CHAPTER 1

1.0 Introduction

Rapid development and the popularity of the contemporary coffee shop is booming in

Malaysia especially in the city for example Kuala Lumpur, Selangor and Cyberjaya. The

emerging of café and bar showed rapid involvement toward coffee drinking and trends.

According to Rahman (2010), showed that coffee drinking trend had undergone several

phase of changes in Malaysia. The coffee drinking trends significantly contributed to the

Malaysian current economies either through industrial or gastronomic activities.

Currently in Malaysia, coffee drinking habits had been a tremendous setting toward the

society and it occurred to fulfil the needs and demands of the society, it had built up a

trends and social interaction toward culture and lifestyle.

According to Vago, S. (2004), a social status was determined primarily by one’s style of

life, how one consume the product and experience it, rather than how one produced”.

So it has been with Malaysia coffee culture with incoming of international coffee brands

that changes the perception of coffee drinking trends. The development of coffee

drinking trends depending on the current situations and current economic status. As cited

by (Ritzer, Kammeyer and Yetman, 1987) mentions that social changes are a variation of

time periods that mold the persons, community, organization and culture. This chapter

will explain the background of the study, the problem statement, objectives of the study,

possible research questions and the professional significance of the study toward

perceived value influence consumer coffee trends.

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1.1 Background of Studies

Food and beverage are known to be of the nerve center of hotel and tourism industry. The

nature of Malaysian food and beverages industry comprise of fine dining restaurant,

bistro, restaurant, food court, cafe, coffee shop (Kopitiam) and road side food vendors. In

addition, food and beverage industry offered varieties of dishes and beverages to the

community.

Hence, it is important for food service provider, not only to deliver food and beverages,

but at the same time they must make sure that consumer satisfaction is achieved. By

doing so, we can ensured that it will lead to increase consumer satisfaction level and

created a positive post-purchase behavior. To achieve this, it is important for food and

beverages operator to understand the consumer decision making process and factor

contributing to its.

In referring to the paragraph above, food and beverages industry had contributed not only

a wide variety of food and beverages products but services as well. The list of beverages

offered, ranging from alcoholic, non-alcoholic, juices, tea and coffee. This research

however to understand consumer perceived value that motivates and influence consumer

either towards international coffee shop or local Malaysian coffee shop.

The study will analyze, whether the dynamic of consumer satisfactions towards coffee

are based on perceived values and perceived service performance. The finding will

contribute to the understanding of consumer intention to purchase products offered by the

coffee business industry and enriching the literature on consumer behavior especially in

hospitality and tourism research. In other words, the study will look into the perception

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that stimuli perceived value that influence the consumer satisfaction towards coffee

drinking trends.

Perceived value is a consumer opinion of a product’s value to consumer. That it may

influence the consumer to purchase. However, it may have little or nothing to do with the

product markets toward business perspectives. It depends on the product’s ability and

attributes to satisfy consumer needs or requirements.

Consumer respond on the ground rules of perception toward the values of a meaningful

and coherent picture, which on the basis of perception, not the basis of objective reality.

Consumer have the decision to respond towards the reality terms and the values of the

products, thus usually will ended with product being purchased (Leon and Joseph, 2015).

Apart of the above explanation about perceived value influence consumer satisfaction.

The field work of this research will be based in Cyberjaya, Selangor. Cyberjaya is located

in the heart of Selangor Darul Ehsan. It is the brainchild of former Malaysian Prime

Minister, Mahathir Mohammed, whom had proposed a new multimedia garden city

known as Cyberjaya, the location will be a multimedia center in Malaysia looking

forward a high information technology that will be develop BBC (1999). The high

technology nature of the city with the combination of multi-racial population, form the

wider metropolitan areas is seen as the most suitable location for this study.

The population is growing and this tremendously creates the market for modern

consumer and luxury goods. The increasing development of the city which had developed

over the years provides an ever increasing of business opportunity especially coffee based

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premises. According to Lim (2014), a café culture had widely mushrooming in

Cyberjaya, hence the

Coffee business able to cater to this growing crowd that had been exposed to the current

coffee trends in Malaysia.

Moreover, current economy towards local coffee shops shows a significance positive

result the Malaysia market and this is opportunity to the local coffee shop. As mention by

our former Tourism Minister, Ng Yen Yen, “Malaysia has a unique heritage of coffee

shops, it shows our traditional culture”. To an account it proves that the importance of

local coffee heritage in Malaysia. She also stated that, “An increasing opportunity toward

food and beverage consumption in Malaysia show that tourist spends about RM300 or

17% from an average expenditure of RM2260. It an opportunity to our local coffee shop

to capture the markets and will increase the country economy strength from tourist

industry”.

However, local coffee shop heritage has dwarf due to rapid competition in the food

industry and the growth of modern and international coffee chains and closure of local

coffee due to the mushrooming of modern and international coffee chains over the past

ten years in Malaysia (Foo, Bajuri, & Wong, 2013), Rahman (2010) also agreed that

Malaysia local coffee shop had been overshadowed by international coffee chain, thus

our local coffee shop unbearable to survive in the current markets.

Nonini (1992) claims that Malaysian are not unproductive, this phenomenon is based on

current market opportunities. The apparent unproductiveness of local commoners was

indeed cultural, in the sense that the group shared the same rational beliefs about how the

economic game was played during the colonial period and still exist in current economy

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now, this is because of trends lend to behavior changes that headed to the possibility of a

new economic outcomes Williams (2007). In Malaysian society once cultural norms have

been established towards the community, individuals follow them as a matter of

expedience, social obligation, or shared understanding Scott (2001).

1.2 Problem Statement

Several local coffee shop in Malaysia are expanding tremendously through new branches,

new franchises or even licensing agreements. Most of the coffee parlor started out with a

entrepreneurial business in late 2013 and has shown a tremendous development in coffee

industry (Sue-Ann and Hamid, 2015). Unfortunately, local coffee shop business in

Malaysia had been over shadowed by the international coffee chain that widely branches

in Malaysia, thus impacting the local coffee business Raj (2011).

According to Brown (2015), Southeast Asia was the most coffee enthusiast that

successfully develop the coffee market. It had been considered as the emerging of the

third wave in coffee industry. The coffee culture in Southeast Asia seems very strong

from the young generation contribution that influenced by the coffee trends. In the event,

current coffee consumer developed a vast knowledge about a good cup of coffee. Hence,

the development of premium coffee had penetrated the coffee market in several Asian

countries like Malaysia. However, coffee market less developed in Hong Kong, China,

Philippines and Indonesia event the third wave of coffee industry is coming.

Focusing on consumer perceived value and coffee related study, others researcher study

about, `How determinant attributes of service quality influence customer-perceived value:

An empirical investigation of the Australian coffee outlet industry’, Hu (2010), on the

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same note is ‘The Analysis of Bangkok Chain’s Consumers and the Influence of Brand

Personalities on their Purchasing Decision’, (Udomkit and Mathews, 2015), and on the

other hands about ‘Tea, coffee and associated lifestyle factors’, Wadsworth (2012). Not

only about ‘Consumer motives for purchasing organic coffee’, Cho (2015), but also ‘The

impacts of green claims on coffee consumers’ purchase intention’, Lee (2015).

Beside that a study about ‘Replication strategies, knowledge and attention: a study of

coffee chains’, Brock (2008) also had been conducted, moreover about coffee ethical

values also had been studied ‘Do Consumer Care about Ethics? Willingness for Fair-

Trade Coffee’, Pelsmacker and Driesen (2005).

The above research study had been comprehensively done in developed countries with

various studies about coffee, consumer behavior, perception and perceived value,

however, very little research has been carried out in Malaysia thus, showing that there is

a lack of studies about coffee toward Malaysian society.

According to Euromonitor (2015), “Currently Malaysian society are changing their

behavior towards the current situations, the changes impacting local Malaysia community

ongoing culture, economics and consumer behavior towards the coffee brands that the

coffee consumer selected. Under those circumstances the policy maker identifies the

trends that rapidly change in coffee acceptance consecutively towards Malaysia socio-

economic, the coffee industry and also the lifestyle of Malaysian society. This brings up

to the behavior changes towards Malaysian community and the product it selves. In

lifestyle concept it contrasts through the rise of international coffee chain, this is because

the brand it selves correlated with the increased standard of living,. Stores that are

typically served expatriates are now finding the young professional is Malaysia are

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targeted as their customers, as policy maker search to acquire premium and imported

goods. A part of this demand is the desire their lives through purchasing choices and to

be accepted in the community”.

According to Victor Mah (2015) the president of Asian Coffee Federation in the recent

exhibition at Matrade Convention and Exhibition Centre dated 7th May 2015 cited that,

‘The coffee industry on Malaysia are witnessing a heightened demand for the production

of high-quality coffee, where coffee is appreciated as an artisanal food and not just

commodity, it had becoming a trend and should bring industrial growth to the country’.

The chart below indicates the coffee activities in Malaysia, from the level of coffee

premises in the country and the beverage, consume by daily populations, growth in coffee

consumption by region, coffee consumption in 2012 in East and Southeast Asia and basic

regression analysis of coffee consumption in Malaysia, please refer to figures 1.0, 2.0,

3.0, 4.0 and 5.0.

Figure 1.0 Growing Trends of Restaurant and Café in Malaysia, Yeap (2012)

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Figure 2.0: Mean Frequency of Beverage Consume Daily by Population, Norimah (2008)

Figure 3.0: Growth in Coffee Consumption by Region (1990-2012), ICC (2014)

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Figure 4.0: Coffee Consumption in 2012 in East and Southeast Asia, ICC (2014)

Figure 5.0: Basic Regression Analysis of Coffee Consumption in Malaysia, ICC (2014)

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In referring to all the finding above, the research study will analyze whether the dynamic

of consumer satisfaction towards coffee are based on perceived value and perceived

service performance. The finding will contribute to the understanding of customer

intention to purchase products offered by the Malaysia coffee business industry and

enriching the literature on consumer behavior especially in hospitality and tourism

research.

Going further, the study would like to seek the tension that built towards the local coffee

shop, since the international coffee chain had vastly expended in Malaysia market. Above

all due to the decreasing of local coffee shop causing the diminishing of local heritage

awareness in Malaysian society.

With this intention, the success of our local coffee shop to flourish are depend to

ourselves as Malaysian to support our own local product, so that our local heritage is

preserve for the next generation. Not to mention this, current situation shows that the lack

of awareness had been identify in our local Malaysian community. Owing to the fact that

these would endangered the local coffee shop survival over the next future generations.

Besides that, the study will help the ownership of next generation, as for local Malaysian

entrepreneurs to sustain the local coffee business. Example like Goh Ching Mun, the

successful generation that able to compete with international coffee brand Gough (2010).

In addition, a strong awareness of certain elements is the determinant of local coffee shop

survival that reflect towards the study of consumer perception and also to understand the

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dynamic of perceived values that influence consumer satisfaction. If not the Malaysia

unique coffee heritage will be just another historical value.

1.3 Objective of the Study

Having introduced to the issue, this study seeks to investigate the influence of

coffee toward satisfaction. Therefor the objective of the study is:

1.3.1 To examine the influence of perceived values of coffee attributes factors toward

consumer satisfaction.

1.3.2 To examine the influence of perceived service performance of coffee premises

toward customer satisfaction.

1.4 Research Questions

1.4.1 To what extent of perceived values of coffee attributes factors toward consumer

satisfaction?

1.4.2 What are the relationships of perceived service performance of coffee premises

toward customer satisfaction?

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1.5 Research Framework

Figure 6.0 illustrates the research framework for this proposed study. It shows the

relationship between the variables of interest.

THE INFLUENCE OF COFFEE

Figure 6.0: Proposed Framework for the Study. Adapted from Rust et. Al., (1999), Zeithalm et al., (1996), Baker

and Crompton (2000), Schneider and Bowen (1993), Susskind (2002), Court and Luptom (1997), Marzursky

(1989), Petrick et al., (2001), Sampol (1996) and Bloemer et al., (1999).

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SATISFACTION

1.Customer Loyalty

2.Intention to switch

PERCEIVED VALUES

1.Emotional factor.

2.Monetary.

3.Behavioral.

H1

PERCEIVED SERVICE

PERFORMANCE

1.Physical Environment

Attributes.

2.Interactional Attributes.

3.Outcomes attributes.

H2

1.6 Hypothesis

According to (Al-Sabbahy, H.Z., and Riley 2004) perceived value consist of several

items, within a consensus of several researchers that perceived value is more complex

concepts, that perceived value consists of several dimensional approach that have the

relationship with value perceptions and this should be taken into consideration by

scholars and managers value perception is determined by the customer perception to

select and consider because through time the development of customer will value will

gain a better understanding towards the products and services rendered by the

organization (Petrick 2002; Sweeney and Soutar, 2001). Therefore, the relationship

generated the below hypothesis for the proposed study.

H1: There is a significant influence between perceived values towards satisfaction.

H1a: There is a significant influence between emotional towards satisfaction.

H1b: There is a significant influence between monetary towards satisfaction.

H1c: There is a significant influence between behavioral towards satisfaction.

As mentions by (Sweeney and Soutar, 2001), ‘to understand the consumer value one

must monitor the products and services thoroughly. Consumer only know that concept of

perceived value on the surface, more importantly to study the relationship of the items

that influence the products and services (Holbrook, 1999, Sweeney and Soutar, 2001) and

towards the understanding of perceived value will generate an emotional feeling of

satisfaction to the customer, as a result of this phenomena this will increase the customer

purchase behavior and intention to revisit occurred (Terblanche, 2010).

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Keller (1999) cited that perceived value attributes and factors are the features that mold

the products and services. Meanwhile other study claims that full range of attributes will

create a “legendary experience” to consumer that influence the consumer behavior

Campbell-Smith (1967). (Andersson and Mossberg, 2004) found that several factors

influenced customer experience towards service, cuisine and the premises. (Clark and

Wood, 1998) also reported that the order of attribute is very importance and is somewhat

different in different styles of food and beverage premises that set by the organizations,

meaning that the ambiance, fix and fixtures that will increase the customer moods.

Through personal selling and good communication skills the companies able to promote

the products and this increase the purchase intention of the consumer (Leung 2001;

Terblanche and Boshoff, 2010). Therefore, the hypothesis proposes have the relationship

as generated below:

H2: There is a significant influence between perceived service performances towards

satisfaction.

H2a: There is a significant influence between physical environment attributes

towards satisfaction.

H2b: There is a significant influence between interactional attributes towards

satisfaction.

H2c: There is a significant influence between outcome attributes towards

satisfaction.

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It is understandable that consumers able to differentiate the relativity of importance

to each product or service attribute, when they make purchase decisions Kotler

(1988). Thus, the importance determinant attributes of service play a critical role in

understanding consumer behavior Kivela et al., 1999).

1.7 SIGNIFICANCE OF THE STUDY

1.7.1 Academic Perspective

For the academic perspective, this study may contribute to the extension of consumer

behavior and coffee attributes. The finding from this study should also provide an academic

platform as it would be adding a current academic finding of the coffee industry. Considering

a valuable information and insights on the current situation of the coffee industry in Malaysia

market. Furthermore, this study wills most likely leading other potential researchers to look

more in-depth or broader scope related to thesis study.

1.7.2 Practical Perspective

In practical terms, the finding in this study is significant toward business opportunity

contribution to the economic development of this country. The proposed research study will

help coffee industry business to form a strategic planning in maintaining customer loyalty.

Specifically, data would help to identify the motivational factors that can be used towards

education and business to influence coffee consumer retention.

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1.8 Definition of Terms

Perceived Value

Need and want of consumer are two main perceptions of what is being received and what is

being given. This concept is called as perceived value and one of the large areas of consumer

behavior study. (Kim, Park, Kim and Ryu, 2013).

Emotional Factor

A cycle of consumer behavior factor that will be evaluate through the consumer expression

after the post-purchase activity had been finalize (Rust et al 1999).

Monetary

When customer learns the process of purchase, a defecting behavior arise in customer minds,

thus will lead to another cycle of consumer behavior, thus, it equates to positive cash flow

and financial status (Zeithaml et al., 1996).

Behavioral

Behavioral meaning is a concept of intention that relay a messages to a certain behavior, for

example, a favorable or positive word-of-mouth behavior intentions that depicts a customer

willingness to recommend to others about the certain products or services that most preferred

(Zeithaml et al., 1996).

Satisfaction

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Considering satisfaction as the main objective towards perceived value and perception that

lead to purchase intentions towards consumer actual purchase behavior (Oliver, 1999;

Westbrook and Oliver, 1991).

Perceived Service Performance

Services that offered to the customer usually ended either positive or negative. It provides

benefit and information to customer. On the other hands services also being interpreted as an

act, efforts and performance that being rendered to the customer (Solomon, W and Stuart

2012).

Physical Environment Attributes

Hu (2010) claims that the emotional value that reacts with the aesthetic features of the stores

creating a positive emotion to the consumer, as ambiance will lead to individual positive

energy.

Interactional Attributes

A services that consist of communication that lead to a good sense of customer orientation, it

beneficial to the organization and will increase customer satisfaction level (Schneider and

Bowen, 1993).

Outcome Attributes

Human nature consists of pre and post purchase experience, a studies reported that people

either discuss positive (acceptance) and negative(withdrawal) experiences towards the

products Susskind (2002).

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Customer and Consumer

Individual who buys services or goods from others is customer while individual that consume

a product of a commodity is a consumer and in the concept of economics, a consumer can be

a numbers of individuals that uses a certain type of service. Meanwhile, consumers determine

as an organism that devours or eats something or receive the services or using the products

either tangible or intangible, as in the field of Science and Ecology as study from Julita

(2012).

CHAPTER 2

LITERATURE REVIEW

2.0 Introduction

An extensive review will focus on the variables under the study, mainly emphasize

towards the variable.

2.1 Coffee Background

Coffee is originated from Eastern African and currently known as Ethiopia, they called it

Qahwa in Arabic and coffee had been introduced by Khaldi, the goat herder. Ever since

coffee had been a domestic trade business towards Turkey through Arabian Peninsula

known as Yemen and finally arrived in European continent. Coffee had been introduced

by Venetian trade merchants. Indeed, the beverage had been famous ever since

introduced. However, some do not accept it and should ban the drink, yet the pope

himself acknowledge the drink and created it as a truly Christian beverage to consume.

Coffee had been known to the wealthiest, however, through time coffee are the most

traded items. Now coffee had been drinks and a very successfully commodity in the

gastronomic worlds Bellissimo (2008).

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Coffee had been introduced to Malaya during British occupation in 1696 and had been a

succeeful business trading activity. Local coffee consumption had been commercializing

through Kopitiam concept and the branding had received a good respond from the local’s

Eventually through time and experience the coffee commodity is not only selling coffee

product, besides by embracing technology as part of the marketing plans to attract

younger generations and following to current market trends and opportunity Rahman

(2010).

2.2 Perceived Value

Perceived value refers to product attributes preferences as a straight forward impact

towards purchase intentions and it is also influencing consumer behavior attitude as cited

from Woodruff (1997). Scholar claimed perceived value summed into a single definition:

Consumer will judge the utility of a product or services before purchase and this is a

cognitive perception towards perceived value. Meanwhile, consumer behavior attitude is

a study towards consumer pre and post purchase behavior (Kim, Jeongdoo, Myung-Ja

and Kisang, 2013).

Most focus in research that the relationship of interaction and process are depend on

customer perception (Echeverri, 1999). Perceived value is not one of the contributors,

either way, the relationship that influence responses and behavioral intentions towards the

products and services offered Kim K. R. R. (2012). Bitner (1992) argued that each food

and beverage have their own ways of serving the customer, this is all based on customer

own individual cognitive perception that will increase their own perception and belief.

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Additionally, research on perceived value toward current market remain subjective

because of the economic and market changes from time to time and a part of its follow

the country economic condition that is based on potentiality as mention by Dmitrovic,

Vida and Reardon, 2009). Following to the previous study framework, perceived value

influence satisfaction through purchase intentions as a discussed item, when satisfaction

is achieved from the perceived value, the consumer will disseminate the information to

others. (Claudia Dumitrescu William Nganje Clifford J. Shultz, 2013).

Currently, the study of consumer behavior is specifically gaining toward a research study

of understanding perceived value concept, as it is the main contributors towards the

process of buying(Gallarza, M.G, Saura and I.G, 2006). However, in the study of

consumer behavior subject, the value concept is still unclear towards the objective and

position to the contemporary market (Sánchez-Fernández, Iniesta-Bonillo, & M.Á.,

2007).

Perceived value consist of 2 concepts that are hedonic and utilitarian value dichotomy

(Holbrook, M.B., Hirschman and E.C., 1982) and the concept are been the most-used in a

classical study approaches, by the same token with the acquisition versus transaction

value differences (Gallarza, M.G., Saura and I.G., 2006).

Referring to the concept of task-specific, efficient and economical terms, it represents the

utilitarian value in customer perceived value, meanwhile hedonic value represents the

after affect that basically towards the emotional arousal from consumer after sales

service. This 2 unique concept explains the differences of perceived value concept

(Holbrook, M.B., Hirschman and E.C., 1982).

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Thus, the concept above apparently achieving a greater value is preferred by each

exchange party in the usual business practices. Therefore, in order to remain competitive

in the market and compete with rivalry, a company must be able to provide a greater net

value to capture the consumer intention rather than its rivalry (Ravald & Grönroos,

1996).

2.2.1 Emotional Factor

Emotional is a reaction that associated with the consumer experience that might have a

significant impact on consumer evaluations that lead to satisfaction (Dube´-Rioux,

Westbrook, Oliver, & Matilla, 1990;1991;2000). Emotional factor able to disturb

consumer to a series of emotional reactions behavior or even no reactions across, as this

is depending on the consumer towards their own self sense of belonging (Wirtz &

Mattila, 2004).

Emotional factor provide benefit to the consumer that will affect the buying behavior and

influence consumer satisfaction (de Chernatony & McDonald, 2003), whereas consumer

satisfaction react to a specific experience are toward the process of purchasing and

consumer behavior (Rust, R., Danaher, & Varki, 1999). For an organization to evaluate

customer, it only can be done with purchases. This is because the consumer perceived

value concept are very subjective and personal whether the products or services will

provide values to the consumer (Parasuraman, Zeithalm and Berry, 1985).

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Overall, emotional factor manifests the situations when perceived performance of a

product or service exceed expectation from consumer perspective, it is either towards

positive or negative feedback will impact consumer satisfaction (Oliver R., 1981). If

consumer perceived bad service quality, their post-purchase behavior intention is

negative and may be harmful for the development of the organization, such as decreased

income and increased costs for customer recommendation. In contrast customer not

reluctant to purchase the same product if achieved a positive post-purchase behavior that

have quality and values, Lin (2009), as the result of the purchase, consumer is entitled

towards their experience and emotional response (Singh, 1990; Singh and Wilkes, 1996;

Fornell and Wernerfelt, 1988; Parasuraman et al., 1996).

2.2.2 Monetary

In the classical study monetary theory toward perceived value being indicated that,

money is being used to show productivity in the economy business cycle Niebyl (1964).

It is Study that most traded commodities become monies interactional attributes Ingham

(2001). Value towards consumer perspective is to seek opportunities that can be obtained

with monetary benefits Seo (2005), hence high quality toward brand or product is a

concept that is not precise and relevant. If the original specifications are present in a

product, it can be said that high quality is present. Products and services offered usually

will be determined by the price that offered from the organization (Prajogo, McDermott

and Goh, 2008).

By ways of contrast, when defecting behavior exists, the financial consequences will

include to the loss of customers spending, thus increasing of costs to attract new

customers, which to balance the positive cash flow (Zeithalm, Berry and Parasuraman,

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1996). Some organization claims that it is an added advantage towards the returning

customer because it able to save the operational cost (Bowen and Sc Chen, P, 2001).

However, to improve these relationships, organization should advance their levels of

sales opportunity within the organization (Stevens, Knutson and Patton, 1995).

According to (Zaithalm et al, 1996) behavioral intentions can affect whether customers

return to purchase or being a defective factor of the business. Providing that, there is less

research study that has been conducted measuring to this construct empirically as claim

by Oberchain (2002). These behaviors have shown noteworthy influence to profitability

in the organizations (Fornell and Wernerfelt, 1987; Reicheld and Ssser, 1990; Zeithaml et

al, 1997). The characteristic indicated that there is a definite life span associated with the

product being purchased or consumed (Biswas and Cassell, 1996; Smucker, 2001).

2.2.3 Behavioral

Oliver (1997) cited that perceived value is the first stage of customer to engage towards

the next steps of consumer behavior, other researcher found that consumer behavior

consisting of several items such as word of mouth, purchase intentions, price sensitivity

and complaining behavior, all of the items mention influence satisfaction either positive

or negative affect (Bloemer, deRuyter and Wetzels, 1999).

There has been a research on the variables independently and linkage of service quality to

behavioral intentions (Zeithalm, Berry and Parasuraman, 1996). It is indicated that such

alliances engage with consumer experiencing two or more brands during purchase

activity (Simonin and Ruth, 1998). According to Baker and Crompton (2000), behavior

can be predicted from intentions from buying the brands that correspond to a certain

behavior.

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Study found that local brand has the highest level of awareness rather than international

brand, this most likely due to the local brand have been in the country for quite

sometimes, meanwhile international brands just entering the global markets. However,

study found that international brands provide most benefit and values, hence there must

be a balance between both markets to the entire industry success. (Schuiling and

Kapferer, 2014).

On the condition of behavior in perceived value show an extensiveness of information

search, the length of the decision-making process, formations of belief, attitudes and

intentions, as well as behavioral outcomes, such as variety seeking of behavioral attitude

toward brand-switching behavior, brand-commitment or loyalty, frequency of product

usage and shopping enjoyment (Beharrel and Dennison; Verbeke and Vickier, 2004).

2.3 Perceived Service Performance

Scholar have argued for some time that services are the most essentially performances as

quoted by several research (Berry, 1980; Grove and Fisk, 1983; Gro¨nroos, C., 1985;

Lovelock, 1994). According to research, perceived service performance are based on the

quality of the service that consumer receive, resulting a components of evaluation process

are being created to determine customer satisfaction levels towards the area of service

marketing as explained from Hamer (2006). Even though service interactions have been

pointed out as one of the most important elements in services industry (Schneider and

White, 2004).

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Other research indicated that the dimensions were follows toward loyalty of the product

and services offered, and also based on consumer preferences (Alexandris et al; Zeithalm

et al.; Bloemer). The fact that employee behaviors are extremely important in service

organization render to the consumer Davidson (2003).

Therefore, an organizational culture has a significant impact on employee service

delivery (Davidson, 2003; Scneider and Bowen, 1993). The quality of service is a

fundamental to an organization and consumers expect a high quality services, seeing that

customer are willing to pay premium for the services to fulfill their needs Park (2007).

Furthermore, Johnston and Clark (2005), add that the customers have to make an input

for themselves, including time, money and effort. After all, consumer looking for an

empathy toward caring of the product or services, hence this individualized attention the

coffee parlor provides it’s to customers, and one of the cornerstone of service quality

(Parasuraman et al., 1988). Across all of these circumstances, the service performance

must be altered to accommodate the consumer for better service quality and adapt to the

situations.

2.3.1 Physical Environment Attributes

The physical environment is very important with regard to services in which customers

are in the premises for a certain periods of time and (Wakefield and Blodgett, 1996).

Kotler (1973) was one to refer to the ambiance of the physical environment, as perceived

through customer’s five senses of visual, aural, olfactory, tactile and gustatory. Baker

(1986) not only included the sensory aspects of the physical environment, presentation

and design also influence customer satisfaction values, including social factors referring

to employees and other customers. Study also support that aesthetics involves a first

person hedonic and utilitarian judgments as claimed by Von Wright (1963), it an

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emotional value that react with the aesthetic features that creates a positive emotions

towards the customer Hu (2010). Previous studies found that perceived quality toward

physical environment attributes affect customer purchasing attitude (Baker et al., 1994;

Nguyen and Leblanc, 2002).

In the restaurant context, the physical environment, such as decor, ambient condition, and

seating comfort, provides a first-visit consumer with a cues that organization deliver the

expected service offerings’ of the consumer nature and consumer perceived value

(Nguyen and Leblanc, 2002) or the service quality (Lai et al., 2009) significantly

influence the premises image. It is also cited by Ryu (2008) that the interior elements are

includes the design of the coffee premises, equipment such as furniture and fixtures,

decoration in the premises, air quality with good air ventilation, appropriate premise

temperature and smells that will attract customer to dine in as ambiance influence the

perceive service performance.

It is confirmed the positive relationship between the elements of the coffee parlor

physical environment like decoration setting, spatial layout and ambient influence

consumer towards perceived value perception directly (Han and Ryu, 2009).

2.3.2 Interactional Attributes

Interactional attributes based on employee services as the main key components of the

coffee parlor towards a legendary service experience to customer to evaluate the service

quality (Chow et al., 2007 Nam Kung and Jang, 2008; Ryu and Han, 2010). Proper

training to the employee will enhance the probability for success and increase the sales

opportunity in the organization and as an organizational creates a culture that able to

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shape the core of service quality that able to be render to the customer at the premises

Davidson, (2003).

It a service experience as the consumers’ direct experience of the service process, the

organization, the facilities, other consumers and how the consumer is treated by the

service representatives to produce an influential customer perception (Johnston and

Clark, 2005). Significantly all consumer expects a good experience and the transaction

must be fair and judge by the relationships from the institutions and salespersons using a

fairness activity to identify as the fundamental base (V., Peiro’, J.M., Ramos and

Moliner, 2006). In other words, to evaluate the service gap to a higher level of service

quality render to achieve consumer satisfaction (Kivela, Inbakaran and Reece, 1999).

Consumer satisfaction is based on service quality and interactional is one of the difficult

services to be measure due to the nature of intangibility (Oh and Parks, 1997;

Parasuraman, Zeithalam and Berry, 1985; Seidman, 2001) hence firms must study the

customer orientation towards greater levels of consumer satisfaction (Schneider and

Bowen, 1993). The definition shows that consumer experience is actively involved in a

parallel concept and organization must takes note that consumer memory aspect into

account to increase sales opportunity and toward productive customer relationship

management activities (Sundbo and Hagedorn-Rasmussen, 2008).

2.3.3 Outcome Attributes

Going further, the local coffee culture has evolved from the origin state and departed

from the original format, when new concept of coffee drinking was being introduced by

the West, it had developed its own interpretations of the coffee experience that changes

the culture as claimed by White (2012) the changes of community culture and becoming

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a trends. Consequently, this is also based on habits, considering toward the normality in

purchasing as a usual habit but not hiding the behavior of repeat purchase or repeat

consumption towards the certain products or services Triandis (1980).

The outcome attributes of a customer experience show that the consumer is actively

involved in some way and takes memory aspect into account. According to Sundbo and

Hagedorn-Rasmussen’s (2008) a customer experience is “a mental journey that leaves the

customer with memories of having performed something special, having learned

something or just having fun, that they can remember and justify the present”.

According to Johnston and Clark (2005) an optional and process-oriented view of a

service consists of customer’s experience plus the perception of the outcome toward the

service experience rendered. Marketing researchers have revealed the relationships

among four essential service management variables that are quality, value, satisfaction

and loyalty (Cronin et al., 2000 Lai et al., 2009). It is also aligned with Oliver (1999),

towards the conceptual reasoning resulted a numerous empirical results that demonstrate

the quality in key determinant value perception.

Meanwhile, Gronroos (1982) proposed two types of service quality that are technical

quality, first which involves from what customer actually receive from the service

provider for example the outcome of the service. Second, towards the functional quality,

this involves the manner, in which customers receive the intangible service, example the

process of service delivery. In customer focus group research study confirmed that both

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outcome attributes and process dimensions’ able to influence customer’s evaluation of

service quality and satisfaction attributes (Parasuraman, Zeithalm and Berry, 1985).

Other studies reported that individual discuss both positive and negative experience by

consumer. Is said that customer able to voice their opinion to the management or

organization, or consumer they just can say nothing and just not return to that

organization or might continue patronizing the organization and not say anything

(Susskind, 2002).

These addressed the definitions of satisfaction, both as an outcome and as a cycle of a

process, the distinguishing satisfaction with service offering from the same organization

with the same consumption experience Yi (1991). Going further, the outcome attributes

able to differentiate the overall satisfaction from experience quality even though the latter

was defined as those benefit or outcome that customer experience as a result that

influence satisfaction (Cole and Scott, 2004). The objective study of consumer behavior

is towards the perception and perceived value of customer, most research found that

satisfaction is the strongest concept that influence future behavior and trends (Cronin et

al., 2000; Hyun 2010; Sirohi et al., 1999). To summarize, as previously stated that the

focus about customer experience has been one of the customers’ cognitive based

perception of predetermined attribute dimensions that measure the outcome of the service

being rendered to consumer (Öström, 2010).

2.4 Satisfaction

Consumer satisfaction is an important study that providing an attention to the researchers

and practitioners as a recognized field of scholarly study, it is a fundamental tool to be

used by financial institutions for enhancing customer loyalty and ultimately

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organizational performance and might as well to increase organization sales profitability,

in other words to capture the sales opportunity (Mohsan, Nawaz, Khan, Shaukat and

Aslam, 2011).

Previous study according to Barsky (1994) on satisfaction research and consulting has

come into existence for severel consumer behaviors literature. Leading satisfaction

researchers argue that, consumer satisfaction drives to future profitability to the

organization. It is a vital measure of performance for firms, the industries, and towards

the country national economies to consider the importance of consumer behavior studies

(Anderson et al., 1994).

Services are performance, it an efforts or act exchanged from producer to user without

any claims to ownership rights. It satisfies customer needs and delivers the benefits when

services provide pleasure or information or convenience to either consumers or to the

businesses entity (Solomon, W., and Stuart, 2012). Study found that satisfaction divided

to two dimension of customer loyalty, behavioral and attitudinal (C., Magi and Lindqvist,

1997).

The behavior dimension refers to consumer’s behavior towards repeat purchase, it

indicates a preference for a brand or service over periods of time (Bowen and Shoemaker,

1998). The attitudinal dimensions refer to a consumer’s intention to repurchase and

recommend, which are good indicators of a loyal consumer (Getty and Thompson, 1994).

Satisfaction is generally considered as one of the main key global that the variables

leading to a future purchase intentions and actual purchase behavior cycle (Oliver, 1999;

Westbrook and Oliver, 1991) it also act as customer fulfilment response and the degree to

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which the level of fulfillment is pleasurable towards customer satisfaction Oliver R.,

(1999).

Satisfaction also is a key to build and retain a loyal base of long-term consumer

relationship, with the product offered from the organization (Limayem, Hirt and Cheung,

2007). Overall study showed that consumer satisfaction accumulated by experience of a

consumer’s expectation, purchase, and consumption experiences as historical value

Andreassen, 1995).

As mention from Kozak (2001), satisfaction is a subjective judgment and can be assessed

after each purchase and the consumption experience that is based on the pre and post

purchase cycle. The disconfirmation paradigm has been widely used as a framework in

which this factor is evaluated by comparing perceived performance of a product with

consumer expectations. The distinguished satisfaction from an attitude of the consumer is

a pre-decision construct which can be change as a result of satisfaction. For this reason,

indicated that satisfaction influence customer perceived value and consumer perceived

service performance.

In service industry like café or coffee premises, the perceived service performance is one

of the main important antecedent towards customer perceived value. Customer will judge

before proceeding to purchase a product. A judgement or perception will influence

customer division to purchase, hence antecedent is the main contributors of consumer

behavior life cycle (Kim, Park, Kim and Ryu, 2013).

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2.4.1 Customer Loyalty

Marketing literature defines and measures that loyalty behaviors as the self-reported

frequency of purchase and consumption periods of time by consumer (Gustafsson,

Johnson and Roos, 2005). Study indicated that product loyalty is an outcome from

customer active planning, this starts with an episodes of a positive cognition and affect

towards a product might as well brand, it will end with a strong commitment or intention

positive judgement or withdrawal and lead to other customer purchased behavior Oliver

R., (1999).

Consumers tend to buy the same brands of products across different experiences, it is

depending on the values and benefit that offered from the organizations for example a

occasions of coffee dinking (Wood and Neal, 2009). It’s develop a habit and will increase

the satisfaction strength that lead to repetition and through over time periods it’s an

automatic respond to purchase, thus, explained that repeated behavior can only occur

without awareness and self-instruction. Consumer develop a tendency for convenience in

order to save cognitive effort and time (Wood and Neal, 2009), which the intention is not

negative per se (Svein Ottar Olsen Ana Alina Tudoran Karen Brunsø Wim Verbeke,

2013).

Therefore, ignoring the habit-persistence effects may systematically overestimate the

intentional of certain product over brand loyalty (Seetharaman, 2004). Without habits,

consumer will unable to guide consciously and cautious in buying (Neal, Wood and

Quinn, 2006). The reason for this assumption that habit or inertia is something that is

passive, convenient, a non-conscious form of retention associated with “spurious loyalty’

and different from ‘true loyalty ‘as an active, planned and conscious component of

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decision-making processes that in relations with customer satisfaction levels Dick and

Basu, 1994.

Buying a brand or product or going to a particular coffee parlor out of habit may be a

consequence of satisfied actions over periods of time Triandis (1980). The number of

current and previous visits also has been regarded as the influential factors for revisit

intention and repurchase behavior (Court and Lupton, 1997; Mazursky, 1989; Petrick et

al 2001; Sampol, 1996). Thus, a relationship that has been established between consumer

loyalty and profitability influence each other’s (Reicheld and Sesser, 1990).

2.4.2 Intention to Switch

Changing consumer behavior towards certain products or services are consequently a

series of consumer experience to the achievement of long term relationship (Ganesh,

Arnold and Reynolds). Furthermore, the consequences for losing a customer can lead to

business closure, due to negative word of mouth that will damage towards the brand

image and reputation. It is expected to be the most harmful impact on the organization

future prospects that literally comes from the consumer (Fco and Olivan, 2006).

For customer a greater usage of the organization new products and values (Hawkins, Best

and Coney, 2004) it will increase customer experience to engage a positive word-of-

mouth and a greater resistance to rivalry to persuasion attack of series attempts in

business strategy (Dick and Basu, 1994). This behavioral intentions of switching

occurred when customer’s response to a bad experienced that lead to withdrawal.

However, intentions can be favorable, which could cause the customer to continue doing

business with the organization or unfavorable, that lead to customer to leave the

organization (Zeithaml et al.; 1996). Therefore, an offensive program created by

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organization to obtain new customers and a defensive program to include for retaining

the current customers (Fornell and Wernerfelt, 1987; Rust and Zahorik, 1993; Zahorik

and Rust, 1992; Zeithalm et al.; 1996).

2.5 Perceived Value Influence Satisfaction

Perceived values is a business factor and can be control by the organization, the concept

of perceived value able to accelerate the effect of consumer satisfaction (Anderson and

Srinivasan, 2003). It is agreeable that quality and value are an antecedents of satisfaction.

The theoretical foundations of the relationship are often explained through appraisal,

emotional response and coping towards the satisfaction behavior study of consumer

Bagozzi (1992). However, antecedents on consumer perceived value are rarely examined

even though it a fundamental determinant of consumer satisfaction that must be study

towards the overall objective in order for future research study (Öström, 2010).

Other researcher examined that consumer perceived value able to explain towards the

consumer behavior as a service context and found that it a positive value and a direct

behavior of an antecedent towards consumer satisfaction Patterson and Spreng (1997).

According to Andreassen and Lindestad (1998), customer perceived value is positive and

comes with stages of consumer behavior level before consumer satisfaction is met,

meanwhile Patterson and Spreng also confirm that customer perceived value had a

positive and direct relationship with consumer satisfaction.

In addition to the indirect effect of value on behavioral intentions via satisfaction,

researcher have postulated that perceived value is a direct predictor of outcome and

willingness to buy (Parasuraman and Grewal, 2000; Dodds, Monroe and Grewal, 1991).

However, this image has a subsequent influence on customer perceived value and

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satisfaction, which, in turn, affects their loyalty (Lai et al., 2009; Patterson and Spreng,

1997; Ryu et al., 2008). To summarize customer perceived value does influence

consumers’ post behavioral intentions Kim K. R. R (2012).

2.6 Perceived Service Performance Influence Satisfaction

Satisfaction is an addition to perceived service performance, satisfaction had been

selected as one of the most preferred evaluation constructs to explain consumer revisit

intention to the organization (Bigne et al 2001; Bowen 2001; Kozak 2001; Kozak and

Rimmington 2000; Mazursky 1989; Oh 1999) and to a great finding that the consumer

intentions of continuing their series of purchases with the future business and sales

opportunity (Reinartz and Kumar, 2003).

In addition, the development of specific skills that created from the organization and

cannot be easily imitate and only with a series of consumer purchases experiences

(Keaveney and Parthasarathy, 2001). At the same time, services follow to the customer’s

identification with the products and services offered. The experience through these

interactions and the development help to reduce the uncertainty of customers’ perceived

value (Bendapudi and Berry, 1997). Similarly, customers who use the service more,

develop a strong, generally positive attitude towards the services being offered

(Keaveney and Parthasarathy, 2001), which reduces their sensitivity to failures in its

delivery, Oliver (1997).

Therefore, satisfaction is a final construct of the purchase decision making process.

Although the cycle is generally measured at the same time in satisfaction, the influence

not only as a predictor of overall satisfaction but also a consequence of revised consumer

attitude which affect the decision making process (Um, Chon and Ro, 2006). According

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to (Zeithalm, Berry and Parasuraman, 1996), behavioral intentions are two concepts of

either favorable or unfavorable to customer. These two factors will then turn the effect of

individual behaviors, which customers will other remain with the same organization or

defect the other services offered.

CHAPTER 3

3.0 RESEARCH METHODOLOGY

This chapter discussed about the research methods that will be used for this proposed

research study.

3.1 Research Approach

This research aim to do a hypothesis testing study towards the variables hence it fulfills

the purpose of quantitative research study. A self-administered survey will be

disseminated to explore the relationship of the variables. The focused scale location will

be in Cyberjaya City, Selangor Darul Ehsan.

A quantitative approach is one in which the investigator primarily use the post positivist

claim for developing knowledge example the cause and effect of thinking, reduction to

specific variables, hypotheses and questions, use and observation and the test theories, to

employs strategies of inquiry such as experiments and surveys and the date collected

predetermined instruments that yield statistical data Creswell (2003). As proposed the

research will begin with data gathering through journal articles, internet source as well as

various research papers similar toward the research study.

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3.2 Sample and Population

Cyberjaya City, a multi-cultural population is the best location to administer the variables

relationship. The element sampling will be focusing to individual that consume coffee.

The sample will be categorized into 2 subsets of category working and not working

respondents. By studying the sample, the researcher should be able to draw a conclusion

toward the generalization to the population of interest.

According to Fariz Yahaya the Managing Director of Cyberview Sdn. Bhd, Cyberjaya’s

day time population has reached 55,000 this year as opposed to 52,000 in 2011. The

number of white collar have increased to 35,000 this year compared to 30,000 in 2011.

Cyberjaya population expected to double up to 100,000 by 2016 with the increasing of

robust developments Puspadevi (2013). Others new sources also cited that Cyberjaya’s

total population is estimated at 80,000 with 8724 homes completed to data, Lee L (2015).

As sources from (Cyberjaya, 2015) summarize the tabulated Cyberjaya population in the

infographic figure 7.0, please refer to appendices.

Non probability sampling will be selected as the sampling technique because the samples are

gathered toward the individuals in Cyberjaya population to have an equal chance to be

selected. Purposive sampling will be used to inspect every element in the population, as the

sample technique considering all elements in the population and equal chance of being

chosen as a subject and more focusing toward quota sampling. An initial sample only toward

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individual that consume coffee at the coffee parlor, this is also due to high advantages of

generalizability of findings.

In order to get a significant number of respondents, the survey will be administered during

office hour and evening period, the 2 allocated time frame most likely capture the target

market consisting of working and non-working individual, for example white and blue collar

worker and students, as well as to differentiate Cyberjaya residents and workers that

commute to Cyberjaya. Time period consist of office hour and the university’s student

schedules.

According to Krejcie & Morgan (1970) the required survey to be disseminate are 383 due

to the estimated population in Cyberjaya. A proposed of 400 survey to be collected. This

will sum up of 30 surveys per day; therefor 406 samples can be collected within a month.

To be specific as roughly drafted (Day period 7 + Evening period = 14 surveys per day x

29 days = 406). In order to get exact population numbers, the data will be collected at

‘Majlis Perbandaran Sepang’ and please refer the approval letter for data collection

periods in appendices image 8.0.

3.3 Research and Instrument Design

“Survey us useful and powerful in finding answers to research questions through data

collection and subsequent analysis, but the result can be deceiving rather than good if the

population is not correctly targeted”, Sekaran (2003). A proposed time horizon of cross

sectional study will be considered as it compares a different population groups at a single

point in time and the proposed research design will be adopt from Zeithalm et al., (1996).

Pilot study consist of 100 respondents are constructed in bilingual language in ‘Bahasa

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Melayu’ and English Language. The pilot study is being administered to test the

reliability of the survey. The survey will be segmented into 4 sections. Those are section

(A) for demographic, section (B) for perceived value, section (C) for perceived service

performance, and section (D) for satisfaction.

SECTION VARIABLES

NO. OF ITEMS SOURCES OF SCALE

A Demographic  10 Descriptive Test

B

Perceived ValueEmotional Factor

10 (Zeithalm, Berry and Parasuraman, 1996)Monetary

Behavioral

C

Perceived Service PerformanceConsumer Behavior Perception 5 (Zeithalm, Berry and Parasumaran

1996)Influencing Perception 5Outcome Attributes 5

DSatisfaction

Customer Loyalty 5 (Anderson and Sullivan, 1993)Intention to switch 5

TABLE 1: Research Instrument Design

3.4 Plans for Data Collection

This research will use a close ended questionnaire for the quantitative data collection

method. This approach had been chosen only to focus on the study that will answer the

questions. Permission will be requested from the respondent before proceeding with the

survey. The researcher will give the questionnaires to the respondent that fit the

parameter of study. In addition, all information provided by the respondents will be

strictly confidential.

3.5 Plans for Data Analysis

SPSS statistical software package will be used to analyze the data collection from this

research study. The hypothesis testing will be tested through the Pearson correlation

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analysis, reason being it measures the strength of the association between two variables

that assess the reliability of this research study.

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