* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download 2.3 Hypotheses
Product placement wikipedia , lookup
Loyalty program wikipedia , lookup
Social media marketing wikipedia , lookup
Target audience wikipedia , lookup
Market penetration wikipedia , lookup
Multicultural marketing wikipedia , lookup
Guerrilla marketing wikipedia , lookup
Subscription box wikipedia , lookup
Food marketing wikipedia , lookup
Marketing mix modeling wikipedia , lookup
Brand awareness wikipedia , lookup
Marketing communications wikipedia , lookup
Pricing strategies wikipedia , lookup
Digital marketing wikipedia , lookup
Street marketing wikipedia , lookup
Direct marketing wikipedia , lookup
Green marketing wikipedia , lookup
Consumer behaviour wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Service parts pricing wikipedia , lookup
Youth marketing wikipedia , lookup
Marketing channel wikipedia , lookup
Target market wikipedia , lookup
Brand equity wikipedia , lookup
Brand ambassador wikipedia , lookup
Advertising campaign wikipedia , lookup
Marketing strategy wikipedia , lookup
Emotional branding wikipedia , lookup
Visual merchandising wikipedia , lookup
Global marketing wikipedia , lookup
Value proposition wikipedia , lookup
Product planning wikipedia , lookup
Customer relationship management wikipedia , lookup
Brand loyalty wikipedia , lookup
Customer experience wikipedia , lookup
Services marketing wikipedia , lookup
Service blueprint wikipedia , lookup
Customer engagement wikipedia , lookup
CHAPTER II LITERATURE REVIEW 2.1 Grand Theory of Marketing Although many people think marketing is advertising or selling, marketing actually encompasses many more activities. Pride and Ferrel (2011:4) defines marketing as the process of creating, distributing, promoting, and pricing goods, services, and ideas to facilitate sastisfying exchange relationships with customers and develop to maintain favorable relationships with stakeholders in a dynamic environment. The definition is consistent with American Marketing Association (2011) which defines marketing as “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. As the purchasers of the products that organizations develop, promote, and distribute, customers are the focal point of all marketing activities. The essence of marketing is to develop satisfying exchange relationships from which both customers and marketers benefit (Pride and Ferrel, 2011:5). Organizations must define their products not according to what they produce, but according to how they satsify customers. Marketing mixes are combinations of marketing tools that marketing managers orchestrate to satisfy customers and company objectives, which is usually associaed with the four Ps: product, price, promotion, and place (Sandhusen, 2008:4). The product, ini marketing terms, is defined as anything, tangible or intangible, offered for attention, acquisition, use, or consumption that is capable of satisfying needs. Included can be objects, people, places, services, and ideas. The price that customers pay for a product influences the product's image and likelihood of purchase. It is the only revenue-generating element of the marketing mix and the easiest to change. 8 9 Promotion programs, designed to persuade customers to buy the product, include personal selling, advertising (paid messages carried by the media), and sales promotion (marketing activities designed to stimulate customer purchasing and dealer effectiveness. Place refers to where the product is made available to market members, which covers channel of distribution (wholesalers, retailers) and physical distribution (transportation, warehousing, and inventory control facilities). Marketing is also depicted as providing consumers with access to the products and services that they need, at the right place, correct time and appropriate price points, whilst communicating product information in ways that interested and amused the customer (Hopkins, 1997 in Ellis et al., 2010:6). So, marketing is the way companies interact with consumers to create relationships that are beneficial to both parties. Businesses use marketing to identify their audience before advertising to them. Based on the explanation above, the marketing process can be summarized into the following five stages: Understand the marketplace and customer needs and wants Design a customerdriven marketing strategy Capture value from customers to create profits and customer equity Figure 2.1 The Marketing Process Source: Kotler dan Armstrong (2012:29) Construct an integrated marketing program Build profitable relationships and create customer delight 10 2.2 Theoretical Base In this sub-chapter, the researcher will present a theoretical review of various sources related to the variables studied, which are experiential value, customer satisfaction, and brand loyalty. 2.2.1 Experiential Value Experiential is derived from the word experience. Experience is practical knowledge, skill, or practice derived from direct observation of or participation in events or in a particular activity (Merriam-Webster Online Dictionary, 2013). Prahalad and Ramaswamy, 2004 (Wang and Lin, 2010) emphasized experiential as a new basis of value and modern market value is created by the mutual interaction of consumers and business. Value is a fair return or equivalent in goods, services, or money for something exhanged (Merriam-Webster Online Dictionary, 2009). Soman and Marandi (2010) defined value as what the customer gets in exchange for what customer gives. Value is subjective and it is created based on the exchange of experience that incurred in the process of transaction or individual perceptions (Lee and Overby, 2004 in Farshad et al., 2012). Peter and Olson (2010:77) said that satisfying a value usually elicits positive affect (happiness, joy, satisfaction), whereas blocking a value produces negative affect (frustration, anger, disappointment). Farshad et al. (2012) stated that experiential value can be created via consumption experience. Current marketing literature highlights the importance of the service experience, suggesting that service providers must not only create a theatrical environment (providing fun, excitement, and entertainment), but also must encourage customers to participate in the service experience (Mathwick, Malhotra, and Rigdon, 2001 in Line, 2012). Math wick et al., 2001 (Wang and Lin, 2010) stated that the recognition of experiential value comes from people's direct usage or long distance appraisal on service and products. Holbrook, 2000 (Fasrhad et al., 2012) proposed to incorporate three elements, such as extrinsic/ intrinsic value, active value/ reactive value, selforiented value/ other oriented value in the traditional concept of experiential value. So, experiential value is a better quality of consumption experience that match the customers expectation. 11 2.2.1.1 Dimensions of Experiential Value Park and Cha (2011) adopts four dimensions of the experiential value as main factors to influence dining satisfaction and preference at restaurants. These three are perceived food quality, aesthetics, and playfulness: a) Food quality is defined as its own features distinguishable from other types of foods. Example: tasty, healthy. b) Service excellence refers to generalized consumer appreciation of a service provider who has demonstrated expertise and provides a dependable service performance. Example: willingness to help, knowledge of servers about the menu. c) Aesthetics reflects a reaction to the harmony and unity of visual elements and display in restaurants. Example: interior design, ambience. d) Playfulness is clarified as an inner experience pursuing an intrinsic enjoyment to escape from routine by engaging activities. Example: enjoyment in dining, escaping from routines. 2.2.2 Customer Satisfaction Satisfaction is derived from the Latin satis (enough) and facere (to do or make). Satisfaction is the consumer’s response to the evaluation of the perceived discrepancy between prior expectations and the actual performance of the product as perceived after its consumption (Oliver, 2010:6). Satisfying products and services have the capacity to provide what is sought to the point of being enough (Oliver, 2010:6). Zifko-Baliga, 1998 (Grigoroudis and Siskos, 2010, p4) said that satisfaction is a standard for how well the customers can predict the performance level at which a product or a service will satisfy them. Grigoroudis and Siskos (2010:4) concludes that satisfaction is a standard of how the offered total product or service fulfils customer expectations. Achieving customer satisfaction is a major goal of marketing efforts. These efforts lead to purchase and/or consumption and in turn result in post-purchase phenomena such as attitude change, repeat purchase, and brand loyalty (Soonhwan et al., 2010). Customer satisfaction directly influences their post purchase behavior, such as praising, complaining, increasing/ decreasing loyalty, attitude and brand switching (Liu, 2008:41). If consumers are satisfied with a product, service, or brand, they will 12 be more likely to continue to purchase it and tell others about their favorable experiences with it. It they are dissatisfied, they will be more likely switch products or brands and complain to manufacturers, retailers, and other consumers (Peter and Olson, 2010:387). Woodside, Frey, & Daly, 1989 (Wang and Lin, 2010) illustrated that customer satisfaction is an attitude after consumption and shows the degree of customers' likes or dislikes after experience. Companies with satisfied customers have a good opportunity to convert them into loyal customers who purchases from those firms over an extended time period (Evans and Lindsay, 1996 in Faizan et al., 2011). A single unsatisfied customer can send away more business from your organization than 10 highly satisfied customers (Faizan et al., 2011). The more you focus on customer satisfaction and retention, the more long-term business you will get. So, customer satisfaction is happened when the customers expectation meet the service performance by the company. It is very important in order to keep the customers coming back and recommend to others about the particular company and brand. There are six comparison standards from customers which may lead to different satisfaction judgements (Woodruff and Gardial, 1996 in Grigoroudis and Siskos, 2010:43), which are: a) Expectations: they represent how the customer believes the product/service would perform. b) Ideals: they represent how the customer wishes the product/service would perform. c) Competitors: the performance of competitors in the same product/service category may be adopted by customers as a standard for comparison d) Other product categories: products or services in completely different categories may also provide comparison standards for customers. e) Marketer promises: they refer to promises that were made by the salesperson, the product/service advertisement, the company spokesperson, or some other form of corporate communication. f) Industry norm: they are related to a “model” or average performance level developped by customers with considerable experience in a product category (across companies and brands) or acess to industry standards. 13 2.2.2.1 Benefits of Customer Satisfaction Hill, Roche, and Allen (2007:19) pointed out four benefits of customer satisfaction for the companies, which are: a) Customer Lifetime Value Customer retention is more profitable than customer acquisition because the value of customers typically increases overtime. This is due to the following factors: 1. Acquisition: the cost of acquiring customers occurs almost exclusively in their first year with the company (before and as they become customers). 2. Base profit: is constant, but often will not begin to offset acquisition costs until the second year or later. 3. Revenue growth: as customers stay, and provided they are satisfied, they tend to buy more of a company’s products/services as their awareness of the product portfolio grows. 4. Cost savings: long term customers cost less to service, since they are more familiar with the organisation’s procedures and more likely to get what they expect. 5. Referrals: highly satisfied customers will recommend companies to their friends. Referral customers eliminate most of the cost of acquisition, and they also tend to be better customers because they are like existing customers. 6. Price premium: long-term customers who are very satisfied will alsi be prepared to pay a price premium since they trust the supplier to provide a product/service that is good value for them. b) Links with employee satisfaction Employee satisfaction typically produces higher levels of customer satisfaction, since more satisfied employees are more highly motivated to give good service. Otherwise, higher customer satisfaction also produces higher employee satisfaction, since employees prefer working with companies that have high levels of customer satisfaction and low levels of problems and complaints. More satisfied employees stay longer, keeping valuable expertise and customer relationships within the organization. 14 c) Sales and profit Aggregate data from the American Customer Satisfaction Index (2007) demonstrated a very strong link between customers’ satisfaction with individual companies and their propensity to spend more with them in the future. d) Shareholder value Based on the ACSI database, a 1% increase in customer satisfaction drives a 3.8% increase in stock market value. Satisfied customers reward companies with, among other things, their repeat business, which has a huge effect on cummulative profits (Professor Fornell, 2007 in Hill, Roche, and Allen, 2007). 2.2.2.2 Gaps in Reaching Customer Satisfaction In achieving customer satisfaction, there are five gaps which can be the causes of customer dissatisfaction (Hill, 1996 in Grigoroudis and Siskos, 2010:5), which are: a) Promotional gap: the inability of the business organization to fulfill expectations created in the minds of customers mainly by marketing communications. b) Understanding gap: the gap occured due to the inaccurate understanding of customer needs and priorities by the managers of the organization. c) Procedural gap: the gap occured due to the translation of customer expectations into appropriate operating procedures and systems with the business organization. d) Behavioral gap: the difference between customer expectations and organization’s performance, focusing on how procedures adequately cover service delivery requirements. e) Perception gap: the difference between customer performance perceptions and reality. 2.2.2.3 Dimensions of Customer Satisfaction There are different theories for understanding customer needs and arriving at specific factors for measuring customer satisfaction. One widely used framework for measuring customer satisfaction is Servqual (Zeithaml, Parasuraman and Berry, 1980 in Bhardwaj, 2010). SERVQUAL was first conceptualized by Parasuraman et al., which proposed that quality and satisfaction are determined by the same attributes (Daniel and Berinyuy, 2010). The SERVQUAL survey is used all over the world in various cultures and industries and is widely regarded as a reliable method of 15 measuring service quality, which in turn leads to a measurement of customer satisfaction (Harr, 2008). Many researchers have realized the interrelated values of service quality and customer satisfaction. Service quality is the key to measure users' satisfaction (Pitt et al., 1995 in Supranata and Iskandar, 2013). Dabholkar et al., 1996 (Supranata and Iskandar, 2013) reported that the service quality divisions are related to overall customer satisfaction. Taylor and Baker, 1994 and Rust and Olivier, 1994 (Supranata and Iskandar, 2013) identified that service quality is one major attribute of satisfaction. According to Sureshchandar et al., 2002 (Daniel and Berinyuy, 2010), customer satisfaction should be seen as a multi dimensional construct just as service quality meaning it can occur at multi levels in an organisation and that it should be operationalized along the same factors on which service quality is operationalized. The method is also known as the RATER model, because it prescribes measuring satisfaction in these five dimensions: a) Reliability: a company’s ability to perform the promised service dependably and accurately. For the food and beverage industry, reliability can be interpreted to mean fresh food delivered at the correct temperature and accurately the first time (Harr, 2008). Reliability contains availability of menu variant, serving time, the serving conformity with the menu ordered, menu pricing, and the amenities in payment (Supranata and Iskandar, 2013). b) Assurance: the knowledge, competence and courtesy of employees and their ability to convey trust and confidence. The trust and confidence may be represented in the personnel who links the customer to the organization (Zeithaml et al., 2006 in Harr, 2008). Assurance contains waiters’ hospitality in serving the customers, waiters’ politeness, waiter’s knowledge about the ingredients of the food, waiter’s ability to recommend food from the menu and waiter’s knowledge about restaurant facilities (Supranata and Iskandar, 2013). c) Tangibles: physical appearance of facilities, equipment, staff and written materials that impress the customers. It translates to the restaurant’s decoration, the appearance of the dinner set, and uniform of the staff, the appearance of the menu book, the environmental hygiene at the restaurant (Harr, 2008). d) Empathy: the level of caring, individualized attention, access, communication and understanding that the customers perceive. Empathy in the context of food and beverage industry can be demonstrated through showing concern in times of 16 service failure and providing service recovery or going out of the way to meet a customer’s special requirements, for instance, providing vegetarian food (Harr, 2008). e) Responsiveness: the willingness displayed to help clients and provide prompt service. This dimension is concerned with dealing with the customer’s requests, questions and complaints promptly and attentively (Harr, 2008). A firm is known to be responsive when it communicates to its customers how long it would take to get answers or have their problems dealt with. 2.2.3 Brand Loyalty Brand loyalty is an intrinsic commitment to repeatedly purchase a particular brand (Peter and Olson, 2010:390). Brand loyalty is defined as a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior" (Oliver, 1999:34 in Hong, Joby, Janda and Muthaly, 2011) Hong, Joby, Janda and Muthaly (2011) defined brand loyalty as a behavioral response expressed by a composite measure with respect to a preferred product or service in the future. High brand loyalty is an asset that lends itself to extension, high market share, high return on investment and ultimately high brand equity (Kabiraj and Shanmugan, 2011). Loyal customers often cost less to the firm because they know the products and services and require less information. They even serve as part-time employees up to some extent. Therefore, loyal customers not only need less information themselves about product and service offerings but also serve as an information source for prospective customers of the firm (Faizan et al., 2011). Customer loyalty is so important because loyal customers bring many benefits to a firm. According to Reichheld, 1996 (Kabiraj and Shanmugan, 2011), the various advantages of customerloyalty include a continuous stream of profit, reduction of marketing costs, growth of per-customer revenue, decrease in operating costs, increase in referral, increase in price premium and switching barriers among loyal customers who will not easily surrender to competitors' promotion efforts. Brand loyalty occurs because the consumer perceives that the brand offers the right product features, image or level of quality at the right price. Piotr, 2004 (Lee, 17 Hsiao and Yang, 2010) indicated loyal customers shows 3 characteristics in the following. (1) They spend more money in purchasing products or service of a company. (2) They encourage others to purchase products or service of a company. (3) They believe it is valuable to purchase products or service of a company. Therefore, brand loyalty is the customers’ commitment to a company and brand that will lead to re-purchase action. 2.2.3.1 Categories in Brand Loyalty Peter and Olson (2010:92) have identified four market segments with different levels of intrinsic self-relevance for a product category and brand. Those with the strongest feelings are: a) Brand loyalists: have strong effective ties to one favorite brand that they regularly buy. They perceive that the product category in general provides personally relevant consequences. Their intrinsic self-relevance includes positive means-end knowledge abouth both the brand and the product category, and leads them to experience high levels of involvement during decision making. They strive to buy the “best” brand for their needs. b) Routine brand buyers: have low intrinsic self-relevance for the product category, but they do have a favorite brand that they buy regularly (little brand switching). For the most part, their intrinsic self-relevance with a brand is not based on knowledge about the means-end consequences of product attributes. Instead, these consumers are interested in other types of consequences associated with regular brand purchase. Such beliefs can lead to consistent purchase, but these consumers are not so interested in getting the “best” brand; only the satisfied consumers will do. The other two segments have weaker levels of intrinsic self-relevance for a particular brand, which are: c) Information seekers: have positive means-end knowledge about the product category, but no particular brand stands out as superior. These consumers usea lot of information to find a “good” brand. Over time, they tend to buy a variety of brands in the product category. d) Brand switchers: have low intrinsic self-relevance for both the brand and the product category. They do not see that the brand or product category provides 18 important consequences, and they have no interest in buying “the best”. They have no special relationship with either the product category or specific brands. Such consumers tend to respond to environmental factors such as price deals or other short-term promotions that act as situational sources of involvement. Chaudhuri and Holbrook, 2001 (Lee, Hsiao and Yang, 2010) revealed customer loyalty is established by attitude loyalty and behavior loyalty. a) Attitude loyalty relates to consumers' psychological commitment to repurchasing the brand, which comprises of: - Loyalty in attitude: willingness to do re-purchase. In restaurant, loyalty in attitude means willingness to do repeat dining for a specific restaurant. - The tolerance to price: intention to repurchase the brand in the case of price increase. To apply in restaurant research, it means allows increased premium price. b) Behavior loyalty is concerned with the action of repurchase, which comprises of: - Continuous purchase: intention to repurchase the brand within a similar buying context and willing to conduct cross purchase (purchase other products of the brand). Continous purchase in restaurant means using the restaurant as the first choice compared to other restaurants. - Recommendation behavior: intention to recommend the brand. This dimension in restaurant research means recommending the restaurant to others. 2.2.4 Theoretical Framework The independent variable in the research is experiential value, which affects the dependent variable brand loyalty, through mediating variable customer satisfaction. Based on explanations above, the relationships between research variables are in the following: a) Relationship Between Experiential Value and Customer Satisfaction Woodruff et al., 1993 (Wang and Lin, 2010) proposed that customers, in viewing product experiential, have intertwined value and satisfaction. Wang and Lin (2010) said that satisfaction is a value obtained from a product used under a specific environment. It is an immediate response and customers would think satisfaction in 19 different value levels, (such as benefit and purpose level). Thus, the degree of customers' satisfaction may vary with different value level of products. If business managers can find factors that affect customers' satisfaction toward products or services, business may change customers' experiential when using products or services and let customers obtain maximum satisfaction. The creation of a better experiential value can actually affect customers in generating positive satisfaction (Wang and Lin, 2010). b) Relationship Between Customer Satisfaction and Brand Loyalty Kabiraj and Shamugan (2011) proposed that if consumers have been satisfied with the promoted brand, their satisfaction is reinforcing and leads to an increase in the probability of choosing the brand again. Harvard (Hill, Roche, and Allen, 2007:19) concluded that loyal customers behaviors explain differences in companies’ financial performance more than any other factor. Customer satisfaction should be the primary objective of an organization to enhance customer loyalty (Faizan et al., 2011). To reap full benefits of customer loyalty, companies need to make customers highly satisfied (Hill, Roche, and Allen, 2007:26). c) Relationship Between Experiential Value and Brand Loyalty Wall & Berry, 2004 (Nae, Sang and Lynn, 2011) pointed out the restaurant experience includes much more than simply eating what the customer wants; all events and activities before and after dining can generate total experience for diners. Therefore, when considering a multilayered experience in a table-service restaurant, it is necessary to explore customers’ experiential values to improve our understanding of customer experience in the consumption setting. Experiential Value Brand Loyalty Customer Satisfaction Figure 2.2 Theoretical Framework Source: Researcher (2013) 20 2.3 Hypotheses Hypotheses that will be examined to achieve the objectives of the research comprises of four hypotheses, which will be explained below. Testing if variable experiential value (X) contributes significantly to variable customer satisfaction (Y) in Boka Buka Restaurant. Hypothesis 1: Ho: Variable experiential value (X) doesn’t contribute significantly to variable customer satisfaction (Y) in Boka Buka Restaurant. Ha: Variable experiential value (X) contributes significantly to variable customer satisfaction (Y) in Boka Buka Restaurant. Testing if variable experiential value (X) and customer satisfaction (Y) contribute significantly to variable brand loyalty (Z) individually and simultaneously in Boka Buka Restaurant. Hypothesis 2: Ho: Variable experiential value (X) and customer satisfaction (Y) don’t contribute significantly to variable brand loyalty (Z) individually and simultaneously in Boka Buka Restaurant. Ha: Variable experiential value (X) and customer satisfaction (Y) contribute significantly to variable brand loyalty (Z) individually and simultaneously in Boka Buka Restaurant. Testing if variable customer satisfaction (Y) mediates between variable experiential value (X) and brand loyalty (Z) in Boka Buka Restaurant. Hypothesis 3: Ho: Variable customer satisfaction (Y) doesn't mediate between variable experiential value (X) and brand loyalty (Z) in Boka Buka Restaurant. Ha: Variable customer satisfaction (Y) mediates between variable experiential value (X) and brand loyalty (Z) in Boka Buka Restaurant.