Management Research Review

Market orientation and service innovation on customer perceived value: The case
of supermarket retailers
Ying-Pin Yeh
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Ying-Pin Yeh , (2016),"Market orientation and service innovation on customer perceived value",
Management Research Review, Vol. 39 Iss 4 pp. 449 - 467
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Market orientation and service Supermarket

retailers
innovation on customer
perceived value
The case of supermarket retailers 449
Ying-Pin Yeh Received 27 August 2014
Department of Business Administration, Revised 15 February 2015
Accepted 18 March 2015
Yu Da University of Science and Technology, Miaoli County, Taiwan

Abstract
Purpose To enhance their competitive advantage, firms are increasingly regarding
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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.
Keywords Relationship quality, Customer-perceived value, Customer participation,
Service innovation, Market orientation, Customer advocacy
Paper type Research paper

Introduction Management Research Review

Customer-perceived value is a crucial factor for predicting purchase behavior and Vol. 39 No. 4, 2016
pp. 449-467
achieving competitive advantage (Landroguez et al., 2013). A superior customer value Emerald Group Publishing Limited
2040-8269
position is achieved when a firm creates more value than its competitors (Beitelspacher DOI 10.1108/MRR-08-2014-0205
 MRR et al., 2011). In recent decades, firms have been operating in a new and complex
39,4 competitive environment in which increasingly more customers are demanding value
creation (Snchez et al., 2009). This has generated a growing interest in creating and
delivering superior value to the customer (Smith and Colgate, 2007). To enhance their
competitive advantage, firms are increasingly regarding customer-perceived value as a
vital factor in advancing the level of service performance.
450 Value is not simply added in the sense of what we can do for you; it is mutually
co-created between firms and customers through a business approach of what you can
do with us, and it is a firms response to the unique and changing needs of customers
(Vargo and Lusch, 2004). The most basic needs of consumers are more than adequately
being met; thus, retailers must focus on determining how they can fulfill the
higher-order needs of consumers (Lusch et al., 2007) and thereby grow. Retailers must
think about how they can create superior value for consumers through innovations that
exceed satisfying basic needs (Reinartz et al., 2011). Weerawardena et al. (2006)
proclaimed the importance of innovation to firm success and frequently cited it as the
key element of superior firm performance. Firms that emphasize innovation are likely to
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try to improve the fit between their innovative offerings and customer needs (Ngo and
OCass, 2013). Market orientation (MO) might increase the ability of an organization to
understand and satisfy customers, thereby increasing its organizational capabilities
(Luo et al., 2005). Responsiveness to market needs in the form of rapid service
development is paramount to firms seeking to improve or maintain their competitive
advantage. A company that has developed MO increases customers interest as a
fundamental element in the business strategy (Elg, 2007). When the MO of an
organization produces value for customers that is rare and difficult to imitate (Narver
et al., 2000), it can be a sustainable source of competitive advantage, which enables firms
to outperform their less market-oriented competitors (Adjei et al., 2009). As an
increasing number of consumers gain access to powerful new media and information
tools to compare products and services (Pitt et al., 2002; Wind and Rangaswamy, 2001),
organizations in a range of industries are responding by developing advocacy-based
strategies and practices (McKenna, 2002; Baker, 2003). Where it is not possible for retail
customers to have a relationship with a salesperson in the supermarket sector,
marketers should invest in developing customer satisfaction and trust in the store
(Wong and Sohal, 2002). Supermarkets operating in an intensely price-based
competitive environment, dependent on high economies of scale, and with low levels of
staff customer interaction invest in factors that are key elements of the relationship
market (Johnson and Selnes, 2004). Supermarkets are committed to a quality experience
and for establishing trust between both parties, and the exchange of information
between them (Whyatt and Koschek, 2010). Therefore, supermarket retailers strive to
acquire quality customer relationships and customer-perceived value.
Although the service management literature acknowledges the need for new skills
and capabilities, it has not yet adequately defined or empirically identified the
characteristics or scope of the competency changes necessary to develop successful MO
and service innovation strategies. Scant empirical evidence is available to improve our
understanding of customer needs, participation and behavior in MO and service
innovation. Additional research is required to validate our proposition that customer
and firm benefits can be realized by harnessing MO and service innovation. The main
purpose of this study was to expand marketing literature by determining the
 relationships among MO, service innovation and customer-perceived value. Supermarket
Specifically, this study clarified the importance of customer advocacy in the retailers
contribution of relationship quality and customer participation to customer-perceived
value by demonstrating its mediating role. This study revealed that MO and service
innovation affect customer-perceived value through customer advocacy, relationship
quality and customer participation. The results of this study are particularly relevant to
supermarket companies that transact or plan on transacting with customers in a 451
business-to-consumer (B2C) setting.
The remainder of this paper is organized as follows: after this introduction, the next
section introduces a summary of the theory and hypotheses. The following section
details the methods and procedures, and it provides an analysis of the theoretical results.
The paper then presents a discussion of the theoretical results and managerial
implications, and offers suggestions for future research.

Theoretical background
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Customer value is recognized as the fundamental basis of all service marketing activity
(Holbrook, 1996), and is regarded as a critical strategic tool for attracting and retaining
customers (Chen and Quester, 2006; Lee and Overby, 2004), as well as an indicator of
repurchase intentions (Parasuraman and Grewal, 2000). Woodall (2003) defined
customer value as a personal perception of advantages generated from a customers
association with an organizations offering. Value is perceived and determined by the
customer, based on the value in use (Vargo and Lusch, 2004). Zeithaml (1988) suggested
that perceived value can be regarded as the consumers overall assessment of the utility
of a product (or service) based on perceptions of what is received and what is given.
Perceived value is an obscure and complex construct, which encompasses notions such
as price, quality and perceived benefits and sacrifices (Holbrook, 1994). Customers are
not homogeneous, and, therefore, various customer segments perceive diverse values
within the same service (Ulaga and Chacour, 2001). For various customers, the
components of perceived value might be differentially weighted. Payne et al. (2008)
indicated that customer-perceived value is a property inherent in the product as
resourced, facilitated and created by firms and their marketers; as derived by customers
through product purchase, use and experience; and as co-created through interactions
and dialog between producers and customers.
Relationship quality refers to the degree to which buyers are satisfied over time
with the overall relationship as manifested in product quality, service quality and
price paid for value received, and the degree to which the relationship functions as
a partnership (Huntley, 2006). Adjei et al. (2009) indicated that developing high
relationship quality with customers can produce enhanced competitiveness in the
competitive environment. However, retailers must meticulously assess their
environmental contexts and then carefully establish relationship quality with
customers. Customer participation can be defined as the specific behaviors and the
degree of mental and physical consumer effort and involvement related to the
production and delivery of a service (Cermak et al., 1994). Customers who actively
participate with firms are likely to create customized offerings for themselves (Firat
et al., 1995). Using the talents of customers are a means to achieve a competitive
advantage (Prahalad and Ramaswamy, 2004a). Customer participation enables
firms to attract customers in the pursuit of long-term and profitable relationships
 MRR (Payne et al., 2009). Customer advocacy refers to the process of faithfully
39,4 representing customer interests and providing them with honest information
(Lawer and Knox, 2006). Advances in information technology are enabling
customers to specify product or service features and prices, choose service delivery
methods, control exposure to product information and learn from other customers
(Wathieu et al., 2002).
452 MO refers to a firms superior ability to clarify and satisfy its customers (Day, 1990).
Yam et al. (2005) argued that organizations should transform toward MO to overcome
new challenges in their environments and develop organizational change capability
relating to MO to influence the success of strategic outcomes. Service innovation refers
to a firms receptivity and inclination to adopt novel ideas that lead to developing and
launching new products (Hurley and Hult, 1998), and is a primary contributor to
organizational success (Hult et al., 2004). Numerous innovation challenges encountered
by retailers are customer-centric in the sense that they require designing retail processes
and products to effectively match (shifting) customer needs (Shah et al., 2006). Firms
with a strong MO can obtain, process and store market information that enables them to
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discover and respond to customer needs, thereby leading to timely new service
introductions that offer unique benefits, and are superior in quality to alternatives
(Baker and Sinkula, 2005). Service firms can stem from the direct interactions of their
personnel with customers. Service personnel gain knowledge about customer lives and
problems, such that they accurately interpret their needs and accordingly develop ideas
for new services (Sundbo, 2010).

Hypotheses development
Throughout this work, we discuss MO and service innovation in the context of the
vulnerabilities of supermarket retailers and the changing drivers of customer
relationship quality and perceived value. We identified numerous firms that are
experimenting with MO and service innovation business models and used these to
contextualize a service management framework. Our analysis will assist managers
in evaluating how their firms might benefit from developing MO and service
innovation.
Consumers typically engage in a relationship in anticipation of receiving benefits,
and these benefits are considered to exceed the costs associated with the relationship
compared with alternative relationship offerings (Danaher et al., 2008). Porter (1990)
discussed providing superior value to the buyer in product quality, special features or
after-sale service. Customer value is a critical strategic tool for attracting and retaining
customers (Snchez and Iniesta, 2006). Firms can develop an on-going relationship with
customers and work closely with customers to ensure offerings meet customer
requirements. Griffith et al. (2006) argued that relationship quality is developed by
converting resources into capabilities, such as market responsiveness, through which
retailers achieve competitive positioning. However, relationship quality does not always
enable a retailer to convert resources into market responsiveness. Therefore, we argue
that, as firms increase their relationship quality with customers, they are more likely to
develop higher-order service capabilities to achieve customer-perceived value. Based on
these analyses, we propose the following hypothesis:
H1. Relationship quality positively affects customer-perceived value.
 Customer participation is vital in providing certain services with optimal quality and a Supermarket
satisfactory outcome (Zeithaml, 1981). Cermak et al. (1994) indicated that increased retailers
customer participation is positively associated with service quality and customer
satisfaction. Customer participation was considered to comprise various behaviors such
as preparation, relationship building, information exchange, quality assurance and
assessment behaviors (Youngdahl et al., 2003). Customer participation in creating the
core offering can occur through shared inventiveness, co-design or the shared 453
production of related goods (Lusch and Vargo, 2006). Customer participation is
associated with improved perceived quality and greater perceived value by customers
(Anderson and Sullivan, 1993), and enables customers to have an active voice, and to
achieve control over the offering co-creation process (Prahalad and Ramaswamy,
2004b). Customer participation assists sellers in developing offerings that facilitate
customer value creation. Customer participation results in attaining desired benefits,
increased control and ability and improved perceptions of the quality of offerings
(Mustak et al., 2013). Therefore, we argue that, as firms increase their customer
participation, they are more likely to develop superior service capabilities to achieve
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customer-perceived value. Based on these analyses, we propose the following

hypothesis:
H2. Customer participation positively affects customer-perceived value.
Company advocates establish a dialogue, not a monologue, with their customers, and
are advocates for their needs. Companies assume that these customers will reciprocate
with their trust, leading to sales and profit growth (Urban, 2004). As trust increases and
accountability and transparency increase, customer advocacy can be used to resolve
customer problems, support their decisions and monitor their dealings in a B2C context.
Implementing customer advocacy shapes numerous specific customer-focused
capabilities of service firms, which support customers through marketing strategies and
tactics that assist them in proactively and voluntarily conveying their experiences to
friends, relatives and colleagues (Lawer and Knox, 2006). Therefore, service firms must
integrate new marketing techniques into the overall customer experience by creating
and facilitating communities, environments and contexts for customers to become
involved with the service. By assisting consumers in determining and executing their
optimal solution in a given market, a firm can more easily earn their trust and
satisfaction. We argue that as firms increase their customer advocacy, they are more
likely to enhance their service capabilities to achieve customer relationship quality.
Based on these analyses, we propose the following hypothesis:
H3. Customer advocacy positively affects relationship quality.
Advocacy strategy incorporates customer consultants (Achrol and Kotler, 1999) or
trusted advisors (Sheth et al., 2000) who seek to assist customers in making superior
purchasing decisions and maximizing product or service value. Customer
advocacy-based firms seek to incentivize and involve consumers and customers in their
marketing efforts. Advocacy implies that companies partner with their customers based
on the expectation that satisfied customers will discuss their positive partnership with
the company with others (Urban, 2004). Customers who clearly understand service
provider value and expectation gain necessary knowledge to interact with the service
provider (Claycomb and Martin, 2002), which stimulates customers to participate in the
 MRR service process. Customer participation allows firms to provide mechanisms to connect
39,4 with the customer, to engage in beneficial exchanges in an effective, efficient and
targeted manner through constructive dialog. Working with customers to create the
service offering, and thus, the firms ability to manage the service delivery process
through customer participation, is a critical delivery mechanism (Ngo and OCass, 2013).
We believe that firms can assist customers in finding and executing their optimum
454 solution in a given market, and easily encourage their participation. Based on these
analyses, we propose the following hypothesis:
H4. Customer advocacy positively affects customer participation.
Day (1994) indicated that MO constitutes a distinctive capability that systematically
gathers, interprets and uses market information. MO represents the principles and
outlooks that determine the firms cognitive processes and behavior (Kuada and Buatsi,
2005). MO can induce the firm to design and plan strategies and actions directed to
create and satisfy customers through continual needs assessment (Nwokah, 2008). The
internet is a great enabler of customer power. People are presently more educated and
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informed than in the past, and possess the tools to verify a companys claims and seek
out superior alternatives from competitors. This power enables customers to avoid
pushy marketers and make their own purchasing decisions (Urban, 2004). Highly
market-oriented firms gather information on consumer needs, market trends and
developments, competitors and the business environment (Siguaw et al., 1998).
Market-oriented firms possess the ability to adapt rapidly to customers manifest and
latent needs, which may translate into a superior new service (Nasution and Mavondo,
2008). MO firms facilitate the institutionalization of customer advocacy through
interaction activities. The actions of a market-oriented firm are based on marketing
concepts (Esteban et al., 2002). Firms must focus on satisfying the requirements of their
employees to provide superior value to customers (Conduit and Mavondo, 2001). Using
MO would create a favorable internal climate conducive to the development of
organizational capabilities (Liao et al., 2011). However, examining the extent to which
MO contributes to the implementation of customer advocacy is necessary. This
relationship has not been assessed before; nonetheless, implementing the marketing
concept is expected to contribute to the adoption of customer advocacy. Based on these
analyses, we propose the following hypothesis:
H5. Market orientation positively affects the customer advocacy of a firm.
Service innovation is the ability of a firm to collect information from customers,
recognize the value of this information and leverage its knowledge (Srivastava et al.,
2001). This ability to reconfigure resources creates potential for firms to achieve new
and innovative forms of competitive advantage (Teece et al., 1997). Service
innovation is a means of increasing market efficiency and shaping value creation
(Moller et al., 2008). Firms have increasing opportunities to assist customer
decisions in stores by using technologies such as radio frequency identification
(RFID), mobile technology, television network and virtual reality (Kalyanam et al.,
2008). Service innovation is not simply a new offering, but improved customer value
co-creation (Ordanini and Parasuraman, 2011). Service innovation promotes the
design of new services and enhancements in service delivery systems (OCass and
Ngo, 2011). To achieve superior customer advocacy, firms should develop new
 service innovation approaches to motivate employees to participate, as well as Supermarket
approaches to successfully monitor and manage the process. Thus, firms exhibiting retailers
a high level of capability pertaining to service innovations tend to facilitate
customer advocacy. Through service innovation, firms can accelerate and increase
the efficiency of information transfer and new knowledge development for
customers (Sherif et al., 2006). Therefore, firms capable of forming customer
advocacy are able to draw on innovative practices. Based on these analyses, we 455
propose the following hypothesis:
H6. Service innovation positively affects the customer advocacy of a firm.

Methods
Measurement of latent variables
The question items used for measuring latent variables are listed in Table I. The
question items used to measure the manifest variables in this research consist mainly of
positive statements. All items were assessed using a seven-point ordinal scale with
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responses ranging from completely disagree (one point) to completely agree (seven
points).

Questionnaire pre-test and revision

Relevant customers of the supermarket industry discussed the preliminary
questionnaire and recommended additional suitable customers to discuss the
questionnaire. We revised the questionnaire to clarify and simplify the wording. We
tested the revised questionnaire on customers to determine whether they adequately
understood the questions, and subsequently, revised the questions based on the
respondent opinions before conducting a full-scale survey.

Results
Sample structure
We researched customers of the Taiwanese supermarket industry, and sought to
understand their opinions and attitudes toward MO and service innovation that was
promoted by supermarket firms. The participants in this study included customers from
five of the largest Taiwanese supermarket retailers. For conveniently collecting sample
data, the questionnaires were provided directly to the customers of supermarket firms.
In total, 562 questionnaires were sent to customers, and 523 questionnaires were
returned, which were encoded and filed. After removing incomplete responses, 510 valid
questionnaires remained (Table II).
We sampled the gender, age, usage period and transactional expenditure at every
turn of the respondents (Table III). These samples are highly representative of the
supermarket industry in Taiwan.

Nonresponse bias and reliability analysis

For each phase, we considered the final wave of surveys we received as representative of
non-respondents. We divided each phase sample into two groups, based on early and
late survey return times, and performed t tests on the responses of both groups. The t
tests yielded no statistically significant differences among the survey items tested.
These results suggest that nonresponse bias did not significantly affect this study.
 MRR Latent variables Measurements
39,4
1. Customer-perceived V1 The supermarket retailer reduces the time required to
value fulfill service requirements
Sources: Snchez and V2 The supermarket retailer ensures that customers receive
Iniesta (2006) positive attention and personalized services
456 V3 The supermarket retailer creates more value for the
customer when comparing all of the costs and benefits in
the relationship
2. Relationship quality V4 The supermarket retailer has the professional capability
Sources: Johnson et al. for providing retailing service
(2004) V5 The supermarket retailer offers retailing services that
provide practical benefits
V6 I intend to increase my usage of the services of the
supermarket retailer in the future
V7 If I ever relocate, I will use the same supermarket retailer
V8 The supermarket retailer provides an excellent retailing
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service policy, and fulfils its commitments to me

(including goods and service information, and service
quality)
V9 My continued transactional relationship with the
supermarket retailers compatible with its long-term
interests
3. Customer V10 The supermarket retailer prepares for providing services
participation by seeking referrals and researching competitors
Sources: Ngo and V11 The supermarket retailer builds a relationship with
OCass (2009) customers by smiling, offering words of kindness,
becoming acquainted with providers and asking for
servers by name
V12 The supermarket retailer provides and seeks information
to clarify service expectations and seek status
V13 The supermarket retailer encourages me to provide
negative performance feedback and become involved in
diagnosing and resolving problems
4. Customer advocacy V14 The supermarket retailer provides complete and open
Sources: Urban (2004) information to customers
V15 The supermarket retailer enables customers to share
information about their experiences in using various
products and services
V16 The supermarket retailer attempts to represent the best
interests of customers
V17 The supermarket retailer helps customers help
themselves
V18 The supermarket retailer supplies its customers with
tools to help them solve their problems
V19 The supermarket retailer provides information, enabling
customers to choose easily among various options
Table I. V20 The supermarket retailer strives to increase the
Research variables efficiency of its service
and measurements (continued)
 Latent variables
5. Market orientation
Sources: Nasution and
Mavondo (2008)
6. Service innovation
Sources: Aragn-
Correa et al. (2007)
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Measurements
Supermarket
retailers
V21 The supermarket retailer generates appropriate market
information pertaining to customers current and future
needs
V22 The supermarket retailer integrates and disseminates
this information across departments
V23 The supermarket retailer coordinates the design and
457
execution of the firms strategic response to market
opportunities
V24 The supermarket retailer is more innovative than its
competitors in deciding what methods to use for
achieving targets and objectives
V25 The supermarket retailer is more innovative than its
competitors in initiating new procedures or systems
V26 The supermarket retailer is more innovative than its
competitors in developing new ways for achieving its

targets and objectives Table I.

Wellcome Matsusei Taiwan fresh Jasons

PX Mart supermarket supermarket supermarket marketplace

Market share (%) 41.8 25.2 16.3 9.1 7.6

Number of subjects 213 129 83 46 39
Table II.
Note: Data Source: market share adopted from Taiwan Distribution News, 2013 Subjects distribution

Table IV shows the data reliability based on Cronbachs alpha. All constructs (latent
variables) had a high reliability, with Cronbachs alpha exceeding 0.8; therefore, the data
reliability is generally acceptable.

Common method variance

This study adopted the single-informant method for data collection. Therefore, common
method variance may be a problem because information on dependent and independent
variables was collected from the same respondents. We conducted Harmans one-factor
test. A factor analysis of the dependent and independent variables did not yield a
single-factor structure that would account for a majority of the variances (Podsakoff and
Organ, 1986). This suggested that common method variance is not a concern in this
sample.

Confirmatory factor analysis

Each indicator variable in the measurement model should load only one factor; that is,
none of the indicators are complex variables (measuring multiple latent variables;
Hatcher, 1998). We used confirmatory factor analysis to assess the psychometric
properties of the measures used in this study. The model fit was determined using the
estimates of CFI, GFI, AGFI, NFI, NNFI and RMR (Table V). The results shown in
 MRR Items Category Frequency (%)
39,4
Gender Male 203 39.8
Female 307 60.2
Age group 20 years 42 8.3
21-30 years 166 32.5
458 31-40 years 144 28.3
41-50 years 80 15.6
51-60 years 47 9.3
60 years 31 6.0
Usage period 1 year 42 8.2
1-2 years 58 11.4
2-3 years 146 28.6
3-4 years 140 27.4
4-5 years 78 15.4
5 years 46 9.0
Transactional expenditure at every turn (US$) $30 68 13.4
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Table III. $31-60 166 32.5

Descriptive statistics $61-90 160 31.4
of demographic $91-120 71 13.9
characteristics $120 45 8.8

Latent variables Cronbachs

Customer-perceived value 0.844

Relationship quality 0.852
Customer participation 0.801
Table IV. Customer advocacy 0.882
Results of reliability Market orientation 0.846
analysis Service innovation 0.835

2 df 2/df GFI AGFI RMR NFI NNFI CFI

796.219 284 2.804 0.893 0.867 0.037 0.905 0.927 0.937

Table V.
Summary of Notes: GFI goodness of fit index; AGFI GFI adjusted for degrees of freedom; RMR root mean
measurement square residual; NFI normed-fit index; NNFI non-normed-fit index; CFI Bentlers comparative fit
statistics index

Table V indicate a good fit with the data; when the fit indices exceeded or approached
0.9, the estimated RMR was 0.037 and the AGFI exceeded 0.8.
Measure reliability was assessed using composite reliability (CR) and variance
extracted estimates. The CR of each construct exceeded 0.7 in this study (Table VI),
satisfying a minimally acceptable level. Variance extracted estimates exceeded or
approached 0.5 in this study. Therefore, our model constructs performed fairly well. We
assessed validity using the t values of the factor loadings. All indicator t values ranged
from 14.770 through 21.487, indicating that all factor loadings were significant
 Latent variable and Standardized Composite Variance extracted
Supermarket
manifest variable factor loadings t-value reliability estimates retailers
Customer perceived 0.844a 0.644
value
V1 0.813 21.382* 0.661b
V2 0.785 20.309* 0.616
V3 0.809 21.208* 0.654
459
Relationship quality 0.855 0.497
V4 0.756 19.467 0.572
V5 0.771 20.048 0.594
V6 0.654 16.030 0.428
V7 0.726 18.319 0.524
V8 0.663 16.301 0.440
V9 0.651 15.926 0.424
Customer 0.806 0.510
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participation
V10 0.738 18.790 0.545
V11 0.744 19.007 0.554
V12 0.744 19.017 0.554
V13 0.624 15.097 0.389
Customer advocacy 0.885 0.525
V14 0.682 16.950 0.465
V15 0.720 18.249 0.518
V16 0.677 16.789 0.458
V17 0.792 20.880 0.627
V18 0.792 20.897 0.627
V19 0.776 20.272 0.602
V20 0.612 14.770 0.375
Market orientation 0.786 0.555
V21 0.612 21.295 0.375
V22 0.809 20.827 0.654
V23 0.797 21.278 0.635
Service innovation 0.837 0.632
V24 0.813 21.487 0.661
V25 0.759 19.441 0.576
V26 0.812 21.464 0.659 Table VI.
Results of reliability
Notes: * Denotes a significant value (p 0.001); a indicates the composite reliability; b
indicates the analysis and factor-
square of factor loadings loading analysis

(p 0.001). This fact supported the convergent validity of all indicators that effectively
measured the same construct (Anderson and Gerbing, 1988).

Path analysis
Based on these results, we used structural equation modeling (SEM) to perform
theoretical model testing using path analysis. The CFI, GFI, NFI and NNFI exceeded or
 MRR approached 0.9, the estimated RMR was 0.034, and the AGFI exceeded 0.8. The research
39,4 model achieved a relatively good fit (Joreskog and Sorbom, 1993). Figure 1 shows a
summary of the path analysis results. All path coefficients in the current model were
statistically significant.

Discussion
460 We investigated how the MO and service innovation capabilities of supermarket
retailers contribute to their customer advocacy to achieve superior customer
participation, customer relationship quality and customer-perceived value.
The research results indicated that relationship quality directly and positively
influenced customer-perceived value (H1 was supported). This indicates that the firm
strengthens customer relationship quality to elevate customer-perceived value. We
determined that a retailers relationship quality with customers stimulate a high
customer-perceived value. These results suggested that investment in the development
of relationship quality with customers is appropriate. These findings are consistent with
those of Adjei et al. (2009). Retailers can acquire comprehensive knowledge and
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understanding of their customers needs. In addition, with customer exchange quality

information, the retailer can satisfy the unique needs of customers more efficiently
compared with their competitors.
The research results indicated that customer participation directly and positively
influenced customer-perceived value (H2 was supported). This indicates that the service
provider strengthens customer participation to elevate customer-perceived value.
Customer participation assists supermarket retailers in saving employee costs, so that
retailers can provide discounts in return for customer participation, further enhancing
customer benefits, which is similar to the finding obtained by Whyatt and Koschek
(2010). Increasing customer participation poses considerable demands on contact
employees and their abilities, requiring adaptability and responsiveness to manage
uncertainty, job stress and emotional strain inherent in additional customer
involvement.
The study results indicate that customer advocacy directly and positively influences
customer participation and customer relationship quality (H3 and H4 are supported).
This indicates that the supermarket retailers strengthens customer advocacy to elevate

Market Relationship
orientation 0.906*** quality
0.381***
0.423***

Customer Customer
advocacy perceived value
0.542***
0.932*** 0.527***

Service Customer
innovation participation
Figure 1.
Testing results of the Notes: Path coefficients are statistically significant ***denotes a significant
theoretical model value p < 0.001
 customer participation and customer relationship quality. Customer advocacy requires Supermarket
a higher level of quality than relationship strategies do because a company that lacks retailers
superior products and is honestly attempting to represent the best interests of customers
cannot recommend itself. Payne et al. (2008) indicated that numerous firms actively
involve their customers in an array of service activities, such as using customer labor to
help design and deliver services. Therefore, customers are increasingly encouraged to
actively collaborate with firms to co-create customized consumption experiences. 461
The study results indicate that MO and service innovation directly and positively
influence customer advocacy (H5 and H6 are supported). This indicates that the retailer
strengthens MO and service innovation to increase customer advocacy. To become
successful customer advocates, retailers must first acknowledge the increasing forces of
MO and determine new approaches to aligning company actions with customer needs.
To build MO capability, retailers must stimulate market-oriented behaviors by
designing market-oriented processes (Kaur and Gupta, 2010). Creating successful
customer advocacy requires a diverse set of service innovation competencies. Numerous
companies have realized that engaging customers in innovation processes is a crucial
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step, which is consistent with Verhoef et al. (2010). The success of innovation depends on
its ability to address the current needs of customers more effectively than existing
offerings do or to address the latent needs of customers, which indicates the importance
of involving customers in developing innovations.

Managerial implications
Supermarket retailers can build a relationship and a quality perception with customers
by investing in customer dialogue. Information exchange is built on trust where the
parties endeavor to maintain a relationship. Businesses operating in an intensely
price-based competitive environment, dependent on high economies of scale and with
low levels of staff customer interactions invest in factors that are key elements of
relationship quality. Supermarket retailers are committed to experience quality and
trust-building between both parties and to information exchange between them.
Supermarket retailers can manage relationship quality with customers in a
cost-effective manner. Retailers can invest in gathering data and conducting analyses
that enable a close customer relationship to be established.
Engaging customers as active participants in the service creation and delivery
process of firms is beneficial to both firms and customers. Customer participation
enables firms to interact with customers to design offerings that meet unique and
changing needs. The supermarket retailers can begin to determine what is required of its
customers by clearly defining its expectation of customer roles, and how it might
develop approaches for training and rewarding its customers for effective participation.
The retailers can develop the strategy of stimulating customer participation to foster
customer-perceived value.
Customer advocacy can build stronger customer relationships by enabling retailers
to obtain new levels of trust and commitment, and by facilitating the development of
mutual transparency, dialogue and partnership with customers. Knowledge of each
customer, and the development of a relationship with them, facilitates a company in
becoming an excellent advocate for customer needs. The optimization of every
opportunity for staff to be helpful and supportive and to establish relationships with
 MRR customers requires employee training and empowerment. All communications with
39,4 customers should be designed to make them feel worthy and valued.
Retailers must develop and harness customer competencies as well as their own, and
establish new communication infrastructures to enable managers to become customer
advocates. Market-oriented retailers can design and plan strategies and actions directed
to create and satisfy customers through continual needs assessments, and implement
462 systems and processes that favor the diffusion of organizational knowledge.
Market-oriented retailers are required, along with a high degree of interfunctional
coordination, to enable retailers to implement resource- and ability-based actions that
create and offer value to consumers. Retailing innovations include those in the realm of
customer experience, such as innovations based on store atmosphere, expertise and
knowledge of front-end staff, information technology and media-enabled retailing
innovations. The service is likely to be seen less as a finished, immutable offering and
more as a process through which customers can provide input. Integrating customers
into a firms innovation processes improves service quality and market success.
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Limitations
Although this study has several limitations, we wish to draw attention to a point that we
believe is of fundamental concern to the advancement of research on this topic.
Specifically, we believe that a possible advantage of such a homogenous sample and
supermarket retailer is that it reduces the confounding effects of cultural differences and
socioeconomic factors. However, the collection of data related to consumers in other
industries and countries is necessary to test the robustness of our theoretical model. The
results of analyzing other industries and other countries may differ.
A cross-section of the information accurately describes the causal relationship and
movement changes. The questionnaire used in this study considers a specific period and
does not include the customer development phase. However, customers consider value
at various times; when they make purchase decisions or when they experience the
service outcome during or after use. In another period, the influence level potentially
varies. During various stages of the service period, distinct mechanisms produce
various benefits; therefore, the customer requires another type of management.

Opportunities for future research

Future studies should consider the extent to which the measures proposed in this study
are valid in various service industries, such as drugstores or banking industries, and the
modifications that must be made to the scale items among diverse samples and contexts.
Future studies could incorporate the effects of variables, such as quality expectation and
price perceptions, on customer loyalty and examine additional influences. Firms that
seek to obtain these advantages require an organizational culture oriented toward the
market that favors knowledge and learning regarding customers and offers effective
responses to customer needs.
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About the author

Ying-Pin Yeh is an Associate Professor at the Department of Business Administration, Yu Da
467
University of Science and Technology, Taiwan. His research subjects include supply chain
management, e-commerce and service management. Ying-Pin Yeh can be contacted at:
kent88@ms1.url.com.tw
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