factors affecting customer loyalty through satisfaction towards retail marketing strategy: an explor

Australian Journal of Basic and Applied Sciences, 8(7) May 2014, Pages: 304-322

AENSI Journals

Australian Journal of Basic and Applied Sciences

ISSN:1991-8178

Journal home page: www.ajbasweb.com

Corresponding Author: Muhammad Khalilur Rahman, Graduate School of Business, Faculty of Business and

Accountancy, University of Malaya, Kuala Lumpur, Malaysia.

Tel: +60103626718

E-mail: [email protected]

Factors Affecting Customer Loyalty through Satisfaction towards Retail Marketing

Strategy: An Exploratory Investigation on Malaysian Hypermarkets 1Muhammad Khalilur Rahman, 2Ahasanul Haque and 2Md. Abdul Jalil

1 Graduate School of Business, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia 2Department of Business Administration, Faculty of Economics and Management Sciences, International Islamic University Malaysia,

Kuala Lumpur, Malaysia, Box No. 10, 50728.

A R T I C L E I N F O A B S T R A C T

Article history:

Received 2 February 2014 Received in revised form 8 April 2014 Accepted 28 April 2014 Available online 25 May 2014

Keywords: Retail marketing strategy, Malaysian

hypermarkets, Service quality, Product

quality, Customer satisfaction, Customer loyalty.

Background: Today, global market is targeted by so many established retailers,

because they are looking for new potential market expansion. Malaysian hypermarkets

are growing drastically challenging in the past decades; as a result customer satisfaction

and customer loyalty has become a critical phenomenon. Objective: The main purpose

of this study is to measure customers‟ loyalty through satisfaction towards retail marketing strategy in Malaysian hypermarkets perspective. Methodology: In this

study, resource based theory has been exploited for developing conceptual research

framework. The data has been collected by distributing self-administered questionnaire among 350 consumers involving different races in Malaysian hypermarkets in Kuala

Lumpur through convenience sampling method. The data analysis has been conducted

using descriptive statistics as well as exploratory and confirmatory factor analysis. Subsequently, by using AMOS through structural equation modeling, 292 valid cases

have been selected to test the hypothesized relationship among the variables in the

research conceptual model. Results: The results revealed that service quality, product quality, price strategy and store attribute have significant relationship with customer

satisfaction and importantly customer satisfaction has direct relationship to customer

loyalty. Conclusion: The study concludes that customer satisfaction is the predecessor to customer loyalty in Malaysian hypermarket setting. Hence, the establishment of

customer satisfaction has a great meaning to the retailers due to its predictive power.

Finally, it is hoped that this study could facilitate improving customer loyalty through customer satisfaction in Malaysian hypermarkets.

© 2014 AENSI Publisher All rights reserved.

To Cite This Article: Muhammad Khalilur Rahman, Ahasanul Haque and Md. Abdul Jalil. Factors Affecting Customer Loyalty through

Satisfaction towards Retail Marketing Strategy: An Exploratory Investigation on Malaysian Hypermarkets. Aust. J. Basic & Appl. Sci.,

8(7): 304-322, 2014

INTRODUCTION

Customers trust the friendly grocery retailers in terms of goods and services offering and even interest in

their personal wellbeing (Rahman & Jalil, 2014). Hypermarkets trade in a highly competitive marketplace where

competitors know each other about their position (Grönroos, 1984). Today, world market is targeted by so many

established retailers, because they are looking for new potential market expansion (Abu & Roslin, 2008;

Gonring, 2008). Malaysian hypermarkets are growing dramatically in the past decades as a result customers‟

satisfaction and customers‟ loyalty have become vital topics in business promotion schemes (Heng, Yeong,

Siong, Shi, & Kuan, 2011). The prominent foreign based retailers are attracting Malaysian consumers in

different types of retail outlets of different sizes (Abu & Roslin, 2008). Loyal customers are shopping frequently

in their chosen hypermarkets. In fact, loyal customers repeat and increase their purchase that helps to increase

sales revenue of business organizations (Li & Green, 2010). Therefore, customers‟ satisfaction and loyalty is the

feedback of a successful retail marketing strategy in a competitive market that creates value for money for

customers. Now, modern hypermarkets and traditional outlets have successfully coexisted in Malaysia without

any discrimination from the customers (Abu & Roslin, 2008). Household income influences customers to be

attracted in different types of outlets (Zain & Rejab, 1989). In Malaysia, traditional retail stores are always

attracting the low and middle level income consumers. Modern retail formats are attracting the upper and middle

income shoppers but at present it is fast changing as improved consumer lifestyles, changing consumer‟s

preferences and changing educational level of population (Abu & Roslin, 2008). In 1992, grocery retail sectors

were operated by many foreign business firms (Abu & Roslin, 2008). Now, Malaysia is attracting other foreign

305 Muhammad Khalilur Rahman, et al, 2014


names such as United Kingdom‟s Tesco, France‟s Carrefour, and Hong Kong based DFI which operates the

Giant hypermarkets.

Historically, most of the business scholars in the world argue that customers‟ satisfaction and loyalty are the

most important issues for retail marketing strategy in hypermarket business. Hypermarket industry is very

popular worldwide due to the individual purchasing power and living standard of people. In Malaysia, the

grocery shopping is most popular. Even during the year of 1996, there were lots of grocery shops in Malaysia

where many consumers had a wider choice for shopping where they bought their daily necessities. In 1970,

many minimarkets were established, but they were replaced by supermarkets between 1980 and early 1990

(Leow, et al., 2011). However, hypermarket is a large retail enterprise that combines the features of other stores

such as departmental stores and grocery stores under one roof. Lim (2001) cited in Leow et al. (2011), that

hypermarkets provided the same merchandise as supermarkets but hypermarket, especially, provide individual

numbers of other commodities and services to customers, such as, car parking facilities, ATM booths, book

stores, Guardian Pharmacy, Own in-house brand, McDonald‟s, KFC, Pizza hut, Baskin Robbins, Coffee Bean

and so on to the extent that Hypermarket has become the one-stop shopping center. In Malaysia, there are many

hypermarkets doing well, but the purpose of this study focuses on three hypermarkets, namely, Giant, Tesco and

Carrefour. This paper focuses on the submission of customers‟ satisfaction and loyalty in hypermarket with

respect to consumers‟ several perspectives and retail marketing strategy. The aim of this research is to identify

specific elements of customers‟ satisfaction and these elements consequent contribution to repeat or frequent

shopping behavior (customers‟ loyalty) in Malaysian hypermarket context.

Traditionally, products and service quality play vital roles to increase customer‟s satisfaction and loyalty.

Today, many companies deeply relied on distinction of goods and services to attract the customers‟ satisfaction

and loyalty. Conversely, business strategy is changing day by day due to vicious competition of new business

companies entering the global market with rapidly developed technology to increase new designs, number of

offers, innovative and imitation of new product features. In addition, the customers have their own new choice

and purchase decision of products or services. They are price conscious that has forced entrepreneurs or

marketers to get used to consumer oriented policy to gain more profit and sustain in the competitive market.

Furthermore, the customers‟ wants and needs are the fundamental key of success of any business organization

(Singh, 2006), and for that particular reason, so many scholars have given attention to the significance of

customers‟ satisfaction, customers‟ loyalty and also customer retention (Singh, 2006; Bridsona, Evansb, &

Hickman, 2008; Carpenter, 2008; Ciavolinoa & Dahlgaardb, 2007; Hoq & Amin, 2010; Vazifehdust &

Farokhian, 2011).

Nowadays, retail sectors and grocery sectors are playing an important role in improving of service quality

and product assortment. According to Yuen & Chan (2010), he posited that customers‟ demands in the grocery

sectors are gradually increasing owing to the development of customer service in parallel with product quality

and diversity. This is similarly reflected in the retailing industry which plays a vital role to the tremendous

growth of the service sector.

As such, it is necessary for the retailers to understand the customers‟ wants and needs to increase the level

of their satisfaction and loyalty. Finally, effective satisfaction creates a long term relationship between the

sellers and the buyers as well as increasing their loyalty through repeat purchase behavior and attitudes, all of

which helps retailers to increase the market share and profit. The customers‟ decision on shopping behavior as

well as the customers‟ wants and needs are sophisticated and important to the effect that retailers seek to build a

stable and long-term relationship with their consumers. Thus, retailers are able to improve the customers‟

satisfaction that later turns into the customers‟ loyalty and finally customer retention. Customer database is very

important for any firm or business organization as proposed by Mauri (2003), that business industries can attain

privileged information about the consumers‟ attributes or needs by using customer relationship database

management that can help them improve the customers‟ satisfaction and loyalty in a competitive market. Zairi

(2000) has compared between new customers and existing or satisfied customers, in which he arrogated that

one satisfied and loyal customer is not much valuable than attracting a new consumer. However, a business

organization should fully concentrate on existing consumers, because existing customers can lead to satisfaction

in which the firm stands to achieve market share and profit by creating the customers‟ satisfaction and loyalty

(Yuen & Chan, 2010). In addition, Siddiqi (2011) asserted that a company‟s market share and profit are

motivated by the customers‟ loyalty as it is a direct outcome of the customers‟ satisfaction. The customer‟s

satisfaction is a direct resutl of service quality founded by (Naeem, Akram, Jinnah, & Saif, 2009).

This study assessments the Malaysian hypermarkets customer loyalty through satisfaction towards retail

marketing strategy. The methodology section, which follows the literature review, design the study, data

collection, explains the sampling method and subsequent self-administered questionnaires to respondents. The

survey questionnaires by using AMOS through structural equation modeling technique with data analysis results

and discussion precede the concluding remarks.



Literature Review:

Hypermarket has been a crucial part of larger class of business industries. Hypermarket is the superstores of

goods or services under one roof which combines supermarkets, grocery stores and departmental stores where

people willingly shop necessary goods or services with respect to diversity of product categories, price discounts

or promotional policy, parking facilities and networking of marketing strategy (Perrigoti & Cliquet, 2006).

Retailing covers the trade activities which involve in selling goods and services to customers for their family

and personal use (Berman & Evans, 2004). Customers‟ demand for goods and services are the common

necessity where retail industry should give attention to provide good service as well as product quality at

reasonable price.

Service Quality:

The main function of the retail marketing strategy is delivery of better and satisfactory services. The

retailers should perform delivery of quality service to their potential customers besides their regular customers.

Service quality is an important dimension of customers‟ loyalty through customers‟ satisfaction in the retail

industry. It is a subjective, complex and abstract concept that means different people have different views of

product perspectives and concepts. According to Parasuraman et al. (1985) and Grönroos (1984), service quality

is the assessment made by the consumers‟ perceptions and expectations of received services as these factors

comprise corporate image and functional quality. Service quality is the consumers‟ perception of particular

dimensions of products or services, such as, reliability, assurance, tangibility, courteousness, personalization,

communication and responsiveness all of which have to be incorporated into the company‟s strategic policy

which in itself rationally affects the consumers‟ satisfaction by providing excellent services including personal

factors, situational factors and product quality. Parasuraman et al. (1985, 1988) and many researchers have

developed the SERVQUAL scale which is very important for measuring the customers‟ service quality. There

were ten dimensions of service quality, but later these were reduced to five dimensions which included

tangibility, reliability, assurance, responsiveness and empathy.

Service quality has a tangible link to customers‟ satisfaction, as in fact, the consumers‟ satisfaction is

represented by the service quality in one way or another. Hence, service quality is an antecedent to customers‟

satisfaction and loyalty (Su, 2004; Jamali, 2007). Service quality is a cognitive assessment which may

invariably influence the customers‟ satisfaction (Oh, 1999). In this literature, the customers‟ loyalty through

satisfaction is the outcome of the proper enforcement of the service quality in the retail marking strategy. Many

researchers have investigated the relationship between the customers‟ satisfaction or loyalty and the service

quality on the complaints received from the dis-satisfied consumers (Al-Rousan, Ramzi, & Mohamed, 2010;

Oh, 1999; Sureshchandar, Rajendran, & Anantharaman, 2002; Yavas, Benkenstein, & Stuhldreier, 2004).

Hence, consumers‟ complaints are viewed through the customers‟ expectation, perceptions and requests on the

presentation of better service of goods in the present and future retail scenario. Customers‟ satisfaction is seen as

one of the most important factors of service quality that have been broadly discussed in the literature.

In addition, in terms of different customers, service quality has different shades of meanings and various

concepts. The study by Lewis (2004), Gronoos (1984) cited by Su (2004), cited that “Service quality is defined

as how well a consumer‟s needs are met and how well the service delivered meets the customer‟s expectations”.

Consumers‟ perceived values of services are heavily reliant on the customers‟ expectations and outcomes of the

evaluation processes (Gronoos, 1984). Tu, Li, & Chih (2011) found that service quality has a significant

relationship with the customers‟ satisfaction which directly affects the customers‟ loyalty. Thus, the retail

business firm should focus on these factors to increase the customers‟ relationship with satisfaction and loyalty

in a competitive retail market globally. Service quality is the major tool for changing or developing the retail

business paradigm (Taylor & Baker, 1994). Customers‟ evaluations of the service quality are quite difficult to

be developed in the retail marketing strategy (Jain & Gupta, 2004). A business organization can gain profit and

competitive advantages by applying an appropriate service quality (Boshoff & Gray, 2004). Service quality is

capable of helping the business firms to realize their envious position in the retail market place (Khan, 2010). If

product prices and other costs are stable, the customers will invariably prefer the service quality as an extra

attraction.

H1: Service quality has a positive impact on customers‟ satisfaction in Malaysian hypermarkets context.

Product Quality:

Product quality is the key dimension of the customers‟ satisfaction and loyalty. There are innumerable

attributes of product qualities, of which especially Garvin (1987) has described eight highly relevant attributes

such as features, performance, conformance, reliability, durability, serviceability, aesthetics and Customer

perceived quality. Hence, five elements have been used to measure the dimensions of a product quality such as

product durability, product variety, product freshness, product attractiveness and brand equity. All these

attributes are important to be used for measuring the customers‟ satisfaction and loyalty (Yuen & Chan, 2010),

but most other relevant elements are also useful for improving the customers‟ satisfaction and loyalty (Garvin,



1987). Product variety is important for the retailers to serve the customers‟ buying behavior, because different

customers have different preferences of product quality. Product variety attracted retailers and it also influenced

the customers to gladly perform more shopping visits at the hypermarkets, in which case it may reasonably be

said that if retailers can give more attention to increase greater product variety, it can develop the purchase

volume of products as well as increase the customers‟ satisfaction and loyalty to a great extent. According to Lu

& Lukoma (2011) pointed out that variety product selection reduced the perceived costs.

The study Minguela-Rata (2011) and Minguela-Rata et al. (2006) point out that product quality is a key

component through which retailers or busienss firms can differentiate themselves from their competitors and

they can gain competitive business advantages. There are two important parameters which are: product

attactiveness and users‟ experinece of product in terms of brand equity and customers‟ satisfaction (Chan et al.,

2010). Three factors are most important for improving the customers‟ relationship and customers‟ satisfaction

which are, namely, i) the right product, ii) the right time and, iii) the right place (Yourdon, 2000) who also

mentioned that product quality, service and value play important roles to develop the customers‟ satisfaction and

loyalty. The study Allaway et al. (2011) stated that product quality, service level and assortemnt were the basic

requirements for achieving high levels of brand equity. He also mentioned that successful brand equity can

successfully arouse commitment, shopping behaviour and the most interesting part is to develop familiarity with

a person to person interactive communication. A major proportion of consumers have strong feelings on

hypermarkets with product brand equity for shopping of goods and services (Rahman & Jalil, 2014). Business

firms had begun to develop the customers‟ satisfaction and loyalty by offering good quality products and

services. Brand equity creates customers‟ equity that emphasizes customers‟ satisfaction and loyalty (Leone et

al., 2006). According to Bolten, Kennerknecht, & Spiller ( 2006) posited that the main determinants of customer

satisfaction and loyalty are the service and product quality.

H2: Product quality has a significant influence on customers‟ satisfaction for measuring customer‟s satisfaction

and loyalty in hypermarkets context.

Price Strategy:

Pricing strategy plays a critical role in improving the customers‟ satisfaction and loyalty as it is more

important than a perceived quality (Matzler, Renzl, & Rothenberger, 2006) in retail marketing strategy in terms

of hypermarket setting. Today‟s modern retailers are much concerned with the price setting of products in a

competitive retail marketing strategy. A comprehensive price strategy can help retailers to achieve a distinctive

business success. According to Frazier-Coleman (2008), he posited that creating and implementing pricing rules

and strategy help retailers to increase sales volume and the resultant profit. Hinz, Hann, & Spann (2011) found

that the threshold price can increase revenue by as much as over 20 percents through the increase of customers‟

satisfaction and loyalty. Therefore, the financial success of a business firms selling retail goods positively

depends on their rationally sophisticated pricing strategy (Frazier-Coleman, 2008). Pricing strategy should be an

integral part of the plan for selling products in the market (Wharton, 2003). Service quality and product delivery

are associated with price variation. Customers‟ expectation and loyalty are closely related with the fair price

strategy (Hellstrand, 2010). According to Yoo, Donthu, & Lee (2000), they mentioned that price promotion is a

short term price reduction strategy and it may also offer in a long term policy. Price promotion comes from the

storage, incidental shopping and brand switching (Heerde, Gupta, & Wittink, 2003). The effect of price

promotion happens with the consumers‟ short term products or brand choices and during the promotion period it

increases price sensitivity of general customers (Mela, Gupta, & Lehmann, 1997). Customer reward scheme is

important in the customer loyalty program as examined by Demoulina & Zidda (2008), where cardholders get a

satisfaction with the rewards as they become more loyal and less price sensitive (Rahman & Jalil, 2014). Price

promotion is generally a short term price reduction policy in a particular product and service.

H3: Price strategy is positively related with customers‟ satisfaction in measuring customer‟s satisfaction

and customer‟s loyalty in retail marketing strategy in Malaysian hypermarkets setting.

Store Attributes:

Store attributes play vital roles in improving the customers‟ satisfaction and loyalty. The study Lindquist

(1975) recognized several important stores attributes (e.g. store atmosphere, service, merchandise, convenience,

post-transaction, clientele, physical facilities and, promotion) that helped to well-disposed of unfavorable

consumer attitudes towards a retail marketing strategy. In this study, most favorable and most relevant elements

of store attributes (e.g. store atmosphere, store image, parking facility, display of lifestyle, merchandise,

convenience and, location) is considered for measuring customer satisfaction and loyalty. Different retail

marketing strategies carry different store images in the hypermarket where store attribute is influenced by the

various components of the retail marketing mix (Jinfeng & Zhilong, 2009), such as, location, display feature,

parking facility, clean and spacious environmental atmosphere, etc. Store image refers to the shopper‟s retail

marketing strategy and minds in which customers begin to perceive shopping opportunities and, thus, willing to

purchase goods and services thereupon (Britta, Martin, & Corinne, 2010). Beneke et al. (2011) showed that



store image directly and indirectly influenced the customers‟ loyalty through the customers‟ satisfaction

phenomena through which customers are comfortably associated with repeat shopping visits in a specific store

and market place, this being also defined as a rational conceptualization (Hartman & Spiro, 2005). Service

levels and a variety of merchandise are the key attributes in developing store image (Beneke, 2011) which also

represents the overall evaluation of the customers‟ shopping experience with a particular store. Store image and

trust are the most antecedents of the customers‟ satisfaction and loyalty in retail marketing strategy (Anderson &

Sullivan, 1993; Wulf, Odekerken-Schröder, & Iacobucci, 2001). According to Kristensen et al. (2004), he

posited that store image had a significant relationship with the customers‟ satisfaction and loyalty in terms of the

retailer as a hypermarket business strategy. Chang and Tu (2005) point out that service, price and variety of

products significantly influence the customers‟ satisfaction in the grocery sector. Gomez et al. (2004) and

Bolten (2006) described in a comprehensive survey and they found the links between the stores attributes

customer satisfaction and the sales performance with data from 250 shops. Personal characteristics and

conducive shopping atmosphere are more important and relevant than price factors in the retail marketing

strategy (Bolten, Kennerknecht, & Spiller, 2006). The study by Rao (2010) said that a store image is a complex

mix of tangible and intangible factors. Tangible is related with functional factors and intangible is related with

psychological factors. He also mentioned that grocery shoppers were at ease with the shopping process,

merchandise mix, and cleanliness of the store. Generally, a retail store starts with a set of characteristics or store

image attributes (Moye, 1998). Samani, Hashim, Golbaz, & Khani (2011) found that store attributes, lifestyle

and consumer satisfaction positively influenced customers‟ loyalty.

H4: Store attribute has significant influence on customers‟ satisfaction in measuring customer‟s satisfaction

and customer‟s loyalty in retail marketing strategy in Malaysian hypermarkets context.

Customers’ Satisfaction:

Retailers and manufacturers argue that Customers‟ satisfaction is a necessary predecessor to customers‟

loyalty. According to Sivadas & Baker-Prewitt (2000) who cited in Abdullah et al. (2012), academicians and

practitioners are agreed that customers‟ satisfaction is an important precursor to customers‟ loyalty. Bennett &

Rundle-Thiele (2004) assumed that customers are likely to increase their loyalty but it should not be only

business goal oriented by the business organizations, as it also should also fulfill the customers‟ actual perceived

values on the products and services offered. The study by Srinivasana et al. (2002) formulated that customers‟

satisfaction is deeply associated with the brand loyalty and service quality. Therefore, customers‟ satisfaction is

defined as matters that concern the post purchase of a particular product or service. Hoq & Amin (2010) posited

that Customer satisfaction was the emotional behavior or cognitive attitudes towards the buying of products and

services. In retail strategy, the customer is the key element, because the customer‟s satisfaction is the nature of

the relationship between the consumers and the service providers of the manufacturing goods and services.

Product and service quality are both prerequisite dimensions for customers‟ satisfaction of particular products

(Hoq & Amin, 2010). Sivadas & Baker-Prewitt (2000) indicated that the customer‟s satisfaction is the

customer‟s response to determine the repeat buying of goods or services. Satisfied customers are the loyal

customers (Rowley, 2005) as this has been examined by many researchers that there is a significant relationship

between the customers‟ satisfaction and customers‟ loyalty (Kandampully & Suhartanto, 2000; Szymanski &

Henard, 2001; Abdullah et al., 2012). Customers are satisfied by achieving expected perceived values of goods

and services. As Singh (2006) explained that customers‟ satisfaction could occur when a company could be able

to provide better product and service than the customer‟s expectation. Each business firm has a positive and a

negative impact on a relation with the customers. Luo & Homburg (2007); Yeung, Ging, & Ennew (2002)

articulate that customers‟ satisfaction increases the profit of a business firm. Many studies are done by

researchers who have investigated the customers‟ attitudes or behavior patterns (Dimitriades, 2006; Olorunniwo

et al., 2006; Chi & Qu, 2006; Faullant, Matzler, & Fuller, 2008). The findings of these studies confirm that the

customers‟ satisfaction produces the customers‟ loyalty that encourages consumers to make repurchase decision

and leads to positive viva-voce on the goods and services offered. The study Anderson, Fornell, & Lehmann

(1994) posited that there are some intermediaries of the customers‟ satisfaction and loyalty which include the

customers‟ experiences, values and qualities. According to Abdullah (2012) defined the value as the proportion

of perceived usefulness of the product relative to the reasonable price for consumers. Thus, it recommends that

the higher customers‟ satisfaction level will result in a higher customers‟ loyalty.

Many business firms are trying to identify the customers‟ needs and want to develop the customers‟

satisfaction. They have a plan of creating store attributes that can excite the customers‟ experience and then

invoke the customers‟ needs. Samani, et al., (2011) mentioned that customers‟ satisfaction is a psychological

reaction which attracts the consumers to consume the specific products or services. Chang & Tu (2005) added

that the customers‟ satisfaction positively increases the consumers‟ intention to post-consume a product at a

particular shop. Thus, customers‟ satisfaction result helps to sustain a long-term benefit on the retail strategy

(Samani, et al., 2011). A customer‟s interest to repurchase comes from an affective experience of the consumer

product and store attributes. The study by Ghosh, Tripathi, & Kumar (2010); Samini, et al., (2011) stated that



consumers‟ attitudinal behavior on the store attributes increases the customers‟ satisfaction. Hence, customers

are highly dependent on the image of store attributes during shopping period. The customer‟s positive

assessment on the store attributes leads to the customer‟s satisfaction, because stores have done their homework

by working hard to know the customer‟s desire and wants (Samani, et al., 2011). Some researchers examined

that the customers were satisfied by the store attributes that directly and indirectly linked to the customer‟s

loyalty (Nguyen, et al., 2007; Koo, 2003; Chang & Tu, 2005; Samani, et al., 2011).

According to Slevitch & Oh (2010); Beneke et al. (2011), the customers‟ satisfaction is an important part

and parcel of a company‟s managerial process. Manager‟s research (Beneke et al., 2011), operational goodwill

and problem solving direction (Singh & Sirdeshmukh, 2000; Sirdeshmukh, Singh, & Sabol, 2002) play a vital

role in improving the customers‟ satisfaction. Homburg, et al., (2005) defined Customer‟s satisfaction as the

overall evaluation of the firm‟s drive from the consumer‟s knowledge on the product or services. This

cumulative evaluation on the customers‟ satisfaction is measured by increasing relationship with the retailers in

specific transactions (Sivadas & Baker-Prewitt, 2000; Beneke, et al., 2011). Store image is the preconditional

component of the customers‟ satisfaction (Wulf, Schroder, & Lacobucci, 2001; Chang & Tu, 2005), as it has a

direct relationship with the customers‟ satisfaction in the retail strategy, like hypermarket (Eskildsen et al.,

2004; Beneke, et al., 2011). The study by Reddy, et al., (2011), asserted that customers‟ satisfaction is

confirmed by the perceived value of store performance where as customers‟ dissatisfaction has occurred when

customers have no expectation on the perceived value of the store performance. Therefore, a customer‟s

perceived value of a store performance is important for the customer‟s satisfaction in the retail strategy. Bloemer

& Schroder (2002), Beneke, et al., (2011) posited that global marketing strategy stood on the customers‟

satisfaction that was improved by the company that provides distinctive benefits to the consumers. Kim (2009)

mentioned that all of the company‟s activities should be operated in terms of the customers‟ satisfaction and

should also be established on a good relatiohship with the market for a long term financial benefit or profit.

In addition, the customers‟ satisfaction is the effective component of the business organization for the

present and future viability of a retail marketing strategy. Customers‟ expectation value is important for

increasing the customers‟ satisfaction. Vazifehdust & Farokhian (2011) examined that there was a significant

relationship between the customers‟ expected value and the customers; satisfaction in a retail business strategy.

According to Shen, et al., (2000) cited in Vazifehdust & Farokhian (2011), a company‟s satisfied customers

play a vital role as an effective viva-voce advertisement as they help to influence other potential cusumers

towards goods and services offered by that company. The study by Tinggi et al. (2012), asserted that retailing

business strategy was the business process of selling goods directly to the consumers to ensure the customers‟

satisfaction as it is the merchandise providing goods or services to the customers under the business firm.

Customers‟ satisfaction is perceived by the final outcome of all buyers‟ activities accomplished during the

process of shopping and consumption. According to Parker & Mathews (2001) cited in Omar et al. (2011),

when consumers get their satisfaction, they only think about the outcome instead of the process aspect. It is

always defined as a course of action and result of the customer‟s purchasing behavior which is identified as a

key determinant of a customer‟s loyalty, especially in the retail strategy (Omar, Aziz, & Nazri, 2011). When

consumers get satisfaction from shopping for a particular product or services in a retail hypermarket, they will

be inclined to purchase frequently. Thus, satisfaction has come from an overall purchase experience and

evaluation with the products and services (Omar et al., 2007; 2011). Customers‟ satisfaction is essential in

marketing activity but it is not exactly a sufficient circumstance for the customers‟ loyalty, because satisfied

customers sometimes may defect if they get a better value and quality of goods or services from elsewhere.

H5: Customers‟ satisfaction has direct relationship on customers‟ loyalty in retail marketing strategy in

Malaysian hypermarkets perspectives.

Customers’ Loyalty:

Wang, Chen, & Chu (2009) stated that “customers‟ loyalty is the forefront area of global research of

marketing theory, especially in the mid 1990s of the 20th century, when the research on customers‟ loyalty

became another hot point after the customers‟ satisfaction”. Customers‟ loyalty or customers‟ adherence is not a

small dimension, as it is broad and difficult to demonstrate. In fact, it exists in the consumers‟ conscience and

attitudes on particular goods or services. The study Abdullah et al., (2012) mentioned that loyal customers were

that customers who had positive behavior to service holders. Getty and Thompson (1994) examined that

customers‟ loyalty had a significant relationship with the service quality and customers‟ satisfaction (Abdullah

et al., 2012). Based on past studies of customers‟ loyalty, it was found that the customers‟ loyalty had a direct

bearing on the consumers‟ precise purchasing power of products (Magi, 2003; Leenheer et al., 2007; Morrisson

& Huppertz, 2010), a quantity of shopping goods or services (Baloglu, 2002), post-purchasing attitude and

activities of consumers (Richard Ho et al., 2009). Many researchers believe that the customers‟ preferred degree

of purchase behavior and actual purchase behavior can reflect the customers‟ loyalty (Davis, 2006: 58; Gomez

et al., 2006). Consumers have two types of royalty, such as, behavioral loyalty and emotional loyalty on goods

or services. Customers‟ behavioral royalty is referred to frequent shopping in a particular retailer, and emotional



loyalty is referred to the customers‟ concern towards certain retailer on the basis of past buying experience and

attitude (Gomez et al., 2006).

Customer Loyalty program is a marketing tool that is used to develop the customers‟ loyalty by providing

incentive benefits to consumers (Yi & Jeon, 2003). Nowadays, customer loyalty is deliberated into three

categories ,such as, providing gift cards, rebates (member discounts, gift cards) and lottery draws (Ou et al.,

2011). The study by Yi & Jeon (2003) mentioned that customers‟ loyalty is included into five distinctive

perceived values which are: cash value, freedom salvation option, emotion, relevance and convenience.

Customers‟ loyalty focuses on the relationship between the customers and the service providers as good

relationship increases customers‟ loyalty and reduces customers‟ dissatisfaction. When a company is able to

improve the customers‟ acceptance through the customers‟ loyalty, they can increase sales volume of products

or services. Customers believe that they will receive rewards and prize opportunities through the shopping

activities. Therefore, a company or a firm should provide diverse benefits to frequent shoppers for developing

the customers‟ loyalty. This approach is done by a previous study (Ou et al., 2011), which examined that

customers‟ satisfaction has a significant relationship with the customers‟ loyalty. The study by Richard Ho et al.

(2009), shows that customers‟ loyalty is not a short term marketing plan strategy, it is difficult to identify

customers‟ loyalty in a company. It has even become knowledge that some retailers have been trying to develop

the customers‟ loyalty program by switching costs to discourage customers‟ defection. Berman (2006)

demonstrated that customers‟ loyalty program was divided into four categories which were generally seen in the

hypermarkets. They are: (i) members receive special discounts through registration (ii) members receive one

free unit after buying n units (iii) members receive rebates and (iv) members receive mails and targeted offers

(Richard Ho et al., 2009), all of which are conducively aimed at gaining the customers‟ loyalty. According to

Gonring (2008), he deduced that during the year of 1980, customers‟ loyalty used to evaluate product durability

and service quality but it changed dramatically in the late 1980 and in 1990, when several retailers identified the

customers‟ needs and wants. Nowadays, in modern competitive target markets, this concept has been shifted by

the companies towards the initial target consumers by producing typical product benefits in order to induce the

customers‟ satisfaction and loyalty (Abdullah, 2012).

Conceptual Framework:

The conceptual framework of this study is based on the relationship between the service quality, product

quality, price strategy, store attributes, customer satisfaction and the customers‟ loyalty in a hypermarket

business strategy. In this research, the model and concept is developed by Tu, Li & Chih (2011); Caceres &

Paparoidamis (2007); Bolten, Kennerknecht & Spiller (2006); Sivadas and Baker-Prewitt (2000) as well as

Heng et al. (2011).

The study Tu, Li & Chih (2011) developed a hypothesized model of the effect of service quality,

customers‟ perceived values and satisfaction on loyalty. The ultimate objective of this model was focused on the

customers‟ satisfaction and loyalty by developing the service quality. Tu, Li and Chih‟s hypothesized model

proposed the relationship between Service quality, Customer Perceived Value, Customer Satisfaction and

Customer Loyalty. Sivadas and Baker-Prewitt (2000) used a hypothesized model of relationship between the

service quality, and the customers‟ satisfaction and loyalty. They used a nationally random telephone survey of

542 customers. The model showed the relationship between the service quality, relative attitudes, satisfaction,

recommendation, repurchase and the customers‟ loyalty. They found that customers‟ satisfaction influenced

repurchase intention, relative attitudes and recommendation, but there was no direct effect on the store loyalty.

According to Cacers & Paparoidamis (2007) established a theoretical concept for developing the customers‟

perception of service quality and product quality and they examined this theoretical concept by an empirical

research. This study shows the relationship between the technical quality, functional quality, relationship

satisfaction, trust, commitment and the loyalty. The study Bolten, Kennerknecht, & Spiller (2006) used a

conceptual model to test the impact of customers‟ satisfaction and customers‟ enthusiasm in the small retailers

in the organic food market. Their research was based on 948 respondents‟ interviews and they also analyzed the

management ratio of twelve organic food shops in Germany where they found that product quality and customer

service quality is the main determinants of the customers‟ satisfaction. In their survey, they showed the

relationship between the quality of products, service quality, shopping atmosphere, environmental protection,

shopping location, economical success, shopping frequency, recommendation, customers‟ satisfaction and

customers‟ enthusiasm. According to study Heng, Yeong, Siong, Shi and Kuan (2011) proposed a theoritical

framework of brand loyalty on the customers‟ perception of marketing mix in Malaysian hypermarket context.

In their study, they focused the relationship between the price, store image, price promotion, advertising

spending, distribution and the customers‟ loyalty. However, based on literature review a few important variables

are determined for this research. In addition, variables are identified by review of the above mentioned studies

and other related studies. The variables are focused on measuring of the customers loyalty through satisfaction

towards retail marekting strategy in Malaysian hypermarkets context. The view of the conceptual framework

and the relationship among the variables are as shown in fig. 1.



Fig. 1: Conceptual framework.

Methodology:

The research method is based on the summary of the systematic investigation, procedure, sample selection

and analysis which are used in the research (Martin & Guerin, 2006). More importantly, since the main purpose

of this study is to measure the customers‟ perceptions towards retail marketing strategy in Malaysian

hypermarkets setting, a self-administered questionnaire was developed to collect the required information from

the customers of Malaysian hypermarkets. The survey questionnaire is consisted with 7 (seven) distinct sections

which contained relating questions of different part of the research. Data was collected by distributing

questionnaires from walk-in consumers and through face to face customers survey at 3 (three) prominent

Malaysian hypermarkets (e.g. Giant, Tesco and Carrefour) in Kuala Lumpur, Wangsamaju, Sri Rampai, Batu

caves, Puchong and Kota Damansara. Respondents were asked to evaluate the items of different variables such

as service quality, product quality, price strategy, store attributes, customer satisfaction as well as customer

loyalty in terms of the customers‟ perceptions based on 5-point Likert scales that ranges from strongly disagree,

disagree, slightly agree, agree, strongly agree which are recommend by Cooper & Schindler (2008). The

primary data is relevant to this exploratory study and it is systematically distributed and collected through

interactions or communications as well as observation methods in which it performed by utilizing a convenience

random sampling method as it is the easiest to conduct with large number of population (Hong 2011, Moye

1998 and Ko 1995). The sampling method is adapted from a convenience random sampling method that

contained some limitations in terms of generalizability as compared to other sampling probability methods. In

this study, it is logically assumed that the sample represented the whole population of Malaysian hypermarkets

customers. The respondents are selected from the population of the Malaysian hypermarkets adult consumers

(above 18 years old) who are living in Kuala Lumpur area. Kuala Lumpur is selected for this survey as it is the

economical hub or major global financial center and a large portion of consumers are shopping in the

hypermarkets. The research questionnaires were distributed to 350 respondents but after completed the

screening process 292 sample sizes founded valid and useable for data analysis. This represented a success rate

of 83% which is considered extremely well in view of time and cost as well as geographical constraints. In this

study, the deductive approach (quantitative research) is applied on data analysis and results discussion. The

study begins with the theoretical and empirical evidence to improving the theory and especially it is an

exploratory research which is aimed at measuring the customers‟ satisfaction and loyalty towards the retail

marketing strategy in terms of the hypermarket business setting in Malaysia. Factor analysis has been used to

measure the customer satisfaction and loyalty as it is a meaningful transforming statistical data into linear

combination of constructs (Hair et al., 1992). The survey research makes use of the fundamental information

and Structural Equation Model (SEM) that carried out to investigate the relationship among the constructs which

influence the customers‟ perception towards retail marketing strategy in Malaysian hypermarkets context. It

appropriately gives the best fit and is commonly utilized by marketing researchers (Hakansson & Johnson,

1992).

RESULTS AND DISCUSSION

Demographic Profile:

In this survey, male participants (58.6%) were greater than female (41.4%). Similarly, in terms of marital

status, single (65.8%) participants were greater than married (34.2%). The classification of age presents that a

large portion of (89.7%) respondents were between 19 to 35 year old, which followed by 7.2% (36-49 years old)

and 2.7% (below 18 years old). In terms of ethnic background, around a half of the participants was Malay

(46%) which followed by Chinese (21%) and Indian and others (18.2%). The highest (59%) of the respondents‟

monthly income was less than RM 2000 which followed by 30.5% (RM2001-RM 4000), 6.2% (RM 4001- RM

8000) and 4% (Above RM 12000).

Service Quality

Product Quality

Price Strategy

Store Attributes Customer Loyalty

Customer Satisfaction



Reliability coefficient:

The reliability coefficient is tested before start the analysis as it is conducted in order to ensure consistent

measurement through different items in the questionnaire. According to Sekaran (2003) posited that the

reliability measurement suggests stability and consistency of the mechanism. Consequently, this method

indicates reliability through examining the internal consistency of the research questionnaires which are posed

in Likert scale (Nor, 2009). The study Nor (2009), Rahman et al. (2010) and Hair et al. (1992) posited that

Cronbach‟s alpha is very important and coommonly used method measuring reliability in which the range of

chronbach‟s alpha should become from 0.0 to 1.0, where higher value pointing higher reliability among the

indicators. Generally, all researchers target of high reliability of the question variables or items. In terms of

cronbach‟s alpha test, all scale of reliabilities in Table 2 are seen greater than 0.70 which is deemed to be

indicative of good scale reliability, recommended by O‟Leary-Kelly & Vokurka (1998) and Rahman et al.

(2010).

Table 1: KMO and Bartlett‟s test.

Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.855

Barlett‟s Test of Sphericity

Approx. Chi Square 5799.668

Df 630

Sig. 0.000

Table 2: Reliability and Factor Loading Matrices Following Rotation of Five-factor Solutions.

Descriptions F1 F2 F3 F4 F5

Service quality (alpha=0.852)

Product display .695

Staff's courteousness .631

Product warranty or guaranty .786

Sales personnel's skills .793

Wider range of products offer .641

Price tag on products .788

Product quality (alpha=0.863)

Different qualities product offer .660

Product durability .683

High quality food product offer .806

Accurate product information .769

Wider range of products offer .643

Innovative product .618

Price strategy (alpha=0.879)

Price discount .767

Reasonable price .815

Promotional price on various products .775

Product variety offer at different prices .620

Quantity discount on product purchase .698

Store attributes (alpha=0.756)

Impressive music .685

Car parking facilities .817

Cleanness and freshness .802

Store decoration .656

Location .690

Customer satisfaction (alpha=0.794)

Hypermarket satisfies my expectation .713

I made the right decision by choosing hypermarket .685

Overall I feel satisfied when I shop in hypermarkets .665

I like to shop regularly at hypermarket .648

Hypermarket is capable to satisfy customer's needs .687

Footnote: 5 point scale (1= strongly disagree to 5= strongly agree). Extraction method: Principal axis factoring based on five factors specification. Rotation method: Varimax with Kaiser Normalization.

Factor Analysis:

The result found from 292 respondents by using SPSS and structural equation modeling approach, the

Principal axis factoring was carried out to explore the fundamental factors related with 31 items. Confirmatory

Factor Analysis (CFA) is accomplished on those measurement models that consisted of purified measure which

derived from the first step of Exploratory Factor Analysis (EFA). The measurement model is examined by

investigating with convergent validity, construct validity and unidimensionality. The construct validity was

tested by using Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) and Bartlett‟s Test of Sphericity

analyzing the strength of association among constructs. KMO was first calculated to define the suitability of

using factor analysis that helps to identify whether data is suitable to execute factor analysis. KMO value is

varied from 0 to 1, but it is greater than 0.60 indicates to perform factor analysis (Hair et al., 2006). The result of



KMO and Bartlett‟s test of sphericity is showed in Table 1 that both constructs are significant and suitable for

the factor analysis.

The minimum factor loading is required to determine an item in its respective variable. Hence, 5 factors are

run based on eignevalues. The study by Hair et al. (1992) recommended that the minimum factor loading can be

considered if its loading is become equal to or greater than 0.30. Factor loading 0.40 is very important but

greater than 0.50 is most significant (Hair, Anderson, Tatham, & Black, 1992). However, for this study the

general requirement has been accepted for items which are greater than 0.55. The Table 2 indicates the factor

loading matrices following rotation of five-factor solutions. The higher loading is very important and it indicates

the strong positive significant of an item in a specific factor. The findings of the result determined that each of

the five factors such as service quality, product quality, price strategy, store attributes and customer satisfactions

are loaded to the different factors and they are significantly related to the customers‟ actual perception.

Reliability, validity and unidimensionality: Assessing the reliability and validity of the questionnaires are very important. Most of the research is

evaluated using the term of „reliability and validity‟. The validity and reliability of the variables must be

measured before the conducting a latent variables model analysis (Rahman et al., 2010). The study by Lowley

(1998) elaborated the basic types of reliability and validity, such as construct validity (theoretical and empirical

evidence), convergent validity (two measurement scales on equal concepts), discriminatory validity (different

measurement scales) and content or face validity (proposed concept under consideration).

Generally, reliability is associated with a clear statement, pretesting and multiple indicators in the survey

questionnaires. According to Churchill & Lacobucci (2010) in terms of each research, the consistency of result

is found from a measurement instrument which is reliable to the content. The study by Ping (2004)

recommended that validity indicates the consistency, reliability and validity. The validity is very crucial to test

the hypothesized relationship among the variables (Musa, 2004). Validity is defined by Malhotra (2007) stated

that the extent to which different observed scale score ponder true differences among objects. The

unidimensionality assesses the extent to which the items in a scale are measured by the same variables (Rahman

et al., 2010 and Venkatraman, 1989). According to Anderson & Gerbing (1982) demonstrated that

unidimensionality and reliability should be conducted before assessed of the discriminant and convergent

validity. Confirmatory Factor Analysis (CFA) can be used for evaluating unidimensionality. Hence, CFA is

conducted for six variables to identify 31 indicators whether these are designated adequately. The structural

equation modeling is used through AMOS to conduct the analysis. Empirical study in CFA is measured by using

criteria such as Root Mean Square of Error Approximation (RMSR), Comparative Fit Index (CFI) Adjusted

Goodness-of-fit Index (AGFI) and Tucker-Lewis Index (TLI) which shows the summarized result in Table 4.

Comparative Fit Index (CFI):

The study M.Bentler (1990) formulated that

Where, , and NCP are the discrepancy, the degrees of freedom and the noncentrality parameter estimate

for the model being evaluated and are the discrepancy, the degrees of freedom and

the noncentrality parameter estimate for the baseline model. The value of CFI is equal to or greater than 0.90

identify that the required level is achieved but 0.95 is a good fit to the data that is recommended by Bentler

(1992) and Awang (2012). According to study Raykov & Marcoulides (2000) and McDonald & Marsh (1990)

argued that CFI value close to 1 indicates a very good fit and acceptable for well-fitting model. Consequently

the study by Awang (2012) mentioned that CFI value 0.90 to 1 is accepted as being indications of good-fit

model. Table 3 reveals that CFI values are very good and high ranging that indicated the good model fit.

Goodness of Fit Index (GFI):

It was devised by Joreskog & Sorbom (1984) for maximum likelihood and unweighted least squares

estimation, as well as generalized to other estimation criteria by Tanaka & Huba (1985). GFI is less than or

equal to 1 is acceptable for a good fit model but especially the value of 1 indicates a perfect fit. The study

Rahman et al. (2010) stated that GFI value is greater than 0.90 for a good model. The GFI is given by

, where is the minimum value of the discrepancy function and is obtained by evaluating

F with , g = 1, 2……., G.



Adjusted Goodness of Fit Index (AGFI):

AGFI takes into account the degrees of freedom available for testing the model. It is an alternative index in

which the index value is adjusted for the number of parameters.

AGFI is bounded by one, which indicates a perfect fit. The AGFI is given by

Where,

TLI:

The Tucker-Lewis coefficient in the notation of Bollen (1989) was discussed by Bentler & Bonett

(1980) in the context of analysis of moment structures, and is also as the Bentler and Bonett non-normed fit

index. It is given by

Where, and are the discrepancy and the degrees of freedom for the model being evaluated, and as

well as are the discrepancy and the degrees of freedom for the baseline model. The typical range for TLI

lies between zero and one, but it is not limited to that range. TLI values close to 1 indicate a very good fit.

Content validity: Content validity is a systematic evaluation (Malhotra, 2007). It is related to the accuracy of the

measurement or valid scale measure what it is designed for and what it is supposed to measure (Bollen, 1989;

Davis & Cosenza, 1993). The content validity is associated with the degree in which the content of the indicator

ponders the proposed concept (Parasuraman, Berry, & Zeithaml, 1991; Burns & Bush, 2000). On the other hand,

the construct validity is the stage where it achieves theoritical and emperical evidence (Steemkamp & Trijp,

1991). The study by Hair et al (2006) posited that construct validity provides the confidence that represents the

accurate score. In this study, a strong content validity in variables was measured based on literature review.

Table 3: The results of model fit.

Factor indicator X2 df P value GFI AGFI CFI RMSEA Alpha

Service quality 16.716 8 0.103 0.981 0.950 0.987 0.061 0.852

SQ1

SQ2

SQ3

SQ4

SQ5

SQ6

Product quality 25.238 9 0.117 0.971 0.932 0.980 0.079 0.863

PQ1

PQ2

PQ3

PQ4

PQ5

PQ6

Price strategy 10.206 5 0.109 0.986 0.959 0.992 0.060 0.879

PS1

PS2

PS3

PS4

PS5

Store attributes 7.905 4 0.205 0.990 0.961 0.992 0.058 0.756

SA1

SA2

SA3

SA4

SA5

Customer satisfaction 9.296 4 0.214 0.987 0.952 0.988 0.067 0.794

CS1

CS2

CS3

CS4

CS5

Customer loyalty 4.509 2 0.115 0.992 0.960 0.994 0.066 0.821

CL1

CL2

CL3

CL4



Convergent validity: The convergent validity is the point of association between two measurement scales which measure the

equal concept (Davis & Cosenza, 1993). According to Hair et al. (2006) demosntrated that convergent validity

is used through factor loadings, reliability and unidimensionality. CFA can be used to evaluate convergent

validity. The staudy by Bentler (1992) posited that Normed Fit Index values equal to or greater than 0.90

indicates an adequate model fit.

In this survey, the questionnaires were distributed to the respondents and they were accordingly developed

and modified upon receipt of the results or feedback. In a validity perspective, briefly it can be defined that the

content validity is achieved through careful research design but convergent validity is achieved when multiple

indicators functions consistently. Multiple elements are used to measure all the constructs that can lead to

accurate convergent validity. Construct validity occurs when data are statistically analyzed, examined, and

described.

The important factors of the customers‟ satisfaction and customer loyalty were in detail and its validity and

reliability scale was verified in the analysis. The factors can be considered as significant when they are

determined by a factor loading greater than 0.5 and the eigenvalue equals to or greater than 1.0. The Cronbach‟s

alpha coefficient is also very important to test the reliability of the scale. The confirmatory factor analysis is

applied to check the validity and reliability of the measurement scale in the data analysis for measuring

customers‟ satisfaction and loyalty in the Malaysian hypermarket perspectives. The study by Byrne (2010)

stated that the confirmatory factor analysis is the multivariate statistical method and it is evaluated by statistical

means to identify the adequacy of its goodness of fit.

According to Fornell & Larcker (1981) posited that discriminatory validity is achieved when the ratio of

variance removed in each construct exceeds the square of the coefficient which represents the correlation with

other constructs. In terms of reliability, the evaluation of an instrument can be made by using the construct

validity and internal validity. The Cronbache‟s alpha coefficient is used to examine the reliability of the scale

that is accepted on the lower limit from 0.60 to 0.70 (Hair, Anderson, Tanthan, & Black, 1998).

Hypothesis Testing:

Turning to the assessment of the hypothetical paths analysis in the statistical structural model, it is

important to know that whether the process of the path coefficients is significant in the hypothesized direction.

Five hypotheses were determined for this study. Table 5 demonstrates the standardized regression weight of the

variables of the hypothesis testing and the result shows that there is positive coefficient of all constructs. The

structural equation model was employed to examine the relationship among the variables. The full model is fit

well statistically and shows that Chi-Square/df=1.282 (Chi-Square=546.336, df=426); RMSEA=0.051;

CFI=0.917; GFI=0.902; AGFI=0.900; TLI=0.910. Generally, the fit indices illustrated the good fit between

proposed model and data as Chi-Square statistics=1.282 (Chi-Square=546.336, df=426); RMSEA=0.051

determine a good fit and most indices achieved greater acceptable range which is illustrated in Table 4. The

fitness indexes assessment for the structural model in according to the Fig. 2 which draws the full model of the

five paths hypothesized model and all the paths were significant at p < 0.05. The hypothesized model with items

indicating the construct service quality, product quality, price strategy, store attributes, customer satisfaction and

customer loyalty. In this model, service quality, product quality, and price strategy and store attributes have

significant relationship on customer satisfaction and overall customer satisfaction has strong effect on customer

loyalty. Especially, product quality is more significant on customer satisfaction with compare to other

constructs. Therefore H2 is accepted at p < 0.000. Customers‟ attention to product quality can change

dramatically due to build up experiences, cost of quality and information accumulate (Rahman et al, 2010;

Quelch & Hoff, 1986). In terms of H1, service quality has significant impact on customer satisfaction therefore

H1 is accepted at p < 0.000. According to some philosophy who found that service quality has a significant

impact on customers (Tu et al., 2011) as service quality based on the perception and expectation of customers

(Rahman et al., 2010; Wal, Van, & Bond, 2002). The result indicates for H3 is also accepted at p < 0.000, since

price strategy has positive relationship with customer satisfaction. According to Hellstrand (2010) posited that

customers‟ expectation and loyalty are closely related with the fair price strategy. Consequently store attributes

has significant relationship to customer satisfaction and overall customer satisfaction has direct relation to

customer loyalty which is seen in Fig. 2.

However, according to hypothesized model, RMSEA is 0.051 and the normed chi-square gives very good

value 1.282. CFI, GFI, AGFI and TLI both are greater than or equal to 0.90 respectively as recommended by

Awang (2012). The result found that the product quality is considered very important in Malaysian

hypermarkets as perceive by customers (beta=0.67) as compared to service quality (beta=0.61). On the other

hand, overall customers‟ satisfaction has strong relationship on customer loyalty (beta=0.75). Therefore, the

result of the analysis, the hypothesis model as demonstrated in Fig. 1 which has indicators for each of the

construct.



Fig. 2: Customers‟ perception towards service quality, product quality, price strategy and store attributes of

Malaysian hypermarkets and their effect on customer satisfaction and loyalty.

Table 4: The fitness indexes assessment of main model.

Name of the category Name of index Index value Comments

(1). Absolute fit RMSEA 0.051 The required level is achieved

Absolute fit GFI 0.902 The required level is achieved

(2). Incremental fit CFI 0.917 The required level is achieved

Incremental fit AGFI 0.900 The required level is achieved

Incremental fit TLI 0.910 The required level is achieved

(3). Parsimonious fit Chisq/df 1.282 The required level is achieved

Table 5: Standard estimation of the main model.

Structural path (Standardized regression weight) Estimate S.E C.R P

H1 Customer satisfaction <--- Service quality .612 .081 6.329 0.000

H2 Customer satisfaction <--- Product quality .677 .087 6.965 0.000

H3 Customer satisfaction <--- Store attributes .472 .064 3.056 0.001

H4 Customer satisfaction <--- Price strategy .530 .076 4.357 0.000

H5 Customer loyalty <--- Customer satisfaction .754 .098 7.305 0.000

Conclusion And Implementation:

The study focused on the customers‟ satisfaction and loyalty of Malaysian hypermarkets from customers‟

behavioral perception. Generally, customers‟ perception is widely varied, which mostly associated with service

quality, price (Rahman et al., 2010), product quality and store attributes of retail industry. This research is also

identified the overall customer satisfaction has strong significant relationship with customer loyalty. Customer is

the king of a business organization. Customer satisfaction and loyalty is deeply interrelated with customers‟

purchase behavior. Indeed, customer satisfaction is very important, since the finding of the research is examined

that service quality, product quality, price strategy and store attributes have significant impact on customer

satisfaction and overall customer satisfaction has direct impact on customer loyalty. Therefore, customer

satisfaction is an antecedent to the customers‟ loyalty in hypermarkets context and it is recommended by Dahesh

et al. (2012) demonstrated that customer satisfaction is the key and real determinant to the customers‟ loyalty to

a particular industry. The author also point out that managerial strategy is an important indicator to the

customers‟ loyalty in every business firm.

To investigate the customer satisfaction in Malaysian hypermarkets, the research provides exploratory study

by distributing research questionnaires among Malaysian hypermarkets (Giant, Tesco and Carrefour) consumers

involving professionals, students, practitioners and other consumers of hypermarket industry. The result found

that service quality and product quality is more significant than other factors of hypermarket setting.

Consequently, price strategy as well as store attributes is verified significant with customer satisfaction.

Customer loyalty can be sustained through developing customer satisfaction. In this study, the result found that

customer satisfaction is the mediating construct which has strong relationship to customer loyalty. The previous



study Abdullah (2012) recommended that the higher customers‟ satisfaction level will result in a higher

customers‟ loyalty.

According to literature review, there was illustrated a vast of customer satisfaction and customer loyalty

dimensions under the different constructs. In this study, four constructs (service quality, product quality, price

strategy and store attributes) are verified to important for developing customer satisfaction. Under the construct

of service quality, five dimensions are most important for customer satisfaction such as staff‟s courteousness,

product warranty or guaranty, sales personnel‟s skills, wider range of product offer and price tag on products are

the important dimensions. In terms of product quality, six dimensions are most important for customer

satisfaction including different qualities product offer, product durability, high quality food product offer,

accurate product information, wider range of product offer and innovative product offer. Consequently, price

discount, reasonable price, promotional price on various product, product variety offer at different prices,

quantity discount on product purchase are the important dimensions for developing customer satisfaction and

customer loyalty. Finally, store attributes is also important construct that is verified to significant with customer

satisfaction. However, in terms of store attributes, the result found the five dimensions that are impressive

music, car parking facilities, cleanness and freshness, store decoration and location are the most important for

developing customer satisfaction and building customer loyalty in the retail business industry in Malaysian

hypermarket context.

Limitation and Direction for Future Research:

The limitation of the study is encountered on the total process of this research. The sample size of this

survey may not demonstrate total population owing to limited financial resources and time consuming. In

addition, two hundred and ninety two (292) samples from Kuala Lumpur area may not enough to illustrate

properly total Malaysian hypermarkets‟ consumers who are aged above 18 years. This limitation does not affect

the overall result of this study because Kuala Lumpur areas such as Batu cave, Wangsamaju, Sri Rampai, Kota

Damasara and Puchong are the highest number of outlets in Malaysia. However, the findings of the study are

constructive, for further verification and implementation by the practitioners of hypermarkets organization. In

terms of future research, this is beneficial and practical as well as discussion relating to the limitation of the

research. The researchers are encouraged to conduct for future study especially throughout the whole Malaysia.

The research should be conducted nationally that covered entirely all area of Malaysia to clarify the customer

satisfaction and customer loyalty. The results of this study from different customers‟ background can aid to

generalize the overall population as well as developing intensive research. For further research, researchers

should look into other construct like managerial strategy, value of products, needs of customers and others.

Particularly, Malaysian hypermarket industry should emphasis and implements properly the customer service

sector, product quality, price strategy and store attributes, as these are verified to significance relationship with

customer‟s satisfaction and loyalty in Malaysian hypermarkets. In addition, diversity research is very important

and it will provide more accurate information as well as solution of the problem to Malaysian hypermarkets for

implementing the effective marketing strategy to develop customer satisfaction and customer loyalty.

Furthermore, different types of languages (English, Tamil and Malay) are necessary for constructing the

questionnaires for future researcher.

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