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International Journal of Accounting & Business Management

www.ftms.edu.my/journals/index.php/journals/ijabm

Vol. 7(No.1), April, 2019

ISSN: 2289-4519 DOI: 10. 24924/ijabm/2019.04/v7.iss1/33.57

This work is licensed under a Creative Commons Attribution 4.0 International License.

Impact of Product Quality and Pricing Strategy on customer satisfaction in hypermarket in Malaysia

Theng Tong Sern

Lord Ashcroft International Business School, Anglia Ruskin University, Cambridge, UK

Ananthlakshmi Mahadevan

FTMS College, Malaysia lakshmi@ftms.edu.my

Abstract

The researcher studied the impact of pricing strategy and product quality on customer satisfaction in

hypermarket in Malaysia. The independent variables in this research are pricing strategy and product quality and the dependent variable is customer satisfaction. 200 respondents in Ipoh town, Ipoh Garden area were participated to answer the questionnaires distributed. All the data were usable. Non probability and convenience sampling method were adopted. There were 4 sections in the questionnaires which are demographic information, pricing strategy, and product quality and customer satisfaction. The demographic sections consist of 9 questions, follow by 5 items each for pricing strategy, product quality and customer satisfaction. 5 points likert scale was used to evaluate the variables. The researcher used SPSS software to analyze the collected data. Descriptive analysis, reliability test, normality test, regression test and Pearsons’s Correlation test were ran to analyze the data. Both the pricing strategy and product quality were tested to have positive significance impact on customer satisfaction in hypermarket in Malaysia at a significance threshold off 0.01 level of significance. The Cronbach’s alpha for all 15 item were at 0.876. The standardized coefficient beta for pricing strategy were .861 and product quality were 0.094 which shows pricing strategy has a lot more weight in affecting customer satisfaction in hypermarket in Malaysia.

Keywords: Customer Satisfaction, Pricing Strategy, Product Quality, Hypermarket Malaysia

1. Introduction

Hypermarkets become more and more popular among the Malaysian consumer to purchase their grocery. As the demand grows, more and more retailers are taking part into the competition to try to increase their market share as they see that there is still a lot of potential for their market expansion plan according to (Abu & Roslin, 2008). Accoring to Heng et al. (2011), in recent decades the hypermarkets in Malaysia are growing in a very rapid pace as hypermarkets are becoming more and more popular around the world. According to Li and Green (2010) customer who is satisfied will be more frequent visiting the same hypermarket establishment and also will increase their purchase from the hypermarket of their choice which the customers are satisfied with, this will in return

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increase the sales and also revenue of the hypermarket operator. Increase of sales and revenue is one of the main or even ultimate goals of every business including the hypermarket operators. As customer satisfaction is so important and effective way to increase the sales and revenue of the hypermarket operator, it is very important for the business operator to meet or even exceed the expectation and desires of the customers. As such almost every organization is eager to understand and identify the need of the customers and those organizations are ready to invest a lot in order to achieve that. In context of retail hypermarket, it is important for the operators to meet the customers’ expectation as fulfilling it determines the level of customers’ satisfaction and it will ultimately lead to the leading in competitive edge in the industry according to (Abu & Roslin, 2008).

The competition in every business nowadays is so high including the hypermarket sector. Even the ultimate goal for every business is about the profitability of business, it is crucial for the business to pay attention to the feedback of the customer over their products and services that the business operators provide according to (Gomez, McLaughlin, & Wittink, 2004). It is important for the hypermarket operator to remember that if they are losing out in the competitive edge by not paying enough attention to satisfied customers’ needs and wants, their business survivability might even be threaten by other competitors. One of the most important key point for the hypermarket operators to differentiate themselves over their competitors is to become the pioneer in gain higher customer satisfaction as it is very common for consumers to visit the hypermarket multiple times by monthly or even by weekly basis according to (Berman and Evans, 2004). Due to the increasing of living standard and individual purchasing power, hyper market is gaining popularity worldwide. Malaysia is not exempted from this trend as well. As a result, there is fierce competition in Malaysia in terms of hypermarket industry. According to Mui (2003), there are 22 hypermarkets in Malaysia in year 2002, and the amount of hyper market in Malaysia increased exponentially to a whopping 296 in year 2011 hypermarket outlet in Malaysia and the trend is going to be increasing according to (Haslina et al., 2012). As such it is important for the hypermarket operator to understand the needs and wants of the customers in Malaysia as it will gain the customers satisfaction and be a leader in the and survived in the competitive business environment. According to Marketline (2016), the forecast of the average compound annual growth rate for the market value of the Malaysia grocery retail market and food sector from year 2015-2020 is at 4.9%. In order for the hypermarket operator to continue to expand their market share, it is important for them to identify the factors which impacting the customer satisfaction and use it as their competitive edge and to benefit from the market growth. Figure below shows the CAGR for Malaysia food and grocery retail market. One of the most important factors impacting the customer satisfaction in terms of hypermarket operation is the product quality according to (Leow et al., 2011). Many business acknowledge that product quality is one of the main key that drives customer satisfaction. As a result, many companies change their company policies to endure the fierce competition from new competitors with new product designs, new product features, and product with new technology. This is very important as the customers have more and more choices of the same product that they can purchase. In addition to that, pricing strategy is playing an important role for customer satisfaction as and it will affect their choice of product which they going to purchase especially in the context of retail purchase (Singh, 2006). On the other hand, pricing strategy is important for the business operators

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in terms of being sustainable and makes more profit in the increasing competitive business environment. Due to these reasons, many scholars did studies of the importance of customer satisfaction (Hoq and Amin, 2010; Carpenter, 2008). According to Heng et al., (2011) the hypermarket business in Malaysia is growing rapidly in recent decades where there is many hypermarket operator is competing fiercely to capture the market share in order to gain more profit and also to maintain the sustainability of the business. As a result, the hypermarket operators put a lot of effort to develop marketing strategy which will allow them to maintain profit and growth through customer satisfaction. With the ever growing of customers expectation due to higher income and higher education level, many hypermarket are facing problem during the process to gain higher customer satisfaction (Abu and Roslin, 2008). There are so many different hyper market operators in Malaysia now and each offers many types of service and products to meet the need and wants of different groups of customers. Many researchers study the impact of different element such as store attributes, geographical location, pricing strategy, product quality, and service quality on the customer satisfaction (Parasuraman et al, 1985; Su, 2004, Hassan and Rahman, 2012; Allaway et al., 2011; Martzler et al., 2006; Wornchanok et al., 2011). Price discounts and free samples are key influencers in Malaysian hypermarket context (Jallow & Dastane, 2016). Perceived value as well affects it significantly (Animashun, Tunkarimu, & Dastane, 2016). From those studies product quality and pricing stand out as the dimension that impact most on customer’s satisfaction. There has been lack of studies conducted to compare only the impact of pricing and product quality on customer satisfaction in the context of the Malaysian hypermarket. As there are already many hypermarkets set up throughout Malaysia with strategic location and offer similar services such as free car park to the customers (Rahman eat al., 2014). It is important for the hypermarket operator to champion in the key determinant of customer satisfaction as one housing area might have few hypermarkets near to each other. Some of the hypermarket operators are facing challenges to increase their sales and growth as a result of lack of focus on the key determinant to satisfied the ever growing customers’ expectation. Many of the hypermarket operators are facing problems in finding a more efficient marketing strategy to keep the customers satisfaction as the customers need, wants, and expectation is changing all the time. The hypermarket operators are facing endless problems in terms of pricing strategy and product quality during their operations (Pettigrew et al., 2005). As an example, some of the products in certain hypermarket are lack of freshness and cleanliness. Customers will not feel comfortable to visit such hypermarket and it will result in low patronage and reduced in sales. Customers in Malaysia nowadays are very price sensitive as their spending power is lower due to the introduction of goods and sales tax and removal of subsidies in petrol and electricity bill. Hence pricing strategy of hypermarket will determine the level of customer’s satisfaction (Heng et al., 2011; Dastane & Fazline, 2017).

Customers is the one who keep a business prosper and afloat. Customer satisfaction become so importance that according to Zairi, (2000), “Customers are the purpose of what we do and rather than depending on us, we very much depend on them. The customer is not the source of a problem; we should not perhaps make that customer “should go away” because it will put the security and future of the business in jeopardy”. That is the why organizations nowadays are so focus on customers’ satisfaction. The aim of this research is to determine the factors that affect most in customer satisfaction in hypermarket in

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Malaysia. The research objectives are to examine the impact of pricing on customer satisfaction in hypermarket and to examine the impact of product quality on customer satisfaction in hypermarket. Corresponding research questions are what is the impact of pricing on customer satisfaction in hypermarket? What is the impact of product quality on customer satisfaction in hypermarket?

The retail sector is growing rapidly worldwide even with the economic slowdown, this result in intense competition in the sector especially for hypermarket operators in Malaysia (Heng et al., 2011). Malaysia has been targeted by so many big hypermarket players such as Tesco, Giant, Aeon, Mydin, Econsave, etc, and each are dedicated to increase the number of hypermarket throughout Malaysia to capture bigger piece of the market share to maintain growth in terms of sales revenue and profitability (Abu and Roslin 2008). It is important for the hypermarket operators to come out with effective marketing strategies which need to be adjusted from time to time to fit the ever changing needs and expectation of the customers so that the customer satisfaction will remain high. Traditional market is shrinking slowly as the modern generation prefers different life style and hypermarket plays an important role in replacing the traditional market (Lu et al., 2011). Customers changing their preference from traditional market to hypermarket due to the comfortable air conditioned and cleaned environment provided by the hypermarket. The hypermarket also able to provide customers to purchase modern household appliances and equipment and also food and groceries. There were many studies done on many other service sectors such as banks, tourism, beauty care and healthcare industry but there is not enough empirical research on hypermarket in Malaysia. This study focus on improving customer satisfaction in the context of hypermarket in Malaysia towards a effective marketing strategy. Effective marketing strategy is important for the hypermarket operator to improve and maximize on customer satisfaction but there is lack of empirical research on hypermarket in Malaysia (Heng et al., 2011). As such, this study is to measure the customer satisfaction in hypermarket in Malaysia. This study is significant as there is lack of research done on measuring the customer satisfaction in hypermarket in Malaysia. Hypermarket operators may use this study to improve their marketing strategy to attract more customers and also improving customer satisfaction. This study also can be used as supporting material for other researchers to conduct research in hypermarket in Malaysia in the future. This study will help the hypermarket operator in Malaysia to come out with a more effective marketing strategy by determining the product quality and pricing of the hypermarket. This study will help the hypermarket operators to focus on the needs and wants of the customers and also to fill up the gap as there is lack of studies done on hypermarket in Malaysia. Customer satisfaction is important for every business including the hypermarket operators in Malaysia.

2. Literature Review

2.1 Definitions of Key Concept

Hypermarket: According to Perrigoti and Cliquet, (2006), hypermarket is superstore retail format which provide different services and goods under one roof. It is a combination of departmental stores, supermarkets, and grocery stores which offer a very wide range of products at a discounted price or very competitive pricing strategy, parking space, where customers are willing to purchase services and goods in that respect. Product Quality: According to Lemmink and Kasper (1994), the definition of product quality is the wants and needs of customer is successfully met by the product which the customer purchased.

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According to Sloan et al. (1984), with the gradual increment of family and individual income and they are more willing to pay more, the consumer are more demanding towards the retailer in terms of product quality. According to Deming (1982), the definition of product quality is the superiority or non-inferiority of a product which exceeds or meets the expectation of the customer. Pricing: According to Nagle (2016), pricing can be defined as the price of a service or product set by the retailer as part of the marketing strategy which the cost of manufacturing, market sentiment, market place, brand name, where the product acquired, and the product quality are accounted. One of the most convincing and powerful way to draw customers to visit and purchase from a specific merchandiser, service provider or retailer is through the use of pricing. Pride et al., (2005), defined that pricing is a tool which utilized by a business to inform the customer about the value of their products and the value will in return satisfy the customer at the end.

Customer Satisfaction: According to Westbrook and Reilly (1983), customer satisfaction can be regard as the enthusiastic reaction of a person to the experience connect with the administration or item that they purchased, encounter gave by the dealer or retail outlet. Customer satisfaction is among one of the most significant key for management of the retail sector that result in few outcomes such as customer loyalty, sales performance and customer retention (Darian at al., 2001). Hoq and Amin (2010) define that the customer satisfaction is the rational propensity of a customer towards the purchase of services and goods offered by a service provider or shop. Therefore it is defined that customer satisfaction is the emotion of concerned about the after purchacing experience of a service or products, and because of this customer driven component is critical to the business, the customer satisfaction which forms the very basic of business strategy. According to Kotler (2000), customer satisfaction is defines as the feeling of the customer of enjoyment, anticipation, disappointment, or liking as a result of them comparing their expectations towards the perceived performance of the customer towards the product..

2.2 Critical review of theories and model

Expectation disconfirmation theory: The theory of expectation confirmation theory was developed by Oliver (1977), Oliver (1980). The theory was developed based the function of expectation to try to find out the result which in this case is the post-purchase satisfaction of the consumer. This theory had been adopted in a few of scientific fields especially in research of the consumer behavior. The theory of expectation disconfirmation theory is made up by four elements which is perceived performance, expectations, disconfirmation of beliefs and lastly satisfaction. Expectation is the anticipation of a person towards a service or product. In the theory it showed that expectation has a direct influence towards the disconfirmation of beliefs and the perceived performance of a service or product, and it has an indirect influence towards the satisfaction of the consumer. This will ultimately benefit the retailers in terms of sales performance and business development and stand out against their competitors.

American Customer Satisfaction Index ACSI: According to Luo et al. (2006), ACSI is an economic gauge and it measures the consumer satisfaction in the USA. This index is the measurement of customer satisfaction which is uniform and can be used for government service for customer satisfaction and also can be used cross-industry. The manifest variable that they use are the overall satisfaction of the customer, comparison to an ideal, and expectation disconfirmation. There are three antecedents in this model which are

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perceived value, and customer expectations, and perceived quality ACSI (2003). The very first factors that determine customer satisfaction is the perceived quality. It is the consumption experience of the customer towards the product and services that they used. Customer perceived quality has a positive impact on customer satisfaction. The next factor which affects the customer satisfaction is perceived value which gauge the product quality relative to the money that the customer paid. It shows that for the first time purchase, the price is the main factors that affect it but it has a smaller impact towards the repurchase. The third and last factors for overall customer satisfaction is the customer expectation which is the pre-consumption experience such as word-of-mouth, advertisement.

KANO’s Model of Customer Satisfaction: Kano et al. (1984), Kano model was developed as a theory for customer satisfaction and product development. In this model, there are three attributes of quality being used to achieve the customer satisfaction which is the must-be quality, attractive quality, and the one-dimensional quality. Must-be quality is pretty much self-explained. This is basically means that the features which a product must have just to meet the customer expectation or demand. It is not possible for the product to be in the market if this must be quality cannot be met. To fulfill this requirement is a must and it give no extra satisfaction to the customer as it is expected to have and if not met will cause strong customer dissatisfaction (Bonacorsi, Steven, 2010). Secondly is the one dimensional attribute which can be regarded as performance attributes including the skills, technical level, knowledge, or ability according to (Brandt, D.Randall, 1988). Lastly, the attractive quality is the “wow” effect of the product, this is of the most unforeseen attributes by the customer and might be able to fetch an unexpectedly high customer satisfaction. This effect can trigger the impulsive needs and wants of the customer and has a higher potential to fetch the largest profit and gain advantage in business rival. The attractive quality can be regarded as the most powerful attribute in Kano model. But over time the same excitement will degrade to be the same level as the basic needs thus innovation plays the key in this attribute (Antony and Preece, 2002). (Sixsigmaonline) did pointed out the limitation of Kano Model as the model can only be used to analyze the effects of the product but it cannot be used for suggesting new product features. Hence, it is important for the business to identify and use other models to better compliment the weakness of this model.

Four stage loyalty model : The four stage loyalty model was developed by Oliver (1997), this new theory is based on the customer loyalty. The four stages which formed this model are the cognitive loyalty, affective loyalty, conation loyalty, and lastly the behavioral loyalty. According to Oliver (1997), loyalty can be define as the deep commitment of a customer to revisit or repurchase a service or product from a specific service provider or retailer. This in return will caused the repetition purchase of same brand or same brand set, regardless the marketing strategy or situational influences to try to induce customer switching behavior. He found that customer loyalty is a learning process which concentrate on the relationship between behavior and attitude which developed in few stages. The first component is the cognition loyalty which is said to be the weakest stage in loyalty. At this stage, the customer loyalty can easily be affected by different factors such as product quality, and pricing. At this stage, the customer will easily switch their choice of brand when they perceived there are other product or service that offer a better value for money that they spend for a similar service or product. The second component is affective loyalty. The affective loyalty is regards as favorable attitude towards the particular product or brand. However, there is limitation to this four stage of customer loyalty model. According to Oliver (1999), in reality the consumer loyalty is more complex especially in the service industry and the model is too restrictive because the model formed in a sequential to form

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the loyalty. According to Evanschitzky and Wunderlich (2006), instead of different stage of customer happened simultaneously it can happen consecutively.

Although there were many research done on customer satisfaction in the context of hypermarket around the world, there were very less research carried out in Malaysia and mostly are related to customer loyalty and not focusing on customer satisfaction and many were using more than 2 independent variables and not just focusing on narrower variables. There seems to be no official published studies which only focus on the impact of pricing strategy, product quality on customer satisfaction in hypermarket in Malaysia as of now. The two tables below show a summary of research done on customer satisfaction and loyalty in retail context in Malaysia and abroad.

Table 2.1 Related studies done in Malaysia

2.3 Research Framework

The relationship between the product quality, pricing strategy, and the customer satisfaction are the base of the conceptual framework in this research for the business strategy of a hypermarket. The model and concept was developed by Rahman et al. (2014); Rana et al. (2004); as well as (Nikhashemi et al. 2014). The research carried out by Rahman et al. (2014), used the impact of product quality, pricing strategy, service quality and store attribute to develop the hypothesis model. The main goal of the model is to find out effect of product quality, pricing strategy, service quality and store attribute on customer satisfaction. The hypothesis model anticipated the relationship between the product quality, pricing strategy, service quality and store attribute on customer satisfaction. In the research of Rana et al. (2014) deloped the hypothesis model based on the linkage between product quality, pricing strategy, and the customer satisfaction. In the research they found that both product quality and pricing have impact on customer satisfaction where product quality has more impact than pricing on customer satisfaction. A theoretical framework of customer satisfaction was proposed by Nikhashemi et. al (2014), and the study found that product quality has a bigger impact among all the variables used in the study. However, two variables are chosen to use in this study for a more focus study on customer satisfaction in hypermarket in Malaysia. The two variables which impact most on customer satisfaction were identified after reviewing the research mentioned above. Figure 2.1 below is the view of the conceptual framework and the relationship of the variables.

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Figure 2.6 : Conceptual Framework

The following hypothesis is formulated based on the discussion from above. H1: Pricing has a significant positive impact on Customer Satisfaction

Customers will more than likely to feel more satisfied when they get more and pay less. According to (Martzler, Renzl, Wurtele, 2006), the price is a very important indication of relative price, price transparency, and price confident, which are the main aspects that affect customer satisfaction. According to (Monroe, 1990), the perception of price is depending on quality of the benefits they receive when they pay for a product. According to (Yoo, Donthu, and Lee) price promotion is usually short term price reduction which has positive effect on customer satisfaction.

H2: Product Quality has a significant positive impact on Customer Satisfaction

Most of the hypermarket customers have strong feelings regarding the product brand for shopping goods and services. According to (Allaway et al, 2011), product quality is one of the basic elements to form high level of brand equity. He mentioned that the commitment and sopping behavior of a customer will increase if the brand equity is successful. (Mossa & Omar 2011) shows that businesses had started to develop the customer satisfaction through provide quality product. According to (Leon, 2006), customer equity can build from product quality which will lead to customer satisfaction.

3. Methodology Quantitative research method is adopted in this research as the research is trying to figure out the response in terms of relational questions of variables in the research. Survey is adopted in this research in the form of questionnaires distributed to collect data. Descriptive research is designed to give a picture of a situation as it happened (Burns and Grove, 2003). According to Vogt (1999), the researchers are able to examine the relationship on between the independent variables and how they are affecting the dependable variables. Questionnaires is adopted in this research to collect primary data as it is a cost efficient way, at the same time it allow the respondent to have enough time to give their input accordingly. In this research, the likert scale is adopted in the questionnaire. The five degree likert scale is adopted for the respondent to answer each question from strongly disagree, disagree, neither agree nor disagree, agree, and strongly agree. There will be a total of 4 sections in the questionnaire. The first section is the questions to gain the demographic data of the respondents. The second section is to get data for the price strategy variable, follow by question to gain data for product quality variable, and the last

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section is the questions for customer satisfaction. There are a total of nine question for demographic section, follow by five questions each for each of the variable. In total, there are 24 questions for the entire questionnaires. The secondary data collection method also adopted in this research. According to Saunders et al. (2012), it is very important to select appropriate secondary data to be used in the research as it will increase the level of validity and reliability of the research. There are many sources to gain the secondary data such as items published in the form of books, journals, magazine, and newspaper.

The total population of this study will be all the customers for hypermarket in Malaysia. According to (Brymand, Bell, 2007), population is the universe of units from which the sample is to be selected, and the sample is the segment of the population that is selected for investigation. According to Proctor (2003), sampling is the method adopted to select the respondent from the population to gain data for the research. It is critical to apply the sampling technique to gain samples from the large populations. See figure 3.1 below. According to Sekaran (2003), a sample size between 30 to 500 is considered as effective in a research. Hence, 200 respondents is the sample size chosen for this research. Non probability and convenience sampling will be used in this research as n individual in the population has an equal chance to be selected (Peck et al., 2001). According to Saunders et al. (2012), convenience sampling is a method to get the sample from a crowd of people which can easily be reached or contacted. The has been used previous for similar studies (See Oluwafemi & Dastane, 2016). The classic example of convenience is by standing in a grocery store, hypermarket, or a public place to ask by-passer to answer the questionnaire or be part of the survey. This is crucial as this method save time and cost for the research. The researcher asked selected an area where there were few hypermarket and supermarket located within 1 kilometer distance to each other and asked the by passer on the road to participate in answering the questionnaires for the survey. The same was recommended by (Wahid & Dastane)

According to Yin (1994), data analysis is a process to categorize, tabulate, examine, and combine the evidence address the initial propositions of a research. There are many statistical software packages available to analyze the data collected in this research such as STATA, AMOS, SPSS. SPSS software package is adopted to analyze the data for this research. The researcher will run analyses such as reliability, descriptive, correlation, and regression on the data collected in order to transform the data collected into a helpful yield.

They are for sections of data used in the research. The first section is the demographic information. This section is coded in SPSS as follow gender, age, marital for marital status, ethnic, academic, income for monthly income, frequency for frequency visiting hypermarket every month, spend for how much money spend each time visiting the hypermarket, and lastly product for product category. In the second section is the pricing strategies which consist of 5 items, PS1 for price discount is important, PS2 for promotion price on various item is important, PS3 for affordable price is important, PS4 for quantity discount on product purchased is important, and PS5 reasonable price is important. The third section is for product quality and it consists of 5 items. PQ1 for product durability is important, PQ2 for Accurate product information is important, PQ3 different qualities product offer is important, PQ4 product reliability is important, PQ5 high quality food product is important. The last section is for customer satisfaction which also consists of 5 items. CS1 for hypermarket visited recently able to satisfy customer need, CS2 for overall satisfied when shop in hypermarket, CS3 for this hypermarket satisfy my expectation, CS4

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for like to shop regularly in hypermarket because I am satisfied and lastly CS5 for I think I made the right decision by choosing this hypermarket. Please see table 3.3 below.

Table 3.3 Coding of items in SPSS 4. Data Analysis and Findings

4.0 Data Analysis and Findings

The direction and objective of this study will be determined through the following series of analysis. The results obtained from the questionnaires will be used and the findings will be presented in bar charts and tables form in the sequence of analysis type in reliability, descriptive, and hypotheses testing using correlations and simple regression analysis. The variables of organizational climate and the impact on the employee performance will be

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discussed based on the analyzed data to prove the hypothesis that have been stated earlier in this study. it commences with the descriptive statistics analysis of the data obtained. Then, the results concerning the validity and reliability of the questionnaire will be analysed and discussed. Thereafter, the focus is shifted to establishing the relationship between product quality, pricing strategy, and customer satisfaction through regression and correlation analysis to test the hypotheses formulated earlier in this research. 4.1 Reliability Test

The table 4.2 below shows the result of the reliability test ran with the 15 test items scored a 0.876 in Cronbach’s alpha hence it can be said that the data which collected in this study is falling into good category and it is reliable (George et al., 2003).

Table 4.2 Reliabity test result

4.2 Respondents’ Response Rate

A total of two hundreds sets of questionnaires were distributed in Ipoh city where the locations have few hypermarkets close by to each others. Among the 200 sets of questionnaires that were distributed 200 sets of questionnaires were received back and there is no missing data. All returned questionnaires are usable for the data analysis. The table 4.3 below stated the response rate of this survey

Table 4.3

Response Rate of Distributed Questionnaires

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4.3 Demographic Information

Table 4.4 below shows the result of the descriptive analysis on the demographic information. There were 46% of male respondents and there were 54% of female respondents. There were 10% of respondents who are below 19 years old. There were 36.5% of respondents in the age of between 19 to 35 years old, follow by 30.5% of respondents between the age of 36 to 49 years old. There were 16% of the respondents between the age of 50-64 and lastly 7% of respondents who were above 64 years old. In terms of marital status, there were 29.5% of respondents who were still single while 70.5% of the respondents are married. In terms of ethnic background, there were 47.5% of the respondents are from the Malay ethnicity, follow by 30% of Chinese respondents, 12.5% of Indian respondents, and lastly 10% of respondents from other ethnicity background. In terms of Academic qualification, there were 23% of respondents with SPM or lower education, 45 % of respondents were bachelor degree holder which contruct the most percentage in the academic qualification. There were 8.5 % of the respondents with master degree, follow by only 1 respondents is with the doctoral degree which translate to 0.5%, and lastly the respondents with other academic background construct 23% in the group of academic background. The lowest income group in terms of monthly income is below RM 2001 and there were 19% of the respondents. Follow by the most respondents which is 48.5% in the income group of between RM 2001 – RM 4000. There were 25% of respondents with the monthly income between RM4001- RM 8000. There were 8 respondents or 4% of them with the income between RM8001 – RM12000, and there were 3.5% of the respondents with the monthly income of more than RM12000.

Table 4.4

Demographic Information

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Table 4.5 below shows the hypermarket experience of the customers. In terms of frequency of visiting the hypermarket per month, there found to be no respondents who never visit hypermarket which means the hypermarket is really popular. There were also no respondents that visit the hypermarket more than 8 times in monthly basis. There were a total of 52.5% of respondents who will visit the hypermarket 1 to 4 times in monthly basis ad there were 47.5% of respondents who will visit the hypermarket 5-8 times in monthly basis. In terms of how much money the respondents spend each time visiting the hypermarket, there were 9.5% of respondents who will spend less than RM 150 per visit to the hypermarket. There we 40% of respondents who will spend between RM 150-RM300 in each visit to the hypermarket. There were 51% of the respondents who spend more than RM300 in each visit to the hypermarket. In terms of product purchase category, it was found that there are a very high number of respondent were visiting hypermarket to purchase food and beverages which is 76.5%, follow by the respondent of 10.5% who visit the hypermarkets for electronic. There were only 7% of respondents who visit the hypermarket for clothing. There were only 3% of respondents who visit the hypermarket for stationeries and other products.

Table 4.5

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Customers Hypermarket Experience

4.4 Descriptive analysis on attributes in questionnaire All attributes used in the questionnaire were analyzed through the descriptive analysis in the SPSS package over the 200 respondents who participated in the study. There were total of three attributes to be analyzed which were product quality, pricing, and customer satisfaction. There were 5 questions developed for each attribute and each attributes were designed to be measured with five points likert scale which 1 was Strongly disagree to 5 which is Strongly agree. 4.4.1 Descriptive Analysis on Product Quality Table 4.6 below shows the result on the descriptive analysis on the perception of the respondents on product quality in hypermarket in Malaysia.

Table 4.6 Descriptive Analysis on Product Quality

In terms of product quality, the average mean for all item used in measuring product quality was 4.362. Product durability has the highest mean which is 4.51, follow by accurate product information is important which score a mean of 4.41. different qualities product offer came in third with a mean of 4.35, followed by product reliability which scored a mean of 4.335. High quality of food product came in last with a very small different which is 0.005 from “different qualities of product offer” which scored 4.205. In

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terms of standard deviation, it is very low with the average of 0.4746 which indicates the consistency of it. The item that scores the lowest of the standard deviation was “high quality food product” which is 0.41695 and the item that scored the highest of standard deviation and it was the only item that scored higher than 0.5 was “product durability” which scored 0.50115. 4.4.2 Descriptive Analysis on Pricing Table 4.7 below shows the result for the descriptive analysis on customer perspective on pricing for hypermarket in Malaysia.

Table 4.7 Descriptive Analysis on Pricing In terms of pricing, the average mean for all items used in measuring pricing was 4.364. The item which scored lowest was affordable price is important which scored 4.195, this item is also the only item that scored below 4.20. The next item which scored the second from the lowest was reasonable price is important which is 4.21. The item price discount is important came in third with a score of 4.335. The item that scored highest was promotion price on various product is important and the score for it was 4.66. Quantity discount is important is the item that score the second highest which is 4.42. In terms of standard deviation for items used to measure pricing, the average of the standard deviation was very low and it was 0.4749 which shows its consistency. The item with the highest standard of deviation was “quantity discount is important” which scored 0.5432. “Promotion price on various products is important” came in as second highest with a standard deviation score of 0.5155. These two items is the only items which scored above 0.5 in standard of deviation. The item which came in third was “price discount is important” which scored 0.4837, followed affordable price is important” which came in with a score of 0.4217. The item with the lowest score was “reasonable price is important” with a score of 0.4205. 4.4.3 Descriptive Analysis on Customer Satisfaction Table 4.8 below shows the result of the descriptive analysis customer satisfaction for hypermarket in Malaysia.

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Table 4.8 Descriptive Analysis on Customer Satisfaction

In terms of customer satisfaction, the average mean for all items used in measuring customer satisfaction was 4.385. The two items which scored higher than the average were “Overall feel satisfy to shop in hypermarket” and “shop regularly at hypermarket because I am satisfied”. The item which scored the highest was “Overall feel satisfy to shop in hypermarket” with a score of 4.68. The item “Overall feel satisfy to shop in hypermarket” came in second highest with a score of 4.455. The item which came in third was “hypermarket just visited able to satisfy customer need” with a score of 4.37. The items which scored second lowest is “this hypermarket satisfy expectation” with a score of 4.215. “I made the right decision to choose this hypermarket” is the item with the lowest score of 4.205. The average of the standard deviation for all the items used in measuring customer satisfaction for hypermarket in Malaysia was very low as well with a score of 0.4701. The item with the highest score in standard deviation was “shop regularly at hypermarket because I am satisfied” with a score of 0.5286, and this is the only item scored above 0.5 in terms of standard deviation. It then followed by the item “overall feel satisfy to shop in hypermarket” with a score of 0.4988. The item “hypermarket just visited able to satisfy customer need” came in third highest with a score of 0.4943 which is marginally lower than the item came in second. The item “I made the right decision to choose this hypermarket” came in as second lowest with a score of 0.4169. The item with the lowest score in standard deviation is “This hypermarket satisfy expectation” which scored 0.4119. 4.5 Normality Test According to Razali et al. (2011), normality test is a process to investigate the normal distribution of of how well a data set modeled and what is the likelihood for a random variable in the data set to be normally distributed. In this research, skewness and kurtosis statistic is used to test the normality of the variables used in the questionnaires. According to Paul et al. (2005), skewness is a measurement for the asymmetry of the data distribution in terms of its mean value. The skewness can be negative or positive. Figure 4.1 below shows the positive and negative skew.

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Figure 4.1

Source: (Paul et al., 2005)

From the figure above, the right tail extend longer and the mass of distribution centered on the left when it is a positive skew in the data collected. The distribution is said to be right-tailed, right skewed even the curve is seen to be leaned to the left. On the other hand, the left tail is seen longer for the negative skew. In the perfect scenario when the distribution is symmetric, then the skewness of the distribution is zero. According to George and Marley (2010), the value between -2 to +2 for the skewness and kurtosis is acceptable. Table 4.9 below shows the skewness and kurtosis for each variable used in the research.

Table 4.9 Skewness and Kurtosis for Variables

From the table above, the skewness and kurtosis of all variables can be seen to be within the acceptable range of -2 to +2 except for the kurtosis of PQ1which is -2.019 which is marginally more than -2. 4.6 Correlation Analysis

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Table 4.11 Correlation between Variable

From the table above, PS (pricing strategy) have a moderate positive Pearson correlation value of 0.608 which PQ (Product Quality) PS has a strong positive correlation value of 0.918 with CS (Customer Satisfaction). PQ has a moderate positive correlation value of 0.608 with PS and also moderate positive linear relationship with CS. Moving forward, CS has a strong positive linear relationship with PS at 0.918 and moderate linear relationship with PQ which is 0.618. All relationship between the variables of PS, PQ, and CS is

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significance as all the p values between the variables are at 0.000 which is lower than the threshold of 0.01. 4.7 Regression Analysis According to Fahrmeir et al. (2009), there are three things can be achieved by using regression analysis which is the relationship between the independent and dependent variables can be shown statistically. By observing the value of the independent variables, it allows the researcher to estimate the value of the independent variables through regression analysis. Lastly it also allow the researcher to determine the individual prognoses through identified the risk factors which influence the outcome. Linear regression analysis is performed in this study. Table 4.12 below shows the result of the model summary.

Table 4.12 Model Summary

According to Hair et al. (2011), the R square value of 0.25, 0.5, 0.75 for endogenous variable can respectively described as weak, moderate, and substantial in research which focused on marketing issues. The R square value in this research is 0.848, hence the independence variables which are product quality, and pricing strategy in this research are considered substantial to the dependable variable which is customer satisfaction. The adjusted R square value is 0.847, hence the independent variables of product quality, and pricing strategy can affect the customer satisfaction by 84.7%. The adjusted R square of 0.847 which is higher than 0.6 this is goodness-fit model (Robert M, 2007). According to Hoe, Dastane, & Selvaraj, (2018), the value which is between 1.5-2.5 for the Durbin-Watson analysis is considered acceptable.

Table 4.13 ANOVA Table

Table 4.13 above shows that the F-test value is 550.12 and the p value of 0.000 which is less than the significant value of 0.01 shows that the F-test is significant.

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Table 4.14 Beta Coefficients for Customer Satisfaction

Multicollinearity is defined as the degree of correlation between the independent variables (Ringim, et al., 2012). Therefore, for this study Multicollinearity was examined between the independent variables for Tolerance test and Variance inflation. According to Hair et al; (2010), it is suggested that if Variance inflation factor exceeds 10 and the Tolerance value is lower than 0.10, it indicates the Multicollinearity has potential problem (Ringim, et al., 2012). The VIF value for both pricing strategy and product quality is 1.587 and the tolerances for both are 0.63 shows that there is no multicollinearity between the independent variables. The table above also shows that the pricing strategy has a positive and significance effect on customer satisfaction as the p value is 0.000, which is less than 0.01. The p value of product quality is 0.008 which is less than 0.01 also shows that product quality has positive and significance effect on customer satisfaction. From the beta reading above, both the variable have impact on customer satisfaction where 86.1% goes to pricing strategy which is very high compare to product quality which is 9.4%. The result indicates that the pricing strategy (86.1%) has significantly affect on the customer satisfaction in hypermarket based on the respondent frequency analysis. 4.8 Discussion Table 4.15 below shows the summary of the following hypothesis after the testing of the hypothesis.

Table 4.15 Summary of Hypothesis

According to the above summary, both the hypothesis in this study was accepted. Both pricing strategy and product quality is found to be significant impacting customer satisfaction due to p-value of both variables are found to be less than 0.01 which scored better than testing confidence level of 95% and 99%. These results is supported by the findings of Rahman (2013), Nguyen (2016) where pricing and product quality has significance impact on customer satisfaction in hypermarket. The study of Rahman (2013), shows that the pricing have the highest score among other items tested in the research which also support the result of this research where pricing has more impact on customer

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satisfaction followed by product quality. The research by Nguyen (2016), also found that pricing has the highest standardize regression coefficient among all items tested to impact customer satisfaction of 0.477 follow by the second highest item which is product quality where the coefficient only stand at 0.19. These finding supported the result in this study where both pricing and product quality have significance impact on customer satisfaction where pricing has a lot more weight on it. From the results of the questionnaires conducted to collect the data, the participants agree that the pricing strategy and product quality has and significance and positive impact on customer satisfaction in hypermarket through the results from series of analysis carried in the research. The pricing strategy is found to be most important in impacting customer satisfaction in hypermarket due to the fact that the beta coefficient of 0.861 is a lot higher than the beta coefficient of product quality of 0.094. A lot of the participants did give opinions that after the implementation of the Malaysia GST (Good and Service Tax) on 1st April 2015 did impact their disposable income and hence many of the participants agrees that pricing has more impact for their customer satisfaction which in other words, hypermarket in Malaysia need to come out with a good pricing strategy in order to achieve higher customer satisfaction. 5. Conclusion

There are two objectives in this research which is to examine the impact of pricing on customer satisfaction in hypermarket, and to examine the impact of product quality on customer satisfaction in hypermarket. The first objective was achieved by developing the items in questionnaire PS1, PS2, PS3, PS4, PS5 regarding pricing strategy refer to table 3.3. The second objective was achieved by developing the items in questionnaire PQ1, PQ2, PQ3, PQ4, PQ5 regarding product quality refer to table 3.3. And lastly the dependent variables of customer satisfaction was answered by developing the items of CS1, CS2, CS3, CS4, CS5 in the questionnaire refer to table 3.3. Each items was develop with the 5 likert scale for respondent to answer from strongly disagree, disagree, neither agree or disagree, agree, and strongly agree. Refer to table 4.14, the significance level for pricing strategy was 0.000 and product quality was 0.008 both lower than the p value threshold of 0.005 and 0.001. From the table 4.14 also shows that although both variables has significance positive impact on customer satisfaction, pricing strategy standout to have more weight on customer satisfaction as the beta coefficient value for pricing strategy was very high at 0.861 compare to product quality of 0.094.

The main purpose of this research is to examine the impact of pricing strategy and product quality on customer satisfaction in hypermarket in Malaysia context. The conclusions of this research are formulated based on the literature review and the results of the empirical investigation. The research limitations and recommendations made for future research will then be discussed. The hypothesis one is accepted due to the fact that it shows a significance and strong positive impact on customer satisfaction in hypermarket in Malaysia. Pricing strategy plays a main role in customer satisfaction in term of hypermarket in Malaysia. By having a good pricing strategy, the hypermarket operator will gain significance customer satisfaction which in return will boost the sales revenue as well as the survivability and expansion in their business.

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Similarly, hypothesis two was accepted as it also shows positive and significant impact on customer satisfaction. Maximize in profit is the goal for every business. Even it is important to maximize profit, the hypermarket should not trade off the product quality as it also play a main impact in customer satisfaction which at the end still affect the profitability and the survivability of any business. This study has several limitations. First, the cost involved to cover the entire target population is a huge amount. Furthermore the researcher to personally visit the selected site and collect data was another challenge as the research is not a funded research. Therefore Ipoh town was selected as it is suitable and easier access for the researcher. This is because according to the world population review there are more than 670,000 people living in Ipoh town. Therefore most of the businesses are successfully operated in the town as the area of the town is small and the population is high. Secondly, the samples are all collected only in Ipoh town, thus it cannot be generalized to the rest of the hypermarket costumer in the rest of Malaysia. Third and the biggest challenge is the time constraint. Since this study is only taken place in Ipoh town, further study across the Perak State or even across the country is recommended. These future studies may only focus on pricing strategy or product quality on its own to thoroughly identify and evaluate for a really good pricing strategy, or element of product quality which will further increase customer satisfaction.

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