The Impact of Marketing Mix Variables on Organizational Goals

on Health Service Clinic at West Bandung-Indonesia

Harman Malau

Lecturer, Master Management Department, Adventist University, Bandung, Indonesia

Email: harmanmalau@unai.edu

Abstract

This study focus on the impact of marketing mix variables toward organizational goals. The purpose is

to test the marketing variables factors such as product, price, promotion and place toward the goals on

Health organization in Indonesia. This research employed primary data by distributing relevant

questionaires and using likert scale surveys from strongly disagree, disagree, undecided, agree and

strongly agree, respectively stands for 1, 2, 3, 4 and 5 to the whole employees. The secondary source

also employed from books, journals, internet and the periodicals. The data was analyzed using

descriptive ( mean, standard deviation) and regression analysis. The empirical studied showed that the

mean for product was 3.3 (36 out of 55 derived from 11 questionaires); price was 3 (18 out of 30 derived

from 6 questionaires); promotion was 2.8 (17 out of 30 derived from 6 questionaires); place was 1.8 (11

out of 30 derived from 6) and goal was 2.2 (11 out of 25 derived from 5 questionairres). Partial

correlation (r) showed respectively 0.304;0.417;0.274 and 0.235 for product, price, promotion and

place. It means that the correlation between independent variables and dependent variables was week.

The analisis of variance results showed that anova F-count =0.889 and anova Sig=0.525. Since the

result of anova Sig. was bigger than 0.05, therefore the regression model could not be used to predict

the success or failure of the organizational goals.

Keywords: Marketing variables, organizational goal, health service

I. Introduction

One of the marketing variable integration is known as the marketing mix. In this case, a

conceptor named Borden (1964) introduces important variables in marketing, developed by McCarthy

(1964) as marketing mix with formal model with formulation of 4Ps which is an abbreviation from the

word product, price, promotion and place (channel of distribution). And the marketing mix continues

to grow, from 4Ps only to the expansion of 7Ps (Booms and Bitner, 1981) by adding three other

variables: people, process and physical evidences as strategic elements, which affect organizational

goals. There is a general concept of marketing Mix model as a generic marketing framework, but there

is no agreement about the total number of the variables (Bobeica, 2011). According to marketing

scholar, (Akroush, 2011) believes that his research has suggested 5Ps rather than 7Ps elements. The

expanded 3Ps, people, process, and physical evidence, are no longer 3Ps rather; They are fully

integrated in one element of the SMM (Service Marketing Mix) elements named as "people" which is

the service providers.

This research limited with 4Ps marketing variables consists of product, price, promotion and

place (channel of distribution). This study focus on the Impact of Marketing Mix Variables on

Organizational Goals On Health Service Clinic at West Bandung-Indonesia. As Sukirman( 2015) stated

that Clinical Management and Community Health Center can not be separated from the management

system. Quality of service has a very important meaning in determining the choice of treatment for the

patient. This study aims to determine how the impact of the use of variable marketing mix in health

services to the achievement of health service organization goals. The object of this study is all the sick

people who went to the clinic and health center in West Bandung consisting of 3.4 million people who

served by 31 health centers and 30 clinics. The location of this service spread throughout West Bandung.

Moreover, Sukirman(2015) also mentioned that many communities living near certain health service

locations do not seek medical treatment but choose other health services. This phenomenon shows that

there are factors that cause why patients do not make their choice to the nearest clinic or health center.

In other words, although clinics and health centers are health services, the competition for getting

patients persists. Progress from a clinic and health centers can not be separated from the number of

patients. This study examines whether marketing mix variables can be used as variables that have a

positive impact on the number of patients. Aside from quality, health organizations have quantity goals.

As a service organization, the application of marketing strategy would be tested with the achievement

of organizational goals. This study focuses on strategy in marketing variabels such as quality of service,

price, promotion and place toward organizational objectives.

Marketing strategy in service organization is not a new concept. Numbers of service

organization has been appling marketing strategy to achieve it's goals. Strategic marketing management

is not only the art of marketing objectives (Odunlami, 2013). As a clinic, beside of patient's quality,

quantity is one of the very important goals of health organizations.

2. Literature Review

2.1 Marketing Variables

Marketing variables is also known as marketing mix that has been used as a foundation in model

in marketing strategy. The marketing mix has been defined as the set of marketing tools that the firm

uses to market its marketing objectives in the target market. According to Kotler (2016) the marketing

mix refers to four broad levels of marketing decision, namely: product, price, promotion, and place.

Product. Product is a good, idea, information, object or service created to fulfill customers' needs and

requirements in markets. In other words, products can be in the form of services or goods (Business

Dictionary, 2017). Product is also defined as high quality and branding of services (Aaker, 1996; Doyle,

1999; Tilley, 1999). Moreover it can be also defined as superior customer service (Reichheld and Sasser,

1990; Wong and Perry, 1991; Christoper, 1999; Lovelock, 2001). In this case, treatment is a product of

service because of the character of intangible, inseparability, variability and perishability (Malau, 2017).

Furthermore, in such health organizations for example; Hospitals, clinics and physician practice is of

course a variable that is classified to product service because it sells treatment services to patients

(Akroush, 2011). Can also be understood as the main mission hospital is a pleasant service and that

brings healing. And that is the need and requirement that is very important for the customer. Services

provided it must provide satisfaction to the patient.

For the sake of marketing success, business management must ensure to have the right type of

service that is in demand for your market. Type of service is a distinguishing thing that can be perceived

by customers. For example speed of service, sophistication of equipment, completeness of facilities,

laboratory examination and hospitality doctor / nurse.

Keep in mind that the four stages that generally occur in the life of a company, business or

service institution. This period begins with the birth of a product or service, then matures and eventually

dies or disappears from the market. The product or service does not experience the same age. There are

companies that remain exist for hundreds of years, but there are also companies that are briefly lost

from the market. This age is highly dependent on customer existence and loyalty. When a company

runs out of its customers, it is certain that the company will die. Stoner (2016) says that it is important

for marketers to reinvent their products to stimulate more demand once it reaches the sales decline

phase. Marketers need to follow their customers' wishes to stay loyal. Marketers need to make better

service changes as expectations change satisfies their customers. According to (Rahmat, 2016) the

success of service companies can not be separated from five important things that need to be considered

by marketers, including the provision of fast and appropriate services in accordance with customer

desires, employee performance improvement, customer pricing reasonable and adjustment approaches

development or trend Work culture.

Changes in customer desires are an ongoing challenge for the company. The incompatibility of

products offered will disappoint the customers who ultimately leave the product. Marketers are very

important to create the right product mix. It may be wise to expand your product mix by diversifying

and increasing the depth of your product line. All in all, marketers must ask themselves the question

"what can I do to offer a better product to this group of people than my competitors".

In developing the right product (Acutt, 2015) you stated that you have to: What does the client

want from the service or product? How will the customer use it? Where will the client use it? What

features must the product have to meet the client's needs? Are there any necessary features that you

missed out? Are you creating features that are not needed by the client? What's the name of the product?

Does it have a catchy name? What are the sizes or colors available? How is the product different from

your products? What does the product look like?

Price. Price is perceived by the customer as an indicator of quality or benefits. High priced products

are often perceived as high quality. But often customers feel disappointed because the expensive price

is not commensurate with the quality or usefulness obtained. Customer loyalty will be disrupted if they

are disappointed with a product. And if a customer is disappointed with a product there is a high

probability that the customer will leave the product.

The price of the product is basically the amount that a customer pays for to enjoy it. Price is a

very important component of the marketing mix definition. It is also a very important component of a

marketing plan as it determines your firm's profit and survival. Adjusting the price of the product has a

big impact on the whole marketing strategy as well as greatly affecting the sales and demand of the

product. This is inherently a touchy area though. If a company is new to the market and has not made a

name for yourself yet, it is unlikely that your target market will be willing to pay a high price. Although

they may be willing in the future to hand over large sums of money, it is inevitably harder to get them

to do so during the birth of a business. Pricing always help shape the perception of your product in

consumer eyes. Always remember that a low price usually means an inferior good in the consumer eyes

as they compare your good to a competitor. Consequently, the prices are too high will make the costs

outweigh the benefits in customers eyes, and they will therefore value their money over your product.

Be sure to examine competitors pricing and price accordingly.

When setting the product price, marketers should consider the perceived value that the product

offers. There are three major pricing strategies, market penetration pricing, market skimming pricing,

and neutral pricing.

Here are some of the important questions that you should ask yourself when you are setting the

product price: How much did it cost you to produce the product? What is the customers’ perceived

product value? How you think that the slight price decrease could significantly increase your market

share? Can the current price of the product keep up with the price of the product’s competitors?

Placement or distribution is a very important part of the product mix definition. You have to position

and distribute the product in a place that is accessible to potential buyers. This comes with a deep

understanding of your target market. Understand them inside out and you will discover the most

efficient positioning and distribution channels that directly speak with your market. There are many

distribution strategies, including: intensive distribution, Eexclusive distribution, selective distribution

and franchising.

Here are some of the questions that you should answer in developing your distribution strategy:

Where do your clients look for your service or product? What kind of stores do potential clients go to?

Do they shop in a mall, in a regular brick and mortar store, in the supermarket, or online? How do you access the different distribution channels? How is your distribution strategy different from your

competitors? Do you need a strong sales force? Do you need to attend trade fairs? Do you need to sell

in an online store?

Promotion. Promotion is a very important component of marketing as it can boost brand

recognition and sales. Promotion is comprised of various elements like: sales, public relations,

advertising and sales promotion. Advertising commercials, radio commercials, print media, and internet

advertisements. In contemporary times, there seems to be a shift in focus offline to the online world.

Public relations, on the other hand, are communications that are typically not paid for. This includes

press releases, exhibitions, sponsorship deals, seminars, conferences, and events.

Word of mouth is also a type of product promotion. Word of mouth is an informal communication

about the products by satisfied customers and ordinary individuals. The sales staff plays a very

important role in public relations and word of mouth. It is important to not take this literally. Word of

mouth can also circulate on the internet. Harnessed effectively and it has the potential to be one of the

most valuable assets you have in boosting your online profits. An extremely good example of this is

online social media and managing a firm's online social media presence.

In an effective marketing promotion strategy, how can you send marketing messages to your

potential buyers? When is the best time to promote your product? Will you reach your potential

audience and buyers through television ads? Is it best to use the social media in promoting the product?

What is the promotion strategy of your competitors?

Place/Channel of Distribution. Place is defined as a channel of distribution and activity in

delivering services or products from providers to receivers (Kotler, 2016; Thornton, J and White, L.,

2001). Place is also define as a connecting bridge between producers to constumers. In the market, the

producer gives the product to wholesaler, middlemen and retailer to be continued to costumers (Kotler,

2015; Malau, 2017).

2.2 Organizational Goal.

The idea of organizational goal has advanced from time to time, but to a great extent a

discussions stressed their "regulating" and "evaluative" capacities (Connolly et al., 1980: 211).

Organizational goals are regularly utilized as criteria for evaluating performance (Hoy and Hellriegel,

1982). Conceptualized along these lines, hierarchical objectives are fundamentally the benchmarks used

to assess viability of hierarchical conduct and accomplishment of results (Tansik, 1973).

Types of Goals. Official goals are the general aims of an organization as expressed in the

corporate charter, annual reports, public statements and mission statements. Their purpose is to give the

organization a favorable public image, provide legitimacy, and justify its activities. Operative goals

reflect the actual intention of an organization. They describe the concrete steps to be taken to achieve

the organization's purpose. They often do not correspond with official goals. For example: Many

organizations mention environmentally friendly behavior as a goal of the organization. However in a

study of the organizations, as well as environmental friendly behaviors as an organizational goal, very

few had corresponding operative goals, i.e. Very few delineated how such behavior will be implemented

in the different departments of the organization. Additional examples: Most prisons have rehabilitation

of prisoners, preparing them for re-integration into society as their official goal, but in practice, most of

them operative procedures involve aspects of custodial care. For many voluntary organizations,

especially in these days of funding cutbacks, the community service which is their official mandate or

goal takes secondary precedence to the fundraising activities that will ensure their survival.

Benefits of organizational goals. Goals serve as guidelines for action, directing and channeling

employee efforts. They provide parameters for strategic planning, allocating resources and identifying

development opportunities. Goals provide constraints in the organization. Choosing certain goals

reduces discretion in pursuing other goals. Eg. The goal of maximising stockholder dividends

immediately reduces financial resources available for expense accounts. Goals act as a source of

legitimacy by justifying an organization's activities and existence. For new organizations the struggle

for legitimacy is great. Maintaining legitimacy is easier but still, some organizations do lose legitimacy.

For example imagine a hospital whose goal is to increase occupancy by performing as much surgery as

possible. Such a goal would surely reduce its legitimacy. According to Tang (2008), goals is defined as

standards of performance. To the extent that the goals are stated, they are set of standards for evaluation.

Goals provide a source of motivation. By presenting a challenge and how to achieve it, organizational

goals act as behavioural incentives. For example: the path-goal theory of leadership (Baumeyer, 2017)

Individual vs organization goals. Organizations do not make goals; Individuals do. Therefore, the

goal will reflect the interests of the individual. The greater the overlap between an individual's goals

and organizational goals, the better for the organization. Unfortunately this is not the case. For example,

it may be in the best interests of an organization to amalgamate certain departments or to outsource

some of the departments and their leaders, so these goals will not be supported. Goals are set in an

organization by creating coalitions of non-competing groups. There is constant bargaining among the

different organizational leaders to find the right direction of the organization. Organizational groups

with greater power will have more control over the direction of the organization. This is not always in

the best interests of the organization.

Goal setting should be measurable, easy to grasp and easy to see. The measurements can be made

based on the following examples:

1. How many new customer targets are set for a given period.

2. How much of the rupiah entry fee or pegged profit is expected to be obtained from the

planned business activities

3. What is the area of targeted marketing coverage for a given time period

To achieve that goal, the company formulates tactics and marketing strategies in this case the

focus in marketing variables. The marketing scientists provide marketing formulas with the number of

different variables. For a certain period of time the fame of the variable undergoes the dynamics of the

changes of 4Ps, 5Ps and 7Ps. This size limitation is believed to be enough to contribute to the variables

that contribute to the achievement of organizational goals. For example 4Ps variable represents product,

price, promotion, and place. While 5Ps is 4Ps plus that variable, that is "people". And 7Ps is 5Ps plus

two other variables, namely "process and physical evidence". (E.g., Booms and Bitner, 1981; Gronroos,

1994; Day and Montgomery, 1999; Al-Khateeb, 2009)

In the achievement of goal, management is very important to make how to make all marketing

variables serve to contribute to achieve the goals set. For example, if a product is created there is a

model expected by the customer that creates satisfaction and encourages repeat purchase. This is

particularly important (Faiza et al 2001; Odunlami, 2015) says that "customer satisfaction has greatly

influence toward repurchase. It can be implicitly understood that customer satisfaction has an effect on

achieving the goal of adding new subscribers (Malau, 2017). But be aware that adding to the number

of customers is not an easy thing. Empirical results prove the fact that "it is five times more expensive

to win a new customer than to keep an existing customer" (Deptolla, 2003). Is the pricing strategy set

already in accordance with customer expectations so it is not considered too expensive. Whether the

promotional form is done can affect and convince customers to take a buying action. In other words, is

the entire treatment of the functions of these variables can achieve organizational goals or not and how

those variables are enabled.

III. Research Methodology

The qualitative method was used in this research by distributiong relevant questionaires and

using likert scale surverys fron stongly disagree, disagree, undecided, agree and strongly agree,

respectively stands for 1,2,3,4 and 5 to the whole employees. The secondary source also employed from

books, journals, internet and the periodicals. The data was analyzed using descriptive (mean, standard

deviation) and regression analysis. Testing criteria:

If the Sig t> 0.05 / 2, then Ho is accepted, it means that there is no significant performance.

If the Sig t <0.05 / 2, then Ho is rejected, it means that there is a significant performance (Santoso 2013;

Siregar, 2012 and Atmajaya, 2009).

Formula of linear regression. One of the tools that is able to predict the requirement in the future

based on the data in the past, or to know the influence of independent variable against dependent

variable is to use the linear regression. Linear regression is divided into two categories, simple linear

regression and double linear regression. The use of simple linear regression is only for one independent

variable and dependent variable. However, double linear regression is used for one independent variable

and two or more dependent variables.

Formula (Siregar, 2013): Y = a + b . X

Y = Dependent variable

X = Independent variable

a and b = Constanta

Formula to find the value of Constanta b

𝑏 = 𝑛 .∑ 𝑋𝑌−∑ 𝑋 . ∑ 𝑌

𝑛.∑ 𝑋2−(∑ 𝑋))2

Formula to find the value of Constanta a:

a =∑ 𝑌−𝑏. ∑ 𝑋

𝑛

n: Total of data

Formula to make a regression equation

Y = a + b . X

IV. Result and Discussion

The following is the statistical result for multiple regression. Table 1 shows that the average

value for product (X1) is 3.3 is the highest value followed by the average price value (X2) of 3;

Promotion (X3) of 2.8; Place (X4) of 17 and variable Y of 2.2. In the same table also indicated that the

standard deviation for product (X1)of 1.2; Then price (X2) 2.27; Promotion(X3) of 2.; Promotion (X4)

1.93 and variable Y of 2.8

Partial correlation between product variable (X1) with organizational goal (Y) is obtained value

of r = 0.304. This value indicates a weak positive relationship between (X1) and (Y). The mean weak

intent here is a direct relationship between variables (X1) and (Y). That is, if the value of work

motivation (X1) rises, then the achievement of goals will go up even though the increase is not

significant. The partial correlation between variable price (X2) and organizational goal (Y) is r = 0.417.

This value indicates a weak positive relationship between (X2) and (Y). The mean weak mean here is

a direct relationship between variables (X2) and (Y). That is, if the value of work motivation (X2)

increases, then the achievement of the goal will rise even though the increase is not significant.

Table 1. Statistic Results

Similarly, correlation partial promotion (X3) obtained value of r = 0.274. This value indicates

a weak positive relationship between (X3) and (Y). The mean weak intent here is a direct relationship

between variables (X3) and (Y). That is, if the value of work motivation (X3) increases, then the

achievement of goals will go up even if it is not significant. And the last is the variable place (X4) with

organizational goal (Y) obtained value of r = 0.235. This value indicates a weak positive relationship

between (X4)

and (Y).

Based on the probability value, if the probability (sig)> 0.05, then Ho is accepted and if the

probability (sig) <0.05, then Ho is rejected. Based on the calculation of SPSS probability value (sig)

obtained = 0.524. Since the Sig value is greater than 0.05 then linear regression is not suitable for

predicting organizational goals that are influenced by marketing variables (product, price, promotion

and place)

V. Conclusion

The empirical studied showed that the mean for product was 3.3 (36 out of 55 derived from 11

questionaires); price was 3 (18 out of 30 derived from 6 questionaires); promotion was 2.8 (17 out of 30 derived from 6 questionaires); place was 1.8 (11 out of 30 derived from 6) and goal was 2.2 (11 out

of 25 derived from 5 questionairres). Partial correlation (r) showed respectively 0.304;0.417;0.274 and

0.235 for product, price, promotion and place. It means that the correlation between independent

variables and dependent variables was week. The analisis of variance results showed that anova F-count

=0.889 and anova Sig=0.525. Since the result of anova Sig. was bigger than 0.05, therefore the

regression model could not be used to predict the success or failure of the organizational goals.

Produk (X1) Price (X2) Promosi (X3) Place (X4) Objective

(Y)

Mean 3.3 3 2.8 1.8 2.2

Std

Deviation

1.207 2.276 2.031 1.933 2.802

Pearson

Correlation

0.304 0.417 0.274 0.235 1

Anova (F) 0.915 1.897 0.732 0.528 -

Anova

(Sig)

0.364 0.202 0.414 0.486 -

Coefficients Y= a +bX

Constant= 8 Product=0.364

Constant=1.213; Price=0.411

Constant=4.598; Promosi=0.395

Constant=4.699; Place=0.486

-

Coefficients

t-hitung.

T=(-0.403);

Sig=0.364

t=1.377

Sig=0.202

t=0.856;

Sig=0.414

t=727

Sig=486

-

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