The influence of customer expectations and the application of marketing mix towards the loyalty of bank clients with customer satisfaction as an intervening variable
THE INFLUENCE OF CUSTOMER EXPECTATIONS AND THE APPLICATION OF
MARKETING MIX TOWARDS THE LOYALTY OF BANK CLIENTS WITH
CUSTOMER SATISFACTION AS AN INTERVENING VARIABLE
(Case Study at Bank Danamon Syariah)
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SYARIF HIDAVATULLAH JAKARTA
By
Arba Adi Aditya Buonowikarto
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MANAGEMENT MAJOR
FACULTY OF ECONOMICS AND SOCIAL SCIENCES
STATE ISLAMIC UNIVERSITY SY ARIF HIDAY A11JLLAH
JAKARTA
.
THE INFLUENCE OF CUSTOMER EXPECTATIONS AND THE APPLICATION
OF MARKETING MIX TOWARDS THE LOYALTY OF BANK CLIENTS WITH
CUSTOMER SATISFACTION AS AN INTERVENING VARIABLE
(Case Study at Bank Danamon Syariah)
Submitted to the Faculty of Economics and Social Sciences as a
Requirement for Acquiring the Bachelor Degree of Economies
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By
PERP\JSTAKAAN UTAMA
UlN SYAHID JAKARTA
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604081000003
Supervised by:
Prof. Dr. Ahmad Rodoni, MM
AriefMufraini, Le, M.Si
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Prof. Dr. Ahmad Rodoni, MM
NIP 150 317 955
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Mef-1\lfUiiraini, Le, M.Si
NIP 150 330 729
INTERNATIONAL CLASS PROGRAM
MANAGEMENT MAJOR
FACULTY OF ECONOMICS AND SOCIAL SCIENCES
STATE ISLAMIC UNIVERSITY SYARIF HIDAY ATULLAH
JAKARTA
1430 Hi 2009 M
.
Today, we administered a comprehensive test examination to Arba Adi Aditya
Buonowikarto ID 604081000003. The title of his thesis is: "The Influence of
Customer Expectations and The Application of Marketing Mix Towards The
Loyalty of Bank Clients With Customer Satisfaction as an Intervening Variable".
After proper examination of the work student, we have decided that he has met all of the
requirements for the title of Bachelor of Economics on the major of Management in 'the
State Islamic University (Universitas Islam Negeri) Syarif Hidayatullah Jakarta.
Jakarta April 20 11' 2009
Comprehensive Examination Team
ｾ＠
Prof. Dr. Ahmad Rodoni, MM
Deputy Dean for Academic Affairs
Prof. Dr. Abdul Hamid, MS
Dean of Faculty of Economics and Social Sciences
The Influence of Customer Expectations and The Application of Marketing
Mix Towards The Loyalty of Bank Clients With Customer
Satisfaction as an Intervening Variable
Thesis
Submitted to Faculty of Economics and Social Sciences
As a Partial Requirement for Acquiring Bachelor Degree of Economic
Submitted by:
Arba Adi Aditya Buonowikarto
604081000003
Under The Guidance of:
Academic Advisor II
Academic Advisor I
ｾ＠
Prof. Dr. Ahmad Rodoni, MM
Expert Examiner
Prof. Dr. Abdul Hamid, MS
INTERNATIONAL CLASS PROGRAM
MANAGEMENT MAJOR
FACULTY OF ECONOMICS AND SOCIAL SCIENCES
STATE ISLAMIC UNIVERSITY SYARIF HIDAYATULLAH
JAKARTA
1430H/2009M
Author's Biography
I.
PERSONAL INFORMATION
I. Name
2. Place and Date ofBi1th
3. Address
4.
II.
Phone
EDUCATION
I. Elementary School
2. Middle School
3. High School
4. Bachelor Degree
Arba Adi Aditya Buonowikarto
Jakarta, 11 July 1986
Taman Giri Loka block C- 15 Sector IV.5
Bumi Serpong Damai, Tangerang
0838-90102986
Al-Azhar Bumi Serpong Damai
Al-Azhar Bumi Serpong Damai
Dwiwarna Highschool
State Islamic University Jakarta
III.
ORGANIZATIONAL EXPERIENCE
I. State Islamic University Debating Club
IV.
FAMILY BACKGROUND
I. Father
2. Place and Date of Bhth
3. Address
Isrowandi Buonowikarto
Surakarta, 5 May 1943
Taman Giri Loka block C-15 Sector IV.5
Bumi Se1pong Damai, Tangerang
4. Phone
021-5373783
5. Mother
6.
7.
Place and Date of Birth
Address
Umroh
Sirih; 27 Mei 1951
Taman Giri Loka block C-15 Sector IV.5
Bumi Serpong Damai, Tangerang
8.
Phone
Siblings
021-5373783
4th son of 4 siblings
9.
ABSTRACT
This research on customer behavior of Bank Syariah Danamon is to
investigate the direct influence between customer expectations and the application
of marketing mix application towards customer loyalty of Bank Danamon
Syariah's head branch. In addition to this, research is done to see the indirect
influence of customer satisfaction as an intervening variable. 125 customers of
Bank Danamon Syariah's head branch are taken as samples.
Ibe results of the research show that customers have moderate
expectations of Bank Danamon Syariah and perceive that the marketing mix is
moderately acceptable. It is also shown that customer expectations and the
marketing mix application have a direct influence towards customer loyalty.
Influences are both significant simultaneously and individually. Meanwhile,
customer satisfaction is proven not to be a positive intervening variable.
Keywords: customer expectations, marketing mix, loyalty, customer satisfaction
ACKNOWLEDGEMENTS
First and foremost, I would like to give my utmost gratitude to the Lord
Almighty, Allah swt., for I would not be able to write this thesis if it were not
because all His blessings and gift of life. May Allah continue to bestow His
blessings upon us all.
To begin with, I would like to express my highest gratitude to my thesis
counselors Mr. Arief Mufraini and Prof. Ahmad Rodoni, without their patience
and belief in me this thesis could not have been completed. My appreciation goes
to all my lectures that have guided and thought me everything I needed to know
about research, business and marketing. I am also deeply indebted to the gracious
support from the International Program Staff, Mr. Syamsudin and Mr. Hamdih.
Their hard work and dedication was of great assistance to cut through all the red
tape and bureaucracy.
Special thanks to all my friends who have supported and motivated me to
finish this thesis, without their undying concern and encouragement I probably
would never have graduated.
Finally, I would like to sincerely thank my family and parents who have
continuously and patiently sustained me no matter how lazy and unmotivated I
was. My parents were always right in the end, and I love them for that. Thank you
Mom and Dad, I hope that I can always make you proud of me.
Arba Adi Adityatama Buonowikarto
Author and Researcher
Tangerang, June 2009
TABLE OF CONTENTS
Author's Biography ..................................................................................... i
ACKNOWLEDGEMENTS ........................................................................ ii
PREFACE ................................................................................................... iii
TABLE OF CONTENTS ............................................................................ iv
LIST OF TABLES ....................................................................................... v
LIST OF FIGURES ..................................................................................... vi
CHAPTER I ................................................................................................. I
Background ....................................................................................... I
Research Premise ............................................................................... 3
Research Goals ................................................................................. 3
Research Benefits ............................................................................. 4
Previous Research ............................................................................ 4
CHAPTER II ................................................................................................ 8
Customer Expectations ..................................................................... 8
Marketing Mix .................................................................................. I 0
Customer Loyalty .............................................................................. 13
Customer Satisfaction ...................................................................... 14
Hypothesis ........................................................................................ 15
CHAPTER III ............................................................ .................................. 16
Research Scope.................................................................................. 16
Sampling Method .............................................................................. 16
Data Collection Method ................................................................... 17
Analysis Method .............................................................................. 18
Operational Variable ........................................................................ 20
Variable Indicators ........................................................................... 21
Validity and Reliability Test ............................................................ 22
The F Test and T Test ...................................................................... 25
CHAPTER IV .............................................................................................. 27
Company Background ..................................................................... 27
Analysis and Discussion ................................................................... 30
CHAPTER V ................................................................................................ 47
Conclusion ........................................................................................ 47
Research Implications ...................................................................... 49
REFERENCES ................................ ........................................................... 50
APPENDIX ................................................................................................. 51
LIST OF TABLES
Table I. I - Previous Research Comparison .................................................. 7
Table Ill.I -The Variable Indicators .......................................................... 21
Table Ill.2 - Scale oflnstrument Reliability ................................................ 24
Table IV. I - The Validity and Reliability Test ........................................... 30
Table IV.2 - Customer Expectations Significance ....................................... 34
Table IV.3 -Application of Marketing Mix Significance ........................... 34
Table IV.4 - Customer Satisfaction Significance ........................................ 35
Table IV.5 - Customer Loyalty Significance .............................................. 36
LIST OF FIGURES
Figure II.I - The Four Main Fields of the Marketing Mix ........................... 11
Figure II.2 - The Extended 7-P Marketing Mix ........................................... 12
Figure III. I - The Path Analysis Model ....................................................... I 9
Figure III.2 - The Operational Variables ...................................................... 20
Figure IV.I -The Path Coefficients ............................................................. 35
CHAPTER I
INTRODUCTION
A.
Background
In any type of business, the final and most important goal is the customer.
The customer is a major stakeholder in any business. The slogan "customer is
king" or "the customer is always right" indicate the importance of customers to
businesses. To know what the customers expect and perceive of a certain
company would be very valuable information. In service oriented industries,
customers are regarded even higher compared to other business types. The
ultimate goal of a customer oriented business would be to create customer
satisfaction and eventually customer loyalty. Satisfied and loyal customers would
return to use the company's services and spread the word of its quality.
The concept of Syariah Bank has become a popular concept in modern
banking today. Its values and system is considered to be strong even in the face of
economic instability and crisis. Bank Syariah Danamon is a major brand in
Indonesia's Syariah Banking competing field. Its products, such as the Dirham
Card, have continued to be innovative and highly successful. Its application of an
exceptional marketing strategy has made it one of the leading brands.
In running its activity, Danamon Syariah applies systems of share holder
profit sharing, trade and deposit, so the bank will not be affected by interest rate
fluctuation. These investments are also managed by high-performance human
resources who fulfill the following characteristic: siddiq (honest), tabligh
(reliable),fathonah (clever), amanah (trustable) and itqan (professional).
The Danamon Syariah Bank existence is expected to fulfill people's need
of banking product and service based on Syariah principles of business and halal
(lawful) instead of embracing riba system (profitting the money), ghoror
(manipulative) and maisyir (speculative). Thereby, people can enjoy banking
service that match with Syariah law, which spiritually will create peace of mind
because their fund will be ploughed back to business or thing that benefits a lot of
people.
In banking, especially syariah banking - which has a high priority on
morals and ethics, aiming to serve the customer better, information on customer
behavior is very important. The researcher aims to better the syariah banking
industry by providing such information.
B.
Research Premise
There are several issues or 'problems' that need to be addressed in the
research. These issues to be resolved can be simplified in there fonn of answering
these following questions:
I. What are the customer's expectations of the clients of Bank Danamon
Syariah?
2. What are the customers' perceptions on the application of the marketing
mix of Bank Danamon Syariah?
3. Is there a direct influence between customer expectations and the marketing
mix application towards customer loyalty?
4. Is customer satisfaction a positive intervening variable between customer
expectations and marketing mix application?
C. Research Goals
A research paper needs to have certain goals so that it can become
measureable if it is successful or not in conducting its research. The research goals
must be able to answer the research issues above.
1. Discover the level of customer expectations of the clients of Bank Danamon
Syariah.
2. Discover the customers' perceptions of the application of the marketing mix
of Bank Danamon Syariah.
3. Determine ifthere is there a direct influence between customer expectations
and the marketing mix application towards customer loyalty.
4. Determine if customer satisfaction is an intervening between customer
expectations and marketing mix application.
D.
Research Benefits
The researcher hopes the research conducted may bring benefit both to the
academic world and the syariah banking in the following capacity;
I. Become a tool for understanding customer behavior
2. Become a tool for developing the science of marketing and marketing
strategy
3. Increase the quality of service for Bank Danamon Syariah
4. Increase the marketing efficiency of Bank Danamon Syariah by
understanding what the customers views on the marketing mix
E.
Previous Research
Previous
research
has been conducted
on
similar variables or
methodologies. The researcher credits these previous researchers in the reference
section and citing them when they are present. The most significant and similar
research done previously before this research can be seen below:
1. The Nature and Determinants of Customer Expectations ofService by Valarie
A. Zeithaml, Leonard L. Berry, and A. Parasuraman (1993)
The research is a conceptual model articulating the nature and determinants of
customer expectations of service is proposed and discussed. The model
specifies three different types of service expectations: desired service,
adequate service, and predicted service. Seventeen propositions about service
expectations and their antecedents are provided. Discussion centers on the
research implications of the model and its propositions.
2. The Ir1fluence of Loyalty Programs and Short-Term Promotions on Customer
Retention by Michael Lewis (2004)
The research estimates the theoretical model using a discrete-choice dynamic
programming formulation. The research evaluates a specific loyalty program
with data from an online merchant that specializes in grocery and drugstore
items. Through simulation and policy experiments, it is possible to evaluate
and compare the long-term effects of the loyalty program and other marketing
instruments (e.g., e-mail coupons, fulfillment rates, shipping fees) on customer
retention.
3. A Path Analysis of a Music Listening Preference Model by Young Chang Jin
(1999)
The purpose of this study was to investigate possible causal relationships in a
music listening preference model which was built with seven variables.
Participants for this study - 672 people, were asked to respond using a 7 point
Likert scale expressing to their own preference and familiarity, and their
perception of others' preference (mothers', fathers' and peers'), while they
were listening to 18 examples of music. Participants also were asked to answer
questions about their own music experiences. A path
｡ｮｬｹｾｩｳ＠
was conducted
to test if a music listening preference model based on these variables fit the
data well. Analysis of the chi-square goodness-of-fit test indicated that the
path model fit the data well.
4. Ekspektasi Pelanggan Dan Ap/ikasi Bauran Pemasaran Terhadap Loyalitas
Tako Moderen Dengan Kepuasan Pelanggan Sebagai Intervening (Studi
Kasus Pada Hypermarket Carrefour Di Surabaya) by Hatane Semuel (2006)
The research examines customer behavior of modem stores. The research goal
is to investigate the direct influence between customer expectation and retail
marketing mix application towards customer loyalty of modem stores in
Surabaya. In addition to this, it is also to see indirect influence of customer
satisfaction as an intervening variable. 400 customers of Carrefour Surabaya
are taken as samples,
Table I.I
Title
The Nature and
Determinants of
Customer
Expectations of
Service
A Path Analysis ofa
Music Listening
Preference Model
The Influence of
Loyalty Programs and
Short-Term
Promotions on
Customer Retention
Ekspektasi Pelanggan
Dan Aplikasi Bauran
Pemasaran Terhadap
Loyalitas Toko
Moderen Dengan
Kepuasan Pelanggan
Sebagai Intervening
The Influence of
Customer
Expectations and the
Application of
Marketing Mix
Towards the Loyalty
ofBank Clients with
Customer Satisfaction
as an Intervening
Variable
Author
Zeithaml, Berry,
and Parasuraman
Year
1993
I.
2.
3.
4.
Young Chang Jin
1999
I.
2.
3.
Michael Lewis
2004
I.
2.
3.
Hatane Semuel
2006
I.
2.
3.
4.
Arba Adi Aditya
Buonowikarto
2009
I.
2.
3.
4.
Variables
Methodolo""
Customer
Explorative
Expectations
with
Desired Service
Conceptual
Adequate Service
Model
Predicted Service
Path Analysis
Listening
Preference
Music Experience
Music Familiarity
Loyalty Programs
Structural
Marketing
Equation
Instruments
Modeling
Customer
Retention
Customer
Structural
Expectations
Equation
Application of
Modeling
Marketing Mix
Customer
Loyalty
Customer
Satisfaction
Customer
Path Analysis
Expectations
Application of
Marketing Mix
Customer
Loyalty
Customer
Satisfaction
CHAPTER II
LITERATURE REVIEW
A.
Customer Expectations
Customer expectations can be defined as a perceived value customers seek
from the purchase of a good or service (Gilbert, 2003). Customer expectations are
what customers want or expect to be present and available at the time of
purchasing a product or service. These expectations include non-tangible things,
such as store environment, quality of services, customer handling system, etc.
Customers' expectations are not constant because they follow the current
development of culture, technology, and economy. What a customer expects today
will not necessarily be the same as what they expect in the future.
According to Zeithaml (1991 ), the conceptual model of customer
expectations is divided into four main sections: (I) the expected service
component, (2) antecedents of desired service, (3) antecedents of adequate
service, and (4) antecedents of both predicted and desired service.
1. The expected service component describes two types of customer
expectations of service. First, desired service is defined as the level of
service the customer hopes to receive and second as the level of service the
customer will accept.
2. Antecedents of desired service define and describe enduring service
intensifiers and personal needs, two of the major influences on desired
service.
3. Antecedents of adequate service identifies and explains five of the main
influences on adequate service-transitory service intensifiers, perceived
service alternatives, self-perceived service role, situational factors, and
predicted service.
4. Antecedents of both desired and predicted service details four variables:
explicit service promises, implicit service promises, word-of-mouth
communications, and past experience, all of which affect both desired and
predicted service.
Service quality is an important factor in customer expectations. According
to Gilbert (2003 ), elements of customer satisfaction can be categorized into the
following:
I. Tangible: Anything with a physical form that can supp01t the business'
service operations. Examples are; building facilities, stationeries & tools,
employee uniforms, etc.
2. Reliability: The ability of the business in delivering service as it has
promised with consistency.
3. Responsiveness: The ability of the business to respond and supp01t its
customers in quick and systematic way.
4. Competence: The capability of the business in delivering its service to
create trust and satisfaction into its customers.
5. Empathy: The business' attitude in delivering its service. A caring,
sympathetic and understanding way of treating customers in included in
this element.
B.
Marketing Mix
A marketing mix can be defined as a set of controllable, tactical marketing
tools that work together to achieve company's objectives (Kotler, 2005). The
marketing mix is generally accepted as the use and specification of the 'four P's'
describing the strategic position of a product in the marketplace. The classical
marketing mix - proposed by E. Jerome McCarthy ( 1960), has four elements
knows as the 'four Ps', which are:
1. Product: A tangible object or an intangible service that is mass produced
or manufactured on a large scale with a specific volume of units.
Intangible products are often service based like the tourism industry & the
hotel industry. Typical examples of a mass produced tangible object are
the motor car and the disposable razor. A less obvious but ubiquitous mass
produced service is a computer operating system.
2. Price: The price is the amount a customer pays for the product. It is
determined by a number of factors including market share, competition,
material costs, product identity and the customer's perceived value of the
product. The business may increase or decrease the price of product if
other stores have the same product.
3. Place: 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.
4. Promotion: Promotion represents all of the communications that a
marketer may use in the marketplace. Promotion has four distinct elements
- advertising, public relations, word of mouth and point of sale.
Figure II.I
Booms and Bitner included three additional 'Ps' to accommodate trends towards a
service or knowledge based economy:
I. People: all people who directly or indirectly influence the perceived value
of the product or service, including knowledge workers, employees,
management and consumers.
2. Process: procedures, mechanisms and flow of activities which lead to an
exchange of value.
3. Physical evidence: the direct sensory experience of a product or service
that allows a customer to measure whether he or she has received value.
Both tangible good that help communicate and perform the service, and
the intangible experience of existing customers and the ability of
businesses to relay that customer satisfaction to potential customers.
Figure II.2
TARGET
MARKET
C.
Customer Loyalty
Customer loyalty can be defined as the totality of feelings or attitudes that
would incline a customer to consider the re-purchase of a particular product or
service. Customer loyalty is determined by three factors: relationship strength,
perceived alternatives and critical episodes (Reichheld, 1996).
Major factors that negatively affect customer loyalty:
I. The customer moves out of the service area
2. The customer no longer has a need for the products or service
3. More suitable alternative providers become available
4. Poor handling of a critical episode
Customer loyalty can be achieved in some cases by offering a quality
products and services with a firm guarantee. Customer loyalty is also achieved
through rewards and incentive programs. The ultimate goal of customer loyalty
programs is satisfied customers who will return to purchase again and persuade
others to use that company's products or services.
The loyalty business model relies on training of employees to achieve a
specific paradigm: quality of product or service leads to customer satisfaction,
which leads to customer loyalty, which leads to profitability. Loyalty marketing is
an extension of that effort, relying upon word-of-mouth and advertising to draw
upon the positive experiences of those exposed to loyalty business model inspired
ventures to attract new customers.
While different systems and labels of customer loyalty are used in every
company, Zeithaml (2001) divides customers into four tiers:
I. The Platinum Tier describes the company's most profitable customers,
typically those who are heavy users of the product, not overly price
sensitive, willing to invest in and try new offerings, and are committed to
the firm.
2. The Gold Tier differs from the Platinum Tier in that profitability levels are
not as high, perhaps because the customers want price discounts that limit
margins. They might not be as loyal to the firm even though they are
heavy users in the product category--they might minimize risk by working
with multiple vendors rather than just the focal company.
3. The Iron Tier contains customers that provide the volume needed to utilize
the firm's capacity but whose spending levels, loyalty, and profitability are
not substantial enough for special treatment.
4. The Lead Tier consists of customers that are costing the company money.
They demand more attention than they are due given their spending and
profitability. They are sometimes problem customers--complaining about
the firm to others and tying up the firm's resources.
Loyalty marketing is an approach to marketing, based on strategic
management, in which a company focuses on growing and retaining existing
customers through incentives. Branding, product marketing and loyalty marketing
all form part of the customer proposition - the subjective assessment by the
customer of whether to purchase a brand or not based on the integrated
combination of the value they receive from each of these marketing disciplines
(Evans, 2007).
D.
Customer Satisfaction
Customer satisfaction is the ability of goods or services to meet or exceed
buyer need and expectations (Km1z and Boone, 1995). According to Kotler
(2000), customer satisfaction is a person's feelings of pleasure or disappointment
resulting from comparing a product perceived performances (or outcome) in
relation to his or her expectations.
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 (John, 2003).
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.
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. According to Berry (Bart Allen)
and Brodeur (1991), there are 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:
E.
I.
Quality
6.
2.
Value
7. Inter-departmental Teamwork
Environment
3. Timeliness
8.
Front line Service Behaviors
4. Efficiency
9.
Commitment to the Customer
5.
10. Innovation
Ease of Access
Hypothesis
HI: Customer expectations have a positive towards customer loyalty.
H2: Marketing mix application has a positive influence towards customer loyalty.
H3: Customer expectations have a positive influence towards customer
satisfaction.
H4: Marketing mix application has a positive influence towards customer
satisfaction.
H5: Customer satisfaction is a positive intervening between customer expectations
and marketing mix application towards customer loyalty.
CHAPTER III
RESEARCH METHODOLOGY
A.
Research Scope
This research is an exploratory study. An exploratory study is undertaken
when there is no infmmation at hand, or no information is available on how
similar problems or research issues have been solved in the past.
In this research, research is done by collecting secondary data coming
from written and digital literature found in book, journals, and the internet.
Primary data is obtained by spreading questionnaires. The population of this
research is the clients of the head branch of Bank Danamon Syariah in Prapatan,
Jakarta.
B.
Sampling Method
The sampling method used is judgment sampling. Judgment sampling
involves the choice of subjects who are most advantageously placed or in the best
position to provide the information required. Thus the judgment sampling design
is used when a limited number or category of people have the information that is
sought.
The criteria for the respondents are:
I. Clients of the head branch of Bank Danamon Syariah at Prapatan, Jakarta
2. Have knowledge of Bank Danamon Syariah 's marketing programs
3. Above the age of20
The level of sampling in this research is accounted based on the opinion of
Hair and Augusty Ferdinand (2002) that the minimum sample measure applied in
Structural Equation Modeling (SEM) is to be counted by 5 observations for every
estimated parameter. This research applies 25 indicators before performing the
validity and reliability tests. Based on the formula mentioned above, the total
samples used in this research= 25 x 5 = 125 respondents.
C.
Data Collection Method
Data collection is done through questionnaires given to clients of Bank
Danamon Syariah. Questions are ordered systematically while answers are in the
form of multiple choices. Questions are made to be simple and easy to understand
to avoid ambiguity.
Questionnaire analysis is done by giving value from every answer to
questions of the questionnaire based on Likert scale method, according to Masri
Singribun (1995) as follows:
•
Strongly agree: value weight 5
•
Agree: value weight 4
•
Not sure (neither agree nor disagree): value weight 3
•
Disagree: value weight 2
•
Strongly disagree: value weight l
The results of the questionnaire are compiled into the form of a table
which will be tabulated systematically.
D.
Analysis Method
1.
Path Analysis
The analysis of this research uses the path analysis. Path analysis is an
extension of the regression model, used to test the fit of the correlation matrix
against two or more causal models which are being compared by the researcher.
The model is usually depicted in a circle-and-arrow figure in which single-headed
arrows indicate causation (Cohen, 2003). A regression is done for each variable in
the model as a dependent on others which the model indicates are causes. The
regression weights predicted by the model are compared with the observed
correlation matrix for the variables, and a goodness-of-fit statistic is calculated.
The best-fitting of two or more models is selected by the researcher as the best
model for advancement of theory.
Path analysis requires the usual assumptions of regression. It is
particularly sensitive to model specification because failure to include relevant
causal variables or inclusion of extraneous variables often substantially affects the
path coefficients, which are used to assess the relative importance of various
direct and indirect causal paths to the dependent variable. Such interpretations
should be undertaken in the context of comparing alternative models, after
assessing their goodness of fit discussed in the section on structural equation
modeling. When the variables in the model are latent variables measured by
multiple observed indicators, path analysis is termed structural equation modeling,
treated separately. The researcher follows the conventional terminology by which
path analysis refers to modeling single-indicator variables.
In applying the analysis, the researcher uses two different kinds of
variables, namely exogenous and endogenous variables, also known as
independent and dependant variables.
Within the path analysis the exogenous variable is the variable that another
variable regresses on. Exogenous variables can be recognized in a graphical
version of the model, as the variables sending out arrowheads, denoting which
variable it is predicting. A variable that regresses on a variable is always an
endogenous variable even if this same variable is used as a variable to be
regressed on. Endogenous variables are recognized as the receivers of an
atTOwhead in the model.
In the path model below, the two independent or 'exogenous' variables
(Customer Expectations and Application of Marketing Mix) are modeled as being
correlated and as having both direct and indirect effects (through Customer
Satisfaction) on Customer Loyalty. Customer Satisfaction and Customer Loyalty
are the two dependent or 'endogenous' variables.
Figure III.I
customer
Expectatl'ons
Customer
SiitlsfacUon
AppHcatlonof
MarketlntfMIX
Custon1er
loyalty
ｌ］Ｍ［ＢＧｾ＠
The model also uses Customer Satisfaction as an intervening variable. An
intervening variable is a hypothetical internal state that is used to explain
relationships between observed variables, such as independent and dependent
variables, in empirical research {Tolman, I 938). An intervening variable
facilitates a better understanding of the relationship between the independent and
dependent variables when the variables appear to not have a definite connection.
E.
Research Design
The researcher uses two different kinds of variables, namely exogenous
and endogenous variables, also known as independent and dependant variables. It
also considers an intervening variable, a hypothetical internal state that is used to
explain relationships between observed variables, such as independent and
dependent variables, in empirical research (Tolman, 1938).
Figure III.2
X1
Customer
Expectations
Y2
Customer
Sati$faction
X2
Application of
Markeling Mix
A. Exogenous I Independent Variables:
X 1 =Customer Expectations
X2 = Application of Marketing Mix
Customer
Loyalty
B. Endogenous I Dependant Variables:
Y 1 = Customer Satisfaction
Y2 = Customer Loyalty
It is hypothesized that X 1 has an indirect affect on Y2 trough
influences Y2. Thus,
F.
X1
X1
that it also
is hypothesized as an intervening variable.
Classification of Variables
Table Ill.I
No
1
2
Variable
Customer
Expectations (X1)
Application of
Marketing Mix
(X2)
No. Indicator
Scale
1
Tangible Expectations
Ordinal
2
Reliability Expectations
Ordinal
3
Responsiveness Expectations
Ordinal
4
Competence Expectations
Ordinal
5
Empathy Expectations
Ordinal
6
Desired Service
Ordinal
7
Predicted Service
Ordinal
8
Antecedents
Ordinal
1
Price
Ordinal
2
Product
Ordinal
3
Place
Ordinal
4
Promotion
Ordinal
No Variable
3
4
G.
Customer
Satisfaction (Y1)
Customer Loyalty
(Y2)
No. Indicator
Scale
5
People
Ordinal
6
Process
Ordinal
7
Physical Evidence
Ordinal
I
Service Quality
Ordinal
2
Service Consistency
Ordinal
3
Service Delivery
Ordinal
4
Service Responsiveness
Ordinal
5
After Sales Service
Ordinal
I
Relationship Strength
Ordinal
2
Perceived Alternatives
Ordinal
3
Critical Episodes
Ordinal
4
Return Purchase
Ordinal
5
Rewards and Incentives
Ordinal
6
Recommendations
Ordinal
Validity and Reliability Test
Validity refers to the degree to which evidence and theory support the
interpretations of test scores entailed by proposed uses of tests {American
Educational Research Association, American Psychological Association, &
National Council on Measurement in Education, 1999). A valid instrnment means
that the instrument is applicable to measure what will be measured accurately and
COITectly.
Test validity can be assessed in a number of ways and thorough test
validation typically involves more than one line of evidence in support of the
validity of an assessment method (e.g. structured interview, personality survey,
etc). The current Standards for Educational and Psychological Testing follows
Samuel Messick in discussing various types of validity evidence for a single
summative validity judgment. These include construct related evidence, content
related evidence, and criterion related evidence.
Construct validity evidence involves the empirical and theoretical support
for the interpretation of the construct. Such lines of evidence include statistical
analyses of the internal structure of the test including the relationships between
responses to different test items. They also include relationships between the test
and measures of other constructs.
The construct validi1'J evidence is what will be used in this research. The
measurements of validity are applied by using the corrected point biserial
correlation test using the SPSS 16.0 software. It is indicated as the Corrected
Item-Total Correlation in the output. This is the correlation between an item and
the rest of the scale, without that item considered pait of the scale. Without this
correction, the correlation would be spuriously inflated, since it would count twice
in the calculation of the correlation (Sherry, 1997). If the correlation is negative, it
means the item isn't measuring what the rest of the test is trying to measure.
The reliability test is done to know consistency and measurement accuracy
when measurements are done at the same object repeatedly with the same
instrument. Testing the reliability is shown by using the Cronbach 's Alpha
coefficient. The standardized formula of Cronbach's Alpha can be defined as:
｡］ＮＬＭｾ＠
N
·c
(v+(N-l)·c)
where N is the number of components (items or testlets), fJ equals the average
variance and
c
is the average of all covariances between the components
(Cronbach, 1951). According to Ferdinand and Agusty (2002), the reliability test
results with value of Cronbach's Alpha > 0.5 are deemed as reliable. But more
flexibly, Sugiono (2005) suggests that the score of reliability differentiates on
every variable. To interpret the range of reliability for an instrument, a base
directive is used as shown below:
Table III.2
Scale of Instrument Reliability
Interval Coefficient
Level of Reliability
MARKETING MIX TOWARDS THE LOYALTY OF BANK CLIENTS WITH
CUSTOMER SATISFACTION AS AN INTERVENING VARIABLE
(Case Study at Bank Danamon Syariah)
Ur1:Jvor,tJli.le. l1thl:ill NO@iHf
SYARIF HIDAVATULLAH JAKARTA
By
Arba Adi Aditya Buonowikarto
604081000003
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: ........................................... ｾﾷＭ
MANAGEMENT MAJOR
FACULTY OF ECONOMICS AND SOCIAL SCIENCES
STATE ISLAMIC UNIVERSITY SY ARIF HIDAY A11JLLAH
JAKARTA
.
THE INFLUENCE OF CUSTOMER EXPECTATIONS AND THE APPLICATION
OF MARKETING MIX TOWARDS THE LOYALTY OF BANK CLIENTS WITH
CUSTOMER SATISFACTION AS AN INTERVENING VARIABLE
(Case Study at Bank Danamon Syariah)
Submitted to the Faculty of Economics and Social Sciences as a
Requirement for Acquiring the Bachelor Degree of Economies
ｾＢＧＭﾷ｜＠
ｾａ］ｲ｢｡､ｩ＠
ＧＺＮａｃＢ､ｩ｡ｂｵｯｮｷｾｫ］ｲｴｉ｟＠
By
PERP\JSTAKAAN UTAMA
UlN SYAHID JAKARTA
__
604081000003
Supervised by:
Prof. Dr. Ahmad Rodoni, MM
AriefMufraini, Le, M.Si
｟ｃｦ｡ｾ＠
ＧＢＷｾＬ｟＠
Prof. Dr. Ahmad Rodoni, MM
NIP 150 317 955
ｾ＠
Mef-1\lfUiiraini, Le, M.Si
NIP 150 330 729
INTERNATIONAL CLASS PROGRAM
MANAGEMENT MAJOR
FACULTY OF ECONOMICS AND SOCIAL SCIENCES
STATE ISLAMIC UNIVERSITY SYARIF HIDAY ATULLAH
JAKARTA
1430 Hi 2009 M
.
Today, we administered a comprehensive test examination to Arba Adi Aditya
Buonowikarto ID 604081000003. The title of his thesis is: "The Influence of
Customer Expectations and The Application of Marketing Mix Towards The
Loyalty of Bank Clients With Customer Satisfaction as an Intervening Variable".
After proper examination of the work student, we have decided that he has met all of the
requirements for the title of Bachelor of Economics on the major of Management in 'the
State Islamic University (Universitas Islam Negeri) Syarif Hidayatullah Jakarta.
Jakarta April 20 11' 2009
Comprehensive Examination Team
ｾ＠
Prof. Dr. Ahmad Rodoni, MM
Deputy Dean for Academic Affairs
Prof. Dr. Abdul Hamid, MS
Dean of Faculty of Economics and Social Sciences
The Influence of Customer Expectations and The Application of Marketing
Mix Towards The Loyalty of Bank Clients With Customer
Satisfaction as an Intervening Variable
Thesis
Submitted to Faculty of Economics and Social Sciences
As a Partial Requirement for Acquiring Bachelor Degree of Economic
Submitted by:
Arba Adi Aditya Buonowikarto
604081000003
Under The Guidance of:
Academic Advisor II
Academic Advisor I
ｾ＠
Prof. Dr. Ahmad Rodoni, MM
Expert Examiner
Prof. Dr. Abdul Hamid, MS
INTERNATIONAL CLASS PROGRAM
MANAGEMENT MAJOR
FACULTY OF ECONOMICS AND SOCIAL SCIENCES
STATE ISLAMIC UNIVERSITY SYARIF HIDAYATULLAH
JAKARTA
1430H/2009M
Author's Biography
I.
PERSONAL INFORMATION
I. Name
2. Place and Date ofBi1th
3. Address
4.
II.
Phone
EDUCATION
I. Elementary School
2. Middle School
3. High School
4. Bachelor Degree
Arba Adi Aditya Buonowikarto
Jakarta, 11 July 1986
Taman Giri Loka block C- 15 Sector IV.5
Bumi Serpong Damai, Tangerang
0838-90102986
Al-Azhar Bumi Serpong Damai
Al-Azhar Bumi Serpong Damai
Dwiwarna Highschool
State Islamic University Jakarta
III.
ORGANIZATIONAL EXPERIENCE
I. State Islamic University Debating Club
IV.
FAMILY BACKGROUND
I. Father
2. Place and Date of Bhth
3. Address
Isrowandi Buonowikarto
Surakarta, 5 May 1943
Taman Giri Loka block C-15 Sector IV.5
Bumi Se1pong Damai, Tangerang
4. Phone
021-5373783
5. Mother
6.
7.
Place and Date of Birth
Address
Umroh
Sirih; 27 Mei 1951
Taman Giri Loka block C-15 Sector IV.5
Bumi Serpong Damai, Tangerang
8.
Phone
Siblings
021-5373783
4th son of 4 siblings
9.
ABSTRACT
This research on customer behavior of Bank Syariah Danamon is to
investigate the direct influence between customer expectations and the application
of marketing mix application towards customer loyalty of Bank Danamon
Syariah's head branch. In addition to this, research is done to see the indirect
influence of customer satisfaction as an intervening variable. 125 customers of
Bank Danamon Syariah's head branch are taken as samples.
Ibe results of the research show that customers have moderate
expectations of Bank Danamon Syariah and perceive that the marketing mix is
moderately acceptable. It is also shown that customer expectations and the
marketing mix application have a direct influence towards customer loyalty.
Influences are both significant simultaneously and individually. Meanwhile,
customer satisfaction is proven not to be a positive intervening variable.
Keywords: customer expectations, marketing mix, loyalty, customer satisfaction
ACKNOWLEDGEMENTS
First and foremost, I would like to give my utmost gratitude to the Lord
Almighty, Allah swt., for I would not be able to write this thesis if it were not
because all His blessings and gift of life. May Allah continue to bestow His
blessings upon us all.
To begin with, I would like to express my highest gratitude to my thesis
counselors Mr. Arief Mufraini and Prof. Ahmad Rodoni, without their patience
and belief in me this thesis could not have been completed. My appreciation goes
to all my lectures that have guided and thought me everything I needed to know
about research, business and marketing. I am also deeply indebted to the gracious
support from the International Program Staff, Mr. Syamsudin and Mr. Hamdih.
Their hard work and dedication was of great assistance to cut through all the red
tape and bureaucracy.
Special thanks to all my friends who have supported and motivated me to
finish this thesis, without their undying concern and encouragement I probably
would never have graduated.
Finally, I would like to sincerely thank my family and parents who have
continuously and patiently sustained me no matter how lazy and unmotivated I
was. My parents were always right in the end, and I love them for that. Thank you
Mom and Dad, I hope that I can always make you proud of me.
Arba Adi Adityatama Buonowikarto
Author and Researcher
Tangerang, June 2009
TABLE OF CONTENTS
Author's Biography ..................................................................................... i
ACKNOWLEDGEMENTS ........................................................................ ii
PREFACE ................................................................................................... iii
TABLE OF CONTENTS ............................................................................ iv
LIST OF TABLES ....................................................................................... v
LIST OF FIGURES ..................................................................................... vi
CHAPTER I ................................................................................................. I
Background ....................................................................................... I
Research Premise ............................................................................... 3
Research Goals ................................................................................. 3
Research Benefits ............................................................................. 4
Previous Research ............................................................................ 4
CHAPTER II ................................................................................................ 8
Customer Expectations ..................................................................... 8
Marketing Mix .................................................................................. I 0
Customer Loyalty .............................................................................. 13
Customer Satisfaction ...................................................................... 14
Hypothesis ........................................................................................ 15
CHAPTER III ............................................................ .................................. 16
Research Scope.................................................................................. 16
Sampling Method .............................................................................. 16
Data Collection Method ................................................................... 17
Analysis Method .............................................................................. 18
Operational Variable ........................................................................ 20
Variable Indicators ........................................................................... 21
Validity and Reliability Test ............................................................ 22
The F Test and T Test ...................................................................... 25
CHAPTER IV .............................................................................................. 27
Company Background ..................................................................... 27
Analysis and Discussion ................................................................... 30
CHAPTER V ................................................................................................ 47
Conclusion ........................................................................................ 47
Research Implications ...................................................................... 49
REFERENCES ................................ ........................................................... 50
APPENDIX ................................................................................................. 51
LIST OF TABLES
Table I. I - Previous Research Comparison .................................................. 7
Table Ill.I -The Variable Indicators .......................................................... 21
Table Ill.2 - Scale oflnstrument Reliability ................................................ 24
Table IV. I - The Validity and Reliability Test ........................................... 30
Table IV.2 - Customer Expectations Significance ....................................... 34
Table IV.3 -Application of Marketing Mix Significance ........................... 34
Table IV.4 - Customer Satisfaction Significance ........................................ 35
Table IV.5 - Customer Loyalty Significance .............................................. 36
LIST OF FIGURES
Figure II.I - The Four Main Fields of the Marketing Mix ........................... 11
Figure II.2 - The Extended 7-P Marketing Mix ........................................... 12
Figure III. I - The Path Analysis Model ....................................................... I 9
Figure III.2 - The Operational Variables ...................................................... 20
Figure IV.I -The Path Coefficients ............................................................. 35
CHAPTER I
INTRODUCTION
A.
Background
In any type of business, the final and most important goal is the customer.
The customer is a major stakeholder in any business. The slogan "customer is
king" or "the customer is always right" indicate the importance of customers to
businesses. To know what the customers expect and perceive of a certain
company would be very valuable information. In service oriented industries,
customers are regarded even higher compared to other business types. The
ultimate goal of a customer oriented business would be to create customer
satisfaction and eventually customer loyalty. Satisfied and loyal customers would
return to use the company's services and spread the word of its quality.
The concept of Syariah Bank has become a popular concept in modern
banking today. Its values and system is considered to be strong even in the face of
economic instability and crisis. Bank Syariah Danamon is a major brand in
Indonesia's Syariah Banking competing field. Its products, such as the Dirham
Card, have continued to be innovative and highly successful. Its application of an
exceptional marketing strategy has made it one of the leading brands.
In running its activity, Danamon Syariah applies systems of share holder
profit sharing, trade and deposit, so the bank will not be affected by interest rate
fluctuation. These investments are also managed by high-performance human
resources who fulfill the following characteristic: siddiq (honest), tabligh
(reliable),fathonah (clever), amanah (trustable) and itqan (professional).
The Danamon Syariah Bank existence is expected to fulfill people's need
of banking product and service based on Syariah principles of business and halal
(lawful) instead of embracing riba system (profitting the money), ghoror
(manipulative) and maisyir (speculative). Thereby, people can enjoy banking
service that match with Syariah law, which spiritually will create peace of mind
because their fund will be ploughed back to business or thing that benefits a lot of
people.
In banking, especially syariah banking - which has a high priority on
morals and ethics, aiming to serve the customer better, information on customer
behavior is very important. The researcher aims to better the syariah banking
industry by providing such information.
B.
Research Premise
There are several issues or 'problems' that need to be addressed in the
research. These issues to be resolved can be simplified in there fonn of answering
these following questions:
I. What are the customer's expectations of the clients of Bank Danamon
Syariah?
2. What are the customers' perceptions on the application of the marketing
mix of Bank Danamon Syariah?
3. Is there a direct influence between customer expectations and the marketing
mix application towards customer loyalty?
4. Is customer satisfaction a positive intervening variable between customer
expectations and marketing mix application?
C. Research Goals
A research paper needs to have certain goals so that it can become
measureable if it is successful or not in conducting its research. The research goals
must be able to answer the research issues above.
1. Discover the level of customer expectations of the clients of Bank Danamon
Syariah.
2. Discover the customers' perceptions of the application of the marketing mix
of Bank Danamon Syariah.
3. Determine ifthere is there a direct influence between customer expectations
and the marketing mix application towards customer loyalty.
4. Determine if customer satisfaction is an intervening between customer
expectations and marketing mix application.
D.
Research Benefits
The researcher hopes the research conducted may bring benefit both to the
academic world and the syariah banking in the following capacity;
I. Become a tool for understanding customer behavior
2. Become a tool for developing the science of marketing and marketing
strategy
3. Increase the quality of service for Bank Danamon Syariah
4. Increase the marketing efficiency of Bank Danamon Syariah by
understanding what the customers views on the marketing mix
E.
Previous Research
Previous
research
has been conducted
on
similar variables or
methodologies. The researcher credits these previous researchers in the reference
section and citing them when they are present. The most significant and similar
research done previously before this research can be seen below:
1. The Nature and Determinants of Customer Expectations ofService by Valarie
A. Zeithaml, Leonard L. Berry, and A. Parasuraman (1993)
The research is a conceptual model articulating the nature and determinants of
customer expectations of service is proposed and discussed. The model
specifies three different types of service expectations: desired service,
adequate service, and predicted service. Seventeen propositions about service
expectations and their antecedents are provided. Discussion centers on the
research implications of the model and its propositions.
2. The Ir1fluence of Loyalty Programs and Short-Term Promotions on Customer
Retention by Michael Lewis (2004)
The research estimates the theoretical model using a discrete-choice dynamic
programming formulation. The research evaluates a specific loyalty program
with data from an online merchant that specializes in grocery and drugstore
items. Through simulation and policy experiments, it is possible to evaluate
and compare the long-term effects of the loyalty program and other marketing
instruments (e.g., e-mail coupons, fulfillment rates, shipping fees) on customer
retention.
3. A Path Analysis of a Music Listening Preference Model by Young Chang Jin
(1999)
The purpose of this study was to investigate possible causal relationships in a
music listening preference model which was built with seven variables.
Participants for this study - 672 people, were asked to respond using a 7 point
Likert scale expressing to their own preference and familiarity, and their
perception of others' preference (mothers', fathers' and peers'), while they
were listening to 18 examples of music. Participants also were asked to answer
questions about their own music experiences. A path
｡ｮｬｹｾｩｳ＠
was conducted
to test if a music listening preference model based on these variables fit the
data well. Analysis of the chi-square goodness-of-fit test indicated that the
path model fit the data well.
4. Ekspektasi Pelanggan Dan Ap/ikasi Bauran Pemasaran Terhadap Loyalitas
Tako Moderen Dengan Kepuasan Pelanggan Sebagai Intervening (Studi
Kasus Pada Hypermarket Carrefour Di Surabaya) by Hatane Semuel (2006)
The research examines customer behavior of modem stores. The research goal
is to investigate the direct influence between customer expectation and retail
marketing mix application towards customer loyalty of modem stores in
Surabaya. In addition to this, it is also to see indirect influence of customer
satisfaction as an intervening variable. 400 customers of Carrefour Surabaya
are taken as samples,
Table I.I
Title
The Nature and
Determinants of
Customer
Expectations of
Service
A Path Analysis ofa
Music Listening
Preference Model
The Influence of
Loyalty Programs and
Short-Term
Promotions on
Customer Retention
Ekspektasi Pelanggan
Dan Aplikasi Bauran
Pemasaran Terhadap
Loyalitas Toko
Moderen Dengan
Kepuasan Pelanggan
Sebagai Intervening
The Influence of
Customer
Expectations and the
Application of
Marketing Mix
Towards the Loyalty
ofBank Clients with
Customer Satisfaction
as an Intervening
Variable
Author
Zeithaml, Berry,
and Parasuraman
Year
1993
I.
2.
3.
4.
Young Chang Jin
1999
I.
2.
3.
Michael Lewis
2004
I.
2.
3.
Hatane Semuel
2006
I.
2.
3.
4.
Arba Adi Aditya
Buonowikarto
2009
I.
2.
3.
4.
Variables
Methodolo""
Customer
Explorative
Expectations
with
Desired Service
Conceptual
Adequate Service
Model
Predicted Service
Path Analysis
Listening
Preference
Music Experience
Music Familiarity
Loyalty Programs
Structural
Marketing
Equation
Instruments
Modeling
Customer
Retention
Customer
Structural
Expectations
Equation
Application of
Modeling
Marketing Mix
Customer
Loyalty
Customer
Satisfaction
Customer
Path Analysis
Expectations
Application of
Marketing Mix
Customer
Loyalty
Customer
Satisfaction
CHAPTER II
LITERATURE REVIEW
A.
Customer Expectations
Customer expectations can be defined as a perceived value customers seek
from the purchase of a good or service (Gilbert, 2003). Customer expectations are
what customers want or expect to be present and available at the time of
purchasing a product or service. These expectations include non-tangible things,
such as store environment, quality of services, customer handling system, etc.
Customers' expectations are not constant because they follow the current
development of culture, technology, and economy. What a customer expects today
will not necessarily be the same as what they expect in the future.
According to Zeithaml (1991 ), the conceptual model of customer
expectations is divided into four main sections: (I) the expected service
component, (2) antecedents of desired service, (3) antecedents of adequate
service, and (4) antecedents of both predicted and desired service.
1. The expected service component describes two types of customer
expectations of service. First, desired service is defined as the level of
service the customer hopes to receive and second as the level of service the
customer will accept.
2. Antecedents of desired service define and describe enduring service
intensifiers and personal needs, two of the major influences on desired
service.
3. Antecedents of adequate service identifies and explains five of the main
influences on adequate service-transitory service intensifiers, perceived
service alternatives, self-perceived service role, situational factors, and
predicted service.
4. Antecedents of both desired and predicted service details four variables:
explicit service promises, implicit service promises, word-of-mouth
communications, and past experience, all of which affect both desired and
predicted service.
Service quality is an important factor in customer expectations. According
to Gilbert (2003 ), elements of customer satisfaction can be categorized into the
following:
I. Tangible: Anything with a physical form that can supp01t the business'
service operations. Examples are; building facilities, stationeries & tools,
employee uniforms, etc.
2. Reliability: The ability of the business in delivering service as it has
promised with consistency.
3. Responsiveness: The ability of the business to respond and supp01t its
customers in quick and systematic way.
4. Competence: The capability of the business in delivering its service to
create trust and satisfaction into its customers.
5. Empathy: The business' attitude in delivering its service. A caring,
sympathetic and understanding way of treating customers in included in
this element.
B.
Marketing Mix
A marketing mix can be defined as a set of controllable, tactical marketing
tools that work together to achieve company's objectives (Kotler, 2005). The
marketing mix is generally accepted as the use and specification of the 'four P's'
describing the strategic position of a product in the marketplace. The classical
marketing mix - proposed by E. Jerome McCarthy ( 1960), has four elements
knows as the 'four Ps', which are:
1. Product: A tangible object or an intangible service that is mass produced
or manufactured on a large scale with a specific volume of units.
Intangible products are often service based like the tourism industry & the
hotel industry. Typical examples of a mass produced tangible object are
the motor car and the disposable razor. A less obvious but ubiquitous mass
produced service is a computer operating system.
2. Price: The price is the amount a customer pays for the product. It is
determined by a number of factors including market share, competition,
material costs, product identity and the customer's perceived value of the
product. The business may increase or decrease the price of product if
other stores have the same product.
3. Place: 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.
4. Promotion: Promotion represents all of the communications that a
marketer may use in the marketplace. Promotion has four distinct elements
- advertising, public relations, word of mouth and point of sale.
Figure II.I
Booms and Bitner included three additional 'Ps' to accommodate trends towards a
service or knowledge based economy:
I. People: all people who directly or indirectly influence the perceived value
of the product or service, including knowledge workers, employees,
management and consumers.
2. Process: procedures, mechanisms and flow of activities which lead to an
exchange of value.
3. Physical evidence: the direct sensory experience of a product or service
that allows a customer to measure whether he or she has received value.
Both tangible good that help communicate and perform the service, and
the intangible experience of existing customers and the ability of
businesses to relay that customer satisfaction to potential customers.
Figure II.2
TARGET
MARKET
C.
Customer Loyalty
Customer loyalty can be defined as the totality of feelings or attitudes that
would incline a customer to consider the re-purchase of a particular product or
service. Customer loyalty is determined by three factors: relationship strength,
perceived alternatives and critical episodes (Reichheld, 1996).
Major factors that negatively affect customer loyalty:
I. The customer moves out of the service area
2. The customer no longer has a need for the products or service
3. More suitable alternative providers become available
4. Poor handling of a critical episode
Customer loyalty can be achieved in some cases by offering a quality
products and services with a firm guarantee. Customer loyalty is also achieved
through rewards and incentive programs. The ultimate goal of customer loyalty
programs is satisfied customers who will return to purchase again and persuade
others to use that company's products or services.
The loyalty business model relies on training of employees to achieve a
specific paradigm: quality of product or service leads to customer satisfaction,
which leads to customer loyalty, which leads to profitability. Loyalty marketing is
an extension of that effort, relying upon word-of-mouth and advertising to draw
upon the positive experiences of those exposed to loyalty business model inspired
ventures to attract new customers.
While different systems and labels of customer loyalty are used in every
company, Zeithaml (2001) divides customers into four tiers:
I. The Platinum Tier describes the company's most profitable customers,
typically those who are heavy users of the product, not overly price
sensitive, willing to invest in and try new offerings, and are committed to
the firm.
2. The Gold Tier differs from the Platinum Tier in that profitability levels are
not as high, perhaps because the customers want price discounts that limit
margins. They might not be as loyal to the firm even though they are
heavy users in the product category--they might minimize risk by working
with multiple vendors rather than just the focal company.
3. The Iron Tier contains customers that provide the volume needed to utilize
the firm's capacity but whose spending levels, loyalty, and profitability are
not substantial enough for special treatment.
4. The Lead Tier consists of customers that are costing the company money.
They demand more attention than they are due given their spending and
profitability. They are sometimes problem customers--complaining about
the firm to others and tying up the firm's resources.
Loyalty marketing is an approach to marketing, based on strategic
management, in which a company focuses on growing and retaining existing
customers through incentives. Branding, product marketing and loyalty marketing
all form part of the customer proposition - the subjective assessment by the
customer of whether to purchase a brand or not based on the integrated
combination of the value they receive from each of these marketing disciplines
(Evans, 2007).
D.
Customer Satisfaction
Customer satisfaction is the ability of goods or services to meet or exceed
buyer need and expectations (Km1z and Boone, 1995). According to Kotler
(2000), customer satisfaction is a person's feelings of pleasure or disappointment
resulting from comparing a product perceived performances (or outcome) in
relation to his or her expectations.
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 (John, 2003).
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.
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. According to Berry (Bart Allen)
and Brodeur (1991), there are 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:
E.
I.
Quality
6.
2.
Value
7. Inter-departmental Teamwork
Environment
3. Timeliness
8.
Front line Service Behaviors
4. Efficiency
9.
Commitment to the Customer
5.
10. Innovation
Ease of Access
Hypothesis
HI: Customer expectations have a positive towards customer loyalty.
H2: Marketing mix application has a positive influence towards customer loyalty.
H3: Customer expectations have a positive influence towards customer
satisfaction.
H4: Marketing mix application has a positive influence towards customer
satisfaction.
H5: Customer satisfaction is a positive intervening between customer expectations
and marketing mix application towards customer loyalty.
CHAPTER III
RESEARCH METHODOLOGY
A.
Research Scope
This research is an exploratory study. An exploratory study is undertaken
when there is no infmmation at hand, or no information is available on how
similar problems or research issues have been solved in the past.
In this research, research is done by collecting secondary data coming
from written and digital literature found in book, journals, and the internet.
Primary data is obtained by spreading questionnaires. The population of this
research is the clients of the head branch of Bank Danamon Syariah in Prapatan,
Jakarta.
B.
Sampling Method
The sampling method used is judgment sampling. Judgment sampling
involves the choice of subjects who are most advantageously placed or in the best
position to provide the information required. Thus the judgment sampling design
is used when a limited number or category of people have the information that is
sought.
The criteria for the respondents are:
I. Clients of the head branch of Bank Danamon Syariah at Prapatan, Jakarta
2. Have knowledge of Bank Danamon Syariah 's marketing programs
3. Above the age of20
The level of sampling in this research is accounted based on the opinion of
Hair and Augusty Ferdinand (2002) that the minimum sample measure applied in
Structural Equation Modeling (SEM) is to be counted by 5 observations for every
estimated parameter. This research applies 25 indicators before performing the
validity and reliability tests. Based on the formula mentioned above, the total
samples used in this research= 25 x 5 = 125 respondents.
C.
Data Collection Method
Data collection is done through questionnaires given to clients of Bank
Danamon Syariah. Questions are ordered systematically while answers are in the
form of multiple choices. Questions are made to be simple and easy to understand
to avoid ambiguity.
Questionnaire analysis is done by giving value from every answer to
questions of the questionnaire based on Likert scale method, according to Masri
Singribun (1995) as follows:
•
Strongly agree: value weight 5
•
Agree: value weight 4
•
Not sure (neither agree nor disagree): value weight 3
•
Disagree: value weight 2
•
Strongly disagree: value weight l
The results of the questionnaire are compiled into the form of a table
which will be tabulated systematically.
D.
Analysis Method
1.
Path Analysis
The analysis of this research uses the path analysis. Path analysis is an
extension of the regression model, used to test the fit of the correlation matrix
against two or more causal models which are being compared by the researcher.
The model is usually depicted in a circle-and-arrow figure in which single-headed
arrows indicate causation (Cohen, 2003). A regression is done for each variable in
the model as a dependent on others which the model indicates are causes. The
regression weights predicted by the model are compared with the observed
correlation matrix for the variables, and a goodness-of-fit statistic is calculated.
The best-fitting of two or more models is selected by the researcher as the best
model for advancement of theory.
Path analysis requires the usual assumptions of regression. It is
particularly sensitive to model specification because failure to include relevant
causal variables or inclusion of extraneous variables often substantially affects the
path coefficients, which are used to assess the relative importance of various
direct and indirect causal paths to the dependent variable. Such interpretations
should be undertaken in the context of comparing alternative models, after
assessing their goodness of fit discussed in the section on structural equation
modeling. When the variables in the model are latent variables measured by
multiple observed indicators, path analysis is termed structural equation modeling,
treated separately. The researcher follows the conventional terminology by which
path analysis refers to modeling single-indicator variables.
In applying the analysis, the researcher uses two different kinds of
variables, namely exogenous and endogenous variables, also known as
independent and dependant variables.
Within the path analysis the exogenous variable is the variable that another
variable regresses on. Exogenous variables can be recognized in a graphical
version of the model, as the variables sending out arrowheads, denoting which
variable it is predicting. A variable that regresses on a variable is always an
endogenous variable even if this same variable is used as a variable to be
regressed on. Endogenous variables are recognized as the receivers of an
atTOwhead in the model.
In the path model below, the two independent or 'exogenous' variables
(Customer Expectations and Application of Marketing Mix) are modeled as being
correlated and as having both direct and indirect effects (through Customer
Satisfaction) on Customer Loyalty. Customer Satisfaction and Customer Loyalty
are the two dependent or 'endogenous' variables.
Figure III.I
customer
Expectatl'ons
Customer
SiitlsfacUon
AppHcatlonof
MarketlntfMIX
Custon1er
loyalty
ｌ］Ｍ［ＢＧｾ＠
The model also uses Customer Satisfaction as an intervening variable. An
intervening variable is a hypothetical internal state that is used to explain
relationships between observed variables, such as independent and dependent
variables, in empirical research {Tolman, I 938). An intervening variable
facilitates a better understanding of the relationship between the independent and
dependent variables when the variables appear to not have a definite connection.
E.
Research Design
The researcher uses two different kinds of variables, namely exogenous
and endogenous variables, also known as independent and dependant variables. It
also considers an intervening variable, a hypothetical internal state that is used to
explain relationships between observed variables, such as independent and
dependent variables, in empirical research (Tolman, 1938).
Figure III.2
X1
Customer
Expectations
Y2
Customer
Sati$faction
X2
Application of
Markeling Mix
A. Exogenous I Independent Variables:
X 1 =Customer Expectations
X2 = Application of Marketing Mix
Customer
Loyalty
B. Endogenous I Dependant Variables:
Y 1 = Customer Satisfaction
Y2 = Customer Loyalty
It is hypothesized that X 1 has an indirect affect on Y2 trough
influences Y2. Thus,
F.
X1
X1
that it also
is hypothesized as an intervening variable.
Classification of Variables
Table Ill.I
No
1
2
Variable
Customer
Expectations (X1)
Application of
Marketing Mix
(X2)
No. Indicator
Scale
1
Tangible Expectations
Ordinal
2
Reliability Expectations
Ordinal
3
Responsiveness Expectations
Ordinal
4
Competence Expectations
Ordinal
5
Empathy Expectations
Ordinal
6
Desired Service
Ordinal
7
Predicted Service
Ordinal
8
Antecedents
Ordinal
1
Price
Ordinal
2
Product
Ordinal
3
Place
Ordinal
4
Promotion
Ordinal
No Variable
3
4
G.
Customer
Satisfaction (Y1)
Customer Loyalty
(Y2)
No. Indicator
Scale
5
People
Ordinal
6
Process
Ordinal
7
Physical Evidence
Ordinal
I
Service Quality
Ordinal
2
Service Consistency
Ordinal
3
Service Delivery
Ordinal
4
Service Responsiveness
Ordinal
5
After Sales Service
Ordinal
I
Relationship Strength
Ordinal
2
Perceived Alternatives
Ordinal
3
Critical Episodes
Ordinal
4
Return Purchase
Ordinal
5
Rewards and Incentives
Ordinal
6
Recommendations
Ordinal
Validity and Reliability Test
Validity refers to the degree to which evidence and theory support the
interpretations of test scores entailed by proposed uses of tests {American
Educational Research Association, American Psychological Association, &
National Council on Measurement in Education, 1999). A valid instrnment means
that the instrument is applicable to measure what will be measured accurately and
COITectly.
Test validity can be assessed in a number of ways and thorough test
validation typically involves more than one line of evidence in support of the
validity of an assessment method (e.g. structured interview, personality survey,
etc). The current Standards for Educational and Psychological Testing follows
Samuel Messick in discussing various types of validity evidence for a single
summative validity judgment. These include construct related evidence, content
related evidence, and criterion related evidence.
Construct validity evidence involves the empirical and theoretical support
for the interpretation of the construct. Such lines of evidence include statistical
analyses of the internal structure of the test including the relationships between
responses to different test items. They also include relationships between the test
and measures of other constructs.
The construct validi1'J evidence is what will be used in this research. The
measurements of validity are applied by using the corrected point biserial
correlation test using the SPSS 16.0 software. It is indicated as the Corrected
Item-Total Correlation in the output. This is the correlation between an item and
the rest of the scale, without that item considered pait of the scale. Without this
correction, the correlation would be spuriously inflated, since it would count twice
in the calculation of the correlation (Sherry, 1997). If the correlation is negative, it
means the item isn't measuring what the rest of the test is trying to measure.
The reliability test is done to know consistency and measurement accuracy
when measurements are done at the same object repeatedly with the same
instrument. Testing the reliability is shown by using the Cronbach 's Alpha
coefficient. The standardized formula of Cronbach's Alpha can be defined as:
｡］ＮＬＭｾ＠
N
·c
(v+(N-l)·c)
where N is the number of components (items or testlets), fJ equals the average
variance and
c
is the average of all covariances between the components
(Cronbach, 1951). According to Ferdinand and Agusty (2002), the reliability test
results with value of Cronbach's Alpha > 0.5 are deemed as reliable. But more
flexibly, Sugiono (2005) suggests that the score of reliability differentiates on
every variable. To interpret the range of reliability for an instrument, a base
directive is used as shown below:
Table III.2
Scale of Instrument Reliability
Interval Coefficient
Level of Reliability