Sinhgad Institute of Hotel Management and Catering Technology

Project Progress Report No. 01

Project Details

Project Title Market potential of Bubble tea in India

Students name Sahil Tanaji Hande
Subject Specialization Food & Beverage
Reporting period 22 jan 2025 to 5 feb 2025
Date submitted 5 feb 2025
Details of Work plan
Work Plan Completed/ In-Progress
Literature searched and reviewed (book / completed
Journals/e-resources)
Data collection tools designed(questionnaire / In progress
interview/)
Sampling and data gathering completed
Analysing and interpretation In progress
Conclusion and suggestions. incomplete
Proofreading submitted to Guide completed
Report writing In progress
References:-
Instruction: - References to be given which the student has searched and found the related work done
in the same field for better understanding the project topic and research gap in the same field.
Date: Signature of Student

Remark of the Project guide:-

The student has submitted their completed work in print format for proofreading. This provides an opportunity
to carefully review the content, ensuring that it is clear, coherent, and free from grammatical errors, typos, and
formatting issues. During the proofreading process, it’s essential to check for proper punctuation, sentence
structure, and overall flow to make sure the ideas are expressed effectively and consistently. Additionally,
attention should be given to any inconsistencies in style, formatting, and citation to ensure the work meets the
required standards.

Signature of Student
Date: Signature of Project Guide

● Enclosed with completed work in print format for proofreading.

Page 1
 Specimen 'A': Title Sheet

(The impact of food service quality and price

on customer satisfaction )

Submitted in partial fulfillment of the

requirements of the degree of

(B.H.M.C.T.)

by

(Srushti Baban
Shelke)

Under the Guidance of

Name of Guide: Mr
raghavendra gade

(Food and Beverage Service)

Sinhgad Institute of Hotel Management and

Catering Technology, Lonavala

( April 2025)
 Specimen `C': Approval Sheet

This Project report entitled

THE IMPACT OF SERVICE QUALITY AND PRICE

ON CUSTOMER SATISFACTION

By

Srushti

Shelke

is approved for the degree of

Bachelor of Hotel Management and Catering Technology with specialization in -

food and beverage service

of

Sinhagd Institute of Hotel Management and Catering Technology, Lonavala

Examiners Name Signature

1. External
Examiner

2. Principal

3. Internal Dr. Veena Tiwari

Examiner

4. Guide

Place: Lonavala Date:

 Specimen `D' – Declaration

I declare that this written submission represents my ideas in my own words and where
others' ideas or words have been included, I have adequately cited and referenced the
original sources. I also declare that I have adhered to all principles of academic
honesty and integrity and have not misrepresented or fabricated or falsified any
idea/data/fact/source in my submission. I understand that any violation of the above
will be cause for disciplinary action by the Institute and can also evoke penal action
from the sources which have thus not been properly cited or from whom proper
permission has not been taken when needed.

(Signature)

(Srushti Baban Shelke)

Da
te:
Pl
ac
e:
 Specimen `B'

CERTIFICATE

This is to certify that the project report entitled ‘The impact of service quality and
price on customer satisfaction’ submitted by Srushti Baban Shelke, in the partial
fulfillment of the requirement for the award of degree of BSC(HS)with specialization
in Food and Beverage of Sinhgad Institute of Hotel Management and Catering
Technology,Lonavala, affiliated to the Savitribai Phule Pune University, is a record of
his own work.

Examiners Name Signature

External Examiner

Principal Dr. Anjali Chaterton

Internal Examiner Dr. Veena Tiwari

Project Guide
 Introduction

In the hospitality industry, customer satisfaction is a critical factor that influences a

hotel's reputation, customer retention, and overall business success. Two key
elements that significantly affect customer satisfaction are service quality and
pricing. Service quality refers to the level of excellence provided in hospitality
services, while price represents the cost customers are willing to pay for these
services. This report explores the relationship between service quality, price, and
their combined effect on customer satisfaction in the hotel industry.
The dynamic nature of the hospitality industry demands continuous improvement
in service quality to meet evolving customer expectations. Additionally, pricing
strategies must be competitive yet reflective of the value offered. Understanding
the interplay between these two factors is crucial for hotel management to
formulate effective policies that enhance customer experiences and ensure long-
term profitability. This report delves deep into the nuances of service quality and
price, offering a comprehensive view of how they collectively shape customer
satisfaction in diverse hotel settings.

Objective of the Study

The primary objective of this study is to analyze how service quality and price
impact customer satisfaction in the hotel sector. It aims to:
1. Understand the role of service quality in enhancing customer satisfaction.

2. Examine the influence of price on customer perceptions and satisfaction.

3. Determine the balance between service quality and price that leads to
optimal customer satisfaction.

4. Provide recommendations for hotel management to improve service

delivery and pricing strategies.

5. Explore case studies of successful hotels that have effectively balanced

service quality and pricing.

6. Assess the impact of cultural and demographic factors on customer

expectations and satisfaction.

7. Investigate how technological advancements influence service quality and

pricing strategies.

8. Analyze the effects of global economic fluctuations on pricing models and

customer satisfaction.

9. Study the role of brand reputation in shaping perceptions of service quality

and price fairness.

Literature Review

Previous studies have highlighted the importance of service quality and pricing in
determining customer satisfaction. According to Parasuraman et al. (1988), the
SERVQUAL model identifies five dimensions of service quality: tangibles,
reliability, responsiveness, assurance, and empathy. These dimensions play a
crucial role in shaping customer experiences in hotels.
Zeithaml (1988) emphasized that perceived value is the trade-off between the
quality received and the price paid. Customers are more likely to be satisfied when
they believe they receive good value for their money. Additionally, Kotler and
Keller (2016) highlighted that customer satisfaction is influenced not only by
service quality and price but also by personal preferences, past experiences, and
expectations.
Various studies have explored the relationship between pricing strategies and
customer satisfaction. For instance, Monroe (1990) discussed price perception
and its psychological impact on consumer behavior. Customers often associate
higher prices with better quality, although this is not always the case. Moreover,
the concept of price fairness, as explored by Xia et al. (2004), indicates that
customers' perceptions of fairness in pricing significantly influence their
satisfaction levels.
Research by Grönroos (1984) introduced the concept of perceived service quality,
emphasizing that it is the outcome of an evaluation process where customers
compare their expectations with actual service experiences. Additionally, studies
by Lovelock and Wirtz (2011) have shown that emotional factors, such as the
warmth of service interactions and personalized attention, play a vital role in
customer satisfaction beyond the core service offering.

Service Quality

Service quality in the hotel industry encompasses various factors, including room
cleanliness, staff behavior, amenities, and the overall ambiance. High service
quality often leads to positive customer experiences, repeat business, and
favorable reviews. Key aspects of service quality include:
1. Tangibles: Physical facilities, equipment, and appearance of personnel.
This includes modern furnishings, well-maintained amenities, and
aesthetically pleasing environments that create a positive first impression.

2. Reliability: The ability to perform promised services dependably and

accurately. Consistency in service delivery, such as timely room service
and accurate billing, fosters trust among customers.

3. Responsiveness: Willingness to help customers and provide prompt

service. Quick and efficient responses to customer requests and complaints
demonstrate attentiveness and professionalism.

4. Assurance: Knowledge and courtesy of staff and their ability to inspire

trust. Well-trained, knowledgeable staff who exude confidence and
professionalism enhance customer trust and satisfaction.

5. Empathy: Providing caring and personalized attention to customers.

Understanding individual customer needs and offering personalized
services contribute to a memorable guest experience.

Factors Affecting Service Quality

● Employee Training and Development: Continuous training programs
ensure that staff are equipped with the necessary skills to deliver
exceptional service. Training in cultural sensitivity, conflict resolution, and
hospitality etiquette enhances service quality.

● Technology Integration: The use of technology, such as mobile check-ins,

automated service requests, and smart room controls, enhances service
efficiency and convenience.
 ● Customer Feedback Mechanisms: Regularly collecting and analyzing
customer feedback helps identify areas for improvement and implement
corrective measures. Feedback tools like online surveys, suggestion boxes,
and real-time service ratings are essential.

● Service Design and Process Optimization: Streamlining service delivery

processes to minimize delays and errors improves the overall customer
experience.

● Employee Engagement and Motivation: Motivated employees are more

likely to provide high-quality service. Recognition programs, performance
incentives, and a positive work environment contribute to staff satisfaction,
which reflects in customer interactions.

Price Sensitivity and Customer Satisfaction

Price sensitivity refers to how changes in price affect customer purchasing

behavior. In the hotel industry, customers compare prices with the quality of
services offered. While some customers prioritize low prices, others are willing to
pay a premium for superior service quality. Understanding price sensitivity helps
hotels develop pricing strategies that align with customer expectations and market
dynamics.
Determinants of Price Sensitivity:
1. Perceived Value: The balance between the quality received and the price
paid. Customers assess whether the service justifies the cost, influencing
 their satisfaction.

2. Competitive Pricing: Comparison with prices of similar hotels in the area.

Transparent pricing relative to competitors helps build trust.

3. Personal Income and Budget: Customers' financial capacity influences

their sensitivity to price changes. Higher disposable income may reduce
price sensitivity.

4. Seasonality: Prices often fluctuate based on demand during peak and off-
peak seasons. Dynamic pricing strategies help optimize revenue without
compromising satisfaction.

5. Brand Loyalty: Loyal customers may exhibit lower price sensitivity due to
trust and positive past experiences.

6. Promotions and Discounts: Special offers can temporarily reduce price

sensitivity, attracting cost-conscious travelers.

Balancing price and service quality is essential. Overpricing with mediocre service
can lead to dissatisfaction, while underpricing may raise concerns about service
quality. Hotels need to adopt pricing strategies that reflect the value provided,
ensuring customers feel they receive fair value for their money.

Pricing Strategies in the Hotel Industry:

● Dynamic Pricing: Adjusting prices based on real-time demand, occupancy
rates, and market conditions. This strategy maximizes revenue during high-
demand periods and attracts customers during low-demand seasons.

● Value-Based Pricing: Setting prices based on the perceived value to

customers rather than solely on costs. This approach considers the unique
 features and experiences offered.

● Cost-Plus Pricing: Adding a markup to the cost of services to determine

the final price. While simple, this method may not always reflect customer
perceptions of value.

● Discount and Loyalty Programs: Offering discounts to repeat customers

or members of loyalty programs to enhance satisfaction and retention.
Exclusive perks, rewards points, and personalized offers strengthen
customer relationships.

● Psychological Pricing: Using pricing techniques that influence customer

perceptions, such as setting prices just below a round number (e.g., $99.99
instead of $100).

The Relationship Between Service Quality, Price, and Customer Satisfaction

Service quality and price are interrelated factors that significantly influence
customer satisfaction. High service quality can justify premium pricing, while
competitive pricing can attract budget-conscious travelers. However, the ultimate
goal is to achieve a balance that aligns with customer expectations and perceived
value.

Case Studies of Successful Hotels:

● Luxury Hotels: Examples of luxury hotels that command high prices due to
exceptional service quality, personalized experiences, and unique offerings.
Hotels like The Ritz-Carlton and Four Seasons are renowned for their
impeccable service standards.

● Budget Hotels: Case studies of budget hotels that maintain high customer
satisfaction through efficient service delivery, cleanliness, and competitive
 pricing. Brands like Ibis and Premier Inn focus on providing value for
money.

Challenges in Balancing Service Quality and Pricing:

● Cost Constraints: Maintaining high service quality while managing
operational costs. Balancing investments in staff training, technology, and
infrastructure with profitability goals.

● Market Competition: Differentiating from competitors in a saturated

market. Unique value propositions, niche targeting, and innovative service
offerings help hotels stand out.

● Changing Customer Expectations: Adapting to evolving customer

preferences, technological advancements, and sustainability concerns.
Continuous market research and trend analysis are crucial.

● Economic Fluctuations: Global economic shifts, such as recessions or

currency fluctuations, impact pricing strategies and customer spending
behavior.

● Reputation Management: Online reviews and social media influence

customer perceptions of service quality and price fairness. Proactive
reputation management strategies are essential.

Recommendations for Hotel Management:

1. Invest in continuous staff training and development programs focusing on
customer service excellence, cultural sensitivity, and technological
proficiency.

2. Implement advanced technology solutions to enhance service efficiency,

such as mobile apps for bookings, AI-driven chatbots for customer support,
and smart room technologies.

3. Regularly review and adjust pricing strategies based on market trends,

 competitor analysis, and customer feedback.

4. Foster a customer-centric culture that prioritizes personalized service,

proactive problem-solving, and emotional connection with guests.

5. Conduct regular customer satisfaction surveys, mystery audits, and focus

group discussions to gather insights and drive service improvements.

6. Develop sustainable practices that align with customer values, such as eco-
friendly initiatives, local sourcing, and community engagement.

7. Strengthen brand identity through consistent service delivery, unique value

propositions, and effective marketing strategies.

8. Build strategic partnerships with travel agencies, online booking platforms,

and local businesses to expand market reach and enhance service
offerings
Date:16th April 2024 Place: Lonavala