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THE IMPACT OF MARKETING MIX ON CUSTOMER SATISFACTION:
A CASE STUDY DERIVING CONSENSUS RANKINGSFROM BENCHMARKING
AMY POH AI LING
DISSERTATION SUBMITTED IN PARTIAL FULFILMENT FOR THE DEGREE OF
MASTER OF SCIENCE (QUALITY AND PRODUCTIVITY
IMPROVEMENT)
FACULTY OF SCIENCE AND TECHNOLOGY
NATIONAL UNIVERSITY OF MALAYSIA
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DECLARATION
I hereby declare that the work in this dissertation is my own except for quotations and
summaries which have been duly acknowledged.
16 April 2006 AMY POH AI LING
P 37435
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ACKNOWLEDGEMENT
I am deeply indebted to my supervisor Dr. Mohamad Nasir Saludin, for his constant
support and assistance for the duration of my thesis. He has been a continual font of ideas,
stimulating suggestions and encouragement helped me in all the time of research for and
writing of this thesis. I have learnt a lot about all aspects of working both as part of aresearch team and as part of the wider research community. It is valuable to have
someone close to the research activities as well as senior to the area.
I want to thank our Program Coordinator, Prof. Madya Dr. Ahmad Mahir Razali for
giving me permission to commence this thesis in the first instance and to do the necessary
research work. I want to thank for his help, support, interest and valuable hints.
Thanks to the lecturers in my courses that helped me in my studies and generously gave
me idea to carry on in this project.
To my research assistants, Chen Zhi Syin, Ivan Leong Jenn Jiang, Tan Ai Lee and Wong
Xiao Wei, they have also made invaluable contributions to this thesis. I spent months
working with them for my own good, and the result is that much of this work (Chapters 2,
3 and 4) was done in conjunction with them.
Last but not least, I would like to express my gratitude to all those who gave me the
possibility to complete this thesis.
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THE IMPACT OF MARKETING MIX ON CUSTOMER SATISFACTION:
A CASE STUDY DERIVING CONSENSUS RANKINGS
FROM BENCHMARKING
ABSTRACT
This paper takes a cautionary stance to the impact of marketing mix on customer
satisfaction, via a case study deriving consensus rankings from benchmarking on retail
stores in Malaysia. Field research was conducted in Tesco Stores (Malaysia) Sdn Bhd,
Carrefour of Magnificent Diagraph Sdn. Bhd., Giant of Dairy Farm International, and the
homegrown retail store, Mydin Mohamed Holdings Berhad. With increasing
globalization, local retailers find themselves having to compete with large foreign players
by targeting niche markets. We build a model in deriving consensus rankings from
benchmarking base on the marketing mix model, the traditional marketing paradigm,
embodied in the well-known Marketing Mix frame work proposed by Borden and
popularized as the 4Ps (Product, Price, Place, Promotion) by McCarthy. The marketing
mix is the lens through which the contemporary customer perceives value in retail stores
on 4Ps is examined. From the model, we analyze what is the best practice among the four
elements derived from a consensus ranking, a ranking method to identify the best in
class. The analysis will mainly depend on the outcome of what customer perceive
towards the four marketing tactics. This paper discusses the introduction and use of a
methodology for project ranking in Retail store and, in particular, illustrates the use of a
particular solution method called ELECTRE. A goal of this research was to introduce a
more objective methodology for the multicriteria outranking methodology as analternative and more sustainable approach for benchmarking analysis in marketing sector.
Keywords: Marketing mix, Customer satisfaction, Retailing, Benchmarking, Multi-
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CONTENT
Page
DECLARATION ii
ACKNOWLEDGEMENTS iii
ABSTRACT iv
CONTENTS v
FIGURE LIST x
ILLUSTRATION LIST xi
TABLE LIST xii
CHAPTER 1 INTRODUCTION 1
1.1 Research Description 1
1.2 Problem Statement 3
1.3 Background 5
1.3.1 Quantitative Marketing Research 5
1.4 Objectives of the Study 6
1.5 The Strength and Significance of the Study 7
1.6 Rationale of the Study 9
1.7 Specification of the Information Needed 10
1.8 Definition of Terms 11
1.8.1 Marketing Mix 11
1.8.2 Customer Satisfaction 11
1.8.3 Retailing 121.8.4 Benchmarking 12
1.8.5 Multi-criteria Decision Making 121.8.6 ELETRE method 13
1.9 Conclusion 13
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CHAPTER II LITERATURE REVIEW 14
2.1 Introduction 14
2.2 Marketing mix 15
2.2.1 Definition 162.2.2 Product Decisions 16
2.2.3 Price Decisions 16
2.2.4 Place (Distribution) Decisions 172.2.5 Promotion Decisions 17
2.2.6 Criticism on Marketing Mix Model 172.2.7 Limitations of the Marketing Mix Framework 19
2.3 Customer satisfaction 20
2.3.1 Measuring Customer Satisfaction 20
2.4 Benchmarking 22
2.4.1 Advantages of benchmarking 22
2.4.2 Competitive benchmarking 222.4.3 Advantage of the Benchmarking 23
2.4.4 Types of Benchmarking 24
2.5 Multi-Criteria Decision Models 28
2.6 Multi-Criteria Outranking Methodology - ELECTRE I 29
2.7 Retailing 31
2.7.1 Retail in Malaysia 312.7.2 Four types of retailers 332.7.3 Retail Activity in Malaysia: 34
From Shop house to Hypermarket
2.7.4 Hypermarkets in Malaysia see strong growth 34
2.8 Retail Stores Profile 35
2.8.1 Tesco Stores (Malaysia) Sdn Bhd. 35
2.8.2 Carrefour - Magnificent Diagraph Sdn.Bhd. 372.8.3 Giant - Dairy Farm International (DFI) 38
2.8.4 Mydin Mohamed Holdings Berhad 39
2.9 Conclusion 39
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CHAPTER III RESEARCH METHODOLOGY 40
3.1 Introduction 40
3.2 Recognisance Survey 40
3.3 Questionnaire Construction 42
3.4 Test-Retest Reliability Checks 43
3.4.1 Cronbach's (alpha) 443.4.2 Pre-Test 45
3.4.2.1 Reliability Statistics for Tesco 453.4.2.2 Reliability Statistics for Mydin 45
3.4.2.3 Reliability Statistics for Carrefour 453.4.2.4 Reliability Statistics for Giant 46
3.4.3 Overall Reliability Statistics 46
3.5 Sampling Methods and Sample Size 47
3.5.1 Simple Random Sampling 483.5.2 Determine Sample Size 49
Statistical Sampling Concepts
3.5.3 Assumptions for Simple Random Sampling 503.6 Data Collection 51
3.7 Illustration of Research Framework 52
3.8 Conclusion 55
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CHAPTER IV DATA ANALYSIS, INTERPRETATION 56
AND DISCUSSION
4.1 Introduction 57
4.2 Consensus Rankings from Benchmarking 59
4.3 Profile of Respondents 60
4.4 Descriptive Statistics 62
4.4.1 Marketing Mix Factor 63
4.4.1.1 Product Factor 634.4.1.2 Price Factor 644.4.1.3 Place/Distribution Factor 65
4.4.1.4 Promotion Factor 66
4.4.2 Marketing Mix Model, 4Ps 674.4.3 Motivating Factor 68
4.4.4 Cross tabulation Analysis 69
4.4.5 Descriptive Statistics Analysis of four retail stores 72
4.4.5.1 Tesco 724.4.5.2 Mydin 73
4.4.5.3 Carrefour 74
4.4.5.4 Giant 75
4.5 Benchmarking and Outranking-Satisfying Methodology 76
4.6 Benchmarking on Customer Satisfaction 83
4.6.1 Product Benchmarking 834.6.2 Price Benchmarking 844.6.3 Promotion Benchmarking 85
4.6.4 Place/Distribution Benchmarking 86
4.7 Conclusion 87
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CHAPTER V SUMMARY, CONCLUSION AND IMPLICATION 88
5.1 SWOT Analysis 88
5.1.1 Strength 88
5.1.2 Weakness 895.1.3 Opportunity 89
5.1.4 Threat 90
5.2 Conclusion 90
5.3 Directions for further research 91
5.4 Scope and Limitation of the Study 76
EXTENDED ABSTRACT - Technical Paper 92
REFERENCES 108
APPENDIX A. Authorization Letter for the Research 114
1. Tesco 1152. Carrefour 1173. Giant 1194. Mydin 121
B. Letter Request of Contribution 123
1. Letter Request of Contribution - Tesco 1242. Letter Request of Contribution - Carrefour 1253. Letter Request of Contribution Giant 1264. Letter Request of Contribution Mydin 137
C. Questionnaires 128
1.
Questionnaires - Tesco 1292. Questionnaires - Carrefour 1313. Questionnaires - Giant 1334. Questionnaires - Mydin 135
D. Major Retail Players in Malaysia 137
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ILLUSTRATION LIST
Illustration No. Page
Illustration 3.1 Selangor's Geographical Position 41
Illustration 3.2 Attribute 4Ps Retail Stores Mapping 52
Illustration 4.1 Graph of S from Table 4.27 (C* 75 percent) 82
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TABLE LIST
Table No. Page
Table 2.1 Types of Benchmarking 24
Table 2.2 Gross Domestic Product by Industry of Origin, 32
Malaysia 2000-2005
Table 3.1 Reliability Statistics Tesco 45
Table 3.2 Reliability Statistics Mydin 45
Table 3.3 Reliability Statistics Carrefour 45
Table 3.4 Reliability Statistics Giant 46
Table 3.5 Overall Reliability Statistics 46
Table 3.6 Level of Confidence 49
Table 4.1 Profile of Respondents Gender 60
Table 4.2 Profile of Respondents Ethnic 60
Table 4.3 Profile of Respondents Marital Status 60
Table 4.4 Profile of Respondents Age 61
Table 4.5 Profile of Respondents Shopping Frequency 61
Table 4.6 Descriptive Statistics of Product Factor 63
Table 4.7 Descriptive Statistics of Price Factor 64
Table 4.8 Descriptive Statistics of Place/Distribution Factor 65
Table 4.9 Descriptive Statistics of Promotion Factor 66
Table 4.10 Descriptive Statistics of Marketing Mix Model, 4Ps 67
Table 4.11 Motivating Factor 68Table 4.12 Motivating Factor * Gender Cross tabulation 69
Table 4.13 Motivating Factor * Ethnic Cross tabulation 69
Table 4.14 Motivating Factor * Marital Status Cross tabulation 70
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Table 4.20 Descriptive Statistics for Giant 75
Table 4.21 Multicriteria matrix (Electre I) 76
Table 4.22 Retail stores Positioning Table 76
Table 4.23 Retail Stores Ranking Table 77
Table 4.24 Multicriteria Matrix 78
Table 4.25 Matrix of Concordance Ssubsystems (Jc) 78
Table 4.26 Concordance Matrix 79
Table 4.27 Outcomes of Concordance Test 80
Table 4.28 Product Benchmarking towards customer satisfaction 83
Table 4.29 Price Benchmarking towards customer satisfaction 84
Table 4.30 Promotion Benchmarking towards customer satisfaction 85
Table 4.31 Place/Distribution Benchmarking towards 86
customer satisfaction
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CHAPTER 1
INTRODUCTION
1.1 RESEARCH DESCRIPTION
To excel and flaunt as a market leader in an ultramodern era and a globalize world where
we barely can catch up with the changes, the organizations must strive not only to
improve but also to commit into a continuous improvement climate, to harvest from its
marketing strategies especially marketing mix model, benchmarking and company
quality policy. Malaysia retail industry has been showing upward trends for quite some
time. Growth in this sector is particularly spurring by the changing buying patterns of
consumers and rising per capita income in the country.
This paper takes a cautionary stance to the impact of marketing mix on customer
satisfaction, via a case study deriving consensus rankings from benchmarking on
multinational retail stores in Malaysia. Field research will be conduct in Tesco Stores
(Malaysia) Sdn Bhd, Carrefour of Magnificent Diagraph Sdn. Bhd., Giant of Dairy Farm
International, and the homegrown retail store, Mydin Mohamed Holdings Berhad. Withincreasing globalization, local retailers find themselves having to compete with large
foreign players by targeting niche markets.
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Ranking and selecting projects is a relatively common, yet often difficult task. It is
complicated because there is usually more than one dimension for measuring the impact
of each project and more than one decision maker. This paper considers a real application
of project selection for the marketing mix element, using an approach called ELECTRE.
The ELECTRE method has several unique features not found in other solution methods;
these are the concepts of outranking and indifference and preference thresholds. The
ELECTRE method is explained and applied to the project selection problem using SPSS
(Statistical Package for the Social Sciences) application. Results show that ELECTRE
was well received by the decision makers and, importantly, provided sensible and
straightforward rankings.
Our contribution is to show the potential in Marketing mix model in deriving a consensus
ranking in benchmarking. According to the feedback from the respondents, we
dynamically rank out the best element to be benchmark.
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1.2 PROBLEM STATEMENT
The decision problem faced by management has been translated into our market research
problem in the form of questions that define the information that is required to make the
decision and how this information obtained. Thus, in this paper, the decision problem
regarding the marketing mix four Ps is translated into a research problem. The
corresponding research problem is to assess whether the market would accept the
consensus rankings derive from benchmarking result from the impact of marketing mix
on customer satisfaction using a multi-criteria decision making outranking methodology.
The project ranking problem is, like many decision problems, challenging for at least two
reasons. First, there is no single criterion in marketing mix model which adequately
captures the effect or impact of each element; in other words, it is a multiple criteria
problem. Second, there is no single decision maker; instead the project ranking requires a
consensus from a group of decision makers. (Henig and Buchanan and Buchanan et al.)
Henig and Buchanan and Buchanan et al. have argued that good decisions come from
good decision process and suggest that where possible the subjective and objective partsof the decision process should be separated. This separation enables the decision making
process to move away from being unnecessarily subjective and toward a more objective
orientation. A decision problem can be conceived as comprising two components; a set of
objectively defined alternatives and a set of subjectively defined criteria. The relationship
between the alternatives and the criteria is described using attributes, which are the
objective and measurable features of alternatives, attributes form the bridge between the
alternatives and the criteria. In Illustration 3.1 the alternative-attribute-criteria mappings
are illustrated.
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Although it is not clearly stated in Simon (1977), we think that one of the main functions
of review is learning and we believe that the best support that could be provided to
organizations would be for learning. In many cases, we have observed that decision is
treated as a one shot game whereas most decisions are more or less repetitive. Human
memory has some known biases and, for that reason, cannot accurately analysis decisions
ex post.
However, very little seems to have been done in this domain up to now. There are many
possibilities related to learning, review and ex post analysis. First, in some sense, a
decision maker can learn the effect of the assignment he has given to the weights.
Similarly, in outranking methods, the decision maker can learn to modify concordance
and discordance factors (Roy and Skalka, 1985; Vetschera, 1986).
Most of the failures arise because one does not take into account that a decision maker
makes a decision according to a set of items (e.g., his preferences) that does not intervene
explicitly in the decision making process itself but constrains it. This is what we call
contextual knowledge.
Let us also remind that, in the framework of decision making, due to the prominent look-
ahead component (Pomerol, 1995), the subjective and contextual data play an important
role. Moreover, due to the incompleteness of the model, especially during the evaluation
phases (Lvine and Pomerol, 1995), among the elements facilitating the cooperation are
explanations and contextual knowledge, and the need to make them explicit and shared
both by the system and the user (Brezillon and Abu-Hakima, 1995) and Brzillon (1996).
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1.3 BACKGROUND
For the multinational corporation (MNC), the pursuit of a global marketing strategy
encompassing a standardized marketing mix (M. Mix) strategy retains the promise of
greater opportunities in the borderless marketplace (Dunning, 1993; Kustin, 1993; Roth,
1995). These strategies also offer the opportunity to develop higher quality products by
obtaining greater efficiencies of production, through lower costs associated with
economies of scale (Levitt, 1983), outsourcing (Kotabe, 1990; Keegan & Green, 2003),
developing priority locations for manufacturing (Dunning, 1998), distribution
(Rosenbloom, Larsen, & Metha, 1997) and economies of scope (Yip, 1989).
Groonroos argues that the 4Ps framework has won an overwhelming acceptance among
marketing practitioners, noticing that . . . Marketing in practice has, to a large extent,
been turned into managing this toolbox . . . , a point shared by Goldsmith who argues
that the . . . time-honored concept of the 4Psthe Marketing Mix . . . is the heart of
the contemporary marketing management.
1.3.1 Quantitative Marketing Research
It is the application of quantitative research techniques to the field of marketing. It has
roots in both the positivist view of the world, and the modern marketing viewpoint that
marketing is an interactive process in which both the buyer and seller reach a satisfying
agreement on the "four P's" of marketing: Product, Price, Place (location) and Promotion.
As a social research method, it typically involves the construction of questionnaires and
scales. People who respond (respondents) are asked to complete the survey. Marketers
use the information so obtained to understand the needs of individuals in the marketplace,
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1.4 OBJECTIVES OF THE STUDY
The objectives of this research are defined clearly to ensure that the true decision problem
is address. This research has two main objectives:
1. To build an analytical connection between the customers satisfaction with the
international marketing mix model, the four Ps and benchmarking.
A. To determine products and services that meets the needs of customers.
B. To observe value of price the intended customers willing to pay.
C. To determine distribution channels the potential customer desire.
D. To analyze impact of the business's promotion have on customers.
E. To set a benchmark base on the marketing mix four Ps.
2. To create perceive value and generate a positive response.
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1.5 THE STRENGTH AND SIGNIFICANCE OF THE STUDY
Retailers need to generate a pool of information in order to introduce products and
services that create value in the mind of customer. The value of what the customer
perceived is a subjective one, the attributes that create value can not simply be deducted
from common knowledge. Rather, data must be collected and analyzed. The purpose of
this marketing research is to provide the facts and direction that managers need to make
their more important marketing decision.
The strength of this research lies on its specific focus on the connection between the
customers satisfaction with the international marketing mix model, the four Ps and
benchmarking. This research also underlines the impact of customer buying behavior
base on the company quality policy.
A survey of small business managers in Texas revealed that 84 percent of those who
conducted formal marketing research projects in the past three years felt that the
information obtained was worth the money spent. Overall, 58 percent said that they were
able to incorporate the research findings into their decision-making process. Only sixpercent reported that they were not able to implement the results. Consequently, when
small businesses do engage in marketing research the benefits usually exceed the costs.
This research enable the retail stores to gain insight into future industry trends that will
affect its business, get data and analysis in the most cost-effective and flexible way and
draw on essential information without being overwhelmed by unnecessary detail.
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It is anticipated that the findings of this research will harvest benefits as follow:
1. Elucidate a clear picture on the connection between the customers satisfaction
with the international marketing mix model, the four Ps.
2. The four Ps are the parameters that the marketing manager can control, subject to
the internal and external constraints of the marketing environment.
3. Manifest a clear picture on the connection between the customers satisfaction
with its company benchmarking strategy.
4. Develop the awareness on the impact of customer buying behavior base on the
company quality policy.
5. Gain insight into future industry trends that will affect its business.
6. Get data and analysis in the most cost-effective and flexible way and draw on
essential information without being overwhelmed by unnecessary detail.
7. Understand the customer.
8. Make value for customer.
9. Communicate the retail value to target market.
10.Help managers to look outside of themselves for solutions.
11.Contribute to the marketing theory (The marketing mix model, 4Ps).12.Adding literature review to the marketing area.
13.Benefit to the retail stores participated (Tesco, Mydin, Carrefour and Giant).
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1.6 RATIONALE OF THE STUDY
The Ministry of Finance expects the retail and wholesale sub-sector in Malaysia to
growth by 8% from 6.3% recorded for the first half of the year 2006. In concord with
this, the Malaysias GDP registered stronger-than-expected growth since 2003. A notable
development has been the changing nature of FDI flows.
Malaysias consumer lifestyle has been evolving and changing due in part to rising
affluence and education levels. High profile international retailers and the global mass
media have also played a hand in shaping consumer-buying behavior. Malaysians are
becoming more westernized, sophisticated, and cosmopolitan. Since the emergence of the
foreign-owned hypermarkets, Malaysians who live in urban areas have become
accustomed to shopping for groceries at hypermarkets and supermarkets. The Malaysian
retail scene is gearing up for intense competition with more new players and expansion
plans undertaken by foreign players.
As consumers become more cautious with their spending, retailers have had to become
extremely price-competitive. The ongoing price war among major retailers continues tohave an adverse effect on the small retailers, who may not be able to compete at lower
prices. Company has become more aware of their marketing strategy and started
benchmarking to measures and compares all its functions, systems and practices against
strong competitors, identifying quality gaps in the organization, and striving to achieve
competitive advantage locally and globally. However, it is note that the intense
competition posed by foreign players will provide additional impetus for local retailers to
leverage on retail technology to better understand consumer purchasing behavior,
streamline operational procedures and to enhance efficiency.
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1.7 SPECIFICATION OF THE INFORMATION NEEDED
The research identified the following factors as part of the choice criteria:
Literature reviews from journal on the best practice for ranking in benchmarking were
done. Further study has to be made on the ranking methodology to determine the best
methodology to apply in this research project.
Findings to gain a better understanding on the four selected retail stores: Tesco Stores
(Malaysia) Sdn Bhd, Carrefour of Magnificent Diagraph Sdn. Bhd., Giant of Dairy Farm
International, and the homegrown retail store, Mydin Mohamed Holdings Berhad.
Determine the element of four Ps to be evaluate such as marketing mix criteria, quality of
merchandise, variety and assortment of merchandise, service of store personnel, prices,
convenience of location, layout of store, credit and billing policy, retail store internal
benchmarking, customer satisfaction, company quality policy and customer buying
behavior.
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1.8 DEFINITION OF TERMS
1.8.1 Marketing Mix
The marketing mix is a model of creating and implementing marketing strategies. It
stresses the blending of various factors in such a way that both organizational and
consumer objectives are attained. The elements are the marketing tactics, also known as
the 'four Ps', the marketing mix elements areprice,place,product,andpromotion. When
blending the mix elements, marketers must consider their target market. They must
understand the wants and needs of the market customer then use these mix elements in
constructing and formulating appropriate marketing strategies andplansthat will satisfy
these wants. These four P's are the parameters that the marketing manager can control,
subject to the internal and external constraints of the marketing environment. The goal is
to make decisions that center the four P's on the customers in the target market in order to
create perceived value and generate a positive response.
1.8.2 Customer Satisfaction
Customer satisfaction is a perception. It is also a question of degree. Providing quality
products and services is all about meeting customer requirements. Customer satisfaction,
a business term, is a measure of how products and services supplied by a company meet
or surpass customer expectation. It is seen as a key performance indicator within business
and is part of the four perspectives of a Balanced Scorecard. In a competitive marketplace
where businesses compete for customers, customer satisfaction is seen as a key
differentiator and increasingly has become a key element of business strategy. The four
key steps for successful marketing are identified as understanding the customer, making
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1.8.3 Retailing
Retailing refers to all activities directly related to the selling of small quantities of goods
and services, at a profit, to the ultimate customers for personal consumption and non-
business use (Mohd-Said, 1990). Retail trading encompasses a wide variety of goods and
services, ranging from household items to food and accessories. Guy (1980) for instance
has categorized retail trade into three groups: (a) convenience goods which include
groceries and daily provisions; (b) shopping or comparison goods which refer to
relatively more expensive items bought at less regular intervals; and (c) specialty goods
which are unique items that appeal to customers of the higher income level.
1.8.4 Benchmarking
Benchmarking, also known as "best practice benchmarking" or "process benchmarking"
is a process used in management and particularly strategic management, in which
organizations evaluate various aspects of their processes in relation to best practice,
usually within own sector. This then allows organizations to develop plans on how to
adopt such best practice, usually with the aim of increasing some aspect of performance.Benchmarking may be a one-off event, but is often treated as a continuous process in
which organizations continually seek to challenge their practices.
1.8.5 Multi-criteria Decision Making
The choice of destination in relocation benchmark for marketing element for retailing
management strategy, either price, product, place/distribution and promotion, can be
performed using multiple criteria decision model (MCDM). Multiple Criteria Decision
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1.8.6 ELETRE method
The simplest method of the ELECTRE family is ELECTRE I. The ELECTRE
methodology is based on the concordance and discordance indices defined as follows.
The ELECTRE I method is used to construct a partial ranking and choose a set of
promising alternatives. ELECTRE II is used for ranking the alternatives. In ELECTRE III
an outranking degree is established, representing an outranking creditability between two
alternatives which makes this method more sophisticated and, of course, more
complicated and difficult to interpret. In order to track the consensus ranking, the project
itself has been broken into a number of four phases, the respondents collection was done
in four different retail stores.
1.9 CONCLUSION
The information generated for this survey is use to adjust practices within the
organization to continuously improve the retail stores products, pricing strategy,
promotion strategy, place and distribution strategy, services, and processes base on the
marketing mix model in order to more completely satisfy its customers. Literaturereviews from journal on the best practice for ranking in benchmarking were done. Further
study has to be made on the ranking methodology to determine the best methodology to
apply in this research project.
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CHAPTER II
LITERATURE REVIEW
2.1 INTRODUCTION
Knowledge is cumulative: every piece of research will contribute another piece to it. That
is why it is important to commence all research with a review of the related literature or
research, and to determine whether any data sources exist already that can be brought to
bear on the problem at hand. This is also referred to as secondary research. Just as each
study relies on earlier work; it will provide a basis for future work by other researchers.
This stage involves a literature review on the status study of the international marketing
mix model, customers satisfaction and the benchmarking methods. This stage also coversthe background and recent reports of the selected retail stores to be survey such as Tesco
Stores (Malaysia) Sdn Bhd, Carrefour of Magnificent Diagraph Sdn. Bhd., Giant of Dairy
Farm International, and the homegrown retail store, Mydin Mohamed Holdings Berhad.
According to the 2005 Global Retail Development Index TM, Malaysias GDP growth
has recovered from the 2001 economic slowdown and stands at 6 percent. Its retail
market remains fragmented, which helped boost it up one notch to the 18th position.
Retail sales have grown up from 6 to 8 percent over the past two years and are expected
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2.2 MARKETING MIX
The term "marketing mix" became popularized after Neil H. Borden published his 1964
article, The Concept of the Marketing Mix. Borden began using the term in his teaching
in the late 1940's after James Culliton had described the marketing manager as a "mixer
of ingredients". The ingredients in Borden's marketing mix included product planning,
pricing, branding, distribution channels, personal selling, advertising, promotions,
packaging, display, servicing, physical handling, and fact finding and analysis. E. Jerome
McCarthy later grouped these ingredients into the four categories that today are known as
the 4 P's of marketing.
The marketing mix is a model of creating and implementing marketing strategies. It
stresses the blending of various factors in such a way that both organizational and
consumer objectives are attained. The elements are the marketing tactics, also known as
the 'four Ps', the marketing mix elements are price,place,product,andpromotion. The
model was developed by Neil Borden (Borden, N. 1964) who first started using the
phrase in 1949. When blending the mix elements, marketers must consider their target
market. They must understand the wants and needs of the market customer then use thesemix elements in constructing and formulating appropriate marketing strategies andplans
that will satisfy these wants.
Figure 2.1 The Marketing Mix Model
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2.2.1 Definition
These four P's are the parameters that the marketing manager can control, subject to the
internal and external constraints of the marketing environment. The goal is to make
decisions that center the four P's on the customers in the target market in order to create
perceived value and generate a positive response.
As Pedhazur and Schmelkin (1991, p. 164) have noted,
Even for people who speak the same language, words have different meanings,
depending on, among other things, who speaks, to whom, in what context, at what time,
and with what purpose . . . . The point is that the different terms reflect different outlooks,
values, attitudes, and the like.
2.2.2 Product Decisions
The term "product" refers to tangible, physical products as well as services. Although this
typically refers to a physical product, it has been expanded to include services offered by
a service organization. The specification of the product is one of the variables that a
marketer has at his/her control. For example, the product can include certain colors,
certain scents, and certain features. Lastly, in the broadest sense when a consumer
purchases a product it also includes the post-sales relationship with the company. The
post-sales relationship can include customer service and any warranty.
2.2.3 Price Decisions
The price is the amount paid for a product. In some cases, especially in business-to-
business marketing this can also include the total cost of ownership (TCO). Total cost of
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2.2.4 Place (Distribution) Decisions
Place represents the location where a product can be purchased. It is often referred to as
the distribution channel. It can include any physical store as well as virtual stores on the
Internet. Distribution is about getting the products to the customer.
2.2.5 Promotion Decisions
In the context of the marketing mix, promotion represents the various aspects of
marketing communication, that is, the communication of information about the product
with the goal of generating a positive customer response. Promotion represents all of the
communications that a marketer may insert into the marketplace. This can include TV,
radio, and print advertising, as well as coupons, direct mail, billboards, and onlineadvertising. One of the less well-defined areas in promotion is the role of a human sales
force. On the other hand, consumers may rather purchase the product only when sold
through the support of a known salesperson. In this case, the service, perceived or real
can be defined as a feature of the product.
2.2.6 Criticism on Marketing Mix Model
Peter Doyle (Doyle, 2000) claims that the marketing mix approach leads to unprofitable
decisions because it is not grounded in financial objectives such as increasing shareholder
value. According to Doyle it has never been clear what criteria to use in determining an
optimum marketing mix. Objectives such as providing solutions for customers at low cost
have not generated adequate profit margins. Doyle claims that developing marketing
based objectives while ignoring profitability has resulted in the dot-com crash and the
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Against Kotler's four P's, some claim that they are too strongly oriented towards
consumer markets and do not offer an appropriate model for industrial product
marketing. Others claim it has too strong of a product market perspective and is not
appropriate for the marketing of services.
Since 1960, the model has broadened beyond its origins in economic theory to encompass
aspects of sociology and cognitive psychology (Hakansson and Waluszewski, 2005).
Indeed, criticism of the 4Ps has centered on its inception in the production and supply
context of the 1950s, and its appropriateness to later twentieth century marketing
functions. Consequently, it has been extended with a further 3Ps of participants, process
and physical evidence (Booms and Bitner, 1981), and an eighth P for personalisation, to
reflect a services marketing orientation (Goldsmith, 1999). The growing importance of
the political environment led Kotler (1984) to propose two additional Ps of politicalpower and PR to the marketing mix.
As marketings focus has moved to consumers and consumption, it has arguably
broadened into an integrated and networked approach to organisational resources
(Brownlie and Saren, 1992). This has accompanied the decline of mass markets and
growth of specialisation, supported by database management and customer relationship
marketing principles, which evolved into the one-to-one marketing opportunities
developed on the internet.
In spite of its deficiencies, the 4Ps remain a staple of the marketing mix. The subsequent
Ps has yet to overcome a consensus about their eligibility and agreement over their
practical application.
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2.2.7 Limitations of the Marketing Mix Framework
The marketing mix framework was particularly useful in the early days of the marketing
concept when physical products represented a larger portion of the economy. Today, with
marketing more integrated into organizations and with a wider variety of products and
markets, some authors have attempted to extend its usefulness by proposing a fifth P,
such as packaging, people, process, etc.
Today however, the marketing mix most commonly remains based on the 4 P's. Despite
its limitations and perhaps because of its simplicity, the use of this framework remains
strong and many marketing textbooks have been organized around it.
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2.3 CUSTOMER SATISFACTION
Customer satisfaction is a perception. It is also a question of degree. Providing quality
products and services is all about meeting customer requirements. Customer satisfaction,
a business term, is a measure of how products and services supplied by a company meet
or surpass customer expectation. It is seen as a key performance indicator within business
and is part of the four perspectives of a Balanced Scorecard.
In a competitive marketplace where businesses compete for customers, customer
satisfaction is seen as a key differentiator and increasingly has become a key element of
business strategy. The four key steps for successful marketing are identified as
understanding the customer, making value for customer, communicating the value to
target market, and making it easy for the customer to buy.
2.3.2 Measuring Customer Satisfaction
Organizations are increasingly interested in retaining existing customers while targeting
non-customers; measuring customer satisfaction provides an indication of how successful
the organization is at providing products and/or services to the marketplace.
Customer satisfaction is an ambiguous and abstract concept and the actual manifestation
of the state of satisfaction will vary from person to person and product/service to
product/service. The state of satisfaction depends on a number of both psychological and
physical variables which correlate with satisfaction behaviors such as return and
recommend rate. The level of satisfaction can also vary depending on other options the
customer may have and other products against which the customer can compare the
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2.4 BENCHMARKING
Benchmarking, also known as "best practice benchmarking" or "process benchmarking"
is a process used in management and particularly strategic management, in which
organizations evaluate various aspects of their processes in relation to best practice,
usually within own sector. This then allows organizations to develop plans on how to
adopt such best practice, usually with the aim of increasing some aspect of performance.
Benchmarking may be a one-off event, but is often treated as a continuous process in
which organizations continually seek to challenge their practices.
2.4.1 Advantages of benchmarking
Benchmarking is a powerful management tool because it overcomes "paradigm
blindness." Paradigm Blindness can be summed up as the mode of thinking, "The way we
do it is the best because this is the way we've always done it." Benchmarking opens
organizations to new methods, ideas and tools to improve their effectiveness. It helps
crack through resistance to change by demonstrating other methods of solving problems
than the one currently employed, and demonstrating that they work, because they are
being used by others.
2.4.2 Competitive benchmarking
Some authors call benchmarking "best practices benchmarking" or "process
benchmarking". This is to distinguish it from what they call "competitive benchmarking".
Competitive benchmarking is used in competitor analysis. When researching your direct
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2.4.3 Advantage of the Benchmarking
1. A better understanding of the waits (expectations) of the customer because it is:
based on the reality of the market estimated in an objectivist way.
2. A better economic planning of the purposes and the objectives to achieve in the
company because they are: centered on what takes place outside controlled and
mastered.
3. A better increase of the productivity: resolution of the real problems
Understanding of the processes and what they produce.
4. Better current practices Search for the change many decisions practices of break.
5. A better competitiveness thanks to: a solid knowledge of the competition a strong
implication of the staff new ideas on practices and tried techniques.
Benchmarking has consequences which are beyond the process itself: it reforms all the
levels of the company; modifies the process of manufacture of the product leads(drives);
also reforms the hierarchical organization of the company, the product itself, and the state
of mind of the employees.
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2.4.4 Types of Benchmarking
There are a number of different types of benchmarking, as summarized below:
Table 2.1 Types of Benchmarking
Type Description Most Appropriate for
the Following Purposes
Strategic
Benchmarking
Where businesses need to improve overall
performance by examining the long-term
strategies and general approaches that
have enabled high-performers to succeed.
It involves considering high level aspects
such as core competencies, developingnew products and services and improving
capabilities for dealing with changes in
the external environment. Changes
resulting from this type of benchmarking
may be difficult to implement and take a
long time to materialize.
Re-aligning business
strategies that have
become inappropriate.
Performance or
Competitive
Benchmarking
Businesses consider their position in
relation to performance characteristics of
key products and services. Benchmarking
partners are drawn from the same sector.
This type of analysis is often undertaken
through trade associations or third parties
Assessing relative level
of performance in key
areas or activities in
comparison with others
in the same sector and
finding ways of closing
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Process
Benchmarking
Focuses on improving specific critical
processes and operations. Benchmarkingpartners are sought from best practice
organizations that perform similar work or
deliver similar services. Process
benchmarking invariably involves
producing process maps to facilitate
comparison and analysis. This type of
benchmarking often results in short term
benefits.
Achieving
improvements in keyprocesses to obtain
quick benefits.
Functional
Benchmarking
Businesses look to benchmark with
partners drawn from different business
sectors or areas of activity to find ways of
improving similar functions or work
processes. This sort of benchmarking can
lead to innovation and dramatic
improvements.
Improving activities or
services for which
counterparts do not
exist.
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International
Benchmarking
Best practitioners are identified and
analyzed elsewhere in the world, perhapsbecause there are too few benchmarking
partners within the same country to
produce valid results. Globalization and
advances in information technology are
increasing opportunities for international
projects. However, these can take more
time and resources to set up and
implement and the results may need
careful analysis due to national
differences.
Where the aim is to
achieve world classstatus or simply because
there are insufficient
national" businesses
against which to
benchmark.
Benchmarking is the concept of discovering what is the best performance being achieved,
whether in your company, by a competitor, or by an entirely different industry.
Benchmarking is a continuous process whereby an organization measures and compares
all its functions, systems and practices against strong competitors, identifying quality
gaps in the organization, and striving to achieve competitive advantage locally and
globally.
Another type of benchmarking is ranking method to identify the best in class that we
practiced in this project. This method shall be discussed in chapter IV.
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2.5 MULTI-CRITERIA DECISION MODELS
The choice of destination in relocation benchmark for marketing element for retailing
management strategy, either price, product, place/distribution and promotion, can be
performed using multiple criteria decision model (MCDM). Multiple Criteria Decision
Model attempt to identify all alternatives and to quantify characteristics of these
alternativesattributesin order to rank them in some consistent manner. MCDM can
be divided into those that allow tradeoffs between attribute levels compensatory
decision rules and those that do not, and those that explicitly incorporate risk, or
uncertainty, and those that do not.
For example, a simple ranking of alternatives in descending order by level of attributes
(elimination by aspects, Holsapple and Whinston 1996) addresses neither tradeoffs norrisk. A standard method for addressing multi-criteria decision problems using
compensatory decision rules is via value functions (Winston 1994). If it can be shown
that the preferences of the decision maker satisfy a number of standard assumptions,
including transitivity, preferential independence, difference independence and tradeoff
independence, then we may define an additive value function to be applied to all
alternatives i and thus generate the ranking we seek. Each single-attribute value function
may be defined by discussions with the decision maker to translate attribute levels to a
uniform scale; weights can be assessed using the swing weighting method or by direct
tradeoffs.
Gardener and Armstrong-Wright (2000) have applied this method to employee selection
using a 0 to 3 scale value function and group attribute means for each weight. Multi-
attribute utility theory, a MCDM that explicitly models individual utility functions, a
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2.6 MULTICRITERIA OUTRANKING METHODOLOGY - ELECTRE I
The simplest method of the ELECTRE family is ELECTRE I. (Michael P. Johnson,2002)
The ELECTRE methodology is based on the concordance and discordance indices
defined as follows. We start from the data of the decision matrix, and assume here that
the sum of the weights of all criteria equals to 1. For an ordered pair of alternatives
(jA , kA ), the concordance index is the sum of all the weights for those criteria
where the performance score of
jkC
jA is least as high as that of kA , i.e.
jkC =:
j ki
Wi
a a , j, k = 1, , n, j k
Clearly, the concordance index lies between 0 and 1. The computation of the discordance
index is a bit more complicated: =0 if > , =1,...,m, i.e. the discordance
index is zero if
jkd jkd ija ika i
jA performs better than kA on all criteria,. Otherwise,
jkd = 1,...,maxi m=1,..., 1,...,
max min
ik ij
ij ij
i m i m
a aa a
= =
, j, k = 1, , n, j k
I.e. for each criterion where kA outperforms jA , the ratio is calculated between the
difference in performance level betweenkA and jA the maximum difference in score
on the criterion concerned between any pair of alternatives. The maximum of these ratios
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This outranking defines a partial ranking on the set of alternatives. Consider the set of all
alternatives that outrank at least one other alternative and are themselves not outranked.
This set contains the promising alternatives for this decision problem. Interactively
changing the level thresholds, we also can change the size of this set.
The ELECTRE I method is used to construct a partial ranking and choose a set of
promising alternatives. ELECTRE II is used for ranking the alternatives. In ELECTRE III
an outranking degree is established, representing an outranking creditability between two
alternatives which makes this method more sophisticated (and, of course, more
complicated and difficult to interpret).
In order to track the consensus ranking, the project itself has been broken into a number
of four phases, the respondents collection was done in four different retail stores.
The details of each phase will be covered in more detail in the following sections, with
results included for those phases which are now complete.
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2.7 RETAILING
Retailing refers to all activities directly related to the selling of small quantities of goods
and services, at a profit, to the ultimate customers for personal consumption and non-
business use (Mohd-Said, 1990).
Retail trading encompasses a wide variety of goods and services, ranging from household
items to food and accessories. Literature has highlighted many attempts to classify the
retail trade. Guy (1980) for instance has categorized retail trade into three groups: (a)
convenience goods which include groceries and daily provisions; (b) shopping or
comparison goods which refer to relatively more expensive items bought at less regular
intervals; and (c) specialty goods which are unique items that appeal to customers of the
higher income level.
Other scholars (Ahmad et. al., 1996; Nik Yacob et. al., 1992; Cox, 1988) have divided
retail trade into small-scale and large-scale establishments. The small-scale retailers
include the single-propriety stores and non-store operators such as hawkers, peddlers and
market stalls. Whilst the large-scale retailers include superstore, discount store,
department store, supermarket, hypermarket and shopping center.
2.7.1 Retail in Malaysia
Retail has been one of the most active sub-sectors in the Malaysian economy. Retail is
the second biggest contributor to the national GDP, contributing RM31, 081 million
(AUD14, 603 million) in 2000 (Eighth Malaysia Plan, 2001).
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Refer to Table 2.2. Higher disposable income, a more affluent society as well as more
sophisticated tastes of the consumers have led to a rapid growth of the sector. This sub-
sector as a whole contributed 14.9% to the national income in 2000, rising from 11.1% in
1999. About 1.6 million people were employed in this sector in 2000 or 17.1% of total
employment in Malaysia. This figure is estimated to increase to 1.9 million (17.3%) in
2005. (Eighth Malaysia Plan, 2001).
Table 2.2 Gross Domestic Product by Industry of Origin, Malaysia 2000-2005
By this standard it is anticipated that retail trade will continue to be a prominent
economic activity in the country. All these efforts have accentuated the importance of the
retail trade in Malaysia.
Retail in Malaysia is wide-ranging; from department stores, supermarkets and mini
markets, specialty shops, convenience stores, provision stores, pharmacies, medical halls,
direct sale, wet market stalls to pavement shops and petrol kiosks (Seventh Malaysia Plan,
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2.7.2 Four types of retailers
Four major categories of retailing can be found operating concurrently in large cities in
Malaysia and in the Southeast Asia region. These four types of retailers include:
1. The informal sector, which includes hawkers and peddlers selling fresh produce,
cooked food and daily provisions in the designated morning market, wholesale
market and enclosed market.
2. The small-scale, single-propriety shops along major roads in town areas. These
premises are usually double or three-storey pre-war shop houses with retail activities
on the ground floor and dwelling units in the upper floors. Examples of such trading
include jewellery, spices and religious paraphernalia, clothing apparel, handbags,
personal items and medicinal herbs and coffee shops.
3. The large-scale department stores and supermarkets built in the late 1970s and early
1980s, generally in modern architectural style.
4. The super regional shopping centers built in the late 1980s and beyond, which feature
several department stores and small-scale shops located under one roof. Such
commercial complexes also provide for leisure and social activities along with
shopping. The architectural styles of these modern shopping complexes, with glass
frames, atrium and perspecs roof, stood in contrast to the existing traditional
architectural landscape in the immediate surrounding area.
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2.7.3 Retail Activity in Malaysia: From Shop house to Hypermarket
Retailing is a subset of the commercial sector that has contributed significantly toMalaysia GDP. Similar to the situation in many Southeast Asian countries, retailing of
various scales, co-exist side by side. This is especially true in the highly urbanized areas
where small-scale retailing co-exist with the large-scale retailing. In the states of
Selangor and Johor, the small-scale retailing in the form of shop houses still continues to
grow in spite of the advancing hypermarkets.
On the other hand, in Federal Territory Kuala Lumpur, the retail trend seems to be
changing from shop houses to large-scale retailing like supermarkets and hypermarkets.
Shopping complexes and hypermarkets have outgrown shop houses in recent years in F.T.
Kuala Lumpur. However, there are still places in Malaysia that is experiencing growth in,
both small-scale retailing and hypermarkets; an example is the state of Penang where
shop houses and hypermarket are achieving high growth.
2.7.4 Hypermarkets in Malaysia See Strong Growth
Malaysian consumers are increasingly making their everyday purchases through
hypermarkets, attracted by their wide range of products at low prices. Furthermore, small
retailers and street vendors use hypermarkets to buy their stock, which they then sell on
to end consumers. With restrictions implemented by the government on the locations of
these large outlets, hypermarkets and supermarkets in Malaysia are deepening their
penetration of areas outside the major cities.
While this is appealing to a growing number of Malaysians as they enjoy easier access to
these stores there are concerns that these giant outlets will have an adverse effect on the
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2.8 RETAIL STORES PROFILE
The company has become more aware of their marketing strategy and started
benchmarking to measures, and compares all its functions, systems and practices against
strong competitors, identifying quality gaps in the organization, and striving to achieve
competitive advantage locally and globally. The world is getting more challenging and
more competitive day by day. We have to look around us in order to reflect objectively
on our achievements.
2.8.1 Tesco Stores (Malaysia) Sdn Bhd
Tesco Stores (Malaysia) Sdn Bhd was incepted on 29 Nov 2001, as a strategic alliance
with local conglomerate, Sime Darby Berhad of which the latter holds 30% of total
shares. Malaysia was selected as the next market of entry because of its growing
economy with political stability, market size & GDP (gross domestic product) and its
ability to grow. Tesco has a corporate-wide policy for corporate social responsibility,
backed by key programs to support the local people and the communities. Tesco has a
strong own brand strategy, offering a three-tier system, designed to provide an own brand
choice for a wide range of consumers. There are three ranges of Tesco branded products.
Tesco offers various lower prices, wider products range, better promotions, more events
and in-store activities, contests and lots more.
As part of Tescos strategy of combining world class retailing approach with a local focus
in Malaysia, Tesco believes in maximizing the benefits of local sourcing. Among the key
steps undertaken are:
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- Developing and assisting local suppliers to supply products under the Tesco brand
to Tesco hypermarkets, locally and internationally.
- Creating retail opportunities for local businesses through rental of retail areas
such as shop lot, food court, temporary kiosks, etc.
- Working with State Government, FAMA, and a subsidiary of Ministry of
Agriculture, to maximize local sourcing opportunities.
- Creating opportunities for smaller businesses allocating 30% of food court
space for Bumiputra suppliers.
Part of Tescos commitment as a responsible corporate citizen is to help uplift the
standard of the retailing industry in Malaysia. In July 2002, Tesco launched its
Management Trainee Program which covered both theory and on-the-job training
sessions over a period of eight months. This is the longest and more comprehensive in the
local retail industry.
Customer service is at the top level of company. The company mission statement: No
one tries harder for customers. They should understand customers better than anyone, be
energetic, be innovative and be first for customers, use their strengths to deliver
unbeatable value to the customers and look after their people so they can look after the
customers. The other is Treat people how I like to be treated.
All retailers, there's one team, that is The Tesco Team. They trust and respect each other,
strive to do their very best, give support to each other and praise more than criticize, ask
more than tell and share knowledge so that it can be used, enjoy work, celebrate success
and learn from experience.
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2.8.2 Carrefour - Magnificent Diagraph Sdn.Bhd.
Carrefour is recognized as the pioneer of the hypermarket concept, which is simply best
bargains, better service, and better choice. It got four leading format that are
hypermarket, supermarket, hard discount and convenience store. The group operates,
directly or via franchise. In Malaysia, Carrefour operates under the registered name of
Magnificent Diagraph Sdn.Bhd. Carrefour Malaysia is known for its discount prices and
100% refund policy that protects the consumers right against defective goods and itslowest price guarantee.
Carrefours mission in Malaysia is based on customer satisfaction. All activities in
Carrefour are geared towards meeting the changing demands of the customers in terms of
products selection and quality at the most competitive prices. In order to be able to
achieve low prices, Carrefour sources a major part of its products locally, with imports
supplementing the product range, purchases in bulk directly from suppliers and
dispensing with the middle men and operates on a self-service basis. Through these
means and by keeping its overheads low, Carrefour is able to pass on saving to the
customers, without compromising on quality and shopping comfort.
With operations in 30 countries, Carrefour is the worlds second largest retail group.
Carrefour has also been present in the Americas since 1975 and in Asia since 1989. This
success stems from its ability to adapt its strategy to fit local markets and to make
globalization an opportunity for progress.
Carrefour is a leading global retailer of food products (accounting for some 80% of
turnover) as well as non-food products (accounting for some 20% of turnover). Its market
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2 8 3 Gi t D i F I t ti l (DFI)
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2.8.3 Giant - Dairy Farm International (DFI)
Giant is owned by Dairy Farm International (DFI). The story of Dairy Farm dates back
to 19th
century Hong Kong. It was from a dairy farm to Asia's leading retailer. Dairy
Farm International Holdings Limited is a retail company in Asia, with a legal base in
Bermuda.
Owned by Dairy Farm International (DFI), Giant is a 60-year old Malaysian brand builton its ability to deliver low prices everyday to consumers. The Giant store brand was
founded by the Teng family as a simple grocery store in one of the suburbs of Kuala
Lumpurin 1944. Its mission was to offer a wide variety of products at the lowest possible
prices. As its reputation grew, so did its business. Dairy Farm, which acquired Giant in
1999, recognized that the key to Giant's success had been its ability to continuously offer
value for money products. It retained this core principle even as it began transforming
Giant into a national and international brand. Giant hypermarkets offer a wide range of
local merchandise, such as fresh local fruits, vegetables, and seafood within a wet market
environment.
In Malaysia, the name Giant has become synonymous with everyday low prices, big
variety and great value. This has been underscored by the Shoppers Trend Survey, which
showed that Giant was perceived as the cheapest place in Malaysia to shop for everyday
groceries. Towards to the cause of the consumer, Giant has thrown its weight fully behind
the Malaysian Government campaign to create smart consumers of Malaysians by
continuously offering Everyday Low Prices, Big Variety and Great Value. The
Government has named many of Giant stores as its low price partner. This has been
underscored by the Shoppers Trend Survey, which showed that Giant was perceived as
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2 8 4 M di M h d H ldi B h d
http://en.wikipedia.org/wiki/Retailhttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/Bermudahttp://en.wikipedia.org/wiki/Kuala_Lumpurhttp://en.wikipedia.org/wiki/Kuala_Lumpurhttp://en.wikipedia.org/wiki/1944http://en.wikipedia.org/wiki/1999http://en.wikipedia.org/wiki/1999http://en.wikipedia.org/wiki/1944http://en.wikipedia.org/wiki/Kuala_Lumpurhttp://en.wikipedia.org/wiki/Kuala_Lumpurhttp://en.wikipedia.org/wiki/Bermudahttp://en.wikipedia.org/wiki/Asiahttp://en.wikipedia.org/wiki/Retail8/14/2019 The Impact of Marketing Mix on Customer Satisfaction a Case Study Deriving Consensus Rankings From B
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2.8.4 Mydin Mohamed Holdings Berhad
Founded in 1957, Mydin Mohamed Holdings Berhad is the largest homegrown wholesale
emporium in Malaysia, employing 2,800 staff across its 20 branches nationwide. The
"Mydin" name today is well established among Malaysians as well as foreigners
particularly in the East Coast and Klang Valley. With the combination concept of
supermarket and large general merchandise store, Mydin is also known as the only
wholesale emporium that offers full range of religious needs for Muslim customer suchas prayer mats and perfume oil.
The philosophy of "Customer First" has always been the guiding principle for Mydin
staff of all levels at all times. Mydin is also committed in providing the best value for
money for the best assortment of goods, excellent service and customer convenience by
opening more outlets at strategic places. In 2004 itself, Mydin opened 2 new Mydin Mart
branches through franchising in Kajang and Seremban. Mydin is looking forward to
expand branches nationwide in order to cater to the growing number of customers.
Mydin aims to be the leading local wholesale and Retail Company by providing the best
value for money for the best assortment of goods, by providing service to our customers
and by striving for excellence. Mydin also aims to inspire more Malaysians for open
outlets with their own proven success formula.
2.9 CONCLUSION
In tune with the Governments aim to establish Malaysia as a prime regional shopping
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CHAPTER 3
RESEARCH METHODOLOGY
3.1 INTRODUCTION
The research methods must be appropriate to the objectives of the study. This research
was carried out via exploratory research which allows me to familiarize myself with the
problem or concept to be studied, followed by descriptive-causal research to determine
which variable might be causing a certain behavior. The final stage will be a conclusive
research to provide information that is useful in reaching conclusions or decision-making
and a reliable or representative picture of the population through the use of a valid
research instrument.
3.2 RECOGNISANCE SURVEY
Based on findings in earlier stage, a recognisance survey was carried out in order to
locate the most suitable site for the research. The section take into consideration sites in
Selangor area. Selangor is Malaysia's most populous state, with the nation's biggest
conurbation, the Klang Valley. Selangor's geographical position in the center of
Peninsular Malaysia contributed to the state's rapid development as Malaysia's
transportation and industrial hub. Selangor has a population of 4,736,100 (2005 estimate);
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Illustration 3 1 Selangor's Geographical Position
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Illustration 3.1 Selangor s Geographical Position
The selected data collection sites are Tesco Saujana Impian Kajang, Carrefour Alamanda
Putrajaya, Giant Bukit Tinggi and Mydin Kajang.
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3.3 QUESTIONNAIRE CONSTRUCTION
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3.3 QUESTIONNAIRE CONSTRUCTION
Good questionnaire construction is critical to the success of a survey. The research
objectives and frame of reference was defined beforehand, including the questionnaire's
context of time, budget, manpower, intrusion and privacy.
A non-comparative Likert scaling techniques was used. The level of measurement of a
variable in mathematics and statistics is a classification that was proposed in order todescribe the nature of information contained within numbers assigned to objects and,
therefore, within the variable.
The questionnaire is divided into 4 sections:
1. Customer Information
2. Marketing Mix Model
3. Customer Perception
4. Motivating Factor
Variables that are measured only nominally are also called categorical variables. The
demography variables measured at a nominal level in Section 1 include gender, ethnic,
marital status, age and how often do the respondents shop at the specific retail store.
A typical test item in a Likert scale is a statement. The respondent is asked to indicate his
or her degree of agreement with the statement or any kind of subjective or objective
evaluation of the statement. In Section 2, a six-point scale is used in a forced choice
method where the middle option of "Neither agree nor disagree" is not available. The
questions comprise four elements such as product, price, promotions, place/distribution;
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Please rate with respect to the following
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p g
Strongly Strongly
Disagree Agree
1 2 3 4 5 6
Product
1) This store offers high quality merchandise
Section 3 evaluates customers perception using the same scale as practice in Section 2
where Section 4, the last part of the questionnaire measure the factor that motivates
respondents the most to patronize the specific retail store using the nominal
measurement.
3.4 TEST-RETEST RELIABILITY CHECKS
A pre-test is done where the questionnaire is tested on a statistically 20 samples of
respondents from each retail store, sum up to a total of 80samples before a full-scale
study in order to identify any unforeseen problems such as unclear wording, flow of the
questions or the questionnaire taking too long to administer.
Reliability is the extent to which a measure will produce consistent results. Test-retest
reliability checks how similar the results are if the research is repeated under similar
circumstances. Stability over repeated measures is assessed with the Pearson coefficient.
Alternative forms reliability checks how similar the results are if the research is repeated
using different forms. Internal consistency reliability checks how well the individual
measures included in the research are converted into a composite measure. Internal
consistency may be assessed by correlating performance on two halves of a test (split-
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3.4.1 Cronbach's (alpha)
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( p )
Cronbach's (alpha) has an important use as a measure of the reliability of a
psychometric instrument. It indicates the extent to which a set of test items can be treated
as measuring a single latent variable. It was first named as alpha by Cronbach (1951), as
he had intended to continue with further instruments. It is the extension of an earlier
version, the Kuder-Richardson Formula 20 (often shortened to KR-20), which is the
equivalent for dichotomous items, and Guttman (1945) developed the same quantityunder the name lambda-2.
Cronbach's is defined as:
1N
N
2 2
1
2
i
N
X Yi
X
=
where N is the number of components (items or testlets), 2X is the variance of the
observed total test scores, and 2iY
is the variance of component i for person y.
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3.4.2 Pre-Test
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Using the SPSS software, the reliability value of the 20 pre-test samples from each retailstore, sum up to a total of 80samples was calculated and the Cronbachs Alpha result is asbelow:
3.4.2.1 Reliability Statistics for Tesco
Table 3.1 Reliability Statistics - Tesco
Reliability Statistics - Tesco
Reliability Statistics
Cronbach'sAlpha N of Items
.888 26
3.4.2.2 Reliability Statistics for Mydin
Table 3.2 Reliability Statistics - Mydin
Reliability Statistics - Mydin
Reliability Statistics
Cronbach'sAlpha N of Items
.700 26
3.4.2.3 Reliability Statistics for Carrefour
Table 3.3 Reliability Statistics - Carrefour
Reliability Statistics - Carrefour
Reliability Statistics
Cronbach'sAlpha N of Items
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3.4.2.1 Reliability Statistics for Giant
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Table 3.4 Reliability Statistics - Giant
Reliability Statistics - Giant
Reliability Statistics
Cronbach'sAlpha N of Items
.984 26
3.4.3 Overall Reliability Statistics
The calculated Cronbachs Alpha result for a total of 80samples from four retail stores,Tesco, Mydin, Carrefour and Giant:
Table 3.5 Overall Reliability Statistics
Reliability Statistics - Overall
Cronbach'sAlpha N of Items
.874 26
According to the output, the overall value of Cronbachs Alpha is 0.883 which is greaterthan 0.7, which is good considering that .70 is the cutoff value for being acceptable.(Note that a reliability coefficient of .70 or higher is considered acceptable in most
Social Science research situations).
Here we can conclude that the questionnaire is reliable and the marketing research survey
shall be continued.
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3.5 SAMPLING METHODS AND SAMPLE SIZE
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There are many considerations that come into play when designing a research study.Compromises are always being made on sample size, acceptable error levels, sources of
bias and the like, based on the availability of resources (time, money, personnel). There is
no one right way to decide what is acceptable.
A sample is the term that refers to the group surveyed anytime the survey is not
administered to all members of the population or universe. The process of selecting a
smaller group of the people that have basically the same characteristics and preferences
as the total group from which it is drawn is called sampling.
A famous quote:
By a small sample we may judge the whole piece. Cervantes
In marketing research, the goal is to assess target segments efficiently and effectively by
designing and executing representative sample plans. In most cases the study objects of
interest consist of a large universal. The reason we select the sampling technique over a
census is due to cost saving, time economy, more in-depth information, less total error,
greater practicality and greater security.
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3.5.1 Simple Random Sampling
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We choose simple random sampling in the research for conceptually; simple randomsampling is the simplest of the probability sampling techniques. It requires a complete
sampling frame, which may not be available or feasible to construct for large populations.
Even if a complete frame is available, more efficient approaches may be possible if other
useful information is available about the units in the population.
In statistics, a simple random sample is a group of subjects (a sample) chosen from a
larger group (a population). Each subject from the population is chosen randomly and
entirely by chance, such that each subject has the same probability of being chosen at any
stage during the sampling process. This process and technique is known as Simple
Random Sampling, and should not be confused with Random Sampling.
In small populations such sampling is typically done "without replacement", i.e., one
deliberately avoids choosing any member of the population more than once. An unbiased
random selection of subjects is important so that in the long run, the sample represents
the population.
However, this does not guarantee that a particular sample is a perfect representation of
the population. Simple random sampling in this study merely allows us to draw externally
valid conclusions about the entire population based on the sample. Although simple
random sampling can be conducted with replacement instead, this is less common and
would normally be described more fully as simple random sampling with replacement.
Advantages using simple random sampling in this study are that it is free of classification
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3.5.2 DETERMINE SAMPLE SIZE
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Statistical Sampling Concepts
The size of the sample will be a function of the accuracy of the sample. In this study, two
criteria are used in measuring accuracy: the margin of error and the level of confidence.
The first is determined as the tolerated-error range (also known as sample precision) and
the second is the probability that the sample will fall within that tolerated-error range. A
margin of error of 3 percent, for example, means that out of all possible samples of a
certain determined size of coin flips, 95 percent will differ from the actual population by
no more than three percentage points.
Sample-size determination ultimately is a reflection of the value of the information
sought. Scientific journals require that reported results must fall in the 95 to 99 percent
confidence levels. When the risk involved in the decision alternatives is high, and then
the 95 to 99 percent confidence levels will be required. The 95 percent confidence level is
suggested for most research.
Using the assumptions of the Central Limit Theorem (that means of samples drawn will
be normally distributed around the population means, etc.), we select a standard normal
deviate from the following tables:
Table 3.6 Level of Confidence
Level of Confidence Z Value
95.00% 1.96
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A way to view calculating the sample size required for a given precision of a proportion
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score is to use the following formula:
n = Z (p.q)
h
where
Z = value from normal distribution table for desired confidence level
p = obtain