Market orientation and service innovation on customer perceived value : The case of supermarket retailers

Purpose To enhance their competitive advantage, firms are increasingly regarding customer-perceived value as a vital factor in advancing the level of service performance. This paper aims to explore how supermarket retailers select and implement market orientation (MO) and service innovation strategies to enhance customer-perceived value based on their investment. Design/methodology/approach A review of the related literature indicated that studies have rarely explored the meanings and outcomes of MO and service innovation. Therefore, this paper examined the roles of MO and service innovation, evaluating how these factors affected relationship quality and customer-perceived value in a supermarket context. Customer advocacy and customer participation were evaluated as the mediating variables, and six hypotheses were formulated. The data were collected by conducting a questionnaire survey of the customers from five of the largest Taiwanese supermarket retailers. A structural equation model was used to test the hypotheses based on the respondent sample data. Findings The results indicated that customer participation and relationship quality are positively related to customer-perceived value. Customer advocacy is positively related to customer participation and relationship quality. MO and service innovation are positively related to customer advocacy. Research Limitations/implications The high explanatory power of the results of the deduced model in this research help explain the MO and service innovation of supermarket retailers toward customers. However, the collection of data related to other retailers requires consumers in other countries to test the robustness of this theoretical model. The results of analyses conducted on other industries and in other countries may differ. Practical Implications This paper investigated how the MO and service innovation capabilities of supermarket retailers contributed to their customer advocacy to achieve superior customer participation, customer relationship quality and customer-perceived value. Originality/value This paper investigates the effect of MO and service innovation on relationship quality and perceived value, and regards customer advocacy and customer participation as mediators.