THE IMPACT OF MARKETING MIX ON CUSTOMER SATISFACTION: A CASE STUDY DERIVING CONSENSUS RANKINGS FROM 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 BANGI 2007

ii

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 a research 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.

AMY POH AI LING P 37435

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 an alternative and more sustainable approach for benchmarking analysis in marketing sector.

Keywords: Marketing mix, Customer satisfaction, Retailing, Benchmarking, Multicriteria decision-making, ELECTRE methods

v CONTENT

Page DECLARATION ACKNOWLEDGEMENTS ABSTRACT CONTENTS FIGURE LIST ILLUSTRATION LIST TABLE LIST ii iii iv v x xi xii 1 1 3 5 5 6 7 9 10 11 11 11 12 12 12 13 13

CHAPTER 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8

INTRODUCTION Research Description Problem Statement Background 1.3.1 Quantitative Marketing Research Objectives of the Study The Strength and Significance of the Study Rationale of the Study Specification of the Information Needed Definition of Terms 1.8.1 1.8.2 1.8.3 1.8.4 1.8.5 1.8.6 Marketing Mix Customer Satisfaction Retailing Benchmarking Multi-criteria Decision Making ELETRE method

1.9

Conclusion

vi CHAPTER II 2.1 2.2 LITERATURE REVIEW Introduction Marketing mix 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.2.7 2.3 2.4 2.3.1 Definition Product Decisions Price Decisions Place (Distribution) Decisions Promotion Decisions Criticism on Marketing Mix Model Limitations of the Marketing Mix Framework Measuring Customer Satisfaction 14 14 15 16 16 16 17 17 17 19 20 20 22 22 22 23 24 28 29 31 31 33 34 34 35 35 37 38 39 39

Customer satisfaction Benchmarking 2.4.1 Advantages of benchmarking 2.4.2 Competitive benchmarking 2.4.3 Advantage of the Benchmarking 2.4.4 Types of Benchmarking

2.5 2.6 2.7

Multi-Criteria Decision Models Multi-Criteria Outranking Methodology - ELECTRE I Retailing 2.7.1 Retail in Malaysia 2.7.2 Four types of retailers 2.7.3 Retail Activity in Malaysia: From Shop house to Hypermarket 2.7.4 Hypermarkets in Malaysia see strong growth

2.8

Retail Stores Profile 2.8.1 Tesco Stores (Malaysia) Sdn Bhd. 2.8.2 Carrefour - Magnificent Diagraph Sdn.Bhd. 2.8.3 Giant - Dairy Farm International (DFI) 2.8.4 Mydin Mohamed Holdings Berhad

2.9

Conclusion

vii CHAPTER III 3.1 3.2 3.3 3.4 RESEARCH METHODOLOGY Introduction Recognisance Survey Questionnaire Construction Test-Retest Reliability Checks 3.4.1 Cronbach's (alpha) 3.4.2 Pre-Test 3.4.2.1 Reliability Statistics for Tesco 3.4.2.2 Reliability Statistics for Mydin 3.4.2.3 Reliability Statistics for Carrefour 3.4.2.4 Reliability Statistics for Giant 3.4.3 Overall Reliability Statistics 3.5 Sampling Methods and Sample Size 3.5.1 3.5.2 3.5.3 3.6 3.7 3.8 Simple Random Sampling Determine Sample Size Statistical Sampling Concepts Assumptions for Simple Random Sampling 40 40 40 42 43 44 45 45 45 45 46 46 47 48 49 50 51 52 55

Data Collection Illustration of Research Framework Conclusion

viii CHAPTER IV 4.1 4.2 4.3 4.4 DATA ANALYSIS, INTERPRETATION AND DISCUSSION Introduction Consensus Rankings from Benchmarking Profile of Respondents Descriptive Statistics 4.4.1 Marketing Mix Factor 4.4.1.1 Product Factor 4.4.1.2 Price Factor 4.4.1.3 Place/Distribution Factor 4.4.1.4 Promotion Factor 4.4.2 Marketing Mix Model, 4Ps 4.4.3 Motivating Factor 4.4.4 Cross tabulation Analysis 4.4.5 Descriptive Statistics Analysis of four retail stores 4.4.5.1 Tesco 4.4.5.2 Mydin 4.4.5.3 Carrefour 4.4.5.4 Giant 4.5 4.6 Benchmarking and Outranking-Satisfying Methodology Benchmarking on Customer Satisfaction 4.6.1 Product Benchmarking 4.6.2 Price Benchmarking 4.6.3 Promotion Benchmarking 4.6.4 Place/Distribution Benchmarking 4.7 Conclusion 57 59 60 62 63 63 64 65 66 67 68 69 72 72 73 74 75 76 83 83 84 85 86 87 56

ix CHAPTER V 5.1 SUMMARY, CONCLUSION AND IMPLICATION SWOT Analysis 5.1.1 Strength 5.1.2 Weakness 5.1.3 Opportunity 5.1.4 Threat 5.2 5.3 5.4 Conclusion Directions for further research Scope and Limitation of the Study 88 88 88 89 89 90 90 91 76 92 108 A. Authorization Letter for the Research 1. 2. 3. 4. 1. 2. 3. 4. 1. 2. 3. 4. Tesco Carrefour Giant Mydin Letter Request of Contribution - Tesco Letter Request of Contribution - Carrefour Letter Request of Contribution Giant Letter Request of Contribution Mydin Questionnaires - Tesco Questionnaires - Carrefour Questionnaires - Giant Questionnaires - Mydin 114 115 117 119 121 123 124 125 126 137 128 129 131 133 135 137 138

EXTENDED ABSTRACT - Technical Paper

REFERENCES

APPENDIX

B. Letter Request of Contribution

C. Questionnaires

D. Major Retail Players in Malaysia E. Classification of MCDM Method

x FIGURE LIST

Figure No. Figure 2.1 Figure 4.1 The Marketing Mix Model Graph of S from Table 4.27 (C* 75 percent)

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xi ILLUSTRATION LIST

Illustration No. Illustration 3.1 Illustration 3.2 Illustration 4.1 Selangor's Geographical Position Attribute 4Ps Retail Stores Mapping Graph of S from Table 4.27 (C* 75 percent)

Page 41 52 82

xii TABLE LIST

Table No. Table 2.1 Table 2.2 Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 4.5 Table 4.6 Table 4.7 Table 4.8 Table 4.9 Table 4.10 Table 4.11 Table 4.12 Table 4.13 Table 4.14 Table 4.15 Table 4.16 Table 4.17 Table 4.18 Table 4.19 Types of Benchmarking Gross Domestic Product by Industry of Origin, Malaysia 2000-2005 Reliability Statistics Tesco Reliability Statistics Mydin Reliability Statistics Carrefour Reliability Statistics Giant Overall Reliability Statistics Level of Confidence Profile of Respondents Gender Profile of Respondents Ethnic Profile of Respondents Marital Status Profile of Respondents Age Profile of Respondents Shopping Frequency Descriptive Statistics of Product Factor Descriptive Statistics of Price Factor Descriptive Statistics of Place/Distribution Factor Descriptive Statistics of Promotion Factor Descriptive Statistics of Marketing Mix Model, 4Ps Motivating Factor Motivating Factor * Gender Cross tabulation Motivating Factor * Ethnic Cross tabulation Motivating Factor * Marital Status Cross tabulation Motivating Factor * Age Cross tabulation Descriptive Statistics for Tesco Descriptive Statistics for Mydin Descriptive Statistics for Carrefour

Page 24 32 45 45 45 46 46 49 60 60 60 61 61 63 64 65 66 67 68 69 69 70 70 72 73 74

Motivating Factor * Shopping Frequency Cross tabulation 71

xiii Table 4.20 Table 4.21 Table 4.22 Table 4.23 Table 4.24 Table 4.25 Table 4.26 Table 4.27 Table 4.28 Table 4.29 Table 4.30 Table 4.31 Descriptive Statistics for Giant Multicriteria matrix (Electre I) Retail stores Positioning Table Retail Stores Ranking Table Multicriteria Matrix Matrix of Concordance Ssubsystems (Jc) Concordance Matrix Outcomes of Concordance Test Product Benchmarking towards customer satisfaction Price Benchmarking towards customer satisfaction Promotion Benchmarking towards customer satisfaction Place/Distribution Benchmarking towards customer satisfaction 75 76 76 77 78 78 79 80 83 84 85 86

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. With increasing globalization, local retailers find themselves having to compete with large foreign players by targeting niche markets. This study continues to research the program component aspect by examining all four facets of the marketing mix, described here as product features, brand name, retail outlets, basic advertising message and retail pricing of a single consumer product.

2 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.

3 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 parts of 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. Outranking relations, in most methods, are built using a concordance-discordance principle. More complexity and flexibility are required in the processing of efficient alternatives. And it is the solutions, not the criteria, which the marketing management is interested in.

4 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 lookahead 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).

5 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, and to create strategies and marketing plans.

6 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.

7 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 six percent 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.

8 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).

9 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 to have 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.

10 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.

11 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 are price, place, product, and promotion. 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 and plans that 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 value for customer, communicating the value to target market, and making it easy for the customer to buy.

12 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 nonbusiness 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 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.

13 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. 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.

14

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 covers the 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 to maintain the same rate. Although Malaysian consumers have embraced hypermarkets and department stores, discount retailers and convenience stores will likely become new vehicles for growth.

15 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, and promotion. 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 these mix elements in constructing and formulating appropriate marketing strategies and plans that will satisfy these wants. Figure 2.1 The Marketing Mix Model

16 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-tobusiness marketing this can also include the total cost of ownership (TCO). Total cost of ownership may include costs such as installation and other products required to deliver a complete functional solution.

17 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 online advertising. 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 Japanese economic collapse. He also claims that pursuing a ROI approach while ignoring marketing objectives is just as problematic. He argues that a net present value approach maximizing shareholder value provides a "rational framework" for managing the marketing mix.

18 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 political power 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.

19 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.

20 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 organization's products. Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed.

21 Work done by Berry, Brodeur between 1990 and 1998 defined ten 'Quality Values' which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance. This provides the measurer with a satisfaction "gap" which is objective and quantitative in nature. Work done by Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the "gap" described by Parasuraman, Zeithaml and Berry as two different measures (perception and expectation of performance) into a single measurement of performance according to expectation. According to Garbrand, customer satisfaction equals perception of performance divided by expectation of performance. The usual measures of customer satisfaction involve a survey with a set of statements using a Likert Technique or scale. In this paper, we use a 6 points Likert scale. The customer is asked to evaluate each statement and in term of their perception and expectation of the performance of the organization being measured.

22 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 competitors you also research the best company in the industry even if it serves a different location.

23 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.

24 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 Strategic Benchmarking Description 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, developing new 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. 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 to protect confidentiality. Assessing relative level of performance in key areas or activities in comparison with others in the same sector and finding ways of closing gaps in performance. Most Appropriate for the Following Purposes Re-aligning business strategies that have become inappropriate.

25 Continue Process Benchmarking

Focuses on improving specific critical processes and operations. Benchmarking partners are sought from best practice 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 key processes to obtain

organizations that perform similar work or 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.

26 Continue Internal Benchmarking

Involves benchmarking businesses or operations from within the same organization (e.g. business units in different countries). The main advantages of internal benchmarking are that access to sensitive data and information is easier; standardized data is often readily available; and, usually less time and resources are needed. There may be fewer barriers to implementation as practices may be relatively easy to transfer across the same organization. However, real innovation may be lacking and best in class performance is more likely to be found through external benchmarking.

Several business units within the same organization exemplify good practice and management wants to spread this expertise quickly, throughout the organization.

External Benchmarking

Involves analyzing outside organizations that are known to be best in class. External benchmarking provides opportunities of learning from those who are at the "leading edge". This type of and resource to ensure the comparability of data and information, the credibility of the findings and the development of sound recommendations.

Where examples of good practices can be found in other organizations and there is a lack of good practices within internal

benchmarking can take up significant time business units.

27 Continue International Benchmarking

Best practitioners are identified and analyzed elsewhere in the world, perhaps because 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 class status 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.

28 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 nor risk. 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. Multiattribute utility theory, a MCDM that explicitly models individual utility functions, a generalization of value functions, using principles developed by von Neumann and Morganstern over half a century ago (Winterfeldt and Edwards [1989]), addresses both tradeoffs and risk.

29 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 ( A j , Ak ), the concordance index where the performance score of

C
j

jk

is the sum of all the weights for those criteria

is least as high as that of Ak , i.e. j, k = 1, , n, j k

jk

=
i:

a j a k

Wi ,

Clearly, the concordance index lies between 0 and 1. The computation of the discordance index

jk

is a bit more complicated:

jk

=0 if
k

a >a
ij

ik

, i =1,...,m, i.e. the discordance

index is zero if

performs better than

on all criteria,. Otherwise,

jk

= max

i =1,..., m

a a max a min a
ik ij i =1,..., m ij i =1,..., m

, j, k = 1, , n, j k
ij

I.e. for each criterion where

outperforms

, the ratio is calculated between the

difference in performance level between

and

the maximum difference in score

on the criterion concerned between any pair of alternatives. The maximum of these ratios (which must lie between 0 and 1) is the discordance index. A concordance threshold c* and discordance threshold d* are then defined such that 0<d*<c*<1. Then,

outranks

if the

jk

>c* and

jk

<d*, i.e. the concordance

index is above and the discordance index is below its threshold, respectively.

30 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.

31 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 nonbusiness 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).

32 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 subsector 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, 1996). Such variety reflects the changing demands and expectations among consumers for better quality products and services.

33 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.

34 2.7.3 Retail Activity in Malaysia: From Shop house to Hypermarket

Retailing is a subset of the commercial sector that has contributed significantly to Malaysia 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 overall retail environment in the country. The government is observing the situation, and may take further action to prevent hypermarkets becoming dominant. For example, in recent years the Malaysian Government revised its foreign ownership laws to moderate the rapid growth of supermarkets and hypermarkets in the country.

35 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:
-

Working with the Ministry of Domestic Trade and Consumer Affairs to develop the Supplier Guidelines Communication Pack for potential suppliers. Organizing seminars, workshops and proactively assisting SMEs (Society of Manufacturing Engineer) on supplying to hypermarkets like Tesco.

36
-

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.

37 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 its lowest 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 share determines its main areas of responsibility. In some countries the Carrefour Group also offers a number of additional services (e.g. holidays, petrol, ticket sales, and financial services), bringing new challenges. With 9,632 stores, of which 57% are integrated, i.e. owned by Carrefour, the Group has a range of retail store formats to help it meet the needs and requirements of its customers.

38 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 built on 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 Lumpur in 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 the cheapest place in Malaysia to shop for everyday groceries.

39 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 such as 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 destination, many new shopping areas have been designated and many shopping campaigns and carnivals were launched to attract shoppers from local and abroad. Such variety reflects the changing demands and expectations among consumers for better quality products and services.

40

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); the state's ethnic composition consisted of Malays 41%, Chinese 37%, Indians 19% and other ethnic groups 3%.

41 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.

42 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 to describe 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; six questions are allocated for each of the 4Ps.

43 Please rate with respect to the following

Strongly Disagree 1 2 3 4 5 Strongly Agree 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 (splithalf reliability). The value of the Pearson product-moment correlation coefficient is adjusted with the Spearman-Brown prediction formula to correspond to the correlation between two full-length tests. A commonly used measure is Cronbach's , which is equivalent to the mean of all possible split-half coefficients. Reliability may be improved by increasing the sample size.

44 3.4.1 Cronbach's (alpha)

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 quantity under the name lambda-2. Cronbach's is defined as:
N 2 2 N X i =1 Yi 2 X N 1

2 where N is the number of components (items or testlets), X is the variance of the

observed total test scores, and 2 is the variance of component i for person y. Yi

45
3.4.2 Pre-Test

Using the SPSS software, the reliability value of the 20 pre-test samples from each retail store, sum up to a total of 80samples was calculated and the Cronbachs Alpha result is as below:
3.4.2.1 Reliability Statistics for Tesco

Table 3.1 Reliability Statistics - Tesco

Reliability Statistics - Tesco Reliability Statistics Cronbach's Alpha .888

N of Items 26

3.4.2.2 Reliability Statistics for Mydin

Table 3.2 Reliability Statistics - Mydin

Reliability Statistics - Mydin Reliability Statistics Cronbach's Alpha .700

N of Items 26

3.4.2.3 Reliability Statistics for Carrefour

Table 3.3 Reliability Statistics - Carrefour

Reliability Statistics - Carrefour Reliability Statistics Cronbach's Alpha .822

N of Items 26

46
3.4.2.1 Reliability Statistics for Giant

Table 3.4 Reliability Statistics - Giant

Reliability Statistics - Giant Reliability Statistics Cronbach's Alpha .984

N of Items 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 Cronbach's Alpha .874

N of Items 26

According to the output, the overall value of Cronbachs Alpha is 0.883 which is greater than 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.

47
3.5 SAMPLING METHODS AND SAMPLE SIZE

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.

48
3.5.1 Simple Random Sampling

We choose simple random sampling in the research for conceptually; simple random sampling 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 error, and it requires minimum advance knowledge of the population. For it best suits situations where not much information is available about the population and data collection can be efficiently conducted on randomly distributed items.

49
3.5.2 DETERMINE SAMPLE SIZE

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 95.00% Z Value 1.96

50 A way to view calculating the sample size required for a given precision of a proportion score is to use the following formula: n = Z (p.q) h where Z = value from normal distribution table for desired confidence level p = obtained proportion q = 1- p h = desired precision Result is obtained: n = (1.96) (1/6) (5/6) (0.05) = 213.42222 214 The sample size required to give 95 percent level of confidence that the sample proportion is within 5 percent of the population proportion is 214.
3.5.3 Assumptions for Simple Random Sampling

Simple random sampling is one form of the general set of sampling procedures referred to as probability sampling. Probability sampling procedures must meet 4 criteria (Chochran, 1977:9): 1. We can define the set of distinct samples which the procedure is capable of selecting. 2. Each possible sample has assigned to it a known probability of selection. 3. We select one of the samples by a random process in which each sample receives its appropriate probability of being selected. 4. The method for computing the estimate must lead to a unique estimate for any specific sample.

51
3.6 DATA COLLECTION

The study was conducted in a Selangor area, the most populous state in Malaysia with approximately 4.19 million residents. At the time of the study, four retail stores were chosen as the research sites. The data were collected by means of questionnaire. Households were the target of the research during the surveyed period. First appointment was conducted with the personal in-charge in each retail store to request cooperation and approval for data collection and survey respond via formal letters from the Department of Mathematical Sciences, Faculty of Science and technology, National University of Malaysia. Field research was conducted in Tesco Saujana Impian Kajang, Carrefour Alamanda Putrajaya, Giant Bukit Tinggi and Mydin Mart Kajang. A simple random sample of 214 households respondents was obtained from each of the four retail stores; sum up a total of 856 respondents data.

52
3.7 ILLUSTRATION OF RESEARCH FRAMEWORK

Illustration 3.2 Attribute 4Ps Retail Stores Mapping

Attribut - 4Ps - Retail Stores Mapping
High Quality Several Brands Good Condition Visual Appearance Maintenance&Repair

Product
Carrefour

National Merchandise

Cheaper In Buy Additional Lowest Price In Area Everyday Best Price Resoanable Price Best Value For Money

Price
Giant

Low Throughout Year

Fast Checkout Convenience Parking Near To My Living Place

Place/
Appealing Decor Easy Layout Distribution Tesco

Public Transport

Advertised Merchandise Offer Coupons Seasonal Promations Privilege Card Promotions Informations

Promotiom
Mydin

Attractive Promotions

53 The illustration of Attribute - 4Ps - Retail Stores Mapping was built to sprout a better understanding on our study framework. It elucidates the main idea of how we determine the targeted attribute of the 4Ps and generate it in the questionnaire to meet out objectives. The relationship between the marketing mix, 4ps with the attributes lies in each P element were elucidate clearly linking to the four selected retail stores, namely Carrefour, Giant, Tesco and Mydin. Once everybody agrees about the family of criteria, assuming that the alternatives are known, it remains to complete the decision matrix, i.e., to evaluate each alternative according to the criteria. This evaluation theoretically depends on the posterior aggregation procedure, but this fact is generally ignored by the designers so that the assessment is generally independent of the aggregation procedure. The system can support a direct assessment method, showing graphically to the decision making, the position of the various alternatives or transforming a pair wise comparison into a numerical (normalized) scale as, for example, in the so-called "Analytical Hierarchical Process"(AHP) (Saaty, 1980). In the framework of multi-attribute utility, the utilities of a given alternative, regarding each attribute, are jointly cardinal. They have consequently to be jointly evaluated (Pomerol & Barba-Romero, 1993). In this case, due to the difficulty either to verify the probabilistic independence or to help the decision maker to jointly evaluate the alternatives by solvability or by the mid-preference point method, the support of a Multicriteria Decision Making methodology should be very useful.

54 This question of the evaluation of the alternatives is even more difficult due to the relationships between the alternatives and the evaluation context. Indeed, it is wellknown that many aggregation procedures are not insensitive to the introduction of new alternatives (Pomerol and Barba-Romero (1993)) and, even worst that the evaluation depends on the alternatives presented to the subject. This is typical in the so-called frame effect (Tversky and Kahneman, 1988): an average valued alternative will be evaluated with better marks when it is presented within a bad alternative set rather than within a good one. The frame effect is typically a contextual effect, and one must consider that it is actually difficult to separate the criteria from the alternatives; they are both defining the context of the decision. Keeney (1992) has emphasized that the decision making should define objectives before seeking alternatives that permit to attain his objectives. In our framework, we can think about objectives as aspiration levels defined for each criterion or alternately as very general goals. We manage to expose the relationship between the marketing mix, 4ps with the attributes lies in each P, it was elucidate clearly link to the four selected retail stores. We cannot leave the topic of criteria without discussing of the question of the assessment of weights or more generally of importance factors. It is not very useful to support the decision making for direct assessment. But it is known that the direct assessment entails so many flaws (Mousseau, 1993; Weber and Borcherding, 1993) that it would probably be preferable to provide some support. One way consists of facilitating the transformation from ordinal weights into cardinal ones. Some systems also can manage intervals of value for weights. Another way is to generate questions about pairwise comparisons to build a coherent set of weights. Mousseau (1993) has designed such a DSS.

55 One of the advantages of the multi-criteria decision framework is to allow a classification of the contextual problems by distinguishing some concepts: alternatives, criteria, goals, assessment. One can observe that the contextual information mainly applies on the relationships between the previous concepts and influences the limits of each of them. In other words, there is a core of knowledge by which a subject easily distinguishes between a criterion, a goal and an alternative, but at some extremities a criterion may become a fact concerning a given alternative or an objective in place of a criterion. Such contextual knowledge preferentially affects the relationships between concepts rather than the concepts themselves, and the borderline of the concepts rather than their core.

3.8

CONCLUSION

The retail stores management uses the information so obtained to understand the needs of individuals in the marketplace, and to create strategies and marketing plans. The process of measurement is central to quantitative research because it provides the fundamental connection between empirical observation and mathematical expression of quantitative relationships.

56

CHAPTER IV

DATA ANALYSIS, INTERPRETATION AND DISCUSSION

Data will be compiled according to the selected sites. The data will be analyzed applying computer software such as Statistical Package for the Social Sciences (SPSS), among the most widely used programs for statistical analysis in social science. It is used by market researchers, health researchers, survey companies, government, education researchers, and others. In addition to statistical analysis, data management (case selection, file reshaping, creating derived data) and data documentation (a metadata dictionary is stored with the data) are features of the base software. Microsoft Words, Microsoft Excel and Adobe Acrobat Professional were use to generate and transform result and dissertation. Information that determines its real value to the organization is determined by: 1. The ability and willingness to act on the infomation 2. The accuracy of the information 3. The level of indecisiveness that would exist without the information 4. The amount of variation in the possible results 5. The level of risk aversion 6. The reaction of competitiors to any decision improved by the information 7. The cost of the information in terms of time and money

57
4.1 INTRODUCTION

The retail market place promotes continuous improvement to survive in a turbulent environment. It does so by creating, acquiring and transferring knowledge and modifying its behavior to reflect new knowledge. For that, benchmarking is the search for industry best practices that leads to superior performance (Camp, 1989). The benchmarking measurement of the retail stores considers a set of indicators and for this reason assumes the configuration of a multicriteria analysis. The literature on retail stores and marketing mix model has identified four major underlying criteria essential to take place in the market place. They are as follows:
ATT1 : Product Attribute
ATT2 : Price Attribute

ATT3 : Promotions Attribute

ATT4 : Place/Distribution Attribute

Multicriteria benchmarking analysis of comparing the four retail stores (Tesco, Carrefour, Giant and Mydin) poses many problems. Since the dominance relation is usually not verified, there is not a best in class organization. Generally, an organization will show better performance on the basis of some indicators and worse performance on the basis of some others: there is no single performance management enterprise system which is best in class across all areas (Sharif, 2002, p. 76). However, in the absence of a superior best in class dominating organization, one cannot search for industry best practice that leads to superior performance, and thus cannot apply benchmarking analysis as advocated.

58 The best in class is the organization with the maximum averaged value, computed by averaging the scores assigned to all the organizations on the basis of all the criteria. Moreover, this paper illustrates the advantages, in terms of flexibility and realism, connected to the application of the multi-criteria outranking methodology as an alternative and more suitable approach for benchmarking analysis of retail stores. That is, the aim of this paper is to show the contribution of the multicriteria outranking methodology to the valuation of the retail stores in the market place in terms of benchmarking analysis. It enables the benchmarking of organizational learning capability without the necessity of an aggregate indicator obtained by averaging all scores assigned to the organizations on the basis of the different criteria. Consider four retail stores:
R1 : Tesco R2 : Mydin

R3 : Carrefour
R4 : Giant

This averaging methodology is the peculiarity and the main disadvantage of the traditional approach, that is, the aim of this chapter is to show the contribution of the multicriteria outranking methodology to the valuation of the impact of marketing mix on customer satisfaction of the four retail stores (Tesco, Carrefour, Giant, Mydin) in terms of benchmarking analysis. The application of outranking approach enables, unlike the traditional analysis, the benchmarking of the impact of marketing mix without the necessity of an aggregate indicator obtained by averaging all scores assigned to the organizations on the basis of the different criteria. Finally, the following section discusses the contribution of the outranking multicriteria methodology to the benchmarking analysis of the impact of marketing mix on customer satisfaction.

59
4.2 CONSENSUS RANKINGS FROM BENCHMARKING

The benchmarking analysis of the retail stores considers a set of criteria: product, price, place/distribution and promotion. The impact of marketing mix on customer satisfaction of the retail stores is a case study deriving consensus rankings from benchmarking analysis by comparing Tesco, Carrefour, Giant and Mydin which considers a set of 4Ps criteria. For this reason it assumes the configuration of a multicriteria analysis. In the traditional benchmarking the multicriteria problem is solved throughout the construction of a synthetic indicator obtained by averaging all scores assigned to an organization on the different criteria. This methodology presents many theoretical and empirical disadvantages. This paper illustrates the advantages, in terms of greater flexibility and realism, connected to the application of the multicriteria methodology founded on the notion of outranking. In fact, such a methodology solves the multicriteria benchmarking problem without using the averaging rule adopted by the traditional benchmarking approach. In fact, such a methodology solves the multicriteria benchmarking problem without using the averaging rule adopted by the traditional benchmarking approach.

60
4.3 PROFILE OF RESPONDENTS

The respondents profile is as presented in Table 4.1 - 4.5. Table 4.1 Profile of Respondents Gender Gender
Gender Male Female Total Frequency 437 419 856 Percent 51.1 48.9 100.0 Valid Percent 51.1 48.9 100.0 Cumulative Percent 51.1 100.0

Table 4.2 Profile of Respondents Ethnic Ethnic

Ethnic Malay Chinese Indian Others Total Frequency 411 325 94 26 856 Percent 48.0 38.0 11.0 3.0 100.0 Valid Percent 48.0 38.0 11.0 3.0 100.0 Cumulative Percent 48.0 86.0 97.0 100.0

Table 4.3 Profile of Respondents Marital Status Marital Status

Marital Status Single Married Total Frequency 465 391 856 Percent 54.3 45.7 100.0 Valid Percent 54.3 45.7 100.0 Cumulative Percent 54.3 100.0

61 Table 4.4 Profile of Respondents Age Age

Age <21 21-35 36-50 >50 Total Frequency 107 506 212 31 856 Percent 12.5 59.1 24.8 3.6 100.0 Valid Percent 12.5 59.1 24.8 3.6 100.0 Cumulative Percent 12.5 71.6 96.4 100.0

Table 4.5 Profile of Respondents Shopping Frequency Shopping Frequency

Shopping Frequency Daily Once a week or more 2-3 times a month Once a month every 2-3 months 2-3 times a year Total Frequency 60 173 191 208 143 81 856 Percent 7.0 20.2 22.3 24.3 16.7 9.5 100.0 Valid Percent 7.0 20.2 22.3 24.3 16.7 9.5 100.0 Cumulative Percent 7.0 27.2 49.5 73.8 90.5 100.0

62
4.4 DESCRIPTIVE STATISTICS

Probably the most often used descriptive statistic is the mean. The mean is a particularly informative measure of the "central tendency" of the variable. We are interested in statistics from our sample only to the extent to which they can infer information about the population. We use descriptive statistic to describe customers in a database based on the data available. This type of analysis assumes that all data are equally important and meaningful. It also assumes that each data element contributes meaningful information. The larger the sample size, the more reliable for the mean. The larger the variation, the less reliable the mean. A descriptive analysis has been generated from the SPSS for the data collected and the following section will discuss the interpretation of those data.

63
4.4.1 Descriptive Statistics of Marketing Mix Factor

4.4.1.1 Descriptive Statistics of Product Factor

Table 4.6 Descriptive Statistics of Product Factor

N High Quality Several Brands Good Condition Visual Appearance Maintenance & Repair National Brand Merchandise Attribute Mean 856 856 856 856 856 856 Minimum 1 1 1 2 1 1 Maximum 6 6 6 6 6 6 Mean 3.84 4.15 4.15 4.07 4.16 4.14 4.09 Std. Deviation .945 .942 .865 .867 .902 .989

Mean
2 1 0 High Quality Several Brands Good Condition Visual Maintenance Appearance & Repair National Brand Merchandise

The highest score for product factor is set for the retail store offers good maintenance and repair of good sold.

64
4.4.1.2 Descriptive Statistics of Price Factor

Table 4.7 Descriptive Statistics of Price Factor

N Cheaper In Buy Additional Lowest Price In Area Everyday Best Price Reasonable Price Best Value For Money Price Low Throughout Year 856 856 856 856 856 856 Minimum 1 1 1 1 1 1 Maximum 6 6 6 6 6 6 Mean 3.81 3.98 4.07 4.16 3.06 3.85 3.82 Std. Deviation 1.081 1.070 1.013 .902 1.482 .981

Attribute Mean

Mean
2 1 0 Cheaper In Lowest Price Buy In Area Additional Everyday Best Price Reasonable Price Best Value For Money Price Low Throughout Year

The highest score for price factor is set for the price of the product is reasonable in the respective retail store.

65
4.4.1.3 Descriptive Statistics of Place/Distribution Factor

Table 4.8 Descriptive Statistics of Place/Distribution Factor

N Fast Checkout Convenience Parking Near To My Living Place Appealing Decor Easy Layout Convenient Public Transport Attribute Mean 856 856 856 856 856 856 Minimum 1 1 1 1 1 1 Maximum 6 6 6 6 6 6 Mean 3.44 3.85 3.75 3.90 3.99 3.36 3.72 Std. Deviation 1.068 1.127 1.180 .944 .964 1.136

Mean

0 Fast Checkout Convenience Near To My Parking Living Place Appealing Decor Easy Layout Convenient Public Transport

The highest score for Place/Distribution is set for the stores layout makes it easy for respondents to find what they need.

66
4.4.1.4 Descriptive Statistics of Promotion Factor

Table 4.9 Descriptive Statistics of Promotion Factor

N Advertised Merchandise Available Offer Coupons Seasonal Promotions Privilege Card Well Informed Of Promotions Attractive Promotions Attribute Mean 856 856 856 856 856 856 Minimum 1 1 1 1 1 1 Maximum 6 6 6 6 6 6 Mean 3.76 3.23 4.01 3.25 3.61 3.77 3.61 Std. Deviation 1.050 1.216 1.012 1.269 1.156 1.055

Mean
2 1 0 Advertised Merchandise Available Offer Coupons Seasonal Privilege CardWell Informed Attractive Promotions Promotions Of Promotions

The highest score for Place/Distribution is set for seasonal promotions are available in the respective store. The conclusion for descriptive analysis is value for money and dont waste time.

67
4.4.2 Descriptive Statistics of Marketing Mix Model, 4Ps

Table 4.10 Descriptive Statistics of Marketing Mix Model, 4Ps

N Descriptive Statistics of Product Factor Descriptive Statistics of Price Factor Descriptive Statistics of Place/Distribution Factor Descriptive Statistics of Promotion Factor 856 Minimum 1 Maximum 6 Mean 4.09

856

3.82

856

3.72

856

3.61 3.61

Attribute Mean

Marketing Mix Model, 4Ps

4.2 4 Mean 3.8 3.6 3.4 3.2 Mean Product 4.09 Price 3.82 Place/Distributi 3.72 Promotion 3.61

Marketing Mix Factor

From the table, we can conclude that Product factor has the highest mean. Meaning the product factor rank the highest in terms of satisfaction perceived from customer from the four retail outlet, followed by price factor, place/distribution factor and promotion factor.

68
4.4.3 Descriptive Statistics of Motivating Factor

Table 4.11 Motivating Factor

Frequency 401 180 151 124 856 Percent 46.8 21.0 17.6 14.5 100.0 Valid Percent 46.8 21.0 17.6 14.5 100.0 Cumulative Percent 46.8 67.8 85.4 100.0

Price Promotions Place/Distribution Product Total

According to the output of motivating factor from SPSS, price is the most motivating factor (61.3%) followed by promotions (21.0%), place/distribution (17.6%) and last but not least product (14.5%). It simply means that customer perceive value of price is the highest factor which drive them to shop at the respective retail store followed by promotions, place/distribution and product.
500

400

300

Count
200 100 0 Product Price Promotions Place/Distribution

Motivating Factor

69
4.4.4 Cross tabulation Analysis

The most motivating factor shown above is a result of demography factors such as gentle, age, marital status, ethnic and shopping frequency. The cross tabulation analysis of the motivating factors is displayed in following tables. Table 4.12 Motivating Factor * Gender Cross tabulation
Gender Male Motivating Factor Product Price Promotions Place/Distribution Total 58 218 74 87 437 Female 66 183 106 64 419 124 401 180 151 856 Total

From the table, we conclude that motivating factor to most male and female is price. Whereas the less motivated factor falls to product for male and place/distribution for female.

Table 4.13 Motivating Factor * Ethnic Cross tabulation

Ethnic Malay Motivating Factor Product Price Promotions Place/Distribution Total 56 225 67 63 411 Chinese 56 112 90 67 325 Indian 10 53 17 14 94 Others 2 11 6 7 26 124 401 180 151 856 Total

From the table, we conclude that the motivating factor for all ethnics is price. Whereas the less motivated factor falls to product for Malay, Chinese, Indian and others respondents.

70 Table 4.14 Motivating Factor * Marital Status Cross tabulation

Marital Status Single Motivating Factor Product Price Promotions Place/Distribution Total 86 194 99 86 465 Married 38 207 81 65 391 124 401 180 151 856 Total

From the table, we conclude that the motivating factor for single and married category respondents is price. Whereas the less motivated factor falls to product, place/distribution for single and product for married respondents.

Table 4.15 Motivating Factor * Age Cross tabulation

Age <21 Motivating Factor Product Price Promotions Place/Distribution Total 17 43 24 23 107 21-35 87 224 111 84 506 36-50 19 115 42 36 212 >50 1 19 3 8 31 124 401 180 151 856 Total

From the table, we conclude that the motivating factor for all age range is price; whereas the less motivated factor falls to product for respondents less than 21years old; place/distribution for respondents range from 21 to 35years old; and product for respondents more than 36years old.

71 Table 4.16 Motivating Factor * Shopping Frequency Cross tabulation

Shopping Frequency Once a week or more 16 89 32 36 173 2-3 times a month 31 92 34 34 191 Total

Daily Motivating Factor Product Price Promotions Place/Distribution Total 3 21 32 4 60

Once a month 35 102 39 32 208

every 23 months 26 70 22 25 143

2-3 times a year 13 27 21 20 81 124 401 180 151 856

From the table, we conclude that the motivating factor for daily shopper is promotions; for the rest category of shopping frequency is price; whereas the less motivated factor falls to product for most of the respondents.

72
4.4.5 Descriptive Statistics Analysis of four retail stores

4.4.5.1 Descriptive Statistics Analysis of Tesco

Table 4.17 Descriptive Statistics for Tesco

N High Quality Several Brands Good Condition Visual Appearance Maintenance & Repair National Brand Merchandise Product Cheaper In Buy Additional Lowest Price In Area Everyday Best Price Reasonable Price Best Value For Money Price Low Throughout Year Price Fast Checkout Convenience Parking Near To My Living Place Appealing Decor Easy Layout Convenient Public Transport Place/Distribution Advertised Merchandise Available Offer Coupons Seasonal Promotions Privilege Card Well Informed Of Promotions Attractive Promotions Promotion 214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 3.81 4.39 4.15 4.10 4.30 3.09 1.127 1.120 1.239 .885 .991 1.232 214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 3.81 4.09 4.20 4.34 3.23 3.98 1.106 1.118 1.109 .872 1.542 1.050 214 214 214 214 214 214 Minimum 2 2 3 3 1 1 Maximum 6 6 6 6 6 6 Mean 4.18 4.52 4.54 4.44 4.42 4.40 Std. Deviation .791 .887 .742 .702 .889 1.015 Attribute Mean

4.42

3.94

3.97
214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 4.22 3.35 4.41 3.41 4.01 3.99 .962 1.242 .860 1.437 1.235 1.122

3.90

73
4.4.5.2 Descriptive Statistics Analysis of Mydin

Table 4.18 Descriptive Statistics for Mydin

N High Quality Several Brands Good Condition Visual Appearance Maintenance & Repair National Brand Merchandise Product Cheaper In Buy Additional Lowest Price In Area Everyday Best Price Reasonable Price Best Value For Money Price Low Throughout Year Price Fast Checkout Convenience Parking Near To My Living Place Appealing Decor Easy Layout Convenient Public Transport Place/Distribution Advertised Merchandise Available Offer Coupons Seasonal Promotions Privilege Card Well Informed Of Promotions Attractive Promotions Promotion 214 214 214 214 214 214 1 1 1 1 1 1 5 6 6 5 6 6 3.25 3.35 3.55 3.53 3.76 3.09 1.079 1.357 1.369 1.073 1.116 1.221 214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 4.00 4.09 4.13 4.25 2.11 3.82 1.343 1.245 1.182 1.035 1.310 1.034 214 214 214 214 214 214 Minimum 1 1 1 2 2 1 Maximum 6 6 6 6 6 6 Mean 3.75 4.05 3.98 3.74 4.12 3.84 Std. Deviation .974 1.062 .986 .952 .993 1.157 Attribute Mean

3.91

3.73

3.42
214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 2.93 2.29 3.56 2.64 2.86 3.40 1.141 1.122 1.220 1.416 1.246 1.259

2.95

74
4.4.5.1 Descriptive Statistics Analysis of Carrefour

Table 4.19 Descriptive Statistics for Carrefour

N High Quality Several Brands Good Condition Visual Appearance Maintenance & Repair National Brand Merchandise Product Cheaper In Buy Additional Lowest Price In Area Everyday Best Price Reasonable Price Best Value For Money Price Low Throughout Year Price Fast Checkout Convenience Parking Near To My Living Place Appealing Decor Easy Layout Convenient Public Transport Place/Distribution Advertised Merchandise Available Offer Coupons Seasonal Promotions Privilege Card Well Informed Of Promotions Attractive Promotions Promotion 214 214 214 214 214 214 1 1 2 1 1 1 6 6 6 6 6 6 3.89 3.33 4.23 3.07 3.64 3.76 .818 1.023 .910 .993 .908 .837 214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 3.34 4.06 3.43 4.02 4.03 3.38 .945 .881 1.147 .858 .869 1.093 214 214 214 214 214 214 1 1 1 1 1 1 6 6 6 6 6 6 3.42 3.72 4.00 4.14 2.71 3.58 .960 1.014 .937 .877 1.275 .883 214 214 214 214 214 214 Minimum 2 2 1 2 1 1 Maximum 6 6 6 6 6 6 Mean 3.93 4.26 4.17 4.02 4.03 4.21 Std. Deviation .748 .784 .846 .784 .793 .901 Attribute Mean

4.10

3.60

3.71

3.70

75
4.4.5.4 Descriptive Statistics Analysis of Giant

Table 4.20 Descriptive Statistics for Giant

N High Quality Several Brands Good Condition Visual Appearance Maintenance & Repair National Brand Merchandise Product Cheaper In Buy Additional Lowest Price In Area Everyday Best Price Reasonable Price Best Value For Money Price Low Throughout Year Price Fast Checkout Convenience Parking Near To My Living Place Appealing Decor Easy Layout Convenient Public Transport Place/Distribution Advertised Merchandise Available Offer Coupons Seasonal Promotions Privilege Card Well Informed Of Promotions Attractive Promotions Promotion 214 214 214 214 214 214 2 1 2 2 2 2 6 6 6 6 6 6 3.37 3.61 3.86 3.96 3.86 3.89 1.030 .760 .740 .844 .758 .740 214 214 214 214 214 214 3 2 2 2 1 2 6 6 6 6 6 6 3.99 4.03 3.95 3.92 4.18 4.04 .725 .822 .762 .749 .886 .884 214 214 214 214 214 214 Minimum 1 2 2 3 2 3 Maximum 6 6 6 6 6 6 Mean 3.49 3.76 3.91 4.06 4.07 4.10 Std. Deviation 1.095 .853 .723 .867 .877 .762 Attribute Mean

3.90

4.02

3.76
214 214 214 214 214 214 1 2 2 2 2 2 6 6 6 6 6 6 3.97 3.96 3.85 3.86 3.93 3.93 .750 .798 .781 .783 .787 .845

3.92

76
4.5 BENCHMARKING AND OUTRANKING-SATISFYING METHODOLOGY

The outranking methodology is a family of algorithms developed by Operational Research (Roy, 1985; Vincke, 1992; Roy and Bouyssou, 1993; Pomerol and BarbaRomero, 2000). Of these, Electre I method will be introduced here. The input of the Electre I method is represented by a multicriteria matrix as in Table 4.21, surrounded by a line containing the weights that the decision making assigns to each criterion. Table 4.21 Multi-criteria matrix (Electre I)
ATT1 (Product) R1 (Tesco) R2 (Mydin) R3 (Carrefour) R4 (Giant) ATT2 (Price)

ATT3 ATT4 (Promotion) (Place/Distribution)

Weight

4.42 3.91 4.10 3.90 1/4

3.94 3.73 3.60 4.02 1/4

3.97 3.42 3.71 3.76 1/4

3.90 2.95 3.70 3.92 1/4

From Table 4.21, the retail stores positioning is generated and shown in the table below: Table 4.22 Retail stores Positioning Table
ATT1 (Product) ATT2 (Price)

ATT3 (Promotion)

ATT4 (Place/Distribution)

1st 2nd 3rd 4th

Tesco Carrefour Mydin Giant

Giant Tesco Mydin Carrefour

Tesco Giant Carrefour Mydin

Giant Tesco Carrefour Mydin

77 Table 4.23 Retail Stores Ranking Table Attributes 1st

ATT1 (Product) ATT2 (Price) ATT3 (Promotion) ATT4 (Place/Distribute)

Retail Stores Ranking 2nd Carrefour Tesco Giant Tesco 3rd Mydin Mydin Carrefour Carrefour 4th Giant Carrefour Mydin Mydin

Tesco Giant Tesco Giant

Average ( RN ) = [ ATT1 ( RN ) + ATT2 ( RN ) + ATT3 ( RN ) + ATT4 ( RN )]/4

Now, let us consider R2 and R3 . Taking into account the values in Table 4.21 it is evident that R3 is better than R2 for three criteria out of four (Marketing Model 4Ps). That is:
ATT1 ( R3 ) = 4.10 > ATT1 ( R2 ) = 3.91

ATT3 ( R3 ) = 3.71 > ATT3 ( R2 ) = 3.42 ATT4 ( R3 ) = 3.70 > ATT4 ( R2 ) = 2.95

Three criteria {1, 3, and 4} agree in considering R3 better than R2 . Only one criterion {2} considers R2 better than R3 . That is:
ATT2 ( R2 ) = 3.73 > ATT2 ( R3 ) = 3.60

78 Interpreting the same procedure for all the other pairs of retail companies will obtain the Table 4.24. Table 4.24 Multi-criteria Matrix
ATT1 (Product) R1 (Tesco) R2 (Mydin) R3 (Carrefour) R4 (Giant) ATT2 (Price)

ATT3 (Promotion)

ATT4 (Place/Distribution)

Weight

4.42 3.91 4.10 3.90 1/4

3.94 3.73 3.60 4.02 1/4

3.97 3.42 3.71 3.76 1/4

3.90 2.95 3.70 3.92 1/4

Table 4.25 Matrix of Concordance Subsystems ( J c )

R1 R1 R2 R3 R4
{2,4} {1,3,4}

R2
{1,2,3,4}

R3
{1,2,3,4} {2}

R4
{1,3}

{1}
{1}

{2,3,4}

{2,3,4}

The generic element J c ( Ri , R j ) of the matrix of Table 4.25 is given by:

J c ( Ri , R j ) = {j J = ATTi ( Ri ) ATT j ( R j )}; where: J = {1, 2, 3, 4}

Taking into account the weights assigned to the various criteria, a concordance index can be calculated for each pair of company ( Ri , R j ): C ( Ri ; R j ) = jJ K j ;
c

Where: K j is the weight assigned to the jth criterion.

79 For example, for the pair ( R3 , R2 ) we have:

C ( R3 , R2 ) = K1 + K 3 + K 4 = 1/4 + 1/4 + 1/4 = 0.75 (75 percent)

We therefore have a majority of criteria of 75 percent in favor of R3 with respect to R2 . Iterating the same procedure for other pairs or organizations, we obtain the concordance matrix of Table 4.26. Table 4.26 Concordance Matrix
R1 R1 R2 R3 R4 R2
1 0 0 0.50 0.75

R3
1 0.25

R4
0.50

0.25
0.25

0.75

0.75

The concordance indicator in Table 4.26 varies between 0 and 1. It is equal to 1 only if there is unanimity or a majority of criteria that are 100 percent in favor of Ri with respect to R j . In order to decide on the superiority of one retail company with respect to another, the decision maker should set a concordance threshold C*. Generally, it is chosen to be a majority greater than or equal to 75 percent (simple majority tightened), that is: C* 0.75 (75 percent). Taking into account the database of Table 4.26 and the concordance threshold C* we have the following concordance test: 1 if C ( Ri ; R j ) C*
Tc ( Ri , R j ) =

0 if otherwise The results of concordance test are shown in Table 4.27.

80 Table 4.27 Outcomes of Concordance Test

R1 R1 R2 R3 R4
0 0 0 1

R2
1

R3
1 0

R4
0

0
0

The Electre I methodology considers another step: the construction of discordance test in order to take into account of an excessive distance (dissimilarity) between the scores
ATT j ( R j ) and ATTi ( Ri ). The discordance test Td is fulfilled if the distance:

D ( R j , Ri ) = max [ ATT j ( R j ) - ATTi ( Ri )];

does not exceed discordance threshold D*. In order to simplify the analysis we suppose that the test of discordance is fulfilled by all pairs ( Ri , R j ).

The ideas behind the test of discordance may be summarized as follows. The outranking methods consists in examining the validity of the proposition a outranks b. The concordance test measures the arguments in favor of saying so, but there may be arguments strongly against that assertion (discordant criteria). The discordant voices can be viewed as vetoes. There is a veto against declaring that a outranks b if b is so much better than a on same criterion that it becomes disputable or even meaningless to pretend that a might be better overall than b. The logic of the test of discordance is quite similar to that on which statistical tests are based. Here as well, conventional levels of significance (like the famous 5 percent rejection intervals) are widely used. The decision maker decides the discordance threshold, that is he decides whether a hypothesis must be rejected or not.

81 If the discordance test is not passed alternatives a and b are said incomparable. They are too different to be compared. For instance, the comparison of a Rolls-Royce with a small cheap car is meaningless because the Rolls-Royce is incomparably better on many criteria but is also incomparably more expensive. Another example, concerns the comparison of projects that involve the risk of loss of human life. Should one prefer a more expensive project with a lower risk or a less expensive one with higher risk? One may advance that the projects are too different to be compared. Taking into account both the concordance and the discordance test we construct a binary outranking relation S. Given two generic retail companies ( Ri , R j ) we say that Ri outranks R j if and only if the concordance test and the discordance test are fulfilled, that is:
Ri S R j if and only if Tc and Td fulfilled.

Because we suppose that the discordance test is passed by all pairs ( Ri , R j ) the outranking relation S coincides with the outcomes of concordance test of Table 4.27. That is:
Ri S R j if and only if Tc fulfilled.

The relation S may be represented by the graph of Illustration and Figure 4.1.

82 Illustration 4.1 Graph of S from Table 4.27 (C* 75 percent)

Figure 4.1 Graph of S from Table 4.27 (C* 75 percent)

R1
Tesco

R3
R4 Giant

R2
Mydin

Giant

Now, R3 is the 2nd worst in class and R2 is the worse in class. But R1 and R4 are not comparable structures: neither R3 outranks R4 nor the opposite. This is another important difference arising from the refusal of the ordering based on the average benchmarking.

83
4.6 BENCHMARKING ON CUSTOMER SATISFACTION

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. Through benchmarking, we get better understanding of the customer because it is based on the reality of the market estimated in an objectivist way and a better economic planning of the purposes and the objectives to achieve in the company for they are centered on what takes place outside controlled and mastered. The management will get a better increase of the productivity, resolution of the real problems and understanding of the processes and what they produce.
4.6.1 Product Benchmarking

Table 4.28 Product Benchmarking towards customer satisfaction

Product Benchmarking
4.60 4.40 M ean 4.20 4.00 3.80 3.60 R1 (Tesco) R2 (Mydin) R3(Carrefour) R4 (Giant) 3.91 4.10 3.90 4.42

We conclude that Tesco rank the highest on customer satisfaction towards product and it shall be the benchmark or guiding star for other retail stores. Mydin, Carrefour and Giant need to benchmark Tescos product strategy and improve to compete in the market.

84
4.6.2 Price Benchmarking

Table 4.29 Price Benchmarking towards customer satisfaction

Price Benchmarking
4.10 4.00 3.90 3.80 3.70 3.60 3.50 3.40 3.30 4.02 3.94 3.73 3.60

Mean

R1 (Tesco)

R2 (Mydin)

R3(Carrefour)

R4 (Giant)

We conclude that Giant rank the highest on customer satisfaction towards price and it shall be the benchmark or guiding star for other retail stores. It proofs that Giants Everyday low price strategy is a success. Tesco rank the second with mean value of 3.94, still in the competition mood with Giant. Mydin and Carrefour need to benchmark Giants pricing strategy and improve to compete in the market.

85
4.6.3 Promotion Benchmarking

Table 4.30 Promotion Benchmarking towards customer satisfaction

Promotion Benchmarking
4.10 4.00 3.90 3.80 3.70 3.60 3.50 3.40 3.30 3.20 3.10 3.97 3.71 3.42 3.76

Mean

R1 (Tesco)

R2 (Mydin)

R3(Carrefour)

R4 (Giant)

We conclude that Tesco rank the highest again on customer satisfaction towards promotion and it shall be the benchmark or guiding star for other retail stores. Tesco promotion strategy is well organized and effective; customers are aware of the latest promotion from the newspaper, flyers and promotion booklet. Giant and Carrefour are a little bit behind with the mean value of 3.76 and 3.71. Mydin rank the last, it need to benchmark Tescos promotion strategy, revise on its promotion strategy and improve to compete in the competitive market.

86
4.6.4 Place/Distribution Benchmarking

Table 4.31 Place/ Distribution Benchmarking towards customer satisfaction

Place/Distribution Benchmarking
4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 3.90 2.95 3.70 3.92

Min

R1 (Tesco)

R2 (Mydin)

R3(Carrefour)

R4 (Giant)

We conclude that Tesco rank the highest on customer satisfaction towards place and distribution and it shall be the benchmark or guiding star for other retail stores. The other three retail stores having very close mean value. Meaning the customer satisfaction towards place and distribution in four retail stores are well perceived. From 4.6.4, we conclude that Giant rank the second, followed by Carrefour and Mydin. They are to benchmark Mydins, and improve on its place and distribution strategy.

87
4.7 CONCLUSION

Outranking methods make it possible to deal with multicriteria benchmarking and avoid the shortcomings of the traditional methods based on the average aggregate monocriterion. If applied to the measurement of learning capability, they are a complete alternative to the traditional approach. They can support the behavioral theory of organizational analysis initiated by H. Simon (Biggiero and Laise, 2003a, b). In fact, even though H. Simon does not explicitly discuss the problem of criteria multiplicity nor does he apply outranking methods, the behavioral theory is nonetheless perfectly comparable with them. The levels of aspirations hypothesized by Simon can be associated with the threshold of concordance and discordance test. The lower the threshold assigned to the concordance test the lower the aspiration levels will be and hence the more the satisfying solutions will be. Outranking methods thus constitute a new and robust base on which to found the entire edifice of the behavioral theory of benchmarking applied to measurement of learning capability. They are a valid alternative to traditional methods, since they are equally rational and rigorous without suffering from its shortcomings and application limitations.

88

CHAPTER V

SUMMARY, CONCLUSION AND IMPLICATION

Global marketers usually find that customer needs are much more in common than they might have seemed (Yip, 2003, p. 214). There is an increasing emphasis on customer satisfaction as a means of affecting storechoice behavior (e.g., Weir, 2001) and although little research exists to substantiate it, it seems intuitive that satisfaction would also affect customer share. After taken a close look into the results, findings and discussions, the following SWOT analysis was born in the extended abstract technical paper.
5.1 5.1.1 SWOT Analysis Strength

Multi-criteria decision-making (MCDM) is one of the most widely used decision methodologies in the sciences, business, government and engineering worlds. MCDM methods can help to improve the quality of decisions by making the decision-making process more explicit, rational, and efficient. It is not a coincidence that a simple search (for instance, by using google.com) on the web under the key words multi criteria decision making returns more than one million hits.

89 In a decisional process the making of choices derives from complex hierarchical comparisons among alternative options, which are often based on conflictual criteria, a large number of external variables plays a relevant role in orienting decision-making. The strength of multi-criteria decision-making methods (MDMM) are to aid decision-makers to be consistent with fixed general objectives; to use representative data and transparent assessment procedures and to help the accomplishment of decisional processes, focusing on increasing its efficiency. The Electre I method, in which the criteria of the set of decisional alternatives are compared by means of a binary relationship, defined as outranking relationship, are more flexible than the ones based on a multi-objective approach.
5.1.2 Weakness

An intriguing problem with decision-making methods which rank a set of alternatives in terms of a number of competing criteria is that oftentimes different methods may yield different answers (rankings) when they are fed with exactly the same numerical data. Thus, the issue of evaluating the relative performance of such methods is naturally raised. This, in turn, raises the question how can one evaluate the performance of such methods? Since it is practically impossible to know which one is the best alternative for a given decision problem, some kind of testing procedures need to be determined.
5.1.3 Opportunity

In this paper, a new approach has been carried out for the use of the ELECTRE: ELimination Et Choix Traduisant la REalit (ELimination and Choice Expressing the REality) model in marketing mix selection. This work shows that ELECTRE can be used successfully in deriving a consensus ranking in benchmarking to select the best in class.

90
5.1.4 Threat

In outranking approaches, the inaccuracy of the data can be modelled through the indifference and preference threshold (so-called pseudocriteria). Of course, threshold must be assessed for each criterion and for each problem separately.
5.2 CONCLUSION

It is not simply enough to identify the strengths, weaknesses, opportunities, and threats of the electre outranking method. In applying the SWOT analysis it is necessary to minimize or avoid both weaknesses and threats. Weaknesses should be looked at in order to convert them into strengths. Likewise, threats should be converted into opportunities. Lastly, strengths and opportunities should be matched to optimize the potential of a firm. Applying SWOT in this fashion can obtain leverage for a company (Marketing Strategy, 1998). Sensitivity analysis showed that, in general, the project rankings were considerably more sensitive to changes in the performances than they were to changes in the thresholds or weights. This is helpful and means that within a relatively wide band of preference, the same projects are considered important. Further, it requires the individual project sponsors to make the effort and ensure that the performance data is both accurate and defensible. As can be seen, the marketing manager should have rough outline of potential marketing activities that can be used to take advantage of capabilities and convert weaknesses and threats. However, at this stage, there will likely be many potential directions for the managers to pursue. Due to the limited resources that most firms have, it is difficult to accomplish everything at once. The manager must prioritize all marketing activities and develop specific goals and objectives for the marketing plan (Contemporary Marketing, 1992).

91
5.3 DIRECTIONS FOR FURTHER RESEARCH

The relationships between customer satisfaction and behavioral outcomes are probably much more complex than initially assumed. This study has looked only at a limited part of the puzzle of how customer satisfaction translates into behavioral outcomes. In what way consumer characteristics moderate the relationship between satisfactions and repurchase behavior is likely to be contingent on the product or service category and the buying and usage process for that category. Other consumer characteristics not included in this study, such as a propensity for variety seeking behavior or a recreational shopping orientation, could potentially be important in many retail industries. Further research on how the effects of satisfaction on behavior is moderated by different consumer characteristics would advance customer satisfaction research as well as be of great managerial significance.
5.4 SCOPE AND LIMITATION OF THE STUDY

The setting selected for conducting this marketing research was focus only on three multinational retail stores and a homegrown retail store due to time constrain. Field researches were 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. The collection of primary data was based on a survey of 856 respondents who visit each respective retail outlets, the number in the sample limited due to the restrictions of time to complete the project and resources to support it.

92

EXTENDED ABSTRACT Technical Paper

93

THE IMPACT OF MARKETING MIX ON CUSTOMER SATISFACTION: A CASE STUDY DERIVING CONSENSUS RANKINGS FROM BENCHMARKING

DR. MOHAMAD NASIR SALUDIN, AMY POH AI LING, CHEN ZHI SYIN, IVAN LEONG JENN JIANG, TAN AI LEE, WONG XIAO WEI

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 an alternative and more sustainable approach for benchmarking analysis in marketing sector. Keywords: Marketing mix, Customer satisfaction, Retailing, Benchmarking, Multi-criteria decision-making, ELECTRE methods

ABSTRAK
Kertas ini yang merupakan satu kajian kes pemerolehan darjat konsensus daripada penandarasan telah berjaya membukitkan bahawa terdapatnya kesan campuran pemasaran terhadap kepuasan pelanggan. Kajian penyelidikan telah dijalankan di Tesco Stores (Malaysia) Sdn Bhd, Carrefour of Magnificent Diagraph Sdn. Bhd., Giant of Dairy Farm International dan emporium tempatan, Mydin Mohamed Holdings Berhad. Dengan pembangunan globalisasi yang pesat, syarikat peruncitan tempatan terpaksa bersaing dengan pelabur asing. Sehubungan itu, satu model telah dibangunkan untuk memperoleh darjat konsensus daripada penandarasan berdasarkan model campuran pemasaran, yang merupakan paradigma pemasaran traditional dengan mempraktiskan 4P iaitu produk, harga, promosi dan tempat/pengedaran. Daripada model campuran pemasaran, kami telah membina hubungan analitik antara kepuasan pelanggan dengan model campuran pasaran iaitu 4Ps dan seterusnya penandarasan daripadanya serta menjana respon yang positif daripada penilaian yang diperoleh. Kertas ini memperbincangkan penggunaan kaedah pemerolehan darjat di syarikat peruncitan serta mempaparkan kebagusan kaedah penyelesaian Electre. Katakunci: Campuran pemasaran, kepuasan pelanggan, peruncitan, menandaras, pembuatan keputusan multi-criteria, kaedah ELECTRE

94
1. Introduction 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. 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. 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. 2. Literature Review 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 parts of 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.

95
Outranking relations, in most methods, are built using a concordance-discordance principle. More complexity and flexibility are required in the processing of efficient alternatives. And it is the solutions, not the criteria, which the marketing management is interested in. 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). 3. Research Methodology 3.1 Recognizance Survey 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); the state's ethnic composition consisted of Malays 41%, Chinese 37%, Indians 19% and other ethnic groups 3%. The selected data collection sites are Tesco Saujana Impian Kajang, Carrefour Alamanda Putrajaya, Giant Bukit Tinggi and Mydin Kajang. 3.2 Research Instrument 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 to describe the nature of information contained within numbers assigned to objects and, therefore, within the variable. The questionnaire is divided into 4 sections: customer information, marketing mix model, customer perception and 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

96
disagree" is not available. The questions comprise four elements such as product, price, promotions, place/distribution; six questions are allocated for each of the 4Ps. 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. We choose simple random sampling in the research for conceptually; simple random sampling 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. 3.3 Illustration of Research Framework Illustration 1 Attribute 4Ps Retail Stores Mapping

The illustration of Attribute - 4Ps - Retail Stores Mapping was built to sprout a better understanding on our study framework. It elucidates the main idea of how we determine the targeted attribute of the 4Ps and generate it in the questionnaire to meet out objectives. The relationship between the marketing mix, 4ps with the attributes lies in each P element were elucidate clearly linking to the four selected retail stores, namely Carrefour, Giant, Tesco and Mydin.

97
Once everybody agrees about the family of criteria, assuming that the alternatives are known, it remains to complete the decision matrix, i.e., to evaluate each alternative according to the criteria. This evaluation theoretically depends on the posterior aggregation procedure, but this fact is generally ignored by the designers so that the assessment is generally independent of the aggregation procedure. The system can support a direct assessment method, showing graphically to the decision making, the position of the various alternatives or transforming a pair wise comparison into a numerical (normalized) scale as, for example, in the so-called "Analytical Hierarchical Process"(AHP) (Saaty, 1980). In the framework of multi-attribute utility, the utilities of a given alternative, regarding each attribute, are jointly cardinal. They have consequently to be jointly evaluated (Pomerol & Barba-Romero, 1993). In this case, due to the difficulty either to verify the probabilistic independence or to help the decision maker to jointly evaluate the alternatives by solvability or by the mid-preference point method, the support of a Multicriteria Decision Making methodology should be very useful. 3.4 Data Collection The study was conducted in a Selangor area, the most populous state in Malaysia with approximately 4.19 million residents. At the time of the study, four retail stores were chosen as the research sites. The data were collected by means of questionnaire. Households were the target of the research during the surveyed period. First appointment was conducted with the personal in-charge in each retail store to request cooperation and approval for data collection and survey respond via formal letters from the Department of Mathematical Sciences, Faculty of Science and technology, National University of Malaysia. Field research was conducted in Tesco Saujana Impian Kajang, Carrefour Alamanda Putrajaya, Giant Bukit Tinggi and Mydin Mart Kajang. A simple random sample of 214 households respondents was obtained from each of the four retail stores; sum up a total of 856 respondents data. In our framework, we can think about objectives as aspiration levels defined for each criterion or alternately as very general goals. We manage to expose the relationship between the marketing mix, 4ps with the attributes lies in each P, it was elucidate clearly link to the four selected retail stores. The retail stores management uses the information so obtained to understand the needs of individuals in the marketplace, and to create strategies and marketing plans. The process of measurement is central to quantitative research because it provides the fundamental connection between empirical observation and mathematical expression of quantitative relationships. 3.5 Data Analysis and Interpretation The retail market place promotes continuous improvement to survive in a turbulent environment. It does so by creating, acquiring and transferring knowledge and modifying its behavior to reflect new knowledge. For that, benchmarking is the search for industry best practices that leads to superior performance (Camp, 1989). The benchmarking measurement of the retail stores considers a set of indicators and for this reason assumes the configuration of a multi-criteria analysis. The literature on retail stores and marketing mix model has identified four major underlying criteria essential to take place in the market place. They are as follows:

ATT1 : Product Attribute ATT2 : Price Attribute ATT3 : Promotions Attribute ATT4 : Place/Distribution Attribute

98
Multi-criteria benchmarking analysis of comparing the four retail stores (Tesco, Carrefour, Giant and Mydin) poses many problems. Since the dominance relation is usually not verified, there is not a best in class organization. Generally, an organization will show better performance on the basis of some indicators and worse performance on the basis of some others: there is no single performance management enterprise system which is best in class across all areas (Sharif, 2002, p. 76). However, in the absence of a superior best in class dominating organization, one cannot search for industry best practice that leads to superior performance, and thus cannot apply benchmarking analysis as advocated. The best in class is the organization with the maximum averaged value, computed by averaging the scores assigned to all the organizations on the basis of all the criteria. Moreover, this paper illustrates the advantages, in terms of flexibility and realism, connected to the application of the multi-criteria outranking methodology as an alternative and more suitable approach for benchmarking analysis of retail stores. That is, the aim of this paper is to show the contribution of the multi-criteria outranking methodology to the valuation of the retail stores in the market place in terms of benchmarking analysis. It enables the benchmarking of organizational learning capability without the necessity of an aggregate indicator obtained by averaging all scores assigned to the organizations on the basis of the different criteria. Consider four retail stores: R1 : Tesco

R2 : Mydin R3 : Carrefour R4 : Giant

This averaging methodology is the peculiarity and the main disadvantage of the traditional approach, that is, the aim of this chapter is to show the contribution of the multi-criteria outranking methodology to the valuation of the impact of marketing mix on customer satisfaction of the four retail stores (Tesco, Carrefour, Giant, Mydin) in terms of benchmarking analysis. The application of outranking approach enables, unlike the traditional analysis, the benchmarking of the impact of marketing mix without the necessity of an aggregate indicator obtained by averaging all scores assigned to the organizations on the basis of the different criteria. Finally, the following section discusses the contribution of the outranking multi-criteria methodology to the benchmarking analysis of the impact of marketing mix on customer satisfaction. 3.6 Benchmarking and Outranking-Satisfying Methodology The outranking methodology is a family of algorithms developed by Operational Research (Roy, 1985; Vincke, 1992; Roy and Bouyssou, 1993; Pomerol and Barba-Romero, 2000). Of these, Electre I method will be introduced here. The input of the Electre I method is represented by a multi-criteria matrix as in Table 1, surrounded by a line containing the weights that the decision making assigns to each criterion. Table 1 Multicriteria matrix (Electre I)

ATT1
(Product)

ATT2 (Price)
3.94 3.73 3.60 4.02 1/4

ATT3
(Promotion) 3.97 3.42 3.71 3.76 1/4

ATT4
(Place/Distribution) 3.90 2.95 3.70 3.92 1/4

R1 (Tesco) R2 (Mydin)

4.42 3.91 4.10 3.90 1/4

R3 (Carrefour) R4 (Giant)
Weight

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From Table 1, the retail stores positioning is generated and shown in the table below: Table 2 Retail stores Positioning Table

ATT1
(Product) 1st 2nd 3rd 4th Tesco Carrefour Mydin Giant

ATT2
(Price) Giant Tesco Mydin Carrefour

ATT3
(Promotion) Tesco Giant Carrefour Mydin

ATT4
(Place/Distribution) Giant Tesco Carrefour Mydin

Table 3 Retail Stores Ranking Table Attributes 1st Retail Stores Ranking 2nd Carrefour Giant Tesco Tesco Tesco Giant Mydin Mydin Carrefour Carrefour Mydin 3rd Giant Carrefour Mydin 4th

ATT1 (Product) ATT2 (Price)

Tesco

ATT3 (Promotion) ATT4 (Place/Distribute) Giant

Average (

RN ) = [ ATT1 ( RN ) + ATT2 ( RN ) + ATT3 ( RN ) + ATT4 ( RN )]/4

R R Now, let us consider R2 and 3 . Taking into account the values in Table 1 it is evident that 3 is better
than R2 for three criteria out of four (Marketing Model 4Ps). That is:

ATT1 ( R3 ) = 4.10 > ATT1 ( R2 ) = 3.91 ATT3 ( R3 ) = 3.71 > ATT3 ( R2 ) = 3.42 ATT4 ( R3 ) = 3.70 > ATT4 ( R2 ) = 2.95
Three criteria {1, 3, and 4} agree in considering better than

R3 better than R2 . Only one criterion {2} considers R2

R3 . That is:
ATT2 ( R2 ) = 3.73 > ATT2 ( R3 ) = 3.60

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Interpreting the same procedure for all the other pairs of retail companies will obtain the Table 4. Table 4 Multicriteria Matrix

ATT1
(Product)

ATT2
(Price) 3.94 3.73 3.60 4.02 1/4

ATT3
(Promotion) 3.97 3.42 3.71 3.76 1/4

ATT4
(Place/Distribution) 3.90 2.95 3.70 3.92 1/4

R1 (Tesco) R2 (Mydin)

4.42 3.91 4.10 3.90 1/4

R3 (Carrefour)
R4 (Giant)
Weight

Table 5 Matrix of Concordance Subsystems ( J )

R1 R1 R2 R3 R4
The generic element {2,4}

R2
{1,2,3,4} {1,3,4} {2,3,4}

R3
{1,2,3,4} {2} {2,3,4}

R4
{1,3} {1} {1}

J c ( Ri , R j ) of the matrix of Table 5 is given by:

J c ( Ri , R j ) = {j J = ATTi ( Ri ) ATT j ( R j )}; where: J = {1, 2, 3, 4}

Taking into account the weights assigned to the various criteria, a concordance index can be calculated for each pair of company (

Ri , R j ):
C(

Ri ; R j ) = jJc K j ;

Where:

Kj

is the weight assigned to the

jth criterion.

For example, for the pair ( C(

R3 , R2 ) we have:

R3 , R2 ) = K1 + K 3 + K 4 = 1/4 + 1/4 + 1/4 = 0.75 (75 percent) R

R

We therefore have a majority of criteria of 75 percent in favor of 3 with respect to 2 . Iterating the same procedure for other pairs or organizations, we obtain the concordance matrix of Table 6.

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Table 6 Concordance Matrix

R1 R1 R2 R3 R4
0 0 0.50

R2
1 0.75 0.75

R3
1 0.25 0.75

R4
0.50 0.25 0.25

The concordance indicator in Table 6 varies between 0 and 1. It is equal to 1 only if there is unanimity or a majority of criteria that are 100 percent in favor of i with respect to j . In order to decide on the superiority of one retail company with respect to another, the decision maker should set a concordance threshold C*. Generally, it is chosen to be a majority greater than or equal to 75 percent (simple majority tightened), that is: C* 0.75 (75 percent). Taking into account the database of Table 6 and the concordance threshold C* we have the following concordance test: 1 if C (

Tc ( Ri , R j ) =

Ri ; R j ) C*

0 if otherwise The results of concordance test are shown in Table 7. Table 7 Outcomes of Concordance Test

R1 R1 R2 R3 R4
0 0 0

R2
1 1 1

R3
1 0 1

R4
0 0 0

The Electre I methodology considers another step: the construction of discordance test in order to take into account of an excessive distance (dissimilarity) between the scores discordance test

ATT j R j
(

) and

ATTi ( Ri ). The

Td is fulfilled if the distance:

D(

R j Ri ATT j R j ATTi Ri , ) = max [ ( )( )]; Ri , R j ).

does not exceed discordance threshold D*. In order to simplify the analysis we suppose that the test of discordance is fulfilled by all pairs (

The ideas behind the test of discordance may be summarized as follows. The outranking methods consists in examining the validity of the proposition a outranks b. The concordance test measures the arguments in favor of saying so, but there may be arguments strongly against that assertion (discordant criteria). The discordant voices can be viewed as vetoes.

102
There is a veto against declaring that a outranks b if b is so much better than a on same criterion that it becomes disputable or even meaningless to pretend that a might be better overall than b. The logic of the test of discordance is quite similar to that on which statistical tests are based. Here as well, conventional levels of significance (like the famous 5 percent rejection intervals) are widely used. The decision maker decides the discordance threshold, that is he decides whether a hypothesis must be rejected or not. If the discordance test is not passed alternatives a and b are said incomparable. They are too different to be compared. For instance, the comparison of a Rolls-Royce with a small cheap car is meaningless because the Rolls-Royce is incomparably better on many criteria but is also incomparably more expensive. Another example, concerns the comparison of projects that involve the risk of loss of human life. Should one prefer a more expensive project with a lower risk or a less expensive one with higher risk? One may advance that the projects are too different to be compared. Taking into account both the concordance and the discordance test we construct a binary outranking relation S. Given two generic retail companies ( i , j ) we say that concordance test and the discordance test are fulfilled, that is:

R R

Ri outranks R j if and only if the

Ri S R j if and only if Tc and Td fulfilled.

Because we suppose that the discordance test is passed by all pairs ( coincides with the outcomes of concordance test of Table 7. That is:

Ri , R j ) the outranking relation S

Ri S R j if and only if Tc fulfilled.

The relation S may be represented by the graph of Figure 1. Figure 1 Graph of S from Table 4.27 (C* 75 percent)

R1
Tesco

R3
Giant

R2
Mydin

R4 Giant

R3 is the 2nd worst in class and R2 is the worse in class. But R1 and R4 are not comparable R structures: neither 3 outranks R4 nor the opposite. This is another important difference arising from the
Now, refusal of the ordering based on the average benchmarking.

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3.7 Benchmarking On Customer Satisfaction 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. Through benchmarking, we get better understanding of the customer because it is based on the reality of the market estimated in an objectivist way and a better economic planning of the purposes and the objectives to achieve in the company for they are centered on what takes place outside controlled and mastered. The management will get a better increase of the productivity, resolution of the real problems and understanding of the processes and what they produce. Table 8 Product Benchmarking towards customer satisfaction

Product Benchmarking
4.60 4.40 M ean 4.20 4.00 3.80 3.60 R1 (Tesco) R2 (Mydin) R3(Carrefour) R4 (Giant) 3.91 4.10 3.90 4.42

We conclude that Tesco rank the highest on customer satisfaction towards product and it shall be the benchmark or guiding star for other retail stores. Mydin, Carrefour and Giant need to benchmark Tescos product strategy and improve to compete in the market. Table 9 Price Benchmarking towards customer satisfaction
Price Benchmarking
4.10 4.00 3.90 3.80 3.70 3.60 3.50 3.40 3.30 4.02 3.94 3.73 3.60

Mean

R1 (Tesco)

R2 (Mydin)

R3(Carrefour)

R4 (Giant)

We conclude that Giant rank the highest on customer satisfaction towards price and it shall be the benchmark or guiding star for other retail stores. It proofs that Giants Everyday low price strategy is a success. Tesco rank the second with mean value of 3.94, still in the competition mood with Giant. Mydin and Carrefour need to benchmark Giants pricing strategy and improve to compete in the market.

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Table 10 Promotion Benchmarking towards customer satisfaction
Promotion Benchmarking
4.10 4.00 3.90 3.80 3.70 3.60 3.50 3.40 3.30 3.20 3.10 3.97 3.71 3.42 3.76

Mean

R1 (Tesco)

R2 (Mydin)

R3(Carrefour)

R4 (Giant)

We conclude that Tesco rank the highest again on customer satisfaction towards promotion and it shall be the benchmark or guiding star for other retail stores. Tesco promotion strategy is well organized and effective; customers are aware of the latest promotion from the newspaper, flyers and promotion booklet. Giant and Carrefour are a little bit behind with the mean value of 3.76 and 3.71. Mydin rank the last, it need to benchmark Tescos promotion strategy, revise on its promotion strategy and improve to compete in the competitive market. Table 11 Place/ Distribution Benchmarking towards customer satisfaction
Place/Distribution Benchmarking
4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 3.90 2.95 3.70 3.92

Min

R1 (Tesco)

R2 (Mydin)

R3(Carrefour)

R4 (Giant)

We conclude that Tesco rank the highest on customer satisfaction towards place and distribution and it shall be the benchmark or guiding star for other retail stores. The other three retail stores having very close mean value. Meaning the customer satisfaction towards place and distribution in four retail stores are well perceived. From table 11, we conclude that Giant rank the second, followed by Carrefour and Mydin. They are to benchmark Mydins, and improve on its place and distribution strategy. 4. Discussion on SWOT analysis 4.1 Strength Multi-criteria decision-making (MCDM) is one of the most widely used decision methodologies in the sciences, business, government and engineering worlds. MCDM methods can help to improve the quality of decisions by making the decision-making process more explicit, rational, and efficient. It is not a coincidence that a simple search (for instance, by using google.com) on the web under the key words multi criteria decision making returns more than one million hits. In a decisional process the making of choices derives from complex hierarchical comparisons among alternative options, which are often based on conflictual criteria, a large number of external variables plays a relevant role in orienting decision-

105
making. The strength of multi-criteria decision-making methods (MDMM) are to aid decision-makers to be consistent with fixed general objectives; to use representative data and transparent assessment procedures and to help the accomplishment of decisional processes, focusing on increasing its efficiency. The Electre I method, in which the criteria of the set of decisional alternatives are compared by means of a binary relationship, defined as outranking relationship, are more flexible than the ones based on a multiobjective approach. 4.2 Weakness An intriguing problem with decision-making methods which rank a set of alternatives in terms of a number of competing criteria is that oftentimes different methods may yield different answers (rankings) when they are fed with exactly the same numerical data. Thus, the issue of evaluating the relative performance of such methods is naturally raised. This, in turn, raises the question how can one evaluate the performance of such methods? Since it is practically impossible to know which one is the best alternative for a given decision problem, some kind of testing procedures need to be determined. 4.3 Opportunity In this paper, a new approach has been carried out for the use of the ELECTRE: ELimination Et Choix Traduisant la REalit (ELimination and Choice Expressing the REality) model in marketing mix selection. This work shows that ELECTRE can be used successfully in deriving a consensus ranking in benchmarking to select the best in class. 4.4 Threat In outranking approaches, the inaccuracy of the data can be modeled through the indifference and preference threshold (so-called pseudocriteria). Of course, threshold must be assessed for each criterion and for each problem separately. 5. Conclusion It is not simply enough to identify the strengths, weaknesses, opportunities, and threats of the Electre outranking method. In applying the SWOT analysis it is necessary to minimize or avoid both weaknesses and threats. Weaknesses should be looked at in order to convert them into strengths. Likewise, threats should be converted into opportunities. Lastly, strengths and opportunities should be matched to optimize the potential of a firm. Applying SWOT in this fashion can obtain leverage for a company (Marketing Strategy, 1998). Sensitivity analysis showed that, in general, the project rankings were considerably more sensitive to changes in the performances than they were to changes in the thresholds or weights. This is helpful and means that within a relatively wide band of preference, the same projects are considered important. Further, it requires the individual project sponsors to make the effort and ensure that the performance data is both accurate and defensible. As can be seen, the marketing manager should have rough outline of potential marketing activities that can be used to take advantage of capabilities and convert weaknesses and threats. However, at this stage, there will likely be many potential directions for the managers to pursue. Due to the limited resources that most firms have, it is difficult to accomplish everything at once. The manager must prioritize all marketing activities and develop specific goals and objectives for the marketing plan (Contemporary Marketing, 1992). Outranking methods make it possible to deal with multicriteria benchmarking and avoid the shortcomings of the traditional methods based on the average aggregate monocriterion. If applied to the measurement of learning capability, they are a complete alternative to the traditional approach. They can support the behavioral theory of organizational analysis initiated by H. Simon (Biggiero and Laise, 2003a, b). In fact, even though H. Simon does not explicitly discuss the problem of criteria multiplicity nor does he apply outranking methods, the behavioral theory is nonetheless perfectly comparable with them. The levels of

106
aspirations hypothesized by Simon can be associated with the threshold of concordance and discordance test. The lower the threshold assigned to the concordance test the lower the aspiration levels will be and hence the more the satisfying solutions will be. Outranking methods thus constitute a new and robust base on which to found the entire edifice of the behavioral theory of benchmarking applied to measurement of learning capability. They are a valid alternative to traditional methods, since they are equally rational and rigorous without suffering from its shortcomings and application limitations. 6. Directions for Further Research The relationships between customer satisfaction and behavioral outcomes are probably much more complex than initially assumed. This study has looked only at a limited part of the puzzle of how customer satisfaction translates into behavioral outcomes. In what way consumer characteristics moderate the relationship between satisfactions and repurchase behavior is likely to be contingent on the product or service category and the buying and usage process for that category. Other consumer characteristics not included in this study, such as a propensity for variety seeking behavior or a recreational shopping orientation, could potentially be important in many retail industries. Further research on how the effects of satisfaction on behavior is moderated by different consumer characteristics would advance customer satisfaction research as well as be of great managerial significance. 7. Scope and Limitation of the Study The setting selected for conducting this marketing research was focus only on three multinational retail stores and a homegrown retail store due to time constrain. Field researches were 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. The collection of primary data was based on a survey of 856 respondents who visit each respective retail outlets, the number in the sample limited due to the restrictions of time to complete the project and resources to support it. AUTHOR BIBLIOGRAPHY Amy Poh Ai Ling was born in Penang, also called Pearl of the Orient, an island in the Straits of Malacca, and also of one of the states of Malaysia, located on the north-west coast of peninsular Malaysia on 8th March 1982. She started her primary education in S.R.K.J. (C) Sin Ya and pursues her secondary education in S.M.J.K. Jit Sin in Bukit Mertajam, where she grew up. She then enrolled into the National University of Malaysia (UKM) and completed her first degree in BBA majoring Marketing. Her passion towards quality moved her one step further enrolling in Master of Science Majoring Quality and Productivity offered by the school of Mathematical Sciences in Faculty of Science and Technology in UKM. Currently she is a member of the National university of Malaysia (UKM) fellowship stationed in Kolej Ibrahim Yaakub, performing duties and serve throughout the year in students welfare. She later becomes a Quality Assurance Engineer in Sony where she applies and contributes her theory and knowledge of quality and productivity improvement towards the company. The author always has an enthusiasm for quality and productivity improvement studies. Annotated Bibliography: Service Quality Term paper: Productivity Measurement

107
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APPENDIX A

AUTHORIZATION LETTER FOR THE RESEARCH

1. TESCO 2. CARREFOUR 3. GIANT 4. MYDIN

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APPENDIX B

LETTER REQUEST OF CONTRIBUTION

1. LETTER REQUEST OF CONTRIBUTION - TESCO 2. LETTER REQUEST OF CONTRIBUTION - CARREFOUR 3. LETTER REQUEST OF CONTRIBUTION - GIANT 4. LETTER REQUEST OF CONTRIBUTION - MYDIN

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APPENDIX C

QUESTIONNAIRE

1. QUESTIONNAIRE - TESCO 2. QUESTIONNAIRE - CARREFOUR 3. QUESTIONNAIRE - GIANT 4. QUESTIONNAIRE - MYDIN

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SURVEY FORM

Serial No

The Impact of Marketing Mix on Customer Satisfaction: A Case Study Deriving Consensus Rankings from Benchmarking on Tesco Stores (Malaysia) Sdn Bhd - Tesco Kajang
Dear customer, Thank you for choosing our retail store and services. We would be glad if you could take a few minutes to complete this questionnaire. Thank you for your time assistance.
CUSTOMER INFORMATION

I) Gender : II) Ethnic : III) Marital Status : IV) Age :

Male Malay Single <21

V) How often do you shop at our store?

Female Chinese Indian Others Married 21 - 35 36 - 50 >50 daily once a week or more 2 - 3 times a month once a month every 2- 3 months 2 - 3 times a year
Disagree 1 Strongly Agree 6

MARKETING MIX MODEL Please rate with respect to the following Strongly
2 3 4 5

Product

2) Offers several brands to choose from in a category 3) Purchased products are usually found in good condition 4) Visual appearance of products in this store is pleasant 5) This store offers good maintenance and repair of good sold 6) Has the widest selection of national brand merchandise
1) This store offers high quality merchandise

Price
7) I can get a lower price if I buy additional similar items 8) This store offers the overall lowest price in the area 9) Maintains the best everyday price for most merchandise

To be continued on the second page at the back

130
MARKETING MIX MODEL Please rate with respect to the following Strongly
Disagree 1 2 3 4 5 Strongly Agree 6

10) The price of the product is reasonable 11) Consistently provides the best values for money 12) The price of the product is low throughout the year

Disagree 1

Strongly Agree 6

Place/ Distribution
13) Fast checkout 14) Convenient parking of vehicles 15) Close to where I live 16) Store atmosphere and decoration are appealing 17) This store layout makes it easy for me to find what I need 18) Convenient public transport to get to this store

Promotion
19) Advertised merchandise is always available 20) Offers coupons in newspaper advertisement 21) Seasonal promotions are available 22) I love shopping here because of the privilege card 23) I am well informed of the promotions held 24) The promotions are always attractive

CUSTOMER PERCEPTION Please rate with respect to the following Strongly

2 3 4 5

25) Overall, I am satisfied with this store

promotions

MOTIVATING FACTOR 26) What factor motivates you the most to patronize our store.

product

price

place/distribution

THANK YOU FOR YOUR COOPERATION ! PLEASE COME AGAIN.

SURVEY FORM

Serial No

131

The Impact of Marketing Mix on Customer Satisfaction: A Case Study Deriving Consensus Rankings from Benchmarking on Magnificient Diagraph Sdn Bhd Carrefour Putrajaya
Dear customer, Thank you for choosing our retail store and services. We would be glad if you could take a few minutes to complete this questionnaire. Thank you for your time assistance.
CUSTOMER INFORMATION

I) Gender : II) Ethnic : III) Marital Status : IV) Age :

Male Malay Single <21

V) How often do you shop at our store?

Female Chinese Indian Others Married 21 - 35 36 - 50 >50 daily once a week or more 2 - 3 times a month once a month every 2- 3 months 2 - 3 times a year
Disagree 1 Strongly Agree 6

MARKETING MIX MODEL Please rate with respect to the following Strongly
2 3 4 5

Product

2) Offers several brands to choose from in a category 3) Purchased products are usually found in good condition 4) Visual appearance of products in this store is pleasant 5) This store offers good maintenance and repair of good sold 6) Has the widest selection of national brand merchandise
1) This store offers high quality merchandise

Price
7) I can get a lower price if I buy additional similar items 8) This store offers the overall lowest price in the area 9) Maintains the best everyday price for most merchandise

To be continued on the second page at the back

132
MARKETING MIX MODEL Please rate with respect to the following Strongly
Disagree 1 2 3 4 5 Strongly Agree 6

10) The price of the product is reasonable 11) Consistently provides the best values for money 12) The price of the product is low throughout the year

Disagree 1

Strongly Agree 6

Place/ Distribution
13) Fast checkout 14) Convenient parking of vehicles 15) Close to where I live 16) Store atmosphere and decoration are appealing 17) This store layout makes it easy for me to find what I need 18) Convenient public transport to get to this store

Promotion
19) Advertised merchandise is always available 20) Offers coupons in newspaper advertisement 21) Seasonal promotions are available 22) I love shopping here because of the privilege card 23) I am well informed of the promotions held 24) The promotions are always attractive

CUSTOMER PERCEPTION Please rate with respect to the following Strongly

2 3 4 5

25) Overall, I am satisfied with this store

promotions

MOTIVATING FACTOR 26) What factor motivates you the most to patronize our store.

product

price

place/distribution

THANK YOU FOR YOUR COOPERATION ! PLEASE COME AGAIN.

SURVEY FORM

Serial No

133

The Impact of Marketing Mix on Customer Satisfaction: A Case Study Deriving Consensus Rankings from Benchmarking on Giant of Dairy Farm International (DFI)
Dear customer, Thank you for choosing our retail store and services. We would be glad if you could take a few minutes to complete this questionnaire. Thank you for your time assistance.
CUSTOMER INFORMATION

I) Gender : II) Ethnic : III) Marital Status : IV) Age :

Male Malay Single <21

V) How often do you shop at our store?

Female Chinese Indian Others Married 21 - 35 36 - 50 >50 daily once a week or more 2 - 3 times a month once a month every 2- 3 months 2 - 3 times a year
Disagree 1 Strongly Agree 6

MARKETING MIX MODEL Please rate with respect to the following Strongly
2 3 4 5

Product

2) Offers several brands to choose from in a category 3) Purchased products are usually found in good condition 4) Visual appearance of products in this store is pleasant 5) This store offers good maintenance and repair of good sold 6) Has the widest selection of national brand merchandise
1) This store offers high quality merchandise

Price
7) I can get a lower price if I buy additional similar items 8) This store offers the overall lowest price in the area 9) Maintains the best everyday price for most merchandise

To be continued on the second page at the back

134
MARKETING MIX MODEL Please rate with respect to the following Strongly
Disagree 1 2 3 4 5 Strongly Agree 6

10) The price of the product is reasonable 11) Consistently provides the best values for money 12) The price of the product is low throughout the year

Disagree 1

Strongly Agree 6

Place/ Distribution
13) Fast checkout 14) Convenient parking of vehicles 15) Close to where I live 16) Store atmosphere and decoration are appealing 17) This store layout makes it easy for me to find what I need 18) Convenient public transport to get to this store

Promotion
19) Advertised merchandise is always available 20) Offers coupons in newspaper advertisement 21) Seasonal promotions are available 22) I love shopping here because of the privilege card 23) I am well informed of the promotions held 24) The promotions are always attractive

CUSTOMER PERCEPTION Please rate with respect to the following Strongly

2 3 4 5

25) Overall, I am satisfied with this store

promotions

MOTIVATING FACTOR 26) What factor motivates you the most to patronize our store.

product

price

place/distribution

THANK YOU FOR YOUR COOPERATION ! PLEASE COME AGAIN.

SURVEY FORM

Serial No

135

The Impact of Marketing Mix on Customer Satisfaction: A Case Study Deriving Consensus Rankings from Benchmarking on Mydin Mohamed Holdings Berhad - Mydin Mart Kajang
Dear customer, Thank you for choosing our retail store and services. We would be glad if you could take a few minutes to complete this questionnaire. Thank you for your time assistance.
CUSTOMER INFORMATION

I) Gender : II) Ethnic : III) Marital Status : IV) Age :

Male Malay Single <21

V) How often do you shop at our store?

Female Chinese Indian Others Married 21 - 35 36 - 50 >50 daily once a week or more 2 - 3 times a month once a month every 2- 3 months 2 - 3 times a year
Disagree 1 Strongly Agree 6

MARKETING MIX MODEL Please rate with respect to the following Strongly
2 3 4 5

Product

2) Offers several brands to choose from in a category 3) Purchased products are usually found in good condition 4) Visual appearance of products in this store is pleasant 5) This store offers good maintenance and repair of good sold 6) Has the widest selection of national brand merchandise
1) This store offers high quality merchandise

Price
7) I can get a lower price if I buy additional similar items 8) This store offers the overall lowest price in the area 9) Maintains the best everyday price for most merchandise

To be continued on the second page at the back

136
MARKETING MIX MODEL Please rate with respect to the following Strongly
Disagree 1 2 3 4 5 Strongly Agree 6

10) The price of the product is reasonable 11) Consistently provides the best values for money 12) The price of the product is low throughout the year

Disagree 1

Strongly Agree 6

Place/ Distribution
13) Fast checkout 14) Convenient parking of vehicles 15) Close to where I live 16) Store atmosphere and decoration are appealing 17) This store layout makes it easy for me to find what I need 18) Convenient public transport to get to this store

Promotion
19) Advertised merchandise is always available 20) Offers coupons in newspaper advertisement 21) Seasonal promotions are available 22) I love shopping here because of the privilege card 23) I am well informed of the promotions held 24) The promotions are always attractive

CUSTOMER PERCEPTION Please rate with respect to the following Strongly

2 3 4 5

25) Overall, I am satisfied with this store

promotions

MOTIVATING FACTOR 26) What factor motivates you the most to patronize our store.

product

price

place/distribution

THANK YOU FOR YOUR COOPERATION ! PLEASE COME AGAIN.

137
APPENDIX D

138

APPENDIX E

Classification of MCDM Method

Number of Decision Makers

Operation Approaches

Type of Data

Single

Group

Deterministic

Stochastic

Fuzzy

Single Criterion Synthesis Approach base on MAUT

Outranking Synthesis Approach based on Outranking Method

TOPSIS SMART

MAVT MAUT

UTA AHP Fuzzy Maximim

ELECTRE I ELECTRE III MELCHOIR PROMETHEE I

ELECTRE IS ELECTRE IV ORESTE NAIADE

ELECTRE II ELECTRE TRI REGIME PROMETHEE II

Fuzzy Weight Sum

Rajah: Klasifikasi bagi kaedah MCDM ( Multicriteria Decision Making)