Bharati Vidyapeeth

(Deemed to be University), Pune, India

Institute of Management and Entrepreneurship
Development, Pune

Servicescape in Retail outlet – Effect on Customer Satisfaction

and consumer Preference

A Summer Training Project Report

Submitted in Partial Fulfillment of the Requirements for the

Award of degree of Master of Business Administration

2018-20

Submitted by Guided by
Name of the Student (Internal Guide)
Roll No.:
Division :
 Certificate from the Company

This is to certify that P.V.S. Swetha Goud daughter of P. Srinivas Goud pursuing MBA
from Institute of Management and Entrepreneurship Development, Pune has
successfully completed the Project Report in our organization on the topic titled,
“Servicescape in Retail outlet – Effect on Customer Satisfaction/consumer Preference”.
From 8 May 2019 to 30 June 2019 . During her project tenure in the company, we found
her hard working, sincere and diligent person and her behavior and conduct was good.
We wish her all the best for her future endeavors.

Signature:
Name and Designation of the Guide
 Certificate of Originality

This is to certify that the project report entitled “Servicescape in Retail outlet – Effect
on Customer Satisfaction/consumer Preference”. Submitted to Bharati Vidyapeeth
(Deemed to be University), Pune in partial fulfillment of the requirement for the
award of the degree of MBA is an original work carried out by Ms P.V.S.
Swetha Goud under the guidance of Mr. T Rajesh . The matter embodied in this
project is a genuine work done by P.V.S. Swetha Goud to the best of my knowledge
and belief and has not been submitted before ,neither to this University nor to any
other University for the fulfillment of the requirement of any course of study.

Signature of the Student Signature of the Guide

Designation
 Certificate

This is to certify that the Project titled “Servicescape in Retail outlet – Effect on
Customer Satisfaction/consumer Preference” is an academic work done by P.V.S.
Swetha Goud submitted in the partial fulfillment of the requirement for the award of
the Degree of MBA from Bharati Vidyapeeth (Deemed to be University), Pune. It has
been completed under the guidance of Dr. RanPreet Kaur and Mr. T Rajesh.
We are thankful to Hindustan Petroleum Corporation Limited (HPCL). For having
allowed our student to undergo project work training. The authenticity of the project
work will be examined by the viva examiner which includes data verification, checking
duplicity of information etc. and it may be rejected due to non fulfillment of quality
standards set by the Institute.

Dr. Sachin S. Vernekar

Dean FMS, BVDU
Director IMED
 Acknowledgement

Apart from my efforts, the success of my project depends largely on the

encouragement and guideline of many others. I take this opportunity to express
my gratitude to the people who have been instrumental in the successful
completion of this project.

I am gratefully indebted to our esteemed guide Dr. Ranpreet Kaur for his
sincere guidance and priceless support which would have been impossible
for us to complete this project.

I express my gratitude to the staff members of Bharati Vidyapeeth (Deemed to be

University) who directly or indirectly helped me. I would also like to express my
sincere gratitude to all my office colleagues in Hindustan Petroleum
Corporation Limited (HPCL).

Finally I thank Institute of Management and entrepreneurship Development

(IMED) for giving me this golden opportunity to do my summer internship in
Hindustan Petroleum Corporation Limited (HPCL).

Name and Signature of the Student

 Preface

In this era of fast changing world, mere class room teaching is not
sufficient to attain maturity and perfection for application of theory
into practice. The dynamic economy, political and technological
environment in which we live continually place demand on us to
change, improve and learn more about jobs, superiors and
subordinates. Two years of continuous classroom teaching is sufficient
for students to implement directly their knowledge in the market. A
practical approach is needed.

The knowledge through project report is an essential requirement for

M.B.A students. The purpose of this project report is to study the
“Servicescape in Retail outlet – Effect on Customer
Satisfaction/consumer Preference” with special reference to
Hindustan Petroleum Corporation Limited (HPCL).

I have tried my level best to do justice to the project. And I hope the
study which was conducted will help not only the organization but also
me and the society too.

Name and Signature of the student.

 INDEX

Chapter 1: INTRODUCTION
1.1 Service scape
1.2 Customer Relation Management
1.3 Overview of the Company

Chapter 2: RESEARCH METHODOLOGY

2.1 Need for Study

2.2Objective and Scope of the study
2.3 Methods of Data Collection
2.4 Sources of Data
2.4.1 Primary Data Collection
2.4.2 Secondary Data Collection
2.5 Tools and Techniques of Data Collection
2.6 Testing of Hypothesis
2.7Formation of Hypothesis
2.8 Limitations of Study

Chapter 3: ANALYSIS AND DISCUSSION

3.1 Analysis
3.2 Methods and Techniques of Data Analysis

Chapter 4: CONCLUSION

Reference
Appendix
HPCL Profile
Questionnaire
 Chapter 1: INTRODUCTION
1.1 Service scape :
 Booms and Bitner defined a Servicescape as "the environment in which the
service is assembled and in which the seller and customer interact, combined
with tangible commodities that facilitate performance or communication of
the service".
OR
 Servicescape’ refers to the environments in which services are delivered and
where the firm and customer interact.

 Bitner refers to the Servicescape as the “built environment” or, more

specifically, the “man-made, physical surroundings as opposed to the natural
or social environment”.

 Four decades ago a new literature stream seems to have evolved Kotler
(1973) coined the term ‘Atmospheres’, also becoming the first to recognize
the influence of in –store environment on the perceptual processes of
customers, purchase decisions and to predict that the service environment
may become the chief form of competition. since then, many studies
highlighted the importance of ‘Servicescape’, a new term for atmospherics
first introduce by Bitner (1992),as it works as a clue for the invisible service
(Aubert-Gamete and Cova,1999; Baker, 1987;Bitner,1992).These studies
also provided evidence of the effect of the Servicescape on consumers
behaviours and emotions (Mehrabian and Russel,1974;Donovan and
Rossiter,1982; Turley and Milliman,2000). Surprisingly, most studies focus
on the impact of Servicescape on the Customers, neglecting that at the same
time atmospherics have multiple effects on the company employees
therefore, employees are ignored in the limited Servicescape research in
marketing (Bitner,1992).the study of parish et al. (2008) is an important
research aiming to shed some light on the underexplored impact of
Servicescape on employees attitude and behaviours.

 The Servicescape of hospital comprised of building, parking, care room,

medical equipment. Other tangible design related elements are uniforms of
doctors and nurses, patient information records, billing statements etc.
 The aim of the Servicescape model is to explain behaviour of people within
the service environment with a view to designing environments that does not
accomplish organisational goals in terms of achieving desired behavioural
responses. For consumers visiting a service or retail store, the service
environment is the first aspect of the service that is perceived by the
customer and it is at this stage that consumers are likely to form impressions
of the level of service they will receive. It includes the appearance,
equipment, signage and layout of a service outlet.

 The Servicescape includes the facility's exterior (landscape, exterior design,

signage, parking, surrounding environment) and interior (interior design and
decor, equipment, signage, layout) and ambient conditions (air quality,
temperature and lighting). In addition to its effects on customer's individual
behaviours, the Servicescape influences the nature and quality of customer
and employee interactions, most directly in interpersonal services.
Companies design their Servicescape to add an atmosphere that enhances the
customer experience and that will affect buyers' behaviour during the service
encounter.

 Most of the times the strategic decision in the Retail Business are around the
Servicescape only. In retail store the physical settings is the most important
link in the retail supply chain. To ensure competitiveness and reach the
target market, retail organisations often remodel their retail stores. This
remodelling

 focusses on the retail store as a strategic resource, creating an atmosphere

that influences clients and workers can lead to a sustainable competitive
advantage.

 Service providers should build environments that achieve a balance

between two primary objectives:

(1) Develop environments that appeal to consumer pleasure and arousal

states while avoiding atmospheres that create submissiveness; and
 (2) Construct environments that facilitate the operational ease and
efficiency of the firm.

 the physical settings may also influence the customer’s ultimate satisfaction
with the service.

 The term Servicescape was coined by Bitner (1992) to describe the physical
surroundings of the service system. As soon as the customer enters the
service system, he or she perceives the physical surroundings that lead to
cognitive, emotional and physiological responses in them which effects
customer’s behaviour. Servicescape also influence the employees’
behaviour. The physical environment or surroundings have the following
dimensions.

 The three important aspects of the Servicescape are:

(1) Spatial Layout and Functionality:

Because service environments generally exist to fulfil specific purposes or

needs of customers, spatial layout and functionality of the physical
surroundings are particularly important. Spatial layout refers to the ways in
which machinery, equipment, and furnishings are arranged, the size and
shape of those items, and the spatial relationships among them. Functionality
refers to the ability of the same items to facilitate the accomplishment of
customer and employee goals.

(2) Signs, Symbols, and Artifacts:

Many items in the physical environment serve as explicit or implicit signals

that communicate about the place to its users. Signs displayed on the exterior
and interior of a structure are examples of explicit communicators. They can
be used as labels (name of company, name of department, and so on) for
directional purposes (entrances, exits), and to communicate rules of
behaviour (no smoking, children must be accompanied by an adult).
Adequate signs have been shown to reduce perceived crowding and stress.
 Other environmental symbols and Artifacts may communicate less directly
than sign, giving implicit cues to users about the meaning of the place and
norms and expectations for behaviour in the place. Quality materials used in
construction, artwork, presence of certificates and photographs on walls,
floor-coverings, and personal objects displayed in the environment can all
communicate symbolic meaning and create an overall aesthetic impression.
The meanings attached to environmental symbols and Artifacts are culturally
embedded.

 Signs, symbols, and Artifacts are particularly important in forming first

impressions and for communicating new service concepts. When customers
are unfamiliar with a particular service establishment, they will look for
environmental cues to help them categorise the place and begin to form their
quality expectations.

 In U.S. office environments, certain cues such as desk size and placement
symbolise status and may be used to reinforce professional image.

(3) Ambient Conditions:

 Ambient conditions include background characteristics of the environment

such as temperature, lighting, noise, music, scent, and colour. All of these
factors can profoundly affect how people feel think, and respond to a
particular service establishment.

 When there is music, shoppers tend to perceive they spend less time
shopping and in line than when there is no music. Slower music tempos at
lower volumes tend to make shoppers more leisurely, and, in some cases,
they spend more.

 For example, people attending a symphony in a hall, where the air

conditioning has failed and the air is hot and stuffy, will be uncomfortable,
 and their discomfort will be reflected in how they feel about the concert. If
the temperature and air quality were within a comfort tolerance zone, these
ambient factors would probably go unnoticed.

 Ambient conditions also have a greater effect when the customer or

employee spends considerable time in the Servicescape. The impact of
temperature, music, odours, and colours builds over time.

 Types of Servicescape:

Is a framework for categorising service organisations on two dimensions that

captures some of the key differences that will impact the management of the
Servicescape? Organisations that share a cell in the matrix will face similar
issues and decisions regarding their physical spaces.
  Interpersonal Services

Both customers and employees are present for interaction such as hospitals
and banks. The needs and requirements of customers and employees should
be facilitated by Servicescape to enhance the social interaction.

 Self-service

services employees are absent and customer has to perform all operations on
his or her own like operating ATMs and vending machines. Servicescape
should guide the customers properly using signage (Arrow or light against
selected button), initiative design (hot tea cup for hot and ice for cold drinks)
and display of steps and other information (like the denomination a vending
machine can accept)

 Remote services

the customers are served from a distance and only employees perform the
actions in the Servicescape such as telephone and utilities related services.
The Servicescape should suit to the employee’s requirements their
satisfaction with primary objectives of motivating employees and improving
operational efficiency.

 Service Design Factors

A) Service Concept or Objectives of service

The nature of the core service should drive the parameters of service design
aligned with service concept. The emergency ward of any hospital should be
free from traffic and easy to approach. A petrol pump can be painted with
bright colour so that the customers driving on highway can prepare to take
turn well in advance.

B) Space Requirement based on location of service site

The location of site whether in rural and urban area impacts on design factor.
The cost of land is usually more in urban area than in rural area. The cost
constraints drive the service organization to utilize the small space
efficiently. The other constraints can be of strict zoning laws and ordinances
which are important to consider while designing facility. The scope of
expansion is again governed by some ordinances. Many KFC outlets have
expanded vertically and have provided seating arrangements on the first
floor.

C) Security

For any service organization it is important to protect the assets. Proper

security arrangement should be incorporated while designing facility to
control and reduce the losses of products and human lives. Installation of
surveillance cameras and related control systems are very common in banks
and supermarkets. Biometric devices to detect the identity of passenger are
another type of tools mostly used in immigration sections at airports.

D) Flexibility

Service facility design must be adaptable to changing customer and

environment conditions. It addresses the capability of either expanding the
service or introducing new types of services. Ability to introduce new
equipment or automated systems with new technology advances must be
captured while designing service facility.

Example

a) Size of parking lot.

b) Size of waiting room.
c) Size of kitchen.
d) Ration of kitchen space to dining area space.
e) Type of seating.
f) The colours and lighting in the dining room.
g) Space between the dining tables.
h) Interior design or décor of dining area.
i) Type of music and sound of music should be selected such as the
guest does not feel uncomfortable or disturbed.
j) Location of rest rooms.
 The physical setting may be more or less important in achieving the
organisation’s marketing and other goals depending on certain factors:

Servicescape Use:

 First, organisations differ in terms of whom the Servicescape will actually

affect. That is, who actually comes into the service facility and thus is
potentially influenced by its design—customers, employees, or both groups?
There are three types of service organisations that differ on this dimension.

 At one extreme is the self-service environment, where the customer performs

most of the activities and few if any employees are involved.

 Examples of self-service environments include ATMs, movie theatres,

express mail drop-off facilities, self-service entertainment such as golf and
theme parks, and online Internet services. In these primarily self-service
environments, the organisation can plan the Servicescape focusing
exclusively on marketing goals such as attracting the right market segment
and making the facility pleasing and easy to use.

 At the other extreme of the use dimension is the remote service, where there
is little or no customer involvement with the Servicescape.
Telecommunications, utilities, financial consultants, editorial, and mail-order
services are examples of services that can be provided without the customer
ever seeing the service facility. In fact, the facility may be in a different state
or a different country.

 Understanding of Different Behaviours in the Servicescape:

 The physical environment is particularly salient for services, as most
services are produced and consumed simultaneously, with the consumer “in
the factory” experiencing the total service within the firm’s physical facility.

 the service setting can affect consumers’ emotional, cognitive, and

physiological responses, which, in turn, influence their evaluations and
behaviours.

 Our focus is on affective responses or feelings that are created by contact

with the physical environment.

 The important thing to remember is that not every person will always
respond in the same way to the environment — individual moods, purposes,
and expectations may influence the response. And common personality
characteristics (arousal seeking, environment screening) may cause certain
groups of people to respond in predictably similar ways.

1.3 Customer Relationship Management

Customer-relationship management (CRM):-

Is an approach to manage a company's interaction with current and potential

customers. It uses data analysis about customers' history with a company to
improve business relationships with customers, specifically focusing on
customer retention and ultimately driving sales growth.
One important aspect of the CRM approach is the systems of CRM that compile
data from a range of different communication channels, including a company's
website, telephone, email, live chat, marketing materials and more recently,
social media. Through the CRM approach and the systems used to facilitate it,
businesses learn more about their target audiences and how to best cater to their
needs.

Basic model which contains a set of 7 basic Components:

• A database of customer activity,

• Analyses of the database,

• given the analyses, decisions about which customers to target,

• Tools for targeting the customers,

• How to build relationships with the targeted customers,

• Privacy issues, and

• Metrics for measuring the success of the CRM program.

Customer Relationship Management Model

• Create a Database
• Analysis
• Customer Selection
• Customer Targeting
• Relationship Marketing
• Privacy Issues
• Metrics

1. Creating a Customer Database

A necessary first step to a complete CRM solution is the construction of a
customer database or information file.' This is the foundation for any customer
relationship management activity. For Web-based businesses, constructing a
database should be a relatively straightforward task, as the customer transaction
and contact information is accumulated as a natural part of the interaction with
customers. For existing companies that have not previously collected much
customer information, the task will involve seeking historical customer contact
data from internal sources such as accounting and customer service.
What should be collected for the database? Ideally, the database should contain
information about the following:
 Transactions- This should include a complete purchase history with
accompanying details (price paid, SKU, delivery date).

 Customer Contacts-Today, there is an increasing number of customer contact

points from multiple channels and contexts. This should not only include
sales calls and service requests, but any customer- or company- initialled
contact.
 Descriptive Information- This is for segmentation and other data analysis
purposes.

 Response to Marketing Stimuli- This part of the information file should

contain whether or not the customer responded to a direct marketing
initiative, a sales contact, or any other direct contact.
The data should also be represented over time.
Companies have traditionally used a variety of methods to construct their
databases.
 HPCL used campaigning as a method of data collecting. As they do
campaigning in different outlets where they collect personal information as
the data base.
 Durable goods manufacturers utilize information from warranty cards for
basic descriptive information. Unfortunately, response rates to warranty
cards are in the 20-30% range leaving big gaps in the databases. Service
businesses are normally in better shape since the nature oil product involves
the kind of customer-company integration that naturally leads to better data
collection. For example, banks have been in the forefront of CRM activities
for a number of years. Telecom-related industries (long distance, wireless,
cable services) similarly have a large amount of customer information.''

2. Analysing the Data

 Traditionally, customer databases have been analysed with the intent to

define customer segments. A variety of univariate statistical methods such as
cluster and discriminant analysis have been used to group together customers
with similar behavioural patterns and descriptive data which are then used to
develop different product offerings or direct marketing campaigns. Direct
marketers have used such techniques for many years. Their goals are to
target the most profitable prospects for catalogue mailings and to tailor the
catalogues to different groups.

 More recently, such segmentation approaches have been heavily criticized.''

Taking a large number of customers and forming groups or segments
presumes a marketing effort towards an "average" customer in the group.
Given the range of marketing tools available that can reach customers one at
a time using tailored messages designed for small groups of customers (what
has been referred to as " 1 -to-1" marketing), there is less need to consider
the usual market segmentation schemes that contain large groups of
customers (e.g., women 18-24 years of age). Rather, there is increased
attention being paid to understanding each "row" of the database—that is
 understanding each customer and what he or she can deliver to the company
in terms of profits and then, depending on the nature of the product or
service, addressing either customers individually or in small clusters.

3. Customer Selection

 Given the construction and analysis of the customer information contained in

the database, the next step is to consider which customers to target with the
firm's marketing programs. The results from the analysis can be of various
types. If segmentation-type analyses are performed on purchasing or related
behaviour, the customers in the most desired segments (e.g., highest
purchasing rates, greatest brand loyally) would normally be selected first for
retention programs. Other segments can also be chosen depending upon
additional factors.

 For example, for promotions or other purchase-inducing tactical decisions,

if the customers in the heaviest purchasing segment already buy at a raid that
implies further purchasing is unlikely, a second tier with more potential
would also be attractive. The descriptor variables for these segments (e.g.,
age, industry type) provide information for deploying the marketing tools. In
addition, these variables can be matched with commercially available
databases of names to land additional customers matching the profiles of
those chosen from the database.
 If individual customer-based profitability is also available through LCV or
similar analysis, it would seem to be a simple task to determine on which
customers to focus. The marketing manager can use a number of criteria
such as simply choosing those customers that are profitable (or projected to
be) or imposing an ROI hurdle. The goal is to use the customer profitability
analysis to separate customers that will provide the most long-term profits
from those that are currently hurting profits. This allows the manager to "fire'
customers that are too costly to serve relative to the revenues being
produced. While this may seem contrary to being customer-oriented, the
basis of the time-honoured "marketing concept," in fact, there is nothing that
says that marketing and profits are contradictions in terms. The 80/20 rule
often holds in approximation: most of a company's profits are derived from a
small percentage of their customers.

4. Targeting the Customers

 Mass marketing approaches such as television, radio, or print advertising are

useful for generating awareness and achieving other communications
objectives, but they are poorly-suited for CRM due to their impersonal
 nature. More conventional approaches for targeting sealed customers include
a portfolio of direct marketing methods such as telemarketing, direct mail,
and, when the nature of the product is suitable, direct sales.

 An extremely popular form of Internet-based direct marketing is the use of

personalized e-mails. When this form of direct marketing first appeared,
customers considered it no different than "junk" mail that they receive at
home and treated as such with quick hits on the delete button on the
keyboard.
5. Relationship Programs

 While customer contact through direct e-mail offerings is a useful

component of CRM, it is more of a technique for implementing CRM than a
program itself. Relationships are not built and sustained with direct e-mails
themselves but rather through the types of programs that are available for
which e-mail may be a delivery mechanism.

 HPCL makes relationship with customer through the campaigning programs.

 The overall goal of relationship programs is to deliver a higher level of

customer satisfaction than competing firms deliver. There has been a large
volume of research in this area. From this research, managers today realize
that customers match realizations and expectations of product performance,
and that it is critical for them to deliver such performance at higher and
higher levels as expectations increase due to competition, marketing
communications, and changing customer needs. In addition, research has
shown that there is a strong, positive relationship between customer
satisfaction and profits.'' Thus, managers must constantly measure
satisfaction levels and develop programs that help to deliver performance
beyond targeted customer expectations.

6. Customer Service/ Issues/ Resolution/ Feedback

 Because customers have more choices today and the targeted customers are
most valuable to the company, customer service must receive a high priority
within the company. In a general sense, any contact or "touch points" that a
customer has with a firm is a customer service encounter and has the
potential either to gain repeat business and help CRM or to have the opposite
effect. Programs designed to enhance customer service are normally of two
types. Reactive service is where the customer has a problem (product failure,
question about a bill, product return) and contacts the company to solve it.
 Most companies today have established infrastructures to deal with reactive
service situations through 800 telephone numbers, faxback systems, e-mail
addresses, and a variety of other solutions. Proactive service is a different
matter: this is a situation where the manager has decided not to wait for
customers to contact the firm but to rather be aggressive in establishing a
dialogue with customers prior to complaining or other behaviour sparking a
relative solution. This is more a matter of good account management where
the sales force or other people dealing with specific customers are trained to
reach out and anticipate customers' needs.

COMPONENTS OF CRM:-

 The main components of CRM are building and managing customer

relationships through marketing, observing relationships as they mature
through distinct phases, managing these relationships at each stage and
recognizing that the distribution of value of a relationship to the firm is not
homogeneous. When building and managing customer relationships through
marketing, firms might benefit from using a variety of tools to help
organizational design, incentive schemes, customer structures, and more to
optimize the reach of its marketing campaigns. Through the
acknowledgement of the distinct phases of CRM, businesses will be able to
benefit from seeing the interaction of multiple relationships as connected
transactions. The final factor of CRM highlights the importance of CRM
through accounting for the profitability of customer relationships. Through
studying the particular spending habits of customers, a firm may be able to
dedicate different resources and amounts of attention to different types of
consumers.
1.3 Overview of the Company:

Hindustan Petroleum Corporation Limited (HPCL)

 Is an Indian oil and natural gas company with its headquarters at Mumbai,
Maharashtra. It has about 25% market-share in India among public-sector
companies (PSUs) and a strong marketing infrastructure. Oil and Natural
Gas Corporation, also the promoter of the company, owns 51.11% shares in
HPCL and others are distributed amongst financial institutes, public and
other investors. The company is ranked 367th on the Fortune Global 500 list
of the world's biggest corporations as of 2016.

 HPCL was incorporated in 1974 after the takeover and merger of erstwhile
Esso Standard and Lube India Limited by the Esso (Acquisition of
Undertakings in India) Act 1974. Caltex Oil Refining (India) Ltd. (CORIL)
was taken over by the Government of India in 1976 and merged with HPCL
in 1978 by the CORIL-HPCL Amalgamation Order, 1978. Kosan Gas
Company was merged with HPCL in 1979 by the Kosan gas Company
Acquisition Act, 1979.

 In 2003, following a petition by the Centre for Public Interest Litigation

(CPIL), the Supreme Court of India restrained the Central government from
privatising Hindustan Petroleum and Bharat Petroleum without the approval
of Parliament.

 HPCL has been steadily growing over the years. The refining capacity
increased from 5.5 million metric tonnes (MMT) in 1984/85 to 14.80 million
metric tonnes as of March 2013. On the financial front, the net income from
sales/operations grew from ₹2687 crores in 1984–1985 to ₹206529 crores in
financial year 2012–2013. During FY 2013-14, its net profit was ₹1740
crores.

Vision:

 World Class Energy Company known for caring and delighting

Customers
 With high quality Products and innovative services
  With Aggressive growth and Delivery superior financial performance.

Mission:
 Integrated Company in Hydrocarbons sector of exploration and Production,
refining and Marketing, Focusing on enhancement of productivity, quality
and Profitability, caring for customers and employees, caring of
Environment protection and cultural heritage.

Operations

 HPCL operates two major refineries producing a wide variety of petroleum

fuels and specialties, one in Mumbai (West Coast) of 7.5 million metric
tonnes per annum (MMTPA) capacity and the other in Visakhapatnam, (East
Coast) with a capacity of 8.3 MMTPA. HPCL holds an equity stake of
16.95% in Mangalore Refinery and Petrochemicals Limited (MRPL), a state-
of-the-art refinery at Mangalore with a capacity of 9 MMTPA. Another
refinery of 9 MMTPA (set up in Bathinda, Punjab by HMEL, and joint
venture with Mittal Energy Investments Pt. Ltd). HPCL has signed a
memorandum of understanding with the Government of Rajasthan for setting
up a refinery near Barmer. It would be operated under a joint venture
company (JVC) called HPCL-Rajasthan Refinery Limited.

 HPCL also owns and operates the largest lubricant refinery in India
producing lube base oils of international standards, with a capacity of 335
TMT. This refinery accounts for over 40% of India's total lube base oil
production. Presently HPCL produces over 300+ grades of lubes, specialities
and greases.

 The marketing network of HPCL consists of 21 zonal offices in major cities

and 128 regional offices facilitated by a supply and distribution
infrastructure comprising terminals, aviation service facilities, liquefied
petroleum gas (LPG) bottling plants, lube filling plants, inland relay depots,
retail outlets (petrol pumps) and LPG and lube distributorships. HPCL has
 state-of-the-art information technology infrastructure to support its core
business. The data centre is at Hi-tech city in Hyderabad.

Products

 Petrol is known as motor spirit in the oil industry. HPCL markets the product
through its retail pumps all over India. Its principle consumers are personal
vehicle owners.

 Diesel is known as high speed diesel in the oil industry. HPCL markets the
products through its retail pumps as well as terminals and depots. Its
consumers are regular auto owners, transport agencies, industries, etc.

 Lubricants: HPCL is the market leader in lubricants and associated products.

It commands over 30% of market share in this sector. The popular brands of
HP lubes are Laal Ghoda, HP Milcy, Thanda Raja, Koolgard, and Racer4.

 Liquefied petroleum gas: The HPCL brand of LPG is a popular brand across
India for domestic and industrial uses.
 Aviation turbine fuel: With major air service facilities in all major airports of
India, HPCL is a key player in this sector supplying ATF to major airlines. It
has an accomplishment of sorts to supply fuel to US.

Refineries

 HPCL has a number of refineries in India. Some are listed below:

• Mumbai Refinery: 7.5 million metric tones (MMT) capacity
• Visakhapatnam Refinery: 8.3 MMT at Visakhapatnam
• Mangalore Refinery Petrochemicals Ltd.: 9.69 MMT at Mangalore,

Karnataka (HPCL has a 16.65% stake).

• Guru Gobind Singh Refinery: 9 MMT at Bathinda, Punjab (HPCL

and Mittal Energy each have a 49% stake)
• Barmer Refinery: It is planned for 9 MMT capacity. It is a joint venture
with the Rajasthan Government.

Major ongoing projects

 Uran - Chakan LPG Pipeline (UCPL)
 Vijayawada - Dharmapuri Pipeline (VDPL)
 Palanpur Vadodara Pipeline (PVPL)
 Visakh Refinery Modernization Project
 Barmer Refinery RAJASTHAN
 Mumbai Refinery Expansion Project
 Chapter 2: RESEARCH METHODOLOGY

2.1 NEED FOR STUDY

Although numerous studies emphasize the importance of Servicescape of
customer but not its impact on the Consumer Satisfaction or Preference. The
project is based on the measurement of impact of the Consumer Preference of
different outlets in different working location and condition.

2.2 Objective and Scope of the study:

 To find relationship between Servicescape in Retail Outlet to its effect on

Consumer Preference.

 Impact of Servicescape on Customer influence.

Scope:
This research is limited only for Servicescape in the Retail outlet. And
investigation on whether service acts as factor or service effects the customer
preference . This deals in consumer point of view. That is, if service scale is
increased or improved in the Retail outlet does consumer preference
improves on that particular outlet remains the same / unchanged. Is
Servicescape a controllable factor of Consumer Preference or not? If
Servicescape is improved, does it Boost market consumption or not?

It may be Tangible or Intangible products Service is essential factor on

which customer decision making is dependent. To perform any activity in
the market and as competitors are increasing there are different approaches
followed to achieve the market requirement but only right and safe yield is
preferred by the consumer.

Will remodelling of the Service strategy can increase sales, particularly by

attracting new customers. If there is any effect is it short term or long term /
permanent or temporary. In some cases, loss of property is observed due to
lack of Service strategy. This also lead to downfall of the company’s market
and ultimately increase in competitors image or performance. So,
Servicescape not only in one certain department but in design, installation
and storage.

Servicescape strongly focus on the functional aspects of facility design, with

an emphasis on productive use of resources and safe, efficient delivery of
 services. But marketers also care about the impression that service facilities
and personnel make on customers and how they contribute to the overall
service experience. The primary objective should be to support or provide all
the needs and services to the customers simultaneously with at most safe.

2.3 Methods of Data Collection :

 Historical Method:

History has all along been a great source of inspiration for the researchers. In
fact there has been considerable research which can be done only with the
help and assistance of historical data. Therefore, this method has helped a lot
in the successful completion of this project.

 Case-study Method:

Under this method, various cases were undertaken and effort was made to
study the problems of employees and customer, their grievances,
compensation to which they were entitled etc. in their entirely keeping in
view unitary character of the subject.

 Survey Method:

In this method, data was collected through Survey method in the HPCL
outlets through campaigning program.

 One of the most important components of Marketing Research is collection

of data required to solve a defined research problem. The general tendency
of the researcher is to organize a survey and collect the data from the field.

 The most important point to be considered before this is to research the

secondary sources and gather data already available. This gives a logical
perspective to problem solving. Only then the actual data required to be
collected from the primary survey can be well defined.

2.4 SOURCES OF DATA COLLECTION:

Data were collected from different sources, i.e. primary sources and
secondary sources.
 Primary Sources:
Primary data collection begins when a researcher is not able to find the data
required for his research purpose from the secondary sources. Market
researchers are interested in a variety of primary data about
demographic/socioeconomic characteristics, attitudes/opinions/interests,
awareness/knowledge, intentions, motivation, and behaviour.
The two most common types of descriptive research designs are:
1. Observation- Observation is a primary method of collecting data by human,
mechanical, electrical or electronic means. The researcher may or may not have
direct contact or communication with the people whose behaviour is being
recorded. Observation techniques can be part of qualitative research as well as
quantitative research techniques.
The Observation of Physical Environment in different Retail Outlets is carryon
that is ambient condition, space/function, sign/symbol by Personally.
2. Surveys: The survey technique mainly involves the collection of primary
data about subjects, usually by selecting a representative sample of the
population or universe under study, through the use of a questionnaire. It is a
very popular since many different types of information can be collected,
including attitudinal, motivational, behavioural and perceptive aspects. It allows
for standardization and uniformity in the questions asked and in the method of
approaching subjects, making it easier to compare and contrast answers by
respondent group. It also ensures higher reliability than some other techniques.
The survey is taken by the questionnaire with different aspect like Proficiency,
Motivation & Satisfaction on the different outlets employees.

Data collection is from firm sources has been according to the requirement and
environment of HPCL Secunderabad , which includes: Approach, Personal
Interview, Informal (friendly) enquiries in outlets, etc.

 Secondary Sources:

Secondary data refers to data which is collected by someone who is someone

other than the user. Common sources of secondary data for social science
include censuses, information collected by government departments,
organizational records and data that was originally collected for other research
purposes.

Refers to all published data. It includes published documents of the Company,

Company records, Internet, Journals & Magazines and Government reports,
other survey reports etc.
 2.5 Tools and Techniques of Data Collection.

 To collect the primary and secondary sources of data the researcher has
adopted various tools and techniques of social science such as schedule,
questionnaire, interview and non-participative observation etc.

2.6 Testing of Hypothesis

Couper (2000)145 described that hypothesis testing is a well-defined procedure

which supports to decide objectively whether to reject or accept the hypothesis
based on the available information from the sample. When a researcher
establishes an assumption or hypothesis then the sample statistics will be close
to the parameter of hypothesized population. A hypothesis is a formalized
procedure that succeeds a standard series of performances. In this way the
researcher has a standardized method for calculating the research studies
outcomes. Other researchers will understand and identify exactly how the data
were evaluated and how the conclusions were reached.
Similarly Dillman and Bowker (2001)146in hypothesis testing two kinds of
hypotheses are involved. The first kind is called null hypothesis which can be
evaluated in terms of probabilities provided by the sample statistics. The second
is research hypothesis which is intended to test the research prediction. The null
hypothesis is the logical opposite to the research hypothesis. Thus if the null
hypothesis is rejected then the research hypothesis is considered acceptable.

2.7 Formation of Hypothesis

 The Servicescape is a predictor of perceived service quality. However,
Servicescape evaluations should precede service quality perceptions as this
element of the service is immediately evident to a customer. Moreover, a
customer may actually use the Servicescape to mould their perceptions of the
personal service they are about to receive in which case the Servicescape
acts as an expectations primer.

 H1 : Servicescape can influence Consumer Satisfaction.

 H2 : Servicescape has positive impact on Consumer Preference.

2.8 Limitations of Study

As limitations are the mandatory part of any project.

The study is subjected to the following limitations:

1. Lack of Time.
2. Fund Unavailability.
3. Sample size is small.
5. Only study on the some outlets of Secunderabad.
Chapter 3: ANALYSIS AND DISCUSSION

3.1 Analysis :

 Mehrabian and Russell (1974) employed the stimulus-organism-response

(SOR) theory adopted from environmental psychology to explain how
people respond to environments. The model conceptualizes that attributes of
the environment as antecedents affect the intervening variables, which
eventually lead to the outcome responses holds that the environment and its
perceptions (conscious and unconscious) elicit emotional (feelings)
responses in consumers, which in turn lead to approach or avoidance
behaviours. Feelings are central to the model, which posits that feelings but
not the cognitions drive behaviour. For example, a person may avoid an
environment not simply for the reason that a lot of people are around but for
the unpleasant feelings created by crowding.

 The favorable customer's behavioral intentions strengthen his or her

relationship with the company and when the customer's behavioural
intentions are unfavourable; this relationship is more likely to be weakened.
Also, behavioural intentions are indicators that signal whether customer
remains with or defect from the company and are frequently developed from
the service experience of the customer (Chaudhuri and Holbrook, 2001).
Further, behavioural intention is a complex construct and can be measured
by using several questions to identify signals that are potentially favourable
or unfavourable for the company.

Positive and negative impacts

 With all the different types of responses Servicescape brings, it can induce a
positive impact but also a negative one. Bitner (1992) demonstrates that
Servicescape should act as a package and a facilitator for the customers’
tasks but also as differentiator among competitiveness. Its purpose is to have
the best possible impact on consumers. Brady and Cronin (2009) studied
how a firm oriented on the customers’ satisfaction can have an impact on
their evaluation of firm’s performance but also on customers’ behaviour. In
this research, they show that the perception of the quality of a service is
highly associated with the physical goods provided and the physical
environment. This positive perception is linked to the value given by the
customer to a service or a firm. This research proves that the components of
 Servicescape evoked before (physical and social components) are strongly
linked to the perception of customers, and consequently linked to their
behaviours. Moreover, Servicescape gives the nature of a service when it is
in ad equation with the company’s values, messages, and environment.
According to Dagger and Danaher (2014) stores are modelled to attract and
retain customers.

 A positive perception of Servicescape should create approach behaviour.

This approach response includes a motivation to move toward the place, the
environment, and consequently through the Servicescape (Sullivan, 2002). A
positive environment in which customers are feeling good and exited has the
possibility to increase their potential purchase behaviour. Moreover, we saw
that Servicescape’s elements, such as music or odour, possibly will change
the time perception of customers (Assadi, 2012; Sullivan, 2002) and this
falsified time perception increases the time spent doing shopping. The more
time customers spend in a store, the more likely they are to purchase a good
or a service.

 Also, Servicescape may have an impact on customer re patronization. If

customers feel good and not stressed in a place, if they are happy with their
experience, the chances they will come back increase. We saw that
Servicescape provides the image of an organisation to customers before their
interaction with the services provided (Lin, 2004 cited in Chua et al., 2010).
It also has an impact on perception and should facilitate re patronage
behaviour (Wakefield and Blodgett, 1999, cited in Chua et al., 2010). The
types of responses to Servicescape can differ. Indeed Daunt and Harris
(2012) suggest that Servicescape can lead to a functional or dysfunctional
behaviour. They explain that a dysfunctional behaviour is a comportment
that intentionally violates the commonly accepted norms and conducts
within an exchange. The terms deviant customer behaviour (Mills, 1981),
consumer misbehaviour (Fullerton & Punj, 2004), and jay customer
behaviour (Lovelock, 2001) can also be used to refer to this concept (cited in
Daunt and Harris, 2012). The target of these behaviours can be other
customers, employees, merchandises, properties or financial assets.
According to Bitner (1992) the physical Servicescape (the interior
environment and the exterior environment) affects the five senses and the
social dimension can impact behaviour as well. Actually, the social density
paradigm by Rossembaum and Massiah (2011) is a good example of
different behaviours influenced by one element.
 They explain that depending on the situation a high density of people
negatively affects approach decisions, but the opposite is true as well.
Moreover, displayed emotions and emotional contagion may boost bad
mood, discomfort and stress among customers. When customers have a bad
perception of Servicescape, avoidance behaviour can be adopted: people
might want to move away from the place and reduce their participation,
which decreases their potential purchase behaviour. This negative experience
may provoke some bad reviews from consumers. Unfortunately, individuals
share bad experiences.

 Indeed, some studies have shown that people are more inclined to share bad
experiences than good ones (Bennett, 2014). An unpleasant Servicescape
tends to be avoided. Hence, it should be a priority for companies to create,
manage and improve Servicescape (Hightower, 2003). But, Servicescape can
fail sometimes in different ways, and so causes a problem in service
delivery, service product, service facility, employees’ and customers’
behaviour. The causes of Servicescape failure are various: bad odours,
slippery floors, broken air-conditioning or unpleasant staff, among others
factors. When a Servicescape failure happens, and customers experience a
dissatisfying interaction with Servicescape, they expect a Servicescape
recovery. Servicescape has different types of recoveries: emphatic responses
or corrective and compensatory interventions from the authority. Sometimes,
a Servicescape failure has no recovery (Chua et al., 2010).

 Fixing the failure of Servicescape by recovery is essential in order to manage

to bring consumers back even if they already had a bad experience. Indeed,
chances of seeing customers coming back increase with just the fact to try to
fix the failure. Nonetheless, customers expect a certain level of recovery and
everyone has its own perception regarding what is appropriate and
reasonable to do in any situation. So a dissatisfactory recovery can occur if
the recovery does not meet the customer’s expectations, and then situation
may get worst. In this case, the re patronization chances are meagre (Chua et
al., 2010). In the case of a bad Servicescape, customers tend to change their
behaviour and give a bad response to Servicescape especially if the firm does
not adopt recovery

 For any company, it is really important to listen and understand the

responses of the consumers in order to provide the best Servicescape
possible to enhance positive responses. It is good for the customers, the
employees, but also for the firm itself, for its brand image in order to
differentiate the place among competition .

Servicescape

Consumer
satisfaction

Consumer
Preference

Decision making
Consumer Satisfaction:

 In service , customers are influenced by the physical environment.

Facility aesthetics are described as the ambient conditions and overall
cleanliness that affect an individual’s perception and response to the
environment.

 The Servicescape is commonly referred to as the interior layout and

design of a service, and has been labelled as a method for services to
create a particular customer environment. These dimensions are
particularly relevant in service industries. Special layout and functionality
has consistently shown these to be positively associated with customer
satisfaction.

Servicescape in HPCL
Retail outlet

Layout
Accessibility
Perceived Customer
Quality
satisfaction
Cleanline
ss
Consumer Preference :

Consumer preferences are measured in terms of the level of satisfaction the

consumer obtains from consuming various combinations or bundles of goods.
The consumer’s objective is to choose the bundle of goods which provides the
greatest level of satisfaction as they the consumer define it. But consumers are
very much constrained in their choices. These constraints are defined by the
consumer’s income, and the prices the consumer pays for the goods.
Chapter : 4

Conclusion

 By this we got a clear view that customer satisfaction in Retail

outlet is due to more milage of Hindustan Petroleum when
compared to other Petroleum outlets and company’s long lasting
loyality towards its customers by updating itself with the changing
standards and improvising its safety and service abilities.

 And Consumer Preference depends on Servicescape in the Outlet ,

Here Hindustan Petroleum have good customer satisfaction due to
which customer preference has also improved. Services given to
the customer is highly satisfied, as we get to know from sample
customer responses in the questionnaire.

 From the analysis we get a clear conclusion that HPCL is providing

very excellent services in the Retailoutlet to their customer there
by having positive impact on consumer satisfaction and preference
towards Hindustan Petroleum.

Reference

Appendix :

www.hpcl.co.in
www.hindustanpetroleum.com
en.m.wikipedia.org
www.sales.hpcl.co.in
www.hpretail.com
www.slideshare.net
www.ukessays.com
www.personneltoday.com
Analysis and Discussion:

This analysis on Servicescape in Retail outlet – Effect on Consumer

satisfaction and preference. Is based on survey and the sample consists of Male
and Female and people of different age groups with varying annual income.
Here, the sample size is 73 in different outlets under Secunderabad Region.

The analysis starts with the personal details of the sample.

1Q). Age :

16 – 25 yrs 26 – 35 yrs
36 – 45 yrs 46 – 55 yrs
> 55 yrs

Here, there are five different age group consumers Of Hindustan Petroleum.

2Q). Gender : Male Female

About 52% of female candidates in considered sample size consists of

female and remaining 47.9% is Male.
3Q). Occupation:

Service Business
Student Agriculture
Professional House wife

Among Male and Female members there are 5% Agriculture,23%House

wife,10% Professionals, 23% Business ,27% Service and 13%Students when
occupation is concerned
4Q). Annual Income:

< 2 lakh 2- 5 lakh

6 – 10 lakh 11- 15 lakh
More than 15 lakh None

As perception and needs varies from customer to customer in which annual

income acts as one of the factor .It is also analyzed based on different range.

5Q). Which vehicle do you own ?

2 wheeler 3 wheeler
4 wheeler Multi wheeler

Consumer satisfaction and preference varies for the type of vehicle owned, as
the requirement Servicescape is different. And the maximum vehicles owned
are 2 wheeler.
6Q). What is your weekly fuel consumption?

1- 10 lts 11 – 20 lts
21 – 30 lts > 30 lts

Most of the weekly fuel consumption range between 1-10 lts in the considered
sample
Size that is about 67% of the consumers.
7Q). Product availability in the HP Retail outlet?
Here, the availability of product that is may be petrol ,diesel, lube oil in
Outlet and the response is divided into categories like agree, strongly agree,
disagree, neutral. For convenience response is processed in graph.

8Q).Whether the availability of Service is 24/7 ?

The response obtained is maximum sample are strongly agree which
means in the outlet services are available when ever it is required.
9Q).Fire Extinguisher availability
As safety plays an important may be in service sector or product based
company. Though there are many services available safety is most
important for which 75% of the customer sample are strongly agree i,e fire
extinguishers are available.

10Q). Provision of Firstaid at the retail outlet

As the product here is hazardous there is requirement to follow basic
safety needs in which Hindustan petroleum is forward.
11Q). Rest Room facility
All the basic facilities availability at the Service providing outlet is
taken into account where all the consumers vote for strongly agree.

12Q)Feasibility of traffic
This question is to know whether the outlet is according to consumer
convenience area or giving any traffic trouble. But there is huge positive
response.
13Q). Appearance of Outlet
Whether the Outlet is spacious, one way i,e enter and exit ways are
specific and other physical properties which can influence and become
factor for preference.

14Q). Behaviour of Staff at the Outlet

More than 50% of the sample size are satisfied with the behavior of
the staff at the outlet .
15Q). Quantity assurance
If there are variations in required quantity and the amount acquired
then it effects consumer satisfaction which reflects on there preference.

16Q). skill of staff

As ground level staff of the company are directly in interact with the
consumers they must be skilled otherwise this would reflect on the
Servicescape. But here in the outlet as per the survey there are skilled staff
and consumer are getting the required service from them.
17Q). Modes of payment
Different Payment modes are also available in the outlet as the
response obtained is strongly agreed by the sample size.

18Q). Quality of customer service

The rating given by the sample size is overall 90% for the quality of
service provided.
 Questionnaire
Personal Details:

Name :

Gender : Male Female

Age :

16 – 25 yrs 26 – 35 yrs
36 – 45 yrs 46 – 55 yrs
> 55 yrs

Occupation:

Service Business
Student Agriculture
Professional House wife

Qualification:

Up to 12 th Graduation
Post Graduatio Diploma
PhD

Annual Income:

< 2 lakh 2- 5 lakh

6 – 10 lakh 11- 15 lakh
More than 15 lakh None

Which vehicle do you own ?

2 wheeler 3 wheeler
4 wheeler Multi wheeler

What is your weekly fuel consumption?

1- 10 lts 11 – 20 lts
21 – 30 lts > 30 lts

Selection of Petroleum Retail Outlets Based On Below Features:

Features Strongly Disagree Neutral Agree Strongly
Disagree Agree
All Products
Availability
24/7 Service
Availability
Electronic billing for
every transaction
Automated Systems to
ensure quantity
Emergency Lightening
back – up provided
Place fire Extinguisher
Skilled staff

Behaviour of staff

Appearance of staff

Appearance of Outlet

Easy Traffic Movement

Availability of Canopy
Availability of first aid
box
Drinking water

Rest rooms

Different modes of
payments
Quality of customer
service