Ricko Achmadi Putra
Bogor Agricultural University, Indonesia
E-mail: ricko.achmadi@gmail.com
Hartoyo Hartoyo
Faculty of Human Ecology, Bogor Agricultural
University, Indonesia
E-mail: hartoyo_bs@yahoo.com
Megawati Simanjuntak
Faculty of Human Ecology, Bogor Agricultural
University, Indonesia
E-mail: mega.juntakipb@gmail.com
Submission: 11/02/2017
Accept: 24/02/2017
ABSTRACT
This journal examines the relationship between perception
of product quality, perception of service quality, perception of Customer
Loyalty Program on retail customer behavior, and sales volumes of cement
products. This study examines three different cement brands, namely cement XYZ
with the largest market share, cement PQR which is the main competitor, as well
as cement ABC, a newcomer cement brand which is strong enough to enter the
Indonesian cement market. The
research is focused on the building material retailers with 100
respondents. The data collection will be done by survey through direct
interview by using questionnaires. The analysis of this research uses descriptive
analysis, analysis by ANOVA and also inferential analysis by using Structural
Equation Model (SEM). The results of this study indicate that from the factors
that influence the attitudes of retail customers of the three variables tested,
only one dominant factor which influences the attitude of retail customers,
which is the perception of the product quality. The results of this research
also show that the perception of product quality also affects sale volume
significantly, the greater the perception of the quality of cement products, the
greater the volume of sales generated by the retail customer.
Keywords: Product
Quality, Service Quality, Customer Loyalty Program, ANOVA, SEM
1. INTRODUCTION
In
2012-2013, there was an explosion of cement demand which was characterized by
property business which was very dominating during those years. At the
beginning of 2013, the ratio between cement demand and installed capacity of
cement producers in Indonesia reached 95 percent, meaning that almost all of
the cement produced and sold in Indonesia could be absorbed by the market. The
large number of cement demands invited producers of cement from outside
Indonesia to be interested to participate in the Indonesian market.
Research
of DBS Bank (2015) states that the installed capacity of cement by the cement
plant spread in some areas of Indonesia will generate a significant difference
for the level of utility comparison between demand and installed capacity of
cement, which reached 74 percent. 2016 will be the new battleground for sixteen
companies to compete in the cement market in Indonesia. PT.
XYZ,
which is the market leader for cement company in Indonesia, experienced a
decline in sales and lower the market share in Indonesia, from 2012 which
reached 32 percent of market share, up to 2014 which declined to 30 percent and
is projected to continue to decline if there is no strategy in facing the
future condition. The change of market share is the characteristic of customers
who change their selection from one product to another.
The
online media The Globe (2013) which discusses blackberry case, stated that the
decrease in market share predominantly due to the customer migration from one
product to the other products. Cement production companies should take the appropriate
strategy to sustain the company. From the background mentioned previously, thus
the research questions are:
a) How is the
influence of the perception of product quality on the customer attitude?
b) How is the
influence of the perception of service quality on the customer attitude?
c) How is the
influence of the perception of Customer Loyalty Program on the customer
attitude?
d) How is the
influence of the perception of customer attitude on the sale of cement products?
2. FRAMEWORK AND LITERATURE REVIEW
2.1.
Research Framework
This
study examines the impact of the perception of the product quality, the
perception of service quality, and the perception of Customer Loyalty Program
toward the customer attitude, and also reviews the effect of customer attitudes
on the sale of cement products. The research model can be seen in Figure 1.
Figure 1: The research model
2.2.
Literature Review
2.2.1. Perception
of Product Quality and the Relationship with Customer Attitude and Sale Volume
Boisvert
and Ashill (2011) conducted a study on the perception of product quality to
customer attitude, and the result is that there is positive influence of the
perception of quality on the customer attitude. Research by Santoso and Kunto
(2014).
Horvat
and Dosen (2013), and Ing Wu and Lie Lo (2007) obtained the same results in
researching the influence of the perception of product quality on the customer
attitude. Aynadis (2014) from the research concluded that the quality of
product is the dominant factor influencing the customer's attitude toward a product.
In the
research of Mennecke et al. (2006), Chen and Cheng (2011), Asshidin et al.
(2015), Jaafar et al. (2012), Christiansen (2010), and Sirfaz et al. (2014)
proved that there is a significant influence on the quality of product on the
customer attitude. In addition to the research of product quality perception on
the customer attitude, there is another study that examined the direct
relationship between the perception of product quality and the sale volume.
Iranita
(2010) in her research obtained the result that there is direct relationship
between the quality of products and sale volume, either simultaneously or
partially. Empirically there are many studies that discuss the quality of the
product against both values. The study has proved that there is positive
influence of the product quality to customer attitude and sale volume, so the
hypotheses proposed are as follows:
·
H1 :
Perception of
product quality significantly affects the customer attitude
·
H2 :
Perception of
product quality significantly affects the sale volume
2.2.2. Perception
of Service Quality and the Relationship Between Customer Attitude and Sale
Volume
Kumari
(2013) in his study examines the relationship between customers’ perception
regarding the quality of service and the customer's attitude obtained the
result that the customer's attitude is influenced by the perception of service
quality by customers.
Khare
(2011) conducted a study which obtained the result that the foreign banks that
provide a good perception of service quality will get positive customer
response and attitude from bank customers. The results of the research
conducted by Khan (2012) also demonstrate the close relationship between
service quality and customer attitude towards the products offered.
Yulianto
et al. (2014), Mpinganjira (2015), Vinayagamoorthy and Magdaline (2015), and
Al-Nasser et al. (2016) have shown a close relationship between service quality
and customer attitude. In addition to the research on the perception of service
quality to the customer attitude, there are other studies that examined the
direct relationship between the perception of service quality and sale volume.
Jahri et
al. (2015) and Pitaloka (2015) concluded that there is a positive relationship
between service quality and sale volume.
Empirically,
there has been a lot of studies with different object of research that have
proven that there is influence of perception of service quality on the customer
attitude and sale volume, so that in the present study the hypotheses proposed
are:
·
H3 :
Perception of
service quality significantly affects customer attitude
·
H4 :
Perception of
service quality significantly affects sales volume
2.2.3. Perception
of Customer Loyalty Program and Its Relationship with Customer Attitude
Frequency
program is designed to provide value or appreciation to the customers who often
make a purchase of a product being offered. While club program is a program for
those who have purchased a specific product and would like to become a member
of the club. To become a member of the club, customers are required to pay
dues, it is done to close the door to people who are not interested in the long
term of this product.
Arbore
and Estes (2013) conducted a study on the perception of CLP on the customer
attitudes. It obtained the result that there is a positive relationship between
the perception of CLP with the attitude of customers of grocery store. Boeck et
al. (2011), McCall and Voorhees (2010), as well as Magateh and Tomalieh (2015)
also conducted research and proved the existence of significant influence
between CLP and customer attitude.
In
addition to the research on the perception of CLP on the customer attitude,
there are other studies that examined the direct relationship between the
perception of CLP with sales volume.
Manalu
(2008) conducted research on a loyalty program by promotions obtained the
result that the perception of CLP directly affects the volume of product sales.
Empirically, there has been a lot of research with the different object of
research that have proven that there is influence of the perception of Customer
Loyalty Program on customer attitude and sale volume directly, the proposed
hypotheses are as follows:
·
H5 :
Perception of
Customer loyalty program significantly affects customer attitude
·
H6 :
Perception of
Customer loyalty program significantly affects sale volume
2.2.4. Customer
Attitude and Its Relationship with Sale Volume
Kamins
and Frank (2004) conducted a study on the company making the claim as a market
leader and the results proved that the relationship of the customer's attitude
towards the product is positive and beneficial to the company, so it can be
concluded from these study that there is a positive relationship between market
share, and in this term is as market leader on the positive attitude of
consumers.
Other
research that addresses the customer's attitude is Christine (2008), which
concluded that there is a positive relationship between the customer's attitude
and the level of sale volume. Rink (1998) also did a research on the relationship
between the customer's attitude and sale volume, and proved that there is a
positive relationship between the customer's attitude and sales.
Huang
(2004) proved in his study that the customer's attitude is closely linked to
volume. Empirically, there has been a lot of research with the different object
of research that have proven that there is an influence of customer attitude
toward sales or market share directly, the proposed hypothesis is as follows:
·
H7 :
The attitude of the
customers has real impact on sale volume
3. RESEARCH METHODOLOGY
This
research is an explanatory research that explains the relationship between the
variables studied, as well as tests the hypothesis that has been formulated
previously (SINGARIMBUN, 1999).
To
obtain the data required in this thesis, the author conducted research to agent
stores of building materials that sell cement in the marketing area of JABODETABEK.
The data collection of this research will be carried out for about two months,
from August 2016 to October 2016. The technique used
in the sampling and determination of the respondent was non-probability
sampling, which was done intentionally (purposive).
The
selected respondents were 100 samples who represent each agent or building
stores that sell cement products. Respondents were selected based on the
capability and the responsibility for making decisions in choosing a product or
have got a recommendation from the head of the company.
To
measure the response of the respondents to the variables of study, the
researcher used Likert scale, because of the number of statements as a tool for
collecting data or information from respondents. Measurement of the answers is
symbolized from scale: 5 (strongly agree); 4 (agree); 3 (neutral); 2
(disagree); up to 1 (strongly disagree). Table 1 shows the definition of each
variable used
4. RESULTS AND DISCUSSION
4.1.
Research Instrument Testing
There
are three criteria in the use of data analysis techniques by SmartPLS to assess
outer model which are by using Discriminant Validity and Composite Reliability.
Discriminant validity is the measurement of indicator and the latent variables.
The measurement of discriminant validity is performed by seeing the AVE value
(Average Variance Extracted) of each variable. Table 1 shows the value of
discriminant validity for cement XYZ, cement PQR and cement ABC.
Table 1: Discriminant validity cement XYZ, cement PQR and
cement ABC
Variable |
Kode |
XYZ Brand |
PQR Brand |
ABC Brand |
Total Brand |
AVE |
AVE |
AVE |
AVE |
||
Perception of Service Quality |
KN |
0.55 |
0.37 |
0.005 |
0.49 |
Perception of Product Quality |
KP |
0.5 |
0.41 |
0.81 |
0.497 |
Perception of Customer Loyalty Program |
CLP |
0.42 |
0.29 |
0.79 |
0.965 |
Customer Attitude |
SP |
0.39 |
0.41 |
0.86 |
0.599 |
Variable is said to have reliability
if the composite reliability value is above 0.60. In Table, the composite
reliability value of latent variable of the experiment results will be
presented. Table 2 shows composite reliability values of cement XYZ, cement PQR
and cement ABC.
Table 2: composite reliability values of cement XYZ,
cement PQR and cement ABC
Variabel |
Kode |
XYZ Brand |
PQR Brand |
ABC Brand |
Total Brand |
CR |
CR |
CR |
CR |
||
Perception of Service Quality |
KN |
0.88 |
0.68 |
0.005 |
0.791 |
Perception of Product Quality |
KP |
0.8 |
0.79 |
0.81 |
0.871 |
Perception of Customer Loyalty Program |
CLP |
0.98 |
0.7 |
0.79 |
0.838 |
Customer Attitude |
SP |
0.83 |
0.86 |
0.86 |
0.982 |
The results of the overall
evaluation, both discriminant validity and composite reliability which have
been described above, it can be concluded that the majority of indicator as the
measure of latent variable is a valid and reliable measure. Some of the
variables and indicators that are not valid will not be removed from the model
for all components of this variable remains contribute to shape good SmartPLS
model in this study.
4.2.
Difference Test Analysis of Cement Products
Analysis
of difference test in this study used ANOVA analysis. ANOVA analysis is used to
determine whether there are significant differences in average values among the
cement brands about something, in this study is about the perception of service
quality, perception of product quality, perception of customer loyalty programs
and the customer attitude.
ANOVA
analysis used SPSS23 to determine the outcome. Table 3 shows the results of ANOVA
for the three cement brands. It resulted that there are indeed many differences
in the assessment of service quality perception, the perception of customer
loyalty programs and customer attitude.
Table 3: shows the results of ANOVA for the three cement
brands
No |
Variabel Laten |
Mean |
Anova |
Conclusion |
||
|
XYZ |
PQR |
ABC |
|||
1 |
Perception
of Service Quality |
0.839 |
0.792 |
0.646 |
0.0001 |
Different |
2 |
Perception
of Product Quality |
0.741 |
0.733 |
0.735 |
0.942 |
No
Different |
3 |
Perception
of Customer Loyalty Program |
0.824 |
0.832 |
0.900 |
0.002 |
Different |
4 |
Customer
Attitude |
0.873 |
0.803 |
0.658 |
0.0001 |
Different |
4.3.
The
Relationship Between Variable and Managerial Implication
From the
conclusions of the research results obtained, we can conclude for the test of
the hypothesis that can be seen in Table 4. The results of this study showed
that from seven hypotheses which were made, there are two hypotheses that can
be accepted, which are the perception of product quality significantly affects
the attitude of retail customers, and the perception of product quality
significantly affects sale volumes of cement. Other hypotheses are rejected
because their t-test values are less than 1.96.
Table 4: The influence of perception of product quality
on customer attitude and sale volume
Hypothesis |
Latent Variable |
T Test |
Conclusion |
H1 |
Perception
of Product Quality -> Customer Attitude |
12.98 |
Accept H1 |
H2 |
Perception
of Product Quality -> Sale Volume |
3.38 |
Accept H2 |
H3 |
Perception
of Service Quality -> Customer Attitude |
0.576 |
Reject H3 |
H4 |
Perception of
Service Quality -> Sale Volume |
0.472 |
Reject H4 |
H5 |
Perception
of Customer Loyalty Program -> Customer Attitude |
1.409 |
Reject H5 |
H6 |
Perception
of Customer Loyalty Program -> Sale Volume |
0.567 |
Reject H6 |
H7 |
Customer Attitude -> Sale Volume |
1.66 |
Reject H7 |
This
study apart from the results of the survey data, the analysis result of depth
interview was also obtained from the retail customers regarding sales and
cement products they sell. The retail customers have a role to provide advice
to final customers in selecting cement products, but most of the final
customers that they are facing have chosen their own demand for cement with a
particular brand and the influence given by retail customers is less addressed.
Final
customers are strict enough in choosing a cement brand. They also have their
own perception on the cement brands they choose either from the perception of
quality of the product until the price given by the store. This study also
obtained an interesting fact that cement XYZ, the management of final customers
are not faced directly by producers but by cement distributor.
This has
resulted in policies regarding service quality, which the role is fully held by
the distributors. The role of the distributors of cement XYZ to the final customers
is more dominant than the producers themselves, so that the perception of
service quality perceived by retail customers is generally performed by the
distributors of cement, especially in cement XYZ.
4.4.
Discussion and Managerial implication
Managerial
implication derived from this research that should be done by the cement
production companies in order to increase the positive attitude of retail
customers, which is concluded from the results in Figure 7 are grouped based on
the approach to the marketing mix that can be seen in Table 5.
Table 5. Managerial
implication based on the total analysis of cement brands
No |
Description of Indicator &
Variable |
The value of t / Outer Loading |
Marketing mix |
Managerial Implication |
1 |
Perception
of production quality affects significantly on customer attitude (H1) |
12.98 |
Product |
Consistency
in the quality of the cement which is produced |
2 |
Perception
of production quality affects significantly on the sale volume (H2) |
3.38 |
Promotion |
marketing
campaign about the perception of
cement product quality should be consistent and improved |
3 |
Characteristic
of the main operation of core product contribute dominantly on the perception
of product quality (KP1 & KP2) |
0.933 &
0.883 (KP1 & KP2 Dominant) |
Product |
Consistency
for the colour of cement which is convincing the customers and also the
superiority in terms of the texture of the cement produt produced |
4 |
The
suitability with the specification contribute dominantly on the perception of
product quality (KP3 & KP4) |
0.889 &
0.890 (KP3 & KP4 Dominant) |
Product |
Consistency
in terms of the quality of cement is appropriate with indonesia national
standards (consistent in the certification achievement) as well as the
superiority compared with other cement brands. |
4.5. CONCLUSIONS AND SUGGESTIONS
The
results of this study indicate that factors that influence the attitude of
retail customers from the three variables tested; there is only one variable
which dominantly influences the attitude of retail customers, which is the
perception of the product quality. This study provides information that the
higher the quality of the cement product received by retail customers, the more
positive retail customers attitude towards the cement brand.
Indicator
which is dominant in its contribution to the perception of product quality is
the characteristic of core product and the suitability with the specifications.
These two indicators could be a suggestion to the cement producers to enhance
the positive attitude of retail customers.
The
results also show that the perception of product quality also affects sale
volume significantly, the greater the perception of the quality of cement
products, the greater the volume of sales generated by the retail customers. It
could also be as a suggestion for cement producers in terms of consistency of
maintaining and improving the quality of cement products and give the
perception of the quality of cement product more intensively.
However,
the further research can look for variables that affect the sale volume because
in this research, variable that is influential is only the perception of the
product quality. The attitude of the final customer is suggested to be studied
because from this research, the retail customer attitude does not significantly
affect the sale volume of cement.
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