THE RELATIONSHIP BETWEEN MARKETING MIX AND INTENTION TO PURCHASE
TOWARDS COOPS 1 MALAYSIA PRODUCT IN PUTATAN DISTRICT
by ARDIANA BT AMRAN PE 2011 7001C CHAPTER I INTRODUCTION 1 1. BACKGROUND OF STUDY This study explores the relationship between selected marketing mix elements and the customer intention to purchase Coop 1Malaysia products. For a good understanding of the study, a case study on Coop 1Malaysia products has been used by considering the lack of theoretical studies being conducted on the sales of Coop 1Malaysia products. 2. PROBLEM STATEMENT Nowadays, because of the globaliation, prices of food increase rapidly and ha!e a direct effect on de!eloping countries where the citiens of the country began to feel the burden of the cost of li!ing is rising. This followed with the attitude of some traders take ad!antages to also increase their prices, particularly on the grounds of lack of food supplies to profiteer. "#ewan $konomi,%&1'(. Cooperati!es Commission of Malaysia has taken appropriate action to introduce Coop 1Malaysia. Coop 1Malaysia product offer a cheaper price, from '& to )& percent and should not doubt halal status. *y using existing cooperati!e network throughout Malaysia to sell these products, they can reduce the cost of manufacturing and marketing. +s a result, consumer may en,oy sa!ings and the Coop1Malaysia product channelled directly to users so that the users can en,oy -uality products but with a cheaper price. +lthough the price is !ery low, there are still many who do not know about the existence of this product. .n addition, there are also indi!iduals who are not responsible for disseminating negati!e perceptions about this product. +mong the 2 negati!e perception is a product sold at a cheap price because the product is manufactured without -uality. .n addition, this product also has an unattracti!e packaging due to want to sa!e costs in order to be sold at a cheap price. . RESEARCH OB!ECTI"E .n general this study is to determine the intention to purchase the Coop 1Malaysia products. /pecifically, this study will explore Coop 1Malaysia brand from the following aspects0 1. Marketing mix relation with the product. 1ow the marketing mix can help to market the product2 %. /trategies and processes, including product positioning, expansion channel, impro!ement of product -uality, loyalty to the product, and identity. 3hat are the strategies used to compete with other products2 '. 1uman resources and organiational structure and arrangement of style created in the production process, including the management structure products, ad!ertising and marketing. 4se of human resources, organiational structure and order management style created also emphasied. ). 5roduct performance in the area by looking at benchmarks, statistics and the index used to measure the success or failure. 1ow to measure the performance of the product in 5utatan area2 #. RESEARCH $UESTION 3 More specifically, this study is conducted to ra!el out the following -uestions0 ).1 3hat are the marketing mixes that influencing intention to purchase towards Coop 1Malaysia products2 ).% .s there any relationship between price and intention to purchase towards Coop 1Malaysia products2 ).' .s there any relationship between promotion and intention to purchase towards Coop 1Malaysia products2 ).) .s there any relationship between place and intention to purchase towards Coop 1Malaysia products ).6 .s there any relationship between promotion and intention to purchase towards Coop 1Malaysia products2 %. SIGNIFICANT OF STUDY This section will pro!ide brief description on the !arious significances of the study gi!en the two categories $ducational and $conomic. T& C&&'()*+,-( C&..,//,&0 &1 M*2*y/,* . The proposed study ser!es the Cooperati!e Commission of Malaysia as their reference or guide in creating their program. .t will also help the Cooperati!e Commission of Malaysia to enhance their program to identify the best product that been choose by customer. T& C3/+&.(). 4 The proposed study will help customer to buy a product by choosing price or -uality. *y this study they will come up with good decision making. T& F3+3)( R(/(*)45() The proposed study will benefits and help the future researcher as their guide. The study can also open in de!elopment of this study. 6. LIMITATION +s with most research, this research is also sub,ect to limitations despite its contribution to some interesting findings. #ue to the time and cost constraints, people in this research were confined only to one district, that is 5utatan district, with a sample sie of only '&& respondents. This may limit the generaliability of the findings as intention to purchase towards Coop 1Malaysia of people in 5utatan may differ from those other district in the state. Furthermore, intention to purchase towards Coop 1Malaysia product of the people in 5utatan district may also be different across race. /uch differences could be important for marketing strategies in a multiracial state like /abah. 1owe!er, due to the time constraint no comparison of brand purchase influences across race was attempted in this study. +nother limitation of this research is the inclusion of only for Coop 1Malaysia products. #ifferent product may ha!e different response from the people and . ha!e to bear in mind that not all off the people ha!e intention to purchase Coop 1Malaysia products. .n addition, some of the respondents may not be honest and sincere in answering the -uestionnaire. The results of this study should also be interpreted with care. The de!elopment of a process measure for referent influence would add to the strength of the findings and is a limitation of this study. #espite these limitations, the study makes some contribution by pro!iding important information regarding to factors that affect Coop 1Malaysia product in /abah for marketing strategies and promotional planning. 5 CHAPTER II LITERATURE RE"IEW 1.0 INTRODUCTION Malaysia is no exception to this phenomenon in the face of an immediate initiati!e step taken by the 7o!ernment to reduce the burden to be borne by the citiens. Ministry of #omestic Trade, Cooperati!es and Consumerism, take opportunity 6 together with the participation Cooperati!e Commission of Malaysia and Felda .n!estment Cooperati!e in Coop1Malaysia products. +ccording to Cooperati!e Commission of Malaysia "%&1&(, Coop 1Malaysia is brand new to the commonly purchased products "Common 1ousehold items(. +ccording to Cooperati!e Commission of Malaysia "%&11(, Coop 1Malaysia products are e!eryday household products most of which are co8operati!es and local entrepreneurs gathered and repackaged and distributed by Felda Trading /dn. 9imited. "FT/*(. Memorandum of understanding "Mo4( between FT/* and M7/ FT/* sealed since %&1& and was appointed as a consultant to implement a pilot pro,ect :etail /hop Transformation "Change( on retail stores owned cooperati!es. 4p to now there are about ;< types of products on the market 1M C==5 brand and this brand will market 16& products C==5 1M next year. Coop 1Malaysia product is not a ri!al to products sold Kedai :akyat 1Malaysia ">:1M(. This mission is to meet the go!ernment?s efforts to ease the burden of the citien due to rising prices of essential goods and cost of li!ing. Coop 1Malaysia product brand are an alternati!e to the branded items a!ailable in the market. 3ith the -uality and appearance comparable to products from well8known brands Coop 1Malaysia product offer a cheaper price, from '& to )& percent and should not doubt halal status "4tusan Malaysia, %&1%(. *y using existing cooperati!e network throughout Malaysia to sell these products, they can reduce the cost of manufacturing and marketing. +s a result, consumer may en,oy sa!ings and the Coop1Malaysia product channelled directly to users so that the users can en,oy -uality products but with a cheaper price. Coop1Malaysia product -uality is also same with other branded products a!ailable in the market. "Cooperati!e Commission of Malaysia, %&1%( 2.0 LITERATURE RE"IEW 2.1 C&&' 1M*2*y/,* P)&734+/ .n line with Malaysian go!ernment transformation program to emphasie on the citien through the official slogan @:akyat #idahulukanA, the national brand of @Coop 1MalaysiaA products was introduced not ,ust for the sake of unity of !arious races, but also to pro!ide basic fast mo!ing consumer products necessities at affordable prices. 7 The low costs in ad!ertising and packaging incurred by local entrepreneurs ha!e made their products sellable at low prices. 5rices that are between '& to 6& percent lower than other well8known manufacturing brands ha!e enlightened societies especially those price8conscious shoppers and low income earners in the urban areas. The products are a!ailable at >edai :akyat 1 Malaysia ">:1M( "4tusan Malaysia, %&1%( and selected hypermarkets. 2.2 M*)8(+,09 M,: The marketing mix is defined as )5Bs namely the product, price, promotion and place ;K&+2() < A)./+)&09= 2006>. They are often designed to influence consumer decision8making and lead to profitable exchanges. $ach element of the marketing mix can affect consumers in many ways ;P(+() < D&00(22y= 2007>. The marketing mix is the set of marketing tools a firm utilies to pursue its marketing ob,ecti!es in the target market ;B&)7(0= 1?@#>. 3hen a store markets its products, it needs to create a successful mix of the right product, sold at the right price, in the right place and using the most suitable promotion. +ccording to the A.(),4*0 M*)8(+,09 A//&4,*+,&0, marketing mix is @a systematic function and as a se-uence of processes for originating, con!eying and transporting importance to the clients and for taking care of customer associations with means which help the company and its stockholders.A Marketing mix can also be defined as @a set of controllable, tactical marketing tools that work together to achie!e companyBs ob,ecti!esA. The marketing tools of product, price, place and promotion ")5Bs( are the !ariables that marketing managers can control in order to best satisfy customers in the target market. Marketing mix refers to the four ma,or areas of decision making ")5Bs( in the marketing process that are blended and mixed to obtain the results desired by the organiation to satisfy the needs and wants of consumers. :eference is also made to the C*lack *oxB model of H&A*)7= !. (+.*2. This model is related to the black box theory of beha!iorisms and is different from S45,11.*0 (+ *2. ;2006> CCustomer 8 5reference FormationB model which studies the beha!ioral processes inside a consumer. .nstead, H&A*)7 (+ *2. ;1?6?> C*lack *oxB model studies the interaction of stimuli, consumer characteristics, decision process and consumer responses. +ccording to this model, en!ironmental factors are the source of stimuli. /timuli are categoried under marketing stimuli and en!ironmental stimuli. Marketing stimuli is planned and pro,ected by companies and comprise the marketing mix ") 5s( of product, price, place and promotion. Companies stri!e to align product -uality and attributes, pricing, place or channel of distribution and promotional efforts to meet customerBs needs and preference by identifying them through market research. $n!ironmental stimuli are the result of social factors based on economic, technical, political and cultural circumstances of a society. $conomic factors affect purchasing power which in turn will influence customerBs preference and buying decisions especially pricing. Technical factors like new in!entions and new technology products will also affect customerBs preference and buying decisions. 5olitical factors for example, in a country which is facing internal fighting, will necessitate the preference and priority of basic food, shelter, safety and amenities. Cultural factors such as religious beliefs, cultural !alues and practices will also influence customerBs preference and buying decisions. The en!ironmental factors comprising both the marketing stimuli and en!ironmental stimuli will then impact the buyerBs black box. The buyerBs black box contains the buyer characteristics and the decision process which determines the buyerBs purchase intention. 2.1.1 P),4( +ccording to C*7&9*0 *07 F&/+() ;2000>= price is probably the most important consideration for the a!erage consumer. Consumers with high brand loyalty are willing to pay a premium price for their fa!oured brand, so, their purchase intention is not easily affected by price. .n addition, customers ha!e a strong belief in the price and !alue of their fa!ourite brands so much so that they would compare and 9 e!aluate prices with alternati!e brands ;E-*0/ et al.= 1??6B K(22()= 200>. ConsumersB satisfaction can also be built by comparing price with percei!ed costs and !alues. .f the percei!ed !alues of the product are greater than cost, it is obser!ed that consumers will purchase that product. 9oyal customers are willing to pay a premium e!en if the price has increased because the percei!ed risk is !ery high and they prefer to pay a higher price to a!oid the risk of any change ;Y&&0 *07 K,.= 2000>. *asically, long8term relationships of ser!ice loyalty make loyal customers more prices tolerant, since loyalty discourages customers from making price comparison with other products by shopping around. 5rice has increasingly become a focal point in consumersB ,udgments of offer !alue as well as their o!erall assessment of the retailer ;D( R3y+() et al.= 1???>. +ccording to B3482,0 et al. ;1??@>= price significantly influences consumer choice and intention to purchase. 1e emphasied that discount pricing makes households switch brands and buy products earlier than needed. 5rice is described as the -uantity of payment or compensation for something. .t indicates price as an exchange ratio between goods that pay for each other. 5rice also communicates to the market the companyBs intended !alue positioning of its product or brand. 5rice consciousness is defined as finding the best !alue, buying at sale prices or the lowest price choice ;S')&2(/ *07 K(07*22= 1?@6>. +dditionally, consumers generally e!aluated market price against an internal reference price, before they decide on the attracti!eness of the retail price. 2.1.# P)&.&+,&0 5romotion is a marketing mix component which is a kind of communication with consumers. 5romotion includes the use of ad!ertising, sales promotions, personal selling and publicity. +d!ertising is a non8personal presentation of information in mass media about a product, brand, company or store. .t greatly affects consumersB images, beliefs and attitudes towards products and brands, and in turn, influences their purchase beha!iours ;E-*0/ et al.= 1??6>. This shows that promotion, 10 especially through ad!ertising, can help establish ideas or perceptions in the consumersB minds as well as help differentiate products against other brands. +ccording to R&A2(y ;1??@>, promotion is an important element of a firmBs marketing strategy. 5romotion is used to communicate with customers with respect to product offerings, and it is also a way to encourage purchase or sales of a product or ser!ice. /ales promotion tools are used by most organisations in support of ad!ertising and public relations acti!ities, and they are targeted toward consumers as final users. /he also states that promotion has a key role in determining profitability and market success and is one of the key elements of the marketing mix which includes ad!ertisingD direct marketingD sales promotionD public relations and publicityD personal selling and sponsorship. 2.2 P3)45*/( I0+(0+,&0 M&)A,+C (+ *2.= ;2007> defined purchase intention as a situation in which consumer is propelled to purchase a product according to certain conditions. 5rior literature has studied the relationship between purchase intention and ad!ertisement effecti!eness. For this purpose B*8() *07 C53)45,22= 1?77 ha!e de!eloped a scale to measure ad!ertisement effecti!eness. KA(8 (+ *2.= ;2010> identifies purchase intent to be one attribute concerning with cogniti!e beha!iour. /ome researcherBs states customer consideration in buying to be a measure of purchase intention. .ntentions and attitudes are two distinct measures. +ttitudes can be referred as summary e!aluations, while intentions represent @the personBs moti!ation in the sense of his or her conscious plan to exert effort to carry out a beha!iorA. 5urchase intention refers to the customerBs willingness to buy the brand, increase and continue its usage. :esearch conducted by ;W*29)(0= (+ *2.= 1??%> examines brand e-uity, brand preference and purchase intention, where relationship of brand e-uity with purchase intention still remains to be explored. 11 ConsumersB buying decision is !ery complex. 4sually purchasing intention is related with consumersB beha!ior, perception and their attitude. 5urchase beha!ior is an important key point for consumers during considering and e!aluating of certain product ;K(22()= 2001>. G5&/5 ;1??0> stated that purchase intention is an effecti!e tool use in predicting purchasing process. =nce the consumers decide to purchase the product in certain store, they will be dri!en by their intention. 1owe!er, purchase intention might be altered by the influence of price, -uality perception and !alue perception ;D(,+5*.2= 1?@@> and G)(A*2 (+ *2 ;1??@>. .n addition, consumers will be interrupted by internal impulse and external en!ironment during purchasing process. Their beha!ior will be dri!en by the physiological moti!ation that stimulates their respond which bring them to the retail store to fulfill their need ;K,. *07 !,0= 2001>. .ntentions are different from attitudes where attitudes are summary e!aluations while intentions represent the personBs moti!ation in the sense of his or her conscious plan to exert effort to carry out a beha!ior ;E*92y < C5*,8(0 1??>. .n F,/5b(,0 and AEC(0F/ ;1?7%> formulation, attitudes influence beha!iour through beha!ioural intentions. 5ast studies indicate that the link between attitude toward the ob,ect and beha!iour is not always clear. .n some cases, attitudes ha!e a direct effect on beha!iours ;B*9&CC, < W*)/5*A 1??2> but no effect in B*9&CC, ;1??2>. +n intention to buy a brand is based on a consumerBs attitude towards buying the brand as well as the influence of social norms about what other people expect. +t times, intention is also difficult to measure. For instance, B*9&CC,= B*3.9*)+0() *07 Y, ;1?@?> commented that when an indi!idual is unclear about his or her intention in regards to some action, there is strong tendency for him to react based on their past actions. 1ere, the indi!idual is likely to report his or her habit rather than intention when responding to the intention ;W*)/*A < D*-,/= 12 1?@%>. #espite issues, purchase intention is an important construct in consumer beha!ior ;K&+2() < A)./+)&09= 200>. CHAPTER III METHODOLOGY ?.1 M(+5&7&2&9y 13 *ased on literature re!iew of past studies, a theoretical framework for marketing mix and intention to purchase was formed. For an o!er!iew of the research model refer to figure 1 below. .n accordance with the research -uestion, the conceptual framework "see Figure 1( was de!eloped to guide this study. Figure 10 5roposed Theoretical Framework RESEARCH DESIGN The -uestionnaire will be di!ided into two parts. The first is concerned with the demographic. The second part is thirty !ariables associated with the marketing mix. + 9ikert8scale of 1 to 6 was adopted for all the marketing mix measures with the anchors Cstrongly disagreeB "1( and Cstrongly agreeB "6(. The items were de!eloped with reference to the empirical studies of Y&& *07 D&0+53 ;2001> and L*//*) (+ *2 ;1??%>. The reason for referring to their scale de!elopment studies is that their scales are the most commonly accepted measure of customer8based brand e-uity ;W*/5b3)0 *07 P2*08= 2002>. ?.2 PRICE 5rice is the amount of money that consumers pay to obtain the product. 5ricing decisions should take into account profit margins and the pricing response of competitors. 5ricing includes list price, discounts, allowances, and payment period and credit terms. 5rice is an important element in the marketing mix structure 14 MARKETING MIX - Price -Promotion -Place -Product Intention to Purchase Coop 1Malaysia Product because low prices may not generate enough profits for the organiation and worse still cannot co!er costs. Too high prices may dri!e away customers. This is because the amount of money that is demanded in exchange for a product is entirely dependent on the customerBs means, preference and needs. +ccording to S5()7(0 ;1??7>, in an article for small business reports, customer defections may be related to price increases. D(,+5*.2 ;1?@@> is of the !iew that monetary cost is one of the factors that influence consumerBs perception of a productBs !alue. G*2( ;1???> used a techni-ue called Customer Ealue +nalysis "CE+( to measure percei!ed !alue. This percei!ed !alue metric was used to link performance of companies to the firmBs relati!e market share. The !alue metric was defined as customerBs response to a Cworth what paid forB -uestion. 7ale posed a !alue -uestion Cconsidering the products and ser!ices that your !endor offers are they worth what you paid for them2B 5rice becomes an important element in the marketing mix that retains Coop 1Malaysia products. .n this study, we will be examining the negati!e relationship between price and customer retention. Therefore, this study will examine the likelihood that lower prices will increase intention to purchase and higher prices will reduce intention to purchase. .n other words0 H1: Price has a positive relationship with intention to purchase ?. P)&.&+,&0 5romotions are acti!ities that persuade target customers to try the product. 5romotion decisions are those related to communicating and selling to potential consumers. 5romotion decisions in!ol!e ad!ertising, sales promotion, sales force, public relations, direct marketing, media types, word of mouth and point of sale. 5romotion is a !ery important element in the marketing mix because it is a means of communication to the customer to promote product awareness, product knowledge, 15 product attributes and benefits and persuade the customer to buy the product. .t pro!ides the stimulus to which customersB response. C5309 (+ *2. ;200> in his study also mentioned that promotion is an important factor in the marketing mix. 5romotion yields great influences on intention to purchase for Coop 1Malaysia products. This study will examine whether more effecti!e promotional acti!ities will result in higher intention to purchase for Coop 1Malaysia products. Therefore, the study will examine whether0 H2: Promotional activities are positively related to intention to purchase. ?.# P2*4( 5lace refers to the company acti!ities that make the product a!ailable. 5lace decisions are those associated with channels of distribution that ser!e as the means for getting the product to the target customers. The distribution system performs transactional, logistical and facilitating functions. #istribution decisions include market co!erage, channel member selection, assortments, locations, in!entory and transport. 5lace is an important aspect of the marketing mix because ob!iously the location of your business and the a!ailability and accessibility of your products should be as con!enient as possible for the customer to reach. *ased on the study by C5309 (+ *2. ;200>, site image or place is therefore, another important factor in the marketing mix which affects intention to purchase for Coop 1Malaysia products. This study will examine the likelihood that the more accessible and a!ailable the product to the customer, the higher will be intention to purchase for Coop 1Malaysia products. Therefore, the study will attempt to establish0 H3: There is a positive link between place and customer retention. ?.% P)&.&+,&0 5romotions are acti!ities that persuade target customers to try the product. 5romotion decisions are those related to communicating and selling to potential 16 consumers. 5romotion decisions in!ol!e ad!ertising, sales promotion, sales force, public relations, direct marketing, media types, word of mouth and point of sale. 5romotion is a !ery important element in the marketing mix because it is a means of communication to the customer to promote product awareness, product knowledge, product attributes and benefits and persuade the customer to buy the product. .t pro!ides the stimulus to which customersB response. C5309 (+ *2. ;200> in his study also mentioned that promotion is an important factor in the marketing mix. 5romotion yields great influences on intention to purchase for Coop 1Malaysia products. This study will examine whether more effecti!e promotional acti!ities will result in higher customer intention to purchase for Coop 1Malaysia. Therefore, the study will examine whether0 H4: Promotional activities are positively related to customer retention. S*.'2( + total of '&& respondents were selected from customers who ha!e potential to purchase Coop 1Malaysia products from grocery and supermarket in 5utatan, /abah. M(*/3)(.(0+ .n general, the measurement employed in this study was modified from pre!ious research in order to reflect situational conditions. The fi!e8point 9ikert scale was de!eloped to measure percei!ed price, promotion, place and product towards Coop 1Malaysia products. +s the 9ikert scale is an inter!al8scale instrument, it is, therefore, appropriate for measuring the abo!e continuous !ariables. The measurements for gauging respondentsB percei!ed price, promotion, place and product towards Coop 1Malaysia products were adapted from the studies of N.1afiah "1<<<(, 3.M. Fasmin "1<<<( and 9. 5ebrianti "%&&6(. 17 Methods: Samples and procedures: + sur!ey instrument in the form of close8ended -uestionnaire was de!eloped for the purpose of data collection. The people of 5utatan district were chosen as the target population of the study in order to reflect the actual user of Coop 1Malaysia products. .n addition, the people of 5utatan district are normally households and comprehending the knowledge towards their buying beha!ior and their loyalty towards a brand would be beneficial for marketers who wish to target this market segment. Furthermore, this segment will ha!e their own purchasing power in the next % to ) years. Thus, understanding their current beha!ior is crucial for the company to exploit future opportunities. + total of '&& respondents from one 5utatan district were selected as a sample of the study. The respondents were selected from households to ha!e a mixture of races and study background. The actual field sur!ey was conducted in within one month period. Statistical tools: #ata on demographic !ariables are processed and reported in descripti!e analysis. #escripti!e analysis refers to the transformation to describe a set of factors that will make them easy to understand and interpret. Fre-uency distribution of the respondents, according to age, gender, race, family monthly income, and budget for monthly shopping will be presented. 18 Hypotheses: + hypothesis is a statement or proposition that can be tested by referring to a collection of empirical studies. 1ypotheses are usually stated in a form that predicts either the differences or association between two !ariables under study ;C53)45,22 *07 B)&A0= 200#>. #e!elopment of a hypothesis in!ol!ing causal ordering where possible and measurable would be useful in guiding the analysis strategy. =ften such hypotheses can be made if the meaning of an item is carefully analyed within a chronological context. ;A)4(2& et al., 1?@7> + null hypothesis predicts there is no difference between the tested groups in relation to some !ariable, or that there is no relationship between two !ariables ;M*25&+)*= 200#>. Null hypothesis in this research is noted as 1& while alternate hypothesis is noted as 11. .t is important to note that a researcher can ne!er actually pro!e that an alternate hypothesis is true ;M*25&+)*= 200#> because of the many potential errors, either known or unknown, in!ol!ed in the measurement of !ariables and the selection of research sub,ects. .t is usual for the researcher to test whether the null is probably true or probably false to accept the alternate hypothesis as the alternate logical solution of the research problem ;C53)45,22 *07 B)&A0= 2000> REFERENCES 19 3arsaw, 5.:. and #a!is, F.5. "1<;6(. #isentangling beha!ior intention and beha!ior expectation. Fournal of $xperimental 5sychology, %1, %1'8%1;. $agly, +. 1. and Chaiken, /. "1<<'(. The 5sychology of +ttitudes. New Gork0 1arcourt *race College 5ublishers. . Fishbein, M. and +,en, .. 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