Influence of Service Guarantee on Consumer Behavior in organized retail stores Kiran Sharma, Ph.D Assistant Professor - Marketing, K.J. Somaiya Institute of Management Studies and Research, Mumbai, India Mathew Varghese K.J. Somaiya Institute of Management Studies and Research, Mumbai, India Abstract: A service guarantee is a promise by a company to compensate the customer in some way if the defined level of service delivered is not met The purpose here is to allow retailers to understand stiff competition and increasing customer expectations by adopting proactive strategies to become more customer-driven and offer higher service quality. The key finding obtained is that service quality directly influences the customer visits to the retail store. A company with poor service quality may want to focus primarily on causes of existing quality gaps, whereas a firm with high quality standards but limited market presence and quality reputation may want to focus mainly on transforming potential customers into loyal ones. Key words: Service guarantee. Service quality. Retailing 1. Introduction The Indian Retail Industry is the largest among all the in- dustries, accounting for over 10 per cent of the India's GDP and around 8 per cent ofthe employ- ment. The Retail Industry in In- dia has come forth as one of the most d5miamic and fast paced industries with several players entering the market. But all of them have not yet tasted success because of the heavy initial in- vestments and pressure on mar- gins due to intense competition at all levels. The purpose of the study is to allow retailers to cope with stiff competition and in- creasing customer expectations, by adopting proactive strategies to become more customer-driven and offer higher service quality. Service quality is now regarded by many service organizations as one key means to achieve competitive advantage. Customer perception of su- perior service quality has been found to increase customer sat- isfaction, market share and profitability in organizations. In turn, customer satisfaction leads to increased customer loy- alty/retention and positive eco- nomic outcomes for the retailer. A popular tool for marketing and achieving higher service quality is the service guarantee. While product guarantees have exist- ed since the nineteenth century, the concept of service guarantee is relatively new. A service guar- antee is a promise by a company to compensate the customer in some way if the defined level of service delivered is not met. The intangibility and unpredictabil- ity of services generally cause consumers to perceive a higher risk associated with a service. With a good service guarantee, such perception can be reduced credibly by promising a mini- mum level of service quality that a customer can expect from the service counter. Thus the objective of this research is to consolidate our understanding of the working of guarantees, £ind to provide mainagers with a framework for assessing the tjrpes of benefits which the in- troduction of a service guaran- tee can have for their own busi- nesses. Previous research con- ducted on service guarantee has established that service guaran- tee improves the perceived ser- vice quality among the custom- ers. A large base of anecdotal evidence suggests that service guarantee improves business performance. The problems with services are Intangibility, Inseparability, Variability, and perishbility. Generally, custom- ers' perceived risk associated with the service encounter in- creases due to its unpredictable nature. A good service guar- antee, by managing customer expectations, can reduce such perceptions by credibly promis- ing high service quality. Wirtz (1998) proposed a model to show the designs of a well designed service guarantee on operations, service quality, and customer behavior and business perfor- mance. Hays and Hill (2001b) developed a model to depict how service guarantees affect 10 Kiran Sharma, Mathew Varghese