ABSTRACT
BACKGROUND: When consumers choose a service provider, they trade-off their perceptions of service quality with their perceptions of the cost of engaging with the service provider. For community pharmacy owners and managers, it is important to understand the relative impact on loyalty of providing the extra resources to improve service quality versus forsaking gross profit by discounting prices. The aim of this study was to explore the relative effects of consumers' perceptions of service quality (pSQ) and price competitiveness (pPC) on patronage loyalty (patronage history of the rated pharmacy), patronage disloyalty (patronage history at other pharmacies) and loyalty intentions. METHODS: This was a cross-sectional study conducted within Australia using an online survey administered to members of a consumer marketing panel. Eligible participants were adults taking 2 or more prescription medicines and had attended a community pharmacy within the past 4 weeks. Participants were asked to rate the pharmacy they had last visited, self-report patronage history of that and other pharmacies and report the brand of pharmacy visited. Previously validated scales were used for consumers' perceptions of service quality (pSQ) and loyalty intentions. New scales were developed for pPC and self-reported patronage loyalty and disloyalty. Confirmatory Factor Analysis (CFA) was used to validate the measurement model. Structural Equation Modelling (SEM) with robust estimator (EQS) was used to test the relationships between the variables. Sensitivity analysis, in the presence of covariates were performed with multivariate regression analysis with bootstrapping. RESULTS: Surveys were completed by 303 participants. Most consumers had visited the rated pharmacy more often than once monthly and most had visited only 1 or 2 pharmacies in the past 12 months for prescription medicines. Overall, participants rated pSQ, pPC highly and expressed high loyalty intentions. The SEM was a good fit for the data. The model predicted 12%, 15% and 69% of the variation in patronage loyalty and patronage disloyalty and loyalty intentions, respectively. The effect of pSQ on patronage was 0.38 (p < 0.05) for loyalty and -0.38 (p < 0.05) on disloyalty whereas the effect of pPC was marginal. The total effect of pSQ and pPC on loyalty intentions was 0.64 (<0.05) and 0.20 (p < 0.05) and in sensitivity analyses, no other covariate, including pharmacy brand was significant. CONCLUSION: In order to drive loyalty behavior and generate loyalty intentions, providing a high-quality service appears to be far more effective than creating perceptions that the pharmacy has competitive prices. This finding affords a motivation for both discount AND non-discount brand pharmacies to undertake the steps needed to improve service quality.
