13

Chapter II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter of the study contains the review of related literature and related

study in which comes from the combination of all information coming from unique

sources with the relevance of the study. Thus, it is important because the review of

related literature and studies will determine whether any data sources exist already that

can be brought to bear on the problem at hand. This is also referred to as secondary

research. Just as each study relies on earlier work; it will provide a basis for future work

or by other researchers.

In this chapter, the researchers will explain all the concepts and relevant

literature and studies related to the main purpose of the study which is to determine the

relationship between the different variables of marketing mix which are the product,

price, place, and people towards customer satisfaction. It is also being stated how the

owners of the sari-sari stores manage the different variables of marketing mix that will be

resulted in either customer satisfaction or dissatisfaction.

2.1 Marketing Mix

According to Dharmestra (2008), marketing mix is a combination of seven

variables which are the product, price, place, promotions, people, process and physical

evidence. These seven elements are related to each other which basically means that

they are affecting and influencing one another, so efforts must be made, to produce an

effective marketing strategy that will satisfy the customers during their buying
 14

experience. However, Arsmtrong and kotler (2011) added that a marketing mix is a set

of steps that are used to deliver the perceived value towards the customers that can

create a strong relationship with them as well as provides benefits to the organization.

Bay, Petrizzi and Gill (2008) also confirmed that when a business properly applied

marketing mixed on the management, then it is most likely expected that this will help

them increase their sales and profits, hence, achieving customer satisfaction which is

the key factor to achieve their marketing objectives. Variables in marketing mix are

considered as the controllable tools that will reflect the satisfaction of the customers

(Shankar and Chin, 2011). Basically, a clear understanding of the elements in marketing

mix will help business owners to influence and acquire potential and current customers

to continue in worshipping the products and services the business had offered that will

become the push factor for them to become loyal to the said business (Sable, 2013). As

a conclusion, marketers should consider their target customer perceptions while

blending the marketing mix elements for the reason that formulating and implementing

better marketing strategy is the marketers must know first about the wants and needs of

their target market and them make use of appropriate marketing mix in order to fully

satisfy the customer needs and wants.

2.2 Product

The product refers to what the business may offer to the business customers in

addressing their needs and wants. According to Amy (2007), a product is a result of the

business production process that can either be tangible or intangible that fulfills the
 15

needs and wants of the consumers. It is also stated that the product must meet the need

and expectations of the target market and must be the indicator that it is important to

maintain an excellent quality of product when producing it, which are vital for retaining

and satisfying customers (Selim and Hebibur, 2015). Neelakantam (2015), stated that

features, design, quality, brand name, packaging services, and variety are the key

factors in satisfying the customer in regards to the product. Therefore, a product must be

made with an excellent quality during its production process that will meet or exceed the

expectations of the customers as well as exceedingly addressed their needs and wants

in the most convenient way.

Through producing an excellent quality product, the customer will be able to feel

satisfied. According to Mammon (2012), there is indeed a significant impact of the

product towards customer satisfaction. For the reason that the customer satisfaction

depends on the quality of the product, if the product will be able to address their needs

and wants properly or if it can last for a long period of time or will provide an excellent

benefit on them then they will feel a sense of satisfaction and will not regret their

purchase which is also vital for the business success.

2.3 Price

According to Belch & Belch (2005), price refers to the variable that the

consumers must give up to purchase a product or service. It is one of the key

components that the business consider must consider in order to achieve its marketing
 16

objectives. Pricing decision is one of the crucial operations of the business and must be

done in accordance with its product's design, quality, and production cost. According to

Kother and Armstrong (2005), many companies support price-positioning strategies with

a technique called target costing, which is a potent strategic tool. This strategy reverses

the usual process of designing a new product first then determining its cost and setting

the selling price. However, customer preference must also be considered and set the

ideal selling price based on what customers are willing to pay for the said product in

order to achieve the satisfaction of their customers.

On the other hand, Voss et al. (2000), states that satisfaction is a function of

price, performance, and expectations. They proposed that price fairness might be a

strong indicator and determinant of satisfaction. Their empirical results suggest that if

there was inconsistent of the perceived price-performance then it will have a strong

negative effect on satisfaction judgment. That is why price decision is one of the most

important components in achieving customer satisfaction. Since, if the price of the

product does not match the product quality then there will be a large possibility that

customers may regret the product they purchase and may be able to feel dissatisfied

and disappointed.

2.4 Location (Place)

The location refers to the place in which the customers can purchase a product

and it is also called the place of distribution. According to Dharmaesta and lrawan (2007)

states that location (place) is a channel utilized by the manufacturers to distribute the
 17

goods from the distributors to the industrial users. Choosing the right location and place

to start the business can affect the overall performance and profitability of the business.

According to Kother and Armstrong (2012), there are factors that are needed to be

considered in choosing the right location and that is close proximity to industrial regions,

offices, government centers, market, housing, numbers of competitors as well as an

adequate facilities and infrastructures. These factors are needed to be considered by an

entrepreneur in order for the business to have a smooth flow of its transaction.

Inconvenience to the customer leads to dissatisfaction among the customers

which further influences the business in a negative way. According to Niharika (2015), in

order to prevent inconvenience, the customers must be kept in their comfort zone and

provide the goods in the more relevant place that suits them and create satisfaction

among them, since it will have also become a benefit to the business in terms of

increasing their sales. In short, the place for providing goods to the customer must be

easy to approach, with clean surroundings, and must be near to customers for less time

consumption and transportation cost.

2.5 Good Customer Service

According to Soderlund and Rosengren, (2008) the friendly attitude and

courteous behavior of the business owners leaves a positive impression on the customer

that leads to customer satisfaction. Many researchers concluded that it is important for a

business to treat their customers appropriately, since this will serve as the key factor for

the customer to feel at ease. However, dissatisfaction will happen if the owners and staff
 18

failed to treat their customers appropriately. And may leave negative feedback to the

business that will surely affect the reputation of the business. As a result, it declines the

business performance.

Furthermore, many previous studies concluded that excellent customer service is

all about meeting the needs of customers. However, customers have an inherent

expectation that they have the rights to be treated in a friendly, kind, and respectful

manner (Enyonam, 2011). This signifies that the business personnel should be

considerate and grateful enough towards their customers to win them over. In addition,

complying some characteristic of a good customer service such as answering the

questions of the customers and being knowledgeable about the product or service will

make the customers to feel more satisfied. Enyonam (2011), further stated that if the

owner/staff of a certain business will deliver the product or service in the way that they

promise and help the customer with any difficulties or challenges. Then, then the

customer will become happy and satisfied with their experience. Enyonam (2011) added

that good customer service is all about ensuring the customer is receiving the

appropriate product or service they truly need and not selling them more product or

service than they need, because through these the customer’s needs will be address

accordingly leading to the achievement of satisfaction. In conclusion, complying with

these practices is considered as good customer service, which is also vital for achieving

customer satisfaction and gaining new customers.

 19

2.6 CUSTOMER SATISFACTION

Customer satisfaction is determined by two things, namely the customer’s

complaints and expectations of the products received (Tjiptono, 2009). Some observe

that if the business’ meets and addressed the needs and wants of the customer, the

customer will have positive feedback about the business performance and is able

satisfied. However, there are instances that a business cannot meet or exceed the

expectation of the customers, which could have the possibility that the customers may

give a negative and unsatisfactory impression towards the business. It is assumed that

the needs and wants of the customers are not properly dressed, which causes the

customer to complain and complain indicates that the customer feels disappointed which

can have a big impact in terms of the progression of the business.

For instance, many studies consider customer satisfaction as one of the

important tools to secure the smooth flow of a business and is a key to achieve the

mission statement of the business. According to (Perng, 2007) customer satisfaction is

indeed of great significance for the future of any business and is seen as the basis for

the security of marketing position and achievement of the company’s objectives.

Therefore, meeting the customer expectation with a high level of products and service

offers is one of the methods to keep customers satisfied and become loyal to the

business for a lifetime.

According to Shaw (2012), one of the ways in achieving customer satisfaction is

through, using effective marketing strategies which are developed around the

identification of consumer’s expectations using such dimensions as products, price, and

 20

treatment along with the organization’s distinctive competence. If the marketing

strategies executed properly, then the business can expect to achieve the satisfaction of

their customers. However, if it is not delivered properly these can be converted into

factors that may hinder the achievement of customer satisfaction which indicates that the

business may face some difficulties in running the business.

2.7 How These Variables Affects the Achievement of Customer Satisfaction

According to Tse and Wilton in Tjiptono (2005), customer satisfaction or

dissatisfaction is the customer’s evaluation between previous expectations of the

product and service they received and actual product performance after its use.

Therefore, when a customer feels satisfied with a product with high involvement, then

there will be a tendency that some customer will not necessarily become satisfied

because of other dominant factors such as product, price, place and good customer

service in terms of achieving customer satisfaction (Rahmiati, 2012). This indicates that

these four factors may affect the rate of achieving customer satisfaction. So, these four

factors must coordinate with one another for the business to achieve customer

satisfaction and lead customers to be loyal to that specific business and will serve as the

competitive advantage of the business towards its competitors.

For instance, if the following factors such as the pricing decision go overboard or

do not match with the quality of the product; the location of the business is not a good
 21

spot for business and the area is not well ventilated; if the product’s offer does not meet

the expectation of the customers; and if the staff/owners of the business will not treat its

customers appropriately then there will be a high possibility that the customers will feel

dissatisfied that can lead for the business to experience the difficulties in achieving

customer satisfaction which is not obviously good for the business. Moreover, when the

product and service dissatisfy the customers, they become very emotional and will

exhibit all kinds of negative behaviors such as regrets and feelings of disappointment

(Jang and Kim, 2011) and will likely purchase products and services in another

business. As a matter of fact, many researchers are interested to study the

dissatisfaction behavior that the customers portray. As asserted by Ferguson and

Johnston, (2011) it is obvious that a costumer’s decision to re-purchase a product or

service is highly influence on the customers past experiences with the same product or

service they received from the specific business. (Ferguson and Johnston, 2011). For

instance, (Zeelenberg and Pieters, 2004) also stated that dissatisfied customers have

more reasons to switch products and will likely repurchase products and service in

another company compared to customers who are already satisfied. This indicates that if

the company cannot formulate a solution to eradicate dissatisfaction then they will

experience a hard time in managing their business in order to survive and grow. That is

why the proper applying of the different marketing mix will avoid the customer

dissatisfaction and will eventually achieve customer satisfaction it is because the

variables of the marketing mix are the main components that will satisfy customers.
 22

2.8 Literature Map

MARKETING MIX

PLACE PEOPLE
PRODUCT PRICE

CUSTOMER

SATISFACTION

How these variables affect customer

satisfaction

Figure 2: Literature Map Between Customer Satisfaction and Marketing Mix

 23

Related Studies

This section holds the previous studies that are related to the topic of the

research. These are usually studies, inquiries, articles, or investigations that are already

conducted to which the present proposed study is related or has some bearing or

similarity (Reyes, 2014). Therefore, in this section, the researchers have a logical plan to

select logical studies of which have been conducted to determine the factors that lead to

the difficulties of achieving customer satisfaction by most business. The researchers are

able to review these studies in depth including stating the authors of the study, the year

it was published, the methodologies used, the participants involved in this study, the

procedure of data analysis, and the major finding of the study of each selected studies in

order to produce a comprehensive related study.

Kirubel Wu Be conducted research in 2011 about the effect of marketing mix

strategy on customer satisfaction which is established with the goal to analyze the

impact of price, product, and promotion towards customer satisfaction on ETE. The

questionnaire is used as a data-gathering instrument and is using simple random

sampling as its sampling technique. A total of 150 respondents were gathered from three

stores, who are active customers of the company. The obtained then analyze using

correlations and linear regressions. The result shows that price, product, promotion, and

place simultaneously has a significant impact on customer satisfaction, however, when it

is categorized individually, the strongest component that will influence customer

satisfaction is the price with a standard deviation of 0.0643 compared to the product

(0.490), place (0.466) and promotion (0.588). Results of the regression analysis exposed
 24

that values of R square and adjusted R square are 0.539 and 0.520 respectively. This

proves that the product, price, place, and promotion explained 50% of the variation in

customer satisfaction.

Abd Wahab et al., 2015 conducted a research study entitled " The relationship

between marketing mix and customer loyalty in the hijab industry: the mediating effect of

customer satisfaction". The main objective of this study is to examine and analyze the

relationship between marketing mix (product, price, promotion, and place) and customer

loyalty as well as the mediating effect of customer satisfaction in the hijab industry. This

study is being established on female customers who are wearing and buying any hijab

products at Shah Alam Outlets. The instrument used for gathering data was

questionnaires and is distributed to 234 participants which is the sample size of the

study. For this study, a convenience sampling technique was used in order to obtained

data from the respondents. The findings of the research study that there is indeed a

correlation between marketing mix which are the product, price, promotion and place to

customer satisfaction for the reason that person correlation(r) is about 0.367 with the

probability (P) that the null hypothesis is true (r= 0.367, n=234, p<0.05). This indicates

that there is a positive, medium, and significant relationship between marketing mix and

customer satisfaction. It is also stated that through this study, it is proven that marketing

mix and elements are indeed important and can help business providers to know the

factors that their customers are looking for when buying a hijab.

Dr. Fans et al. conducted an empirical study in 2016 which aims to investigate

and analyze the impact of marketing mix elements such as product, place, promotion,

and place on customer satisfaction for the tourism industry in the context of Malaysia. As

this is a quantitative design, the research instrument is questionnaires and was

 25

distributed to the tourism firms located in Malaysia to collect the data needed for the

study. A total of 123 tourism service providers operating in Malaysia is being selected as

its sample size for the recent study. The data was analyzed with the use of SPSS 21.0 in

determining the impact of each element of the marketing mix on the satisfaction of the

customers. The findings of the study show and prove that there is a significant positive

relationship among the four elements of marketing mix which are the product, price,

promotion, and place on achieving customer satisfaction in the tourism industry in

Malaysia. Furthermore, it has been included that the tourism industry in Malaysia should

consider the importance of marketing mix while designing their marketing strategy to be

able to achieve customer satisfaction which leads to good performance in the tourism

industry.

Bernandus Simangunsong et al., conducted a study on 2018 about the effect of

marketing mix on loyalty through customer satisfaction in PT. Merck Tbk Cabang

Medan. The purpose of this study is to find the effect of the marketing mix, which

consists of product, price, promotion, and place on loyalty through customer satisfaction

in PT. Merk Tbk Cabang Medan. The determining sampling technique is the purposive

sampling method. Moreover, the total sample size is 60 respondents gathered from the

different pharmacies that have made transactions with Anugrah Pahrmindo Lestari

distributor which have the most percentage or distribution. The data were conducted

through a questionnaire and the data analysis is performed by using path analysis. The

result demonstrated that the marketing mix, which consists of product, price, promotion,

and place is affecting customer satisfaction. Specifically, the results of the four variables

is 0. 658 and this indicates a strong comparability between marketing mix and customer

satisfaction. In short, any change of the product, price, promotion, and place are
 26

simultaneously and significantly affected the customer satisfaction. Therefore, it is

obtained that the offered product, price, promotion, and place of the business will

positively and significantly affect customer satisfaction with the F - value= 26.451 and a

significance value of 0.000<0.05.

Deni, Yuna & Dina conducted research in 2018 about the effects of marketing

mix on customer satisfaction and loyalty on PT. TIKI Padang Branch. The main purpose

of the study is to analyze the effects of marketing mix which consist of the product, price,

promotion, and place in achieving customer satisfaction and loyalty in PT. TIKI Padang

Branch. This research is included in the causative with the Structure Equation Model as

its technique for analyzing data. The population in this study or the participants involved

in the study is all the consumers in PT. TIKI Padang Branch with a total sample size of

200 respondents. The result showed that products, promotions, employees, and

satisfaction had a positive and significant effect on customer satisfaction on PT. TIKI

Padang Branch. However, price, location, process, and physical evidence do not have a

significant and positive effect on customer satisfaction on PT. TIKI Padang Branch. It

has been observed that improving the products offered by providing service guarantees,

meeting customer requirements, enhancing the TIKI brand name is said to be the ways

on improving the business.

Naibaho conducted an empirical study on 2020 about the different factors

affecting customer satisfaction in PT AIA Financial Branch Phoenix Medan. In which the

main purpose of the study is to examine and analyze the factors affecting customer

satisfaction in the form of the product's quality, price, location, and the people

organization's treatment towards its customers. The type of this research is quantitative

with a sample of 94 respondents. The techniques used in collecting the data are
 27

observation, interviews, questionnaires, and documentation studies. The data analysis

technique used is multiple linear regression. The results showed that the factors

affecting customer satisfaction specifically the products, price, place, and the owner's

treatment had a significant effect on customer satisfaction. Price mix is the most

influential on customer satisfaction, based on the result of the regression coefficient

which shows a high and positive value and a probability of p < 0.05. Based on the

coefficient of determination it can be seen that 89.2% of customer satisfaction can be

explained by the product, price, place, and the treatment of the customers.
 28

Synthesis of the Review

This section stated the overall summary of the review which consist of the

similarities and differences between the recent study which is the relationship between

marketing mix and customer satisfaction of the sari-sari stores in Saac 1, Buaya Lapu-

Lapu City, and the review of the related literature and studies in which consist the

combined literature and studies coming from different sources such as books, internet,

articles and previous studies that are selected based on its relevance to the present

study.

The present study and the related literature and studies dictate the same

objectives and that is to determine the relationship of the various variables of marketing

mix and customer satisfaction. Both of them discussed the effect of the variables such

as the price, product, and place (location) of a certain business in which affects the

customer to feel satisfied and dissatisfied. The related literature is composed of different

literatures based on the relevance of the research question of the study and is being

structured by a category in order to further enhance the foundation of knowledge with

regards to the topic. In short, the present study and the related literature hold the same

keywords. Moreover, the related study is composed of various previous studies about

the different variables that affect customer satisfaction in which shares the same

characteristics of the recent study in which aims to determine the relationship of

marketing mix and customer satisfaction. In conclusion, both of them, the present study

and the related literature and studies, aims one thing and that is to further examine,

investigate and analyze the different variables affecting customer satisfaction and how
 29

are these variables impact the customers to feel satisfied during the time of their

purchase.

However, the present study and related literature and studies also have features

that differentiate them from one another. The present study aims to determine the

relationship of marketing mix towards the achievement of customer satisfaction. The

researchers only focused on these four different variables which are the product's price,

the product's quality and stocks, the place(location) and area of which the business is

constructed, and how the owners of the business treat the customers well. The research

environment of the present study focuses on the different sari-sari stores residing in

Saac1, Buaya Lapu-Lapu City. While most of the selected related studies focus on one

thing and that is to know the impact of marketing mix on customer satisfaction. This

focuses on the different marketing mix such as the product's price, the product's type

and quality, the place of the business as well as the promotion done in the business. It

also differs in terms of its research environment since most of the selected related

studies are focused on the large such as PT. Merk Tbk Cabang Medan, PT. AIA

Financial Branch Phoenix Medan, Tourism Industry, Hijab Industry, and Wagagen Bank.

In short, the related studies are mostly coming from different nations (international). In

conclusion, the difference between the present study and the related studies are its

factors/variables use. In the present study, promotion is not included since a sari-sari

store is not applicable to it; in the related studies, people is not included since it only

focuses on the elements of the 4P's of marketing mix which are the product price place

and promotion.
 30

Therefore, the aspects of the present study that makes it original and novel is

that the study's main focus is to determine the relationship between the variables of the

marketing mix in achieving customer satisfaction and the variables mentioned are

specifically the product's price, quality, and stock, the place of the sari-sari store and

how the owners of the sari-sari store treats its customers well. The present study also

focuses more on how the sari-sari store owners apply the different variables of

marketing mix in their business management and performance in which resulted in either

customer satisfaction and dissatisfaction. Lastly, this study only focuses on the sari-sari

store residing in Saac1, Buaya Lapu-Lapu City.