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8/14/2019 The Impact of Marketing Mix on Customer Satisfaction a Case Study Deriving Consensus Rankings From B

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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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iv

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
http://en.wikipedia.org/wiki/Marketing_strategieshttp://www.marketingteacher.com/Lessons/lesson_pricing.htmhttp://www.marketingteacher.com/Lessons/lesson_place.htmhttp://www.marketingteacher.com/Lessons/lesson_plc.htmhttp://www.marketingteacher.com/Lessons/lesson_promotion.htmhttp://en.wikipedia.org/wiki/Target_markethttp://en.wikipedia.org/wiki/Marketing_planhttp://en.wikipedia.org/wiki/Marketing_planhttp://en.wikipedia.org/wiki/Target_markethttp://www.marketingteacher.com/Lessons/lesson_promotion.htmhttp://www.marketingteacher.com/Lessons/lesson_plc.htmhttp://www.marketingteacher.com/Lessons/lesson_place.htmhttp://www.marketingteacher.com/Lessons/lesson_place.htmhttp://www.marketingteacher.com/Lessons/lesson_pricing.htmhttp://en.wikipedia.org/wiki/Marketing_strategies


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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

15


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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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Continue

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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Continue

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/Retail


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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

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



.700 26

3.4.2.3 Reliability Statistics for Carrefour

Table 3.3 Reliability Statistics - Carrefour

Reliability Statistics - Carrefour



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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



.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


.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

the impact of marketing mix on customer satisfaction a case study deriving consensus rankings from b

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