiation across suppliers, or if they are not particularly concerned about selling to you because you are not a large customer to them (Plog, 2004). Competitor power. Competitors have economic power based on their ability to compete. Competitors with disproportionately strong resource bases can be aggressive and create a strong rivalry. It is important to define the nature of rivalry in each market, as well as the industry as a whole. The key to rivalry in some hotel markets is pricing, for example, whereas in others it may be brand differentiation. In still other markets a key to success is locating near existing hotel properties. Firms that have multiple properties in different markets are often competing against some of the same firms in several markets, a situation called multi-point competition. In that situation, it is important to evaluate the effects of

25

strategic moves in one market on possible competitor responses in other markets (Plog, 2004). Labor power. Unions have more economic power when labor is highly organized. Unions have tremendous economic clout in Germany, for example. The nature of unions' workrelated actions (such as strikes and slowdowns) also gives unions economic power, which may be exercised during contract negotiations. To some extent, the size of a union's budget is also a factor in the power it possesses. Large unions with big budgets can engage in activities to protect their members (Plog, 2004). 2.2.9 Political Power

Political power can be defined as the ability to persuade lawmakers, society, or regulators to take steps that influence a firm's actions or performance. For example, a politically strong customer group might influence government to enact legislation to protect its rights, or a politically strong media participant may be able to influence people to avoid certain restaurants or hotels. When Arizona's governor announced that his state would not honor the Martin Luther King holiday, several groups announced their intentions to cancel conventions that were to be held in the state (and encouraged other groups to do likewise) (Kincaid, 2003). Organization increases stakeholders' power. For example, customers that have organized into buying groups have more power. Similarly, suppliers often organize into trade groups that lobby politicians based on an agenda that is friendly to their industry. Competitors may also combine for lobbying or other political activities. Japan's Keiretsu, which often include dozens of organizations with common interests and joint ownership, are extreme forms of organization. They are effective at determining the nature of the political (and economic) environment in Japan (Kincaid, 2003). 2.3 Ways of promoting Products Strategy

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Dimensions of Product Strategies are Product-Positioning; Product Elimination; ProductRepositioning; New Product; Product-Overlap; Diversification; Product Scope; ValueMarketing and Product-Design. Product Positioning: The Procedure one is to analyze product attributes that are salient to Customers. Two, to examine the distribution of these attributes among different segments. Three, to determine the optimal position for the product in regard to each attribute, taking into consideration the position occupied by existing brands and four is to choose an overall position for the product (based on overall match between product attributes and their distribution in the population and the position of existing brands) (Bjerre, 2002). Product Positioning Strategy this is the placing of a brand in that part of the market where it will have a favorable reception compared with competing brands. The objectives are to position the product in the market so that it stands apart from competing brands. To position the product so that it tells customers what you stand for, what you are, and how you would like customers to evaluate you. In the case of positioning multiple brands: To seek growth by offering varied products in differing segments of the market and to avoid competitive threats to a single brand (Bjerre, 2002). Product Positioning Strategy Requirements: Use of marketing mix variables, especially design and communication efforts. Successful management of a single brand requires positioning the brand in the market so that it can stand competition from the toughest rival and maintaining its unique position by creating the aura of a distinctive product. Successful management of multiple brands requires careful positioning in the market so that multiple brands do not compete with nor cannibalize each other. Thus it is important to be careful in segmenting the market and to position an individual product as uniquely suited to a particular segment through design and promotion. Expected Results: Short term success Meet as much as possible the needs of specific segments of the market Limit sudden changes in sales. Make customers faithful to the brands (Bjerre, 2002).

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Product Re-positioning Strategy this is the reviewing the current positioning of the product and its marketing mix and seeking a new position for it that seems more appropriate. The objectives are to increase the life of the product. To correct an original positioning mistake. Requirements: If this strategy is directed toward existing customers, repositioning is sought through promotion of more varied uses of the product. If the business unit wants to reach new users, this strategy requires that the product be presented with a different twist to the people who have not been favorably inclined toward it. In doing so, care should be taken to see that, in the process of enticing new customers, current ones are not alienated. If this strategy aims at presenting new uses of the product, it requires searching for latent uses of the product, if any. Although all products may not have latent uses, there are products that may be used for purposes not originally Intended (Bjerre, 2002). Product Re-positioning Strategy Expected Results: Among existing customers: increase in sales growth and profitability. Among new users: enlargement of the overall market, thus putting the product on a growth route, and increased profitability. New product uses: increased sales, market share, and profitability (Bjerre, 2002). Product Overlap Strategy Definition: Competing against ones own brand through introduction of competing products, use of private labeling, and selling to originalequipment manufacturers. Objectives: (a) To attract more customers to the product and thereby increase the overall market. (b) To work at full capacity and spread overhead. (c) To sell to competitors; to realize economies of scale and cost reduction. Requirements: (a) Each competing product must have its own marketing organization to compete in the market. (b) Private brands should not become profit drains. (c) Each brand should find its special niche in the market. If that doesnt happen, it will create confusion among customers and sales will be hurt. (d) In the long run, one of the brands may be withdrawn, yielding its position to the other brand Product Overlap Strategy Expected Results: Increased market share. Increased growth (Bjerre, 2002).

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Product Scope Strategy Definition: The product-scope strategy deals with the perspectives of the product mix of a company. The product-scope strategy is determined by taking into account the overall mission of the business unit. The company may adopt a single-product strategy, a multiple-product strategy, or a system-of- products strategy. Objectives: Single product: to increase economies of scale by developing specialization. Multiple products: to cover the risk of potential obsolescence of the single product by adding additional products. System of products: to increase the dependence of the customer on the companys products as well as to prevent competitors from moving into the market (Bjerre, 2002). Product Scope Strategy Requirements: (a) Single product: company must stay up-todate on the product and even become the technology leader to avoid obsolescence. (b) Multiple products: products must complement one another in a portfolio of products. (c) System of products: company must have a close understanding of customer needs and uses of the products. Expected Results: Increased growth, market share, and profits with all three strategies. With system-of-products strategy, the company achieves monopolistic control over the market, which may lead to some problems with the Justice Department, and enlarges the concept of its product/market opportunities (Bjerre, 2002). Product Design Strategy Definition: The product-design strategy deals with the degree of standardization of a product. The company has a choice among the following strategic options: standard product, customized product, and standard product with modifications. Objectives: Standard product: to increase economies of scale of the company. Customized product: to compete against mass producers of standardized products through product-design flexibility. Standard product with modifications: to combine the benefits of the two previous strategies. Requirements: Close analysis of product/market perspectives and environmental changes, especially technological changes (Bjerre, 2002). Product Design Strategy Expected Results: Increase in growth, market share, and profits. In addition, the third strategy allows the company to keep close contacts with the market and gain experience in developing new standard products (Bjerre, 2002). Product 29

Elimination Strategy Definition: Cuts in the composition of a companys business unit product portfolio by pruning the number of products within a line or by totally divesting a division or business. Objectives: To eliminate undesirable products because their contribution to fixed cost and profit is too low, Eliminate Products that its future performance looks grim, or because they do not fit in the businesss overall strategy. The product elimination strategy aims at shaping the best possible mix of products and balancing the total business. Requirements: No special resources are required to eliminate a product or a division. However, because it is impossible to reverse the decision once the elimination (Bjerre, 2002). Product Elimination Strategy Requirements: No special resources are required to eliminate a product or a division. An in-depth analysis must be done to determine + (a) the causes of current problems; + (b) the possible alternatives, other than elimination, that may solve problems (e.g., Are any improvements in the marketing mix possible?); + (c) the repercussions that elimination may have on remaining products or units. Expected Results: In the short run, cost savings from production runs, reduced inventories, and in some cases an improved return on investment can be expected. In the long run, the sales of the remaining products may increase because more efforts are now concentrated on them (Bjerre, 2002). New Product Strategy Definition: A set of operations that introduces (a) within the business, a product new to its previous line of products; (b) on the market, a product that provides a new type of satisfaction. Three alternatives emerge from the above: product improvement/modification, product imitation, and product innovation.. Objectives: To meet new needs and to sustain competitive pressures on existing products. In the first case, the new-product strategy is an offensive one; in the second case, it is a defensive one. Requirements: A new-product strategy is difficult to implement if a new product development system does not exist within a company. Five components of this system should be assessed: Corporate aspirations toward new products, Organizational openness to creativity (Bjerre, 2002).

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New Product Strategy Requirements: A new-product strategy is difficult to implement if a new product development system does not exist within a company. Five components of this system should be assessed: Environmental favor toward creativity Screening method for new ideas, and Evaluation process Expected Results: Increased market share and profitability. are now concentrated on them (Bjerre, 2002). Diversification Strategy Definition: Developing unfamiliar products and markets through: Concentric diversification (products introduced are related to existing ones in terms of marketing or technology), Horizontal diversification (new products are unrelated to existing ones but are sold to the same customers) Conglomerate diversification (products are entirely new). Objectives: Diversification strategies respond to the desire for: Growth when current products/markets have reached maturity, Stability by spreading the risks of fluctuations in earnings, Security when the company may fear backward integration from one of its major customers, Credibility to have more weight in capital markets (Bjerre, 2002). Diversification Strategy Requirements: In order to reduce the risks inherent in a diversification strategy, a business unit should: Diversify its activities only if current product/market opportunities are limited. Have good knowledge of the area in which it diversifies. Provide the products introduced with adequate support. Forecast the effects of diversification on existing lines of products. Expected Results: Increase in sales. Greater profitability and flexibility (Bjerre, 2002). Value Marketing Strategy Definition: The value-marketing strategy concerns delivering on promises made for the product or service. These promises involve product quality, customer service, and meeting time commitments. Objectives: Value-marketing strategies are directed toward seeking total customer satisfaction. It means striving for excellence to meet customer expectations. Requirements: (a) Examine customer value perspectives. (b) Design programs to meet customer quality, service, and time requirements. (c) Train employees and distributors to deliver on promises. Expected Results: This strategy enhances customer satisfaction, which leads to customer loyalty and, hence, to higher

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market share. This strategy makes the firm less vulnerable to price wars, permitting the firm to charge higher prices and, thus, earn higher profits (Bjerre, 2002).

CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY 3.0 Introduction This chapter describes the research design and methodology that was employed to establish the effects of product strategy on customer satisfaction. The chapter focused on the study design, target population, sampling for the study and data collection instruments and procedures. And finally describes how the data collected was analyzed in an attempt to answer the research questions. 3.1 Research Design

Case study research design was chosen for this project, to gain a deeper understanding of something when identifying a problem, this collective research provides solutions to the problems. The overall aim of the design was to develop an accessible, robust body of knowledge that enhances the understanding of design processes, applications, methods and contexts. Often, this knowledge helps to define best practice and workable methods in dealing with design and design related problems. It therefore has considerable potential for improving the use and management of design. Research techniques in design take a holistic 32

approach where different stake holders get involved in different stages of the product development process. 3.1.1 Study Area

The study area for this research was Sirikwa Hotel situated in Eldoret Municipality. The main reason for choosing this area was that it is heavily affected by the effects of product strategy on customer satisfaction. This gave the relationship that the study tried to establish. 3.2 Target Population

The target population comprised of 37 respondents who work in Sirikwa Hotel. This target population had the characteristic the researcher was interested in.

3.3

Sampling Design and Sample Size

A sample size of 20 respondents was selected from the target population. The sample size represents 54% of the target population of the study. The research used stratified random sampling method where the respondents were selected as follows; 6 Supervising Staff, 7 Room Service Attendants, 7 Waiters and Waitresses. This is shown in table 3.1: Table 3.1 Sample Size Respondents Supervising Staff Room Service Attendants Waiters and Waitresses Total Target Populations 10 15 12 37 Sample size 6 7 7 20

The above sample represents 54% of the target population. 3.4 Data Collection Instruments

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After sampling the staff, the researcher formulated research instruments to collect data. Data was collected according to the following procedure: a letter was sent to the staff of Sirikwa Hotel, informing them of the research and the fact that, interviewer would conduct them in future. The introductory letter was attached giving the condition of the research. The Questionnaire was distributed, collected and completed by the respondents. Study analysis was done and compiled by the use of statistical tables showing the processed data from the field. Extensive editing was conducted to ensure that all responses were accurate, consistent, logical, and complete. 3.5 3.5.1 Research Instruments Questionnaire:

The study used a set of simple structured questionnaires and administered them to the various categories of respondents by physical dropping and picking. The instrument contained closed and open-ended questions to enrich the research. The choice of structured questionnaire was due to its ease administration, analysis and time saving. The questionnaire tool was most appropriate since a questionnaire data captures data directly from the respondents. Closed-ended questions in the questionnaire were used to standardize and qualify responses from the research. The open-ended questions in the questionnaire ensured that an in-depth data with details and explorative of all aspects of the variable under the study was obtained. 3.5.2 Interview schedules:

These were used to collect data from the busy staff whose work has no float time. The interview schedules have an advantage of: giving clarification and get the desired answers from the respondents without confusing the respondent; another advantage is that all questions were answered. The main disadvantage is that the interviewer might bias the respondents while answering the questions there by affecting the results of the study. 3.6 Reliability and Validity of Research Instruments

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Validity of research was concerned with the extent to which that data measures what they are supported to measure, while the rest of reliability is concerned with the extent to which the researcher can depend confidently on the information gathered through various sources of data, adopted to obtain the study. In planning a research study, appropriate research tool or instrument will be chosen which is very important in data collection. Research instruments will be selected or developed carefully to fit the research design and the plan of data analysis, so that the data collected could have facilitated the answering of research questions. Validity and reliability often are properties of the research instruments, which mean they represent how well instruments measure the variables of interest to the researcher. To test the validity of the research instruments, the questionnaire will be prepared and submitted to the supervisor and other research experts for cross checking and also to assess the reliance of the content. The questionnaire was pre-tested through a pilot study; the findings enabled modification to free questionnaire from ambiguity. The pilot study was carried out one week earlier in the organization. 3.7 Data Analysis The data collected was both quantitative, descriptive methods was employed in analyzing qualitative data where frequencies and proportions were used in interpreting the respondents perception of issues raised in the questionnaires so as to answer the research questions. Tables were used in data presentation.

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CHAPTER FOUR: DATA RESULTS, FINDINGS AND DISCUSSION. 4.0 Introduction This chapter deals with data analysis, presentation and interpretation. The data was analysed by percentages. The analysis was based on the research objectives. 4.1 Personal Data

It was necessary to seek generalization in order to build information and assess the demographic data such as the gender of respondents, age bracket, level of education and working experience. 4.1.1 Gender of Respondents

The research sought to find out the sex of the respondents as it was necessary to determine the results based on gender. The result is shown in the table 4.1 below: Table 4.1 Gender Male Female Gender of Respondents Frequency 15 5 36 Percentage 75 25

Total

20

100

The findings revealed that, 75% of the respondents were male and 25% of the respondents were female. This clearly indicates that, the male respondents dominate the female respondents at Sirikwa hotel. 4.1.2 The Level of Education

The education of the respondents was important since the researcher wanted to ascertain that the staff were professionally competent. The findings are summarized in the table 4.2 below.

Table 4.2 Category Primary Secondary Tertiary University Total

The Level of Education of Respondent Frequency 5 2 7 6 20 Percentage 25 10 35 30 100

The findings showed that the majority of the staff respondents had college qualification representing 65% of the sample; this fact shows the level of competency within Sirikwa Hotel. 4.1.3 Age of Respondents

The age bracket was sought in order to get the respective employees maturity, that is in term of personality; morally and equality in order to get to know if really there was an issue of exploiting the workers who were under age. The table 4.3 below shows the details. Table 4.3 Years 18-25 26-35 Age of Respondents Frequency 8 9 37 Percentage 40 45

36-45 Over 46 Totals

2 1 20

10 5 100

The study reveals that the staffs of Sirikwa hotel who were interviewed had more of young people than old ones. The respondents ages show that 40% was aged between 18-25 years old, 45% aged from 26-35, 10% aged from 36-45 and 5% were aged from 46 years. 4.1.4 Marital Status

The researcher sought the marital status of the respondent to correlate it with the ability of the staff to render effective product strategy. The table 4.4 below shows the details. Table 4.4 Years Single Married Totals Age of Respondents Frequency 14 6 20 Percentage 70 30 100

Most of the respondents were not married; the respondent sample had 14 singles against 6 married respondents. 4.2 General data 4.2.1 Quality and Quantity.

The researcher sought to find out the perception of the respondents with regard to offering products that were quality and he right quantity. Details are show in table 4.5 below. Table 4.5 Quality and Quantity Rating Almost never Occasionally Half the time Usually Almost always Totals Frequency 1 1 2 7 9 20 Percentage 5 5 10 35 45 100

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According to the findings, number of respondents who indicated almost never was 1, occasionally was 1, half the time were 2, usually was favored by 7 respondents, while those indicating almost always were 9 respondents. Most of the respondents agreed that one of the most effective and common product strategies within the hotel industry is offering goods that are quality and of he right quantity. 4.2.2 Pricing Strategies.

The researcher sought to find out the perception of the respondents with regard to pricing strategies. Details are show in table 4.6 below. Table 4.6 Pricing Strategies. Rating Strongly Agree Agree Undecided Disagree Strongly Disagree Totals Frequency 7 9 2 1 1 20 Percentage 35 45 10 5 5 100

According to the findings, the respondents who believe that effective product strategies were a common product strategy in the hotel industry were totaling to 16. Those who felt otherwise were 2 and those undecided were also 2. 4.2.3 Developing business strategies The researcher sought to find out the perception of the respondents with regard to developing business strategies. Details are show in table 4.7 below.

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Table 4.7 Developing business strategies Rating Strongly Agree Agree Undecided Disagree Strongly Disagree Totals Frequency 7 9 2 1 1 20 Percentage 35 45 10 5 5 100

According to the findings, the respondents who believe that developing business strategies to improve customer service delivery was an effective product strategy applicable at Sirikwa Hotel were totaling to 16. Those who felt otherwise were 2 and those undecided were also 2. 4.2.4 Quality of customer service. The researcher sought to find out the perception of the respondents with regard to quality of customer service. Details are show in table 4.8 below. Table 4.8 Quality of Customer Service. Rating Almost never Occasionally Half the time Usually Almost always Totals Frequency 2 3 2 8 5 20 Percentage 10 15 10 40 25 100

According to the findings, number of respondents who indicated almost never were 2, occasionally were 3, half the time were 2, usually was favored by 8 respondents, while those indicating almost always were 5 respondents. Majority of the respondents agreed that focusing on the quality of customer service in order to stay competitive and remain profitable is an effective way of product strategy applicable in then hotel industry. 4.2.5 Effective Product Strategy and Customers. 40

The researcher sought to find out if the respondents believed that effective product strategy keeps and adds customers. Details are show in table 4.9 below. Table 4.9 Effective Product Strategies on Customers. Rating Strongly Agree Agree Undecided Disagree Strongly Disagree Totals Frequency 9 4 3 2 2 20 Percentage 45 20 15 10 10 100

According to the findings, number of respondents who felt that effective product strategy keeps and adds customers was 11, undecided were 3 respondents, while the respondents who felt otherwise were 4 respondents. 4.2.6 Customer-driven Markets.

The researcher sought to find out the perception of the respondents with regard to Customer-driven market. Details are show in table 4.10 below.

Table 4.10 Customer-Driven Markets. Rating Almost never Occasionally Half the time Usually Almost Always Totals Frequency 2 9 5 2 2 20 41 Percentage 10 45 25 10 10 100

According to the findings, number of respondents who felt that todays markets are customer-driven, and that customers who arent satisfied with their purchasing experiences, are not going to return was 4 respondents; those who selected half of the time were 5, while those who indicated almost never were 2 and occasionally were 9 respondents. 4.2.6 Research on Customers needs.

The researcher sought to find out the perception of the respondents with regard to research on customers needs. Details are show in table 4.11 below. Table 4.11 Research on Customers needs. Rating Almost never Occasionally Half the time Usually Almost Always Totals Frequency 2 2 1 6 9 20 Percentage 10 10 5 30 45 100

According to the findings, number of respondents who indicated that research on customers needs was a possible way of promoting product strategy on customer satisfaction were 15, half of the time was 1, while whose who indicated almost never and occasionally were 4 respondents. 4.2.7 Measuring Customer Satisfaction.

The researcher sought to find out the perception of the respondents with regard to measuring customer satisfaction. Details are show in table 4.12 below. Table 4.12 Measuring Customer Satisfaction Rating Strongly agree Agree undecided Disagree Strongly disagree Frequency 5 8 4 1 2 42 Percentage 25 40 20 5 10

Totals

20

100

According to the findings, number of respondents who indicated strongly agrees and agreed that measuring customer satisfaction provides indication of how successful the organization is at products and/or services to the market place were 13 respondents, the undecided were 4, while those strongly disagree and disagree were 3 respondents.

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 5.0 Introduction This chapter introduces the finding of the study, highlights the main responds and gives reasons for further findings. It therefore discusses the conditions and recommendations made from the findings, gives some research suggestions. 5.1 Summary of findings

The findings revealed that majority of the respondents at Sirikwa hotel were male and only a quarter were of the respondents were female. This clearly indicates that, the male respondents dominate the female respondents. Majority of the respondents had college qualification and the study also revealed that the staffs of Sirikwa hotel who were interviewed had more of young people than old ones. However, most of the respondents were not married. 43

According to the findings, most of the respondents agreed that one of the most effective and common product strategies within the hotel industry is offering goods that are quality and of the right quantity as this makes the customers loyal to the business. Effective product strategies were a common product strategy in the hotel industry. According to the findings, the respondents believed that developing business strategies to improve customer service delivery was an effective product strategy applicable at Sirikwa Hotel and focusing on the quality of customer service in order to stay competitive and remain profitable is an effective way of product strategy applicable in then hotel industry. Majority of the respondents felt that effective product strategy keeps and adds customers and that todays markets are customer-driven, and that customers who arent satisfied with their purchasing experiences, are not going to return.

According to the findings, the respondents indicated that research on customers needs was a possible way of promoting product strategy on customer satisfaction and measuring customer satisfaction provides indication of how successful the organization is at products and/or services to the market place. 5.1.1 Testing hypothesis The study indicated that there was a link between product strategies to the customers satisfactory level. The study suggests that a deep knowledge of customer satisfaction can improve the processes that create and deliver products. The study argued that customer satisfaction drivers can increase the effectiveness of product strategy. 5.2 Conclusion Organizations need to retain existing customers while targeting non-customers; Measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace. 44

Customer satisfaction is an abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other factors the customer, such as other products against which the customer can compare the organization's products. The study identified the factors that drive customer perceptions of value and describes linkages with product strategy. In addition, customer satisfaction can provide critical insights for product development and organization efficiency. Anticipating changes in customer satisfaction is critical to the success of product strategy investment. 5.3 Recommendations In order to stay competitive and remain profitable, businesses have to focus on the quality of their customer service. Companies that invest time, energy and money into developing and nurturing quality so customers can have a satisfactory experience are going to be more profitable and better likely to experience more sustained growth over the long-term. Companies who ignore their customer service approaches will quickly find themselves losing out to their competitors. To avoid falling into this pitfall, it is of value for companies to develop business strategies to improve customer service delivery. This shouldn't be a one time deal, but rather part of a long-term strategy that is immersed in the company's organizational philosophy. Even a company that has good customer service should engage in ongoing evaluation to ensure their customers are happy with products or services they've bought. Satisfaction is paramount because customers, even though they may have had a good experience, who don't walk away completely pleased with their purchase may not be a repeat customer. 45

Customer satisfaction strategies can range from simple to complex; from pricey to free. Not all strategies have to be expensive, with proper training and organizational approaches established many of the strategies won't cost a cent. 5.3.1 Suggestion for further studies

Future research is needed to further define and validate the proposed linkages between customer value, product strategy, and business processes. Another study should consider how customer value migrates over time and how this dynamic might be forecasted. Additional study should be done on understanding the impact of the buying situation.

REFERENCES A. Mugenda and O. Mugenda 1990 Research Methods kenya Armstrong G & Kotler P, 2004, Principles of Marketing, Pearson Education Inc, New Jersey, USA. Arnerup B & Edvardsson B, 1998, Tjnstemarknadsfring i Teori och Praktik, Studentlitteratur, Lund, Sweden. Bradley, Nigel Marketing Research. Tools and Techniques. Oxford University Press, Oxford, 2007 Bjerre M & Hougaard S, 2002, Strategic Relationship Marketing, Springer- Verlag Berlin, Heidelberg, Germany. Gummesson E, 2002, Relations marketing; Frn 4P till 30R, Liber Ekonomi, Kristanstad, Sweden. Hayes B. E, 1992, Measuring Customer Satisfaction: Development and Use of Questionnaires, ASQC, Milwaukee, Wisconsin, USA.

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Hill N, 1996, Handbook of Customer Satisfaction Measurement, Gower Publishing Ltd, Cambridge, Uk. Hughes A, 2003, The Customer Loyalty Solution- What Works (and What Doesnt) in Customer Loyalty Programs, McGraw- Hill, USA. Kincaid J, 2003, Customer Relationship Management, Hewlett- Packard Company, New Jersey, USA Marder, Eric The Laws of ChoicePredicting Customer Behavior (The Free Press division of Simon and Schuster, 1997. Patton M, 1990, Qualitative Evaluation and Research methods, Sage Publications Ltd, USA. Peppers D & Rogers M, 1999 Enterprise One to One; Handbook in Relations markering Richters, Falun, Sweden. Plog S, 2004, marketing Handbook, Pearson Education Inc, New Jersey, USA Young, Charles E, The Advertising Handbook, Ideas in Flight, Seattle, WA, April 2005.

SECTION A: PERSONAL INFORMATION 1. Gender? a) Male b) Female 2. Age bracket? a) 0-24 b) 25-39 c) 40-49 d) Over 50 3. Educational level? a) Primary 47

b) Secondary c) College d) University e) Others

4 Positions a) Doctor b) Infected Youth c) Affected relatives

SECTION B GENERAL INFORMATION 6. Is it true that offering quality goods of reasonable quantity is one of the product strategies commonly used within the hotel industry? Almost never Ocassionally Half the time Usually Almost always Additional comments 7. Do you believe that effective pricing strategies is common in the hotel industry? Strongly agreed 48

Agreed Undecided Disagreed Strongly disagreed Additional comments 8. Is it true that developing business strategies to improve customer service delivery is an effective product strategy applicable in the hotel industry and in this case Sirikwa hotel? Strongly agreed Agreed Undecided Disagreed Strongly disagreed Additional comments 9 Do you believe that of the applicable product strategy In the hotel industry is focusing on the quality of customer service in o9rder to stay competitive and remain profitable? Almost never Ocassionally Half the time Usually Almost always Additional comments 49

 10. Is it true that todays market is customer-drive and customers who arent satisfied with their purchasing experience, are not going to return? Strongly agreed Agreed Undecided Disagreed Strongly disagreed Additional comments

11. Do you believe that companies who ignore their customer service approaches will quickly loose their customers to competitors? Almost never Ocassionally Half the time Usually Almost always Additional comments 12. Is it true that research on customers needs is one of the most effective ways of promoting product strategy that will ensure customer satisfaction? Almost never Ocassionally Half the time Usually Almost always Additional comments 50

 13. Do you believe that measuring customer satisfaction provides indication of how successful the organisation is at providing products and/or services tto the market place? Strongly agreed Agreed Undecided Disagreed Strongly disagreed Additional comments

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