Factors Affecting Customer Loyalty Throu PDF

Australian Journal of Basic and Applied Sciences, 8(7) May 2014, Pages: 304-322
AENSI Journals
Australian Journal of Basic and Applied Sciences
ISSN:1991-8178
Journal home page: www.ajbasweb.com
Factors Affecting Customer Loyalty through Satisfaction towards Retail Marketing

Strategy: An Exploratory Investigation on Malaysian Hypermarkets
1
Muhammad Khalilur Rahman, 2Ahasanul Haque and 2Md. Abdul Jalil
1
Graduate School of Business, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia
2
Department of Business Administration, Faculty of Economics and Management Sciences, International Islamic University Malaysia,
Kuala Lumpur, Malaysia, Box No. 10, 50728.
ARTICLE INFO ABSTRACT

Article history: Background: Today, global market is targeted by so many established retailers,
Received 2 February 2014 because they are looking for new potential market expansion. Malaysian hypermarkets
Received in revised form are growing drastically challenging in the past decades; as a result customer satisfaction
8 April 2014 and customer loyalty has become a critical phenomenon. Objective: The main purpose
Accepted 28 April 2014 of this study is to measure customers‟ loyalty through satisfaction towards retail
Available online 25 May 2014 marketing strategy in Malaysian hypermarkets perspective. Methodology: In this
study, resource based theory has been exploited for developing conceptual research
Keywords: framework. The data has been collected by distributing self-administered questionnaire
Retail marketing strategy, Malaysian among 350 consumers involving different races in Malaysian hypermarkets in Kuala
hypermarkets, Service quality, Product Lumpur through convenience sampling method. The data analysis has been conducted
quality, Customer satisfaction, using descriptive statistics as well as exploratory and confirmatory factor analysis.
Customer loyalty. Subsequently, by using AMOS through structural equation modeling, 292 valid cases
have been selected to test the hypothesized relationship among the variables in the
research conceptual model. Results: The results revealed that service quality, product
quality, price strategy and store attribute have significant relationship with customer
satisfaction and importantly customer satisfaction has direct relationship to customer
loyalty. Conclusion: The study concludes that customer satisfaction is the predecessor
to customer loyalty in Malaysian hypermarket setting. Hence, the establishment of
customer satisfaction has a great meaning to the retailers due to its predictive power.
Finally, it is hoped that this study could facilitate improving customer loyalty through
customer satisfaction in Malaysian hypermarkets.
© 2014 AENSI Publisher All rights reserved.

To Cite This Article: Muhammad Khalilur Rahman, Ahasanul Haque and Md. Abdul Jalil. Factors Affecting Customer Loyalty through
Satisfaction towards Retail Marketing Strategy: An Exploratory Investigation on Malaysian Hypermarkets. Aust. J. Basic & Appl. Sci.,
8(7): 304-322, 2014
INTRODUCTION
Customers trust the friendly grocery retailers in terms of goods and services offering and even interest in
their personal wellbeing (Rahman & Jalil, 2014). Hypermarkets trade in a highly competitive marketplace where
competitors know each other about their position (Grönroos, 1984). Today, world market is targeted by so many
established retailers, because they are looking for new potential market expansion (Abu & Roslin, 2008;
Gonring, 2008). Malaysian hypermarkets are growing dramatically in the past decades as a result customers‟
satisfaction and customers‟ loyalty have become vital topics in business promotion schemes (Heng, Yeong,
Siong, Shi, & Kuan, 2011). The prominent foreign based retailers are attracting Malaysian consumers in
different types of retail outlets of different sizes (Abu & Roslin, 2008). Loyal customers are shopping frequently
in their chosen hypermarkets. In fact, loyal customers repeat and increase their purchase that helps to increase
sales revenue of business organizations (Li & Green, 2010). Therefore, customers‟ satisfaction and loyalty is the
feedback of a successful retail marketing strategy in a competitive market that creates value for money for
customers. Now, modern hypermarkets and traditional outlets have successfully coexisted in Malaysia without
any discrimination from the customers (Abu & Roslin, 2008). Household income influences customers to be
attracted in different types of outlets (Zain & Rejab, 1989). In Malaysia, traditional retail stores are always
attracting the low and middle level income consumers. Modern retail formats are attracting the upper and middle
income shoppers but at present it is fast changing as improved consumer lifestyles, changing consumer‟s
preferences and changing educational level of population (Abu & Roslin, 2008). In 1992, grocery retail sectors
were operated by many foreign business firms (Abu & Roslin, 2008). Now, Malaysia is attracting other foreign
Corresponding Author: Muhammad Khalilur Rahman, Graduate School of Business, Faculty of Business and
Accountancy, University of Malaya, Kuala Lumpur, Malaysia.
Tel: +60103626718
E-mail: [email protected]
305 Muhammad Khalilur Rahman, et al, 2014
names such as United Kingdom‟s Tesco, France‟s Carrefour, and Hong Kong based DFI which operates the
Giant hypermarkets.
Historically, most of the business scholars in the world argue that customers‟ satisfaction and loyalty are the
most important issues for retail marketing strategy in hypermarket business. Hypermarket industry is very
popular worldwide due to the individual purchasing power and living standard of people. In Malaysia, the
grocery shopping is most popular. Even during the year of 1996, there were lots of grocery shops in Malaysia
where many consumers had a wider choice for shopping where they bought their daily necessities. In 1970,
many minimarkets were established, but they were replaced by supermarkets between 1980 and early 1990
(Leow, et al., 2011). However, hypermarket is a large retail enterprise that combines the features of other stores
such as departmental stores and grocery stores under one roof. Lim (2001) cited in Leow et al. (2011), that
hypermarkets provided the same merchandise as supermarkets but hypermarket, especially, provide individual
numbers of other commodities and services to customers, such as, car parking facilities, ATM booths, book
stores, Guardian Pharmacy, Own in-house brand, McDonald‟s, KFC, Pizza hut, Baskin Robbins, Coffee Bean
and so on to the extent that Hypermarket has become the one-stop shopping center. In Malaysia, there are many
hypermarkets doing well, but the purpose of this study focuses on three hypermarkets, namely, Giant, Tesco and
Carrefour. This paper focuses on the submission of customers‟ satisfaction and loyalty in hypermarket with
respect to consumers‟ several perspectives and retail marketing strategy. The aim of this research is to identify
specific elements of customers‟ satisfaction and these elements consequent contribution to repeat or frequent
shopping behavior (customers‟ loyalty) in Malaysian hypermarket context.
Traditionally, products and service quality play vital roles to increase customer‟s satisfaction and loyalty.
Today, many companies deeply relied on distinction of goods and services to attract the customers‟ satisfaction
and loyalty. Conversely, business strategy is changing day by day due to vicious competition of new business
companies entering the global market with rapidly developed technology to increase new designs, number of
offers, innovative and imitation of new product features. In addition, the customers have their own new choice
and purchase decision of products or services. They are price conscious that has forced entrepreneurs or
marketers to get used to consumer oriented policy to gain more profit and sustain in the competitive market.
Furthermore, the customers‟ wants and needs are the fundamental key of success of any business organization
(Singh, 2006), and for that particular reason, so many scholars have given attention to the significance of
customers‟ satisfaction, customers‟ loyalty and also customer retention (Singh, 2006; Bridsona, Evansb, &
Hickman, 2008; Carpenter, 2008; Ciavolinoa & Dahlgaardb, 2007; Hoq & Amin, 2010; Vazifehdust &
Farokhian, 2011).
Nowadays, retail sectors and grocery sectors are playing an important role in improving of service quality
and product assortment. According to Yuen & Chan (2010), he posited that customers‟ demands in the grocery
sectors are gradually increasing owing to the development of customer service in parallel with product quality
and diversity. This is similarly reflected in the retailing industry which plays a vital role to the tremendous
growth of the service sector.
As such, it is necessary for the retailers to understand the customers‟ wants and needs to increase the level
of their satisfaction and loyalty. Finally, effective satisfaction creates a long term relationship between the
sellers and the buyers as well as increasing their loyalty through repeat purchase behavior and attitudes, all of
which helps retailers to increase the market share and profit. The customers‟ decision on shopping behavior as
well as the customers‟ wants and needs are sophisticated and important to the effect that retailers seek to build a
stable and long-term relationship with their consumers. Thus, retailers are able to improve the customers‟
satisfaction that later turns into the customers‟ loyalty and finally customer retention. Customer database is very
important for any firm or business organization as proposed by Mauri (2003), that business industries can attain
privileged information about the consumers‟ attributes or needs by using customer relationship database
management that can help them improve the customers‟ satisfaction and loyalty in a competitive market. Zairi
(2000) has compared between new customers and existing or satisfied customers, in which he arrogated that
one satisfied and loyal customer is not much valuable than attracting a new consumer. However, a business
organization should fully concentrate on existing consumers, because existing customers can lead to satisfaction
in which the firm stands to achieve market share and profit by creating the customers‟ satisfaction and loyalty
(Yuen & Chan, 2010). In addition, Siddiqi (2011) asserted that a company‟s market share and profit are
motivated by the customers‟ loyalty as it is a direct outcome of the customers‟ satisfaction. The customer‟s
satisfaction is a direct resutl of service quality founded by (Naeem, Akram, Jinnah, & Saif, 2009).
This study assessments the Malaysian hypermarkets customer loyalty through satisfaction towards retail
marketing strategy. The methodology section, which follows the literature review, design the study, data
collection, explains the sampling method and subsequent self-administered questionnaires to respondents. The
survey questionnaires by using AMOS through structural equation modeling technique with data analysis results
and discussion precede the concluding remarks.
Literature Review:
Hypermarket has been a crucial part of larger class of business industries. Hypermarket is the superstores of
goods or services under one roof which combines supermarkets, grocery stores and departmental stores where
people willingly shop necessary goods or services with respect to diversity of product categories, price discounts
or promotional policy, parking facilities and networking of marketing strategy (Perrigoti & Cliquet, 2006).
Retailing covers the trade activities which involve in selling goods and services to customers for their family
and personal use (Berman & Evans, 2004). Customers‟ demand for goods and services are the common
necessity where retail industry should give attention to provide good service as well as product quality at
reasonable price.
Service Quality:
The main function of the retail marketing strategy is delivery of better and satisfactory services. The
retailers should perform delivery of quality service to their potential customers besides their regular customers.
Service quality is an important dimension of customers‟ loyalty through customers‟ satisfaction in the retail
industry. It is a subjective, complex and abstract concept that means different people have different views of
product perspectives and concepts. According to Parasuraman et al. (1985) and Grönroos (1984), service quality
is the assessment made by the consumers‟ perceptions and expectations of received services as these factors
comprise corporate image and functional quality. Service quality is the consumers‟ perception of particular
dimensions of products or services, such as, reliability, assurance, tangibility, courteousness, personalization,
communication and responsiveness all of which have to be incorporated into the company‟s strategic policy
which in itself rationally affects the consumers‟ satisfaction by providing excellent services including personal
factors, situational factors and product quality. Parasuraman et al. (1985, 1988) and many researchers have
developed the SERVQUAL scale which is very important for measuring the customers‟ service quality. There
were ten dimensions of service quality, but later these were reduced to five dimensions which included
tangibility, reliability, assurance, responsiveness and empathy.
Service quality has a tangible link to customers‟ satisfaction, as in fact, the consumers‟ satisfaction is
represented by the service quality in one way or another. Hence, service quality is an antecedent to customers‟
satisfaction and loyalty (Su, 2004; Jamali, 2007). Service quality is a cognitive assessment which may
invariably influence the customers‟ satisfaction (Oh, 1999). In this literature, the customers‟ loyalty through
satisfaction is the outcome of the proper enforcement of the service quality in the retail marking strategy. Many
researchers have investigated the relationship between the customers‟ satisfaction or loyalty and the service
quality on the complaints received from the dis-satisfied consumers (Al-Rousan, Ramzi, & Mohamed, 2010;
Oh, 1999; Sureshchandar, Rajendran, & Anantharaman, 2002; Yavas, Benkenstein, & Stuhldreier, 2004).
Hence, consumers‟ complaints are viewed through the customers‟ expectation, perceptions and requests on the
presentation of better service of goods in the present and future retail scenario. Customers‟ satisfaction is seen as
one of the most important factors of service quality that have been broadly discussed in the literature.
In addition, in terms of different customers, service quality has different shades of meanings and various
concepts. The study by Lewis (2004), Gronoos (1984) cited by Su (2004), cited that “Service quality is defined
as how well a consumer‟s needs are met and how well the service delivered meets the customer‟s expectations”.
Consumers‟ perceived values of services are heavily reliant on the customers‟ expectations and outcomes of the
evaluation processes (Gronoos, 1984). Tu, Li, & Chih (2011) found that service quality has a significant
relationship with the customers‟ satisfaction which directly affects the customers‟ loyalty. Thus, the retail
business firm should focus on these factors to increase the customers‟ relationship with satisfaction and loyalty
in a competitive retail market globally. Service quality is the major tool for changing or developing the retail
business paradigm (Taylor & Baker, 1994). Customers‟ evaluations of the service quality are quite difficult to
be developed in the retail marketing strategy (Jain & Gupta, 2004). A business organization can gain profit and
competitive advantages by applying an appropriate service quality (Boshoff & Gray, 2004). Service quality is
capable of helping the business firms to realize their envious position in the retail market place (Khan, 2010). If
product prices and other costs are stable, the customers will invariably prefer the service quality as an extra
attraction.
H1: Service quality has a positive impact on customers‟ satisfaction in Malaysian hypermarkets context.
Product Quality:
Product quality is the key dimension of the customers‟ satisfaction and loyalty. There are innumerable
attributes of product qualities, of which especially Garvin (1987) has described eight highly relevant attributes
such as features, performance, conformance, reliability, durability, serviceability, aesthetics and Customer
perceived quality. Hence, five elements have been used to measure the dimensions of a product quality such as
product durability, product variety, product freshness, product attractiveness and brand equity. All these
attributes are important to be used for measuring the customers‟ satisfaction and loyalty (Yuen & Chan, 2010),
but most other relevant elements are also useful for improving the customers‟ satisfaction and loyalty (Garvin,
1987). Product variety is important for the retailers to serve the customers‟ buying behavior, because different
customers have different preferences of product quality. Product variety attracted retailers and it also influenced
the customers to gladly perform more shopping visits at the hypermarkets, in which case it may reasonably be
said that if retailers can give more attention to increase greater product variety, it can develop the purchase
volume of products as well as increase the customers‟ satisfaction and loyalty to a great extent. According to Lu
& Lukoma (2011) pointed out that variety product selection reduced the perceived costs.
The study Minguela-Rata (2011) and Minguela-Rata et al. (2006) point out that product quality is a key
component through which retailers or busienss firms can differentiate themselves from their competitors and
they can gain competitive business advantages. There are two important parameters which are: product
attactiveness and users‟ experinece of product in terms of brand equity and customers‟ satisfaction (Chan et al.,
2010). Three factors are most important for improving the customers‟ relationship and customers‟ satisfaction
which are, namely, i) the right product, ii) the right time and, iii) the right place (Yourdon, 2000) who also
mentioned that product quality, service and value play important roles to develop the customers‟ satisfaction and
loyalty. The study Allaway et al. (2011) stated that product quality, service level and assortemnt were the basic
requirements for achieving high levels of brand equity. He also mentioned that successful brand equity can
successfully arouse commitment, shopping behaviour and the most interesting part is to develop familiarity with
a person to person interactive communication. A major proportion of consumers have strong feelings on
hypermarkets with product brand equity for shopping of goods and services (Rahman & Jalil, 2014). Business
firms had begun to develop the customers‟ satisfaction and loyalty by offering good quality products and
services. Brand equity creates customers‟ equity that emphasizes customers‟ satisfaction and loyalty (Leone et
al., 2006). According to Bolten, Kennerknecht, & Spiller ( 2006) posited that the main determinants of customer
satisfaction and loyalty are the service and product quality.
H2: Product quality has a significant influence on customers‟ satisfaction for measuring customer‟s satisfaction
and loyalty in hypermarkets context.
Price Strategy:
Pricing strategy plays a critical role in improving the customers‟ satisfaction and loyalty as it is more
important than a perceived quality (Matzler, Renzl, & Rothenberger, 2006) in retail marketing strategy in terms
of hypermarket setting. Today‟s modern retailers are much concerned with the price setting of products in a
competitive retail marketing strategy. A comprehensive price strategy can help retailers to achieve a distinctive
business success. According to Frazier-Coleman (2008), he posited that creating and implementing pricing rules
and strategy help retailers to increase sales volume and the resultant profit. Hinz, Hann, & Spann (2011) found
that the threshold price can increase revenue by as much as over 20 percents through the increase of customers‟
satisfaction and loyalty. Therefore, the financial success of a business firms selling retail goods positively
depends on their rationally sophisticated pricing strategy (Frazier-Coleman, 2008). Pricing strategy should be an
integral part of the plan for selling products in the market (Wharton, 2003). Service quality and product delivery
are associated with price variation. Customers‟ expectation and loyalty are closely related with the fair price
strategy (Hellstrand, 2010). According to Yoo, Donthu, & Lee (2000), they mentioned that price promotion is a
short term price reduction strategy and it may also offer in a long term policy. Price promotion comes from the
storage, incidental shopping and brand switching (Heerde, Gupta, & Wittink, 2003). The effect of price
promotion happens with the consumers‟ short term products or brand choices and during the promotion period it
increases price sensitivity of general customers (Mela, Gupta, & Lehmann, 1997). Customer reward scheme is
important in the customer loyalty program as examined by Demoulina & Zidda (2008), where cardholders get a
satisfaction with the rewards as they become more loyal and less price sensitive (Rahman & Jalil, 2014). Price
promotion is generally a short term price reduction policy in a particular product and service.
H3: Price strategy is positively related with customers‟ satisfaction in measuring customer‟s satisfaction
and customer‟s loyalty in retail marketing strategy in Malaysian hypermarkets setting.
Store Attributes:
Store attributes play vital roles in improving the customers‟ satisfaction and loyalty. The study Lindquist
(1975) recognized several important stores attributes (e.g. store atmosphere, service, merchandise, convenience,
post-transaction, clientele, physical facilities and, promotion) that helped to well-disposed of unfavorable
consumer attitudes towards a retail marketing strategy. In this study, most favorable and most relevant elements
of store attributes (e.g. store atmosphere, store image, parking facility, display of lifestyle, merchandise,
convenience and, location) is considered for measuring customer satisfaction and loyalty. Different retail
marketing strategies carry different store images in the hypermarket where store attribute is influenced by the
various components of the retail marketing mix (Jinfeng & Zhilong, 2009), such as, location, display feature,
parking facility, clean and spacious environmental atmosphere, etc. Store image refers to the shopper‟s retail
marketing strategy and minds in which customers begin to perceive shopping opportunities and, thus, willing to
purchase goods and services thereupon (Britta, Martin, & Corinne, 2010). Beneke et al. (2011) showed that
store image directly and indirectly influenced the customers‟ loyalty through the customers‟ satisfaction
phenomena through which customers are comfortably associated with repeat shopping visits in a specific store
and market place, this being also defined as a rational conceptualization (Hartman & Spiro, 2005). Service
levels and a variety of merchandise are the key attributes in developing store image (Beneke, 2011) which also
represents the overall evaluation of the customers‟ shopping experience with a particular store. Store image and
trust are the most antecedents of the customers‟ satisfaction and loyalty in retail marketing strategy (Anderson &
Sullivan, 1993; Wulf, Odekerken-Schröder, & Iacobucci, 2001). According to Kristensen et al. (2004), he
posited that store image had a significant relationship with the customers‟ satisfaction and loyalty in terms of the
retailer as a hypermarket business strategy. Chang and Tu (2005) point out that service, price and variety of
products significantly influence the customers‟ satisfaction in the grocery sector. Gomez et al. (2004) and
Bolten (2006) described in a comprehensive survey and they found the links between the stores attributes
customer satisfaction and the sales performance with data from 250 shops. Personal characteristics and
conducive shopping atmosphere are more important and relevant than price factors in the retail marketing
strategy (Bolten, Kennerknecht, & Spiller, 2006). The study by Rao (2010) said that a store image is a complex
mix of tangible and intangible factors. Tangible is related with functional factors and intangible is related with
psychological factors. He also mentioned that grocery shoppers were at ease with the shopping process,
merchandise mix, and cleanliness of the store. Generally, a retail store starts with a set of characteristics or store
image attributes (Moye, 1998). Samani, Hashim, Golbaz, & Khani (2011) found that store attributes, lifestyle
and consumer satisfaction positively influenced customers‟ loyalty.
H4: Store attribute has significant influence on customers‟ satisfaction in measuring customer‟s satisfaction
and customer‟s loyalty in retail marketing strategy in Malaysian hypermarkets context.
Customers’ Satisfaction:
Retailers and manufacturers argue that Customers‟ satisfaction is a necessary predecessor to customers‟
loyalty. According to Sivadas & Baker-Prewitt (2000) who cited in Abdullah et al. (2012), academicians and
practitioners are agreed that customers‟ satisfaction is an important precursor to customers‟ loyalty. Bennett &
Rundle-Thiele (2004) assumed that customers are likely to increase their loyalty but it should not be only
business goal oriented by the business organizations, as it also should also fulfill the customers‟ actual perceived
values on the products and services offered. The study by Srinivasana et al. (2002) formulated that customers‟
satisfaction is deeply associated with the brand loyalty and service quality. Therefore, customers‟ satisfaction is
defined as matters that concern the post purchase of a particular product or service. Hoq & Amin (2010) posited
that Customer satisfaction was the emotional behavior or cognitive attitudes towards the buying of products and
services. In retail strategy, the customer is the key element, because the customer‟s satisfaction is the nature of
the relationship between the consumers and the service providers of the manufacturing goods and services.
Product and service quality are both prerequisite dimensions for customers‟ satisfaction of particular products
(Hoq & Amin, 2010). Sivadas & Baker-Prewitt (2000) indicated that the customer‟s satisfaction is the
customer‟s response to determine the repeat buying of goods or services. Satisfied customers are the loyal
customers (Rowley, 2005) as this has been examined by many researchers that there is a significant relationship
between the customers‟ satisfaction and customers‟ loyalty (Kandampully & Suhartanto, 2000; Szymanski &
Henard, 2001; Abdullah et al., 2012). Customers are satisfied by achieving expected perceived values of goods
and services. As Singh (2006) explained that customers‟ satisfaction could occur when a company could be able
to provide better product and service than the customer‟s expectation. Each business firm has a positive and a
negative impact on a relation with the customers. Luo & Homburg (2007); Yeung, Ging, & Ennew (2002)
articulate that customers‟ satisfaction increases the profit of a business firm. Many studies are done by
researchers who have investigated the customers‟ attitudes or behavior patterns (Dimitriades, 2006; Olorunniwo
et al., 2006; Chi & Qu, 2006; Faullant, Matzler, & Fuller, 2008). The findings of these studies confirm that the
customers‟ satisfaction produces the customers‟ loyalty that encourages consumers to make repurchase decision
and leads to positive viva-voce on the goods and services offered. The study Anderson, Fornell, & Lehmann
(1994) posited that there are some intermediaries of the customers‟ satisfaction and loyalty which include the
customers‟ experiences, values and qualities. According to Abdullah (2012) defined the value as the proportion
of perceived usefulness of the product relative to the reasonable price for consumers. Thus, it recommends that
the higher customers‟ satisfaction level will result in a higher customers‟ loyalty.
Many business firms are trying to identify the customers‟ needs and want to develop the customers‟
satisfaction. They have a plan of creating store attributes that can excite the customers‟ experience and then
invoke the customers‟ needs. Samani, et al., (2011) mentioned that customers‟ satisfaction is a psychological
reaction which attracts the consumers to consume the specific products or services. Chang & Tu (2005) added
that the customers‟ satisfaction positively increases the consumers‟ intention to post-consume a product at a
particular shop. Thus, customers‟ satisfaction result helps to sustain a long-term benefit on the retail strategy
(Samani, et al., 2011). A customer‟s interest to repurchase comes from an affective experience of the consumer
product and store attributes. The study by Ghosh, Tripathi, & Kumar (2010); Samini, et al., (2011) stated that
consumers‟ attitudinal behavior on the store attributes increases the customers‟ satisfaction. Hence, customers
are highly dependent on the image of store attributes during shopping period. The customer‟s positive
assessment on the store attributes leads to the customer‟s satisfaction, because stores have done their homework
by working hard to know the customer‟s desire and wants (Samani, et al., 2011). Some researchers examined
that the customers were satisfied by the store attributes that directly and indirectly linked to the customer‟s
loyalty (Nguyen, et al., 2007; Koo, 2003; Chang & Tu, 2005; Samani, et al., 2011).
According to Slevitch & Oh (2010); Beneke et al. (2011), the customers‟ satisfaction is an important part
and parcel of a company‟s managerial process. Manager‟s research (Beneke et al., 2011), operational goodwill
and problem solving direction (Singh & Sirdeshmukh, 2000; Sirdeshmukh, Singh, & Sabol, 2002) play a vital
role in improving the customers‟ satisfaction. Homburg, et al., (2005) defined Customer‟s satisfaction as the
overall evaluation of the firm‟s drive from the consumer‟s knowledge on the product or services. This
cumulative evaluation on the customers‟ satisfaction is measured by increasing relationship with the retailers in
specific transactions (Sivadas & Baker-Prewitt, 2000; Beneke, et al., 2011). Store image is the preconditional
component of the customers‟ satisfaction (Wulf, Schroder, & Lacobucci, 2001; Chang & Tu, 2005), as it has a
direct relationship with the customers‟ satisfaction in the retail strategy, like hypermarket (Eskildsen et al.,
2004; Beneke, et al., 2011). The study by Reddy, et al., (2011), asserted that customers‟ satisfaction is
confirmed by the perceived value of store performance where as customers‟ dissatisfaction has occurred when
customers have no expectation on the perceived value of the store performance. Therefore, a customer‟s
perceived value of a store performance is important for the customer‟s satisfaction in the retail strategy. Bloemer
& Schroder (2002), Beneke, et al., (2011) posited that global marketing strategy stood on the customers‟
satisfaction that was improved by the company that provides distinctive benefits to the consumers. Kim (2009)
mentioned that all of the company‟s activities should be operated in terms of the customers‟ satisfaction and
should also be established on a good relatiohship with the market for a long term financial benefit or profit.
In addition, the customers‟ satisfaction is the effective component of the business organization for the
present and future viability of a retail marketing strategy. Customers‟ expectation value is important for
increasing the customers‟ satisfaction. Vazifehdust & Farokhian (2011) examined that there was a significant
relationship between the customers‟ expected value and the customers; satisfaction in a retail business strategy.
According to Shen, et al., (2000) cited in Vazifehdust & Farokhian (2011), a company‟s satisfied customers
play a vital role as an effective viva-voce advertisement as they help to influence other potential cusumers
towards goods and services offered by that company. The study by Tinggi et al. (2012), asserted that retailing
business strategy was the business process of selling goods directly to the consumers to ensure the customers‟
satisfaction as it is the merchandise providing goods or services to the customers under the business firm.
Customers‟ satisfaction is perceived by the final outcome of all buyers‟ activities accomplished during the
process of shopping and consumption. According to Parker & Mathews (2001) cited in Omar et al. (2011),
when consumers get their satisfaction, they only think about the outcome instead of the process aspect. It is
always defined as a course of action and result of the customer‟s purchasing behavior which is identified as a
key determinant of a customer‟s loyalty, especially in the retail strategy (Omar, Aziz, & Nazri, 2011). When
consumers get satisfaction from shopping for a particular product or services in a retail hypermarket, they will
be inclined to purchase frequently. Thus, satisfaction has come from an overall purchase experience and
evaluation with the products and services (Omar et al., 2007; 2011). Customers‟ satisfaction is essential in
marketing activity but it is not exactly a sufficient circumstance for the customers‟ loyalty, because satisfied
customers sometimes may defect if they get a better value and quality of goods or services from elsewhere.
H5: Customers‟ satisfaction has direct relationship on customers‟ loyalty in retail marketing strategy in
Malaysian hypermarkets perspectives.
Customers’ Loyalty:
Wang, Chen, & Chu (2009) stated that “customers‟ loyalty is the forefront area of global research of
marketing theory, especially in the mid 1990s of the 20th century, when the research on customers‟ loyalty
became another hot point after the customers‟ satisfaction”. Customers‟ loyalty or customers‟ adherence is not a
small dimension, as it is broad and difficult to demonstrate. In fact, it exists in the consumers‟ conscience and
attitudes on particular goods or services. The study Abdullah et al., (2012) mentioned that loyal customers were
that customers who had positive behavior to service holders. Getty and Thompson (1994) examined that
customers‟ loyalty had a significant relationship with the service quality and customers‟ satisfaction (Abdullah
et al., 2012). Based on past studies of customers‟ loyalty, it was found that the customers‟ loyalty had a direct
bearing on the consumers‟ precise purchasing power of products (Magi, 2003; Leenheer et al., 2007; Morrisson
& Huppertz, 2010), a quantity of shopping goods or services (Baloglu, 2002), post-purchasing attitude and
activities of consumers (Richard Ho et al., 2009). Many researchers believe that the customers‟ preferred degree
of purchase behavior and actual purchase behavior can reflect the customers‟ loyalty (Davis, 2006: 58; Gomez
et al., 2006). Consumers have two types of royalty, such as, behavioral loyalty and emotional loyalty on goods
or services. Customers‟ behavioral royalty is referred to frequent shopping in a particular retailer, and emotional
loyalty is referred to the customers‟ concern towards certain retailer on the basis of past buying experience and
attitude (Gomez et al., 2006).
Customer Loyalty program is a marketing tool that is used to develop the customers‟ loyalty by providing
incentive benefits to consumers (Yi & Jeon, 2003). Nowadays, customer loyalty is deliberated into three
categories ,such as, providing gift cards, rebates (member discounts, gift cards) and lottery draws (Ou et al.,
2011). The study by Yi & Jeon (2003) mentioned that customers‟ loyalty is included into five distinctive
perceived values which are: cash value, freedom salvation option, emotion, relevance and convenience.
Customers‟ loyalty focuses on the relationship between the customers and the service providers as good
relationship increases customers‟ loyalty and reduces customers‟ dissatisfaction. When a company is able to
improve the customers‟ acceptance through the customers‟ loyalty, they can increase sales volume of products
or services. Customers believe that they will receive rewards and prize opportunities through the shopping
activities. Therefore, a company or a firm should provide diverse benefits to frequent shoppers for developing
the customers‟ loyalty. This approach is done by a previous study (Ou et al., 2011), which examined that
customers‟ satisfaction has a significant relationship with the customers‟ loyalty. The study by Richard Ho et al.
(2009), shows that customers‟ loyalty is not a short term marketing plan strategy, it is difficult to identify
customers‟ loyalty in a company. It has even become knowledge that some retailers have been trying to develop
the customers‟ loyalty program by switching costs to discourage customers‟ defection. Berman (2006)
demonstrated that customers‟ loyalty program was divided into four categories which were generally seen in the
hypermarkets. They are: (i) members receive special discounts through registration (ii) members receive one
free unit after buying n units (iii) members receive rebates and (iv) members receive mails and targeted offers
(Richard Ho et al., 2009), all of which are conducively aimed at gaining the customers‟ loyalty. According to
Gonring (2008), he deduced that during the year of 1980, customers‟ loyalty used to evaluate product durability
and service quality but it changed dramatically in the late 1980 and in 1990, when several retailers identified the
customers‟ needs and wants. Nowadays, in modern competitive target markets, this concept has been shifted by
the companies towards the initial target consumers by producing typical product benefits in order to induce the
customers‟ satisfaction and loyalty (Abdullah, 2012).
Conceptual Framework:
The conceptual framework of this study is based on the relationship between the service quality, product
quality, price strategy, store attributes, customer satisfaction and the customers‟ loyalty in a hypermarket
business strategy. In this research, the model and concept is developed by Tu, Li & Chih (2011); Caceres &
Paparoidamis (2007); Bolten, Kennerknecht & Spiller (2006); Sivadas and Baker-Prewitt (2000) as well as
Heng et al. (2011).
The study Tu, Li & Chih (2011) developed a hypothesized model of the effect of service quality,
customers‟ perceived values and satisfaction on loyalty. The ultimate objective of this model was focused on the
customers‟ satisfaction and loyalty by developing the service quality. Tu, Li and Chih‟s hypothesized model
proposed the relationship between Service quality, Customer Perceived Value, Customer Satisfaction and
Customer Loyalty. Sivadas and Baker-Prewitt (2000) used a hypothesized model of relationship between the
service quality, and the customers‟ satisfaction and loyalty. They used a nationally random telephone survey of
542 customers. The model showed the relationship between the service quality, relative attitudes, satisfaction,
recommendation, repurchase and the customers‟ loyalty. They found that customers‟ satisfaction influenced
repurchase intention, relative attitudes and recommendation, but there was no direct effect on the store loyalty.
According to Cacers & Paparoidamis (2007) established a theoretical concept for developing the customers‟
perception of service quality and product quality and they examined this theoretical concept by an empirical
research. This study shows the relationship between the technical quality, functional quality, relationship
satisfaction, trust, commitment and the loyalty. The study Bolten, Kennerknecht, & Spiller (2006) used a
conceptual model to test the impact of customers‟ satisfaction and customers‟ enthusiasm in the small retailers
in the organic food market. Their research was based on 948 respondents‟ interviews and they also analyzed the
management ratio of twelve organic food shops in Germany where they found that product quality and customer
service quality is the main determinants of the customers‟ satisfaction. In their survey, they showed the
relationship between the quality of products, service quality, shopping atmosphere, environmental protection,
shopping location, economical success, shopping frequency, recommendation, customers‟ satisfaction and
customers‟ enthusiasm. According to study Heng, Yeong, Siong, Shi and Kuan (2011) proposed a theoritical
framework of brand loyalty on the customers‟ perception of marketing mix in Malaysian hypermarket context.
In their study, they focused the relationship between the price, store image, price promotion, advertising
spending, distribution and the customers‟ loyalty. However, based on literature review a few important variables
are determined for this research. In addition, variables are identified by review of the above mentioned studies
and other related studies. The variables are focused on measuring of the customers loyalty through satisfaction
towards retail marekting strategy in Malaysian hypermarkets context. The view of the conceptual framework
and the relationship among the variables are as shown in fig. 1.
Service Quality
Product Quality Customer Satisfaction
Price Strategy
Store Attributes Customer Loyalty
Fig. 1: Conceptual framework.
Methodology:
The research method is based on the summary of the systematic investigation, procedure, sample selection
and analysis which are used in the research (Martin & Guerin, 2006). More importantly, since the main purpose
of this study is to measure the customers‟ perceptions towards retail marketing strategy in Malaysian
hypermarkets setting, a self-administered questionnaire was developed to collect the required information from
the customers of Malaysian hypermarkets. The survey questionnaire is consisted with 7 (seven) distinct sections
which contained relating questions of different part of the research. Data was collected by distributing
questionnaires from walk-in consumers and through face to face customers survey at 3 (three) prominent
Malaysian hypermarkets (e.g. Giant, Tesco and Carrefour) in Kuala Lumpur, Wangsamaju, Sri Rampai, Batu
caves, Puchong and Kota Damansara. Respondents were asked to evaluate the items of different variables such
as service quality, product quality, price strategy, store attributes, customer satisfaction as well as customer
loyalty in terms of the customers‟ perceptions based on 5-point Likert scales that ranges from strongly disagree,
disagree, slightly agree, agree, strongly agree which are recommend by Cooper & Schindler (2008). The
primary data is relevant to this exploratory study and it is systematically distributed and collected through
interactions or communications as well as observation methods in which it performed by utilizing a convenience
random sampling method as it is the easiest to conduct with large number of population (Hong 2011, Moye
1998 and Ko 1995). The sampling method is adapted from a convenience random sampling method that
contained some limitations in terms of generalizability as compared to other sampling probability methods. In
this study, it is logically assumed that the sample represented the whole population of Malaysian hypermarkets
customers. The respondents are selected from the population of the Malaysian hypermarkets adult consumers
(above 18 years old) who are living in Kuala Lumpur area. Kuala Lumpur is selected for this survey as it is the
economical hub or major global financial center and a large portion of consumers are shopping in the
hypermarkets. The research questionnaires were distributed to 350 respondents but after completed the
screening process 292 sample sizes founded valid and useable for data analysis. This represented a success rate
of 83% which is considered extremely well in view of time and cost as well as geographical constraints. In this
study, the deductive approach (quantitative research) is applied on data analysis and results discussion. The
study begins with the theoretical and empirical evidence to improving the theory and especially it is an
exploratory research which is aimed at measuring the customers‟ satisfaction and loyalty towards the retail
marketing strategy in terms of the hypermarket business setting in Malaysia. Factor analysis has been used to
measure the customer satisfaction and loyalty as it is a meaningful transforming statistical data into linear
combination of constructs (Hair et al., 1992). The survey research makes use of the fundamental information
and Structural Equation Model (SEM) that carried out to investigate the relationship among the constructs which
influence the customers‟ perception towards retail marketing strategy in Malaysian hypermarkets context. It
appropriately gives the best fit and is commonly utilized by marketing researchers (Hakansson & Johnson,
1992).
RESULTS AND DISCUSSION
Demographic Profile:
In this survey, male participants (58.6%) were greater than female (41.4%). Similarly, in terms of marital
status, single (65.8%) participants were greater than married (34.2%). The classification of age presents that a
large portion of (89.7%) respondents were between 19 to 35 year old, which followed by 7.2% (36-49 years old)
and 2.7% (below 18 years old). In terms of ethnic background, around a half of the participants was Malay
(46%) which followed by Chinese (21%) and Indian and others (18.2%). The highest (59%) of the respondents‟
monthly income was less than RM 2000 which followed by 30.5% (RM2001-RM 4000), 6.2% (RM 4001- RM
8000) and 4% (Above RM 12000).
Reliability coefficient:
The reliability coefficient is tested before start the analysis as it is conducted in order to ensure consistent
measurement through different items in the questionnaire. According to Sekaran (2003) posited that the
reliability measurement suggests stability and consistency of the mechanism. Consequently, this method
indicates reliability through examining the internal consistency of the research questionnaires which are posed
in Likert scale (Nor, 2009). The study Nor (2009), Rahman et al. (2010) and Hair et al. (1992) posited that
Cronbach‟s alpha is very important and coommonly used method measuring reliability in which the range of
chronbach‟s alpha should become from 0.0 to 1.0, where higher value pointing higher reliability among the
indicators. Generally, all researchers target of high reliability of the question variables or items. In terms of
cronbach‟s alpha test, all scale of reliabilities in Table 2 are seen greater than 0.70 which is deemed to be
indicative of good scale reliability, recommended by O‟Leary-Kelly & Vokurka (1998) and Rahman et al.
(2010).
Table 1: KMO and Bartlett‟s test.

Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.855
Barlett‟s Test of Sphericity Approx. Chi Square 5799.668
Df 630
Sig. 0.000
Table 2: Reliability and Factor Loading Matrices Following Rotation of Five-factor Solutions.
Descriptions F1 F2 F3 F4 F5
Service quality (alpha=0.852)
Product display .695
Staff's courteousness .631
Product warranty or guaranty .786
Sales personnel's skills .793
Wider range of products offer .641
Price tag on products .788
Product quality (alpha=0.863)
Different qualities product offer .660
Product durability .683
High quality food product offer .806
Accurate product information .769
Wider range of products offer .643
Innovative product .618
Price strategy (alpha=0.879)
Price discount .767
Reasonable price .815
Promotional price on various products .775
Product variety offer at different prices .620
Quantity discount on product purchase .698
Store attributes (alpha=0.756)
Impressive music .685
Car parking facilities .817
Cleanness and freshness .802
Store decoration .656
Location .690
Customer satisfaction (alpha=0.794)
Hypermarket satisfies my expectation .713
I made the right decision by choosing hypermarket .685
Overall I feel satisfied when I shop in hypermarkets .665
I like to shop regularly at hypermarket .648
Hypermarket is capable to satisfy customer's needs .687
Footnote: 5 point scale (1= strongly disagree to 5= strongly agree). Extraction method: Principal axis factoring based on five factors
specification. Rotation method: Varimax with Kaiser Normalization.
Factor Analysis:
The result found from 292 respondents by using SPSS and structural equation modeling approach, the
Principal axis factoring was carried out to explore the fundamental factors related with 31 items. Confirmatory
Factor Analysis (CFA) is accomplished on those measurement models that consisted of purified measure which
derived from the first step of Exploratory Factor Analysis (EFA). The measurement model is examined by
investigating with convergent validity, construct validity and unidimensionality. The construct validity was
tested by using Kaiser-Meyer-Olkin Measure of Sampling Adequacy (KMO) and Bartlett‟s Test of Sphericity
analyzing the strength of association among constructs. KMO was first calculated to define the suitability of
using factor analysis that helps to identify whether data is suitable to execute factor analysis. KMO value is
varied from 0 to 1, but it is greater than 0.60 indicates to perform factor analysis (Hair et al., 2006). The result of
KMO and Bartlett‟s test of sphericity is showed in Table 1 that both constructs are significant and suitable for
the factor analysis.
The minimum factor loading is required to determine an item in its respective variable. Hence, 5 factors are
run based on eignevalues. The study by Hair et al. (1992) recommended that the minimum factor loading can be
considered if its loading is become equal to or greater than 0.30. Factor loading 0.40 is very important but
greater than 0.50 is most significant (Hair, Anderson, Tatham, & Black, 1992). However, for this study the
general requirement has been accepted for items which are greater than 0.55. The Table 2 indicates the factor
loading matrices following rotation of five-factor solutions. The higher loading is very important and it indicates
the strong positive significant of an item in a specific factor. The findings of the result determined that each of
the five factors such as service quality, product quality, price strategy, store attributes and customer satisfactions
are loaded to the different factors and they are significantly related to the customers‟ actual perception.
Reliability, validity and unidimensionality:

Assessing the reliability and validity of the questionnaires are very important. Most of the research is
evaluated using the term of „reliability and validity‟. The validity and reliability of the variables must be
measured before the conducting a latent variables model analysis (Rahman et al., 2010). The study by Lowley
(1998) elaborated the basic types of reliability and validity, such as construct validity (theoretical and empirical
evidence), convergent validity (two measurement scales on equal concepts), discriminatory validity (different
measurement scales) and content or face validity (proposed concept under consideration).
Generally, reliability is associated with a clear statement, pretesting and multiple indicators in the survey
questionnaires. According to Churchill & Lacobucci (2010) in terms of each research, the consistency of result
is found from a measurement instrument which is reliable to the content. The study by Ping (2004)
recommended that validity indicates the consistency, reliability and validity. The validity is very crucial to test
the hypothesized relationship among the variables (Musa, 2004). Validity is defined by Malhotra (2007) stated
that the extent to which different observed scale score ponder true differences among objects. The
unidimensionality assesses the extent to which the items in a scale are measured by the same variables (Rahman
et al., 2010 and Venkatraman, 1989). According to Anderson & Gerbing (1982) demonstrated that
unidimensionality and reliability should be conducted before assessed of the discriminant and convergent
validity. Confirmatory Factor Analysis (CFA) can be used for evaluating unidimensionality. Hence, CFA is
conducted for six variables to identify 31 indicators whether these are designated adequately. The structural
equation modeling is used through AMOS to conduct the analysis. Empirical study in CFA is measured by using
criteria such as Root Mean Square of Error Approximation (RMSR), Comparative Fit Index (CFI) Adjusted
Goodness-of-fit Index (AGFI) and Tucker-Lewis Index (TLI) which shows the summarized result in Table 4.
Comparative Fit Index (CFI):

The study M.Bentler (1990) formulated that
Where, , and NCP are the discrepancy, the degrees of freedom and the noncentrality parameter estimate
for the model being evaluated and are the discrepancy, the degrees of freedom and
the noncentrality parameter estimate for the baseline model. The value of CFI is equal to or greater than 0.90
identify that the required level is achieved but 0.95 is a good fit to the data that is recommended by Bentler
(1992) and Awang (2012). According to study Raykov & Marcoulides (2000) and McDonald & Marsh (1990)
argued that CFI value close to 1 indicates a very good fit and acceptable for well-fitting model. Consequently
the study by Awang (2012) mentioned that CFI value 0.90 to 1 is accepted as being indications of good-fit
model. Table 3 reveals that CFI values are very good and high ranging that indicated the good model fit.
Goodness of Fit Index (GFI):

It was devised by Joreskog & Sorbom (1984) for maximum likelihood and unweighted least squares
estimation, as well as generalized to other estimation criteria by Tanaka & Huba (1985). GFI is less than or
equal to 1 is acceptable for a good fit model but especially the value of 1 indicates a perfect fit. The study
Rahman et al. (2010) stated that GFI value is greater than 0.90 for a good model. The GFI is given by
, where is the minimum value of the discrepancy function and is obtained by evaluating
F with , g = 1, 2……., G.
Adjusted Goodness of Fit Index (AGFI):

AGFI takes into account the degrees of freedom available for testing the model. It is an alternative index in
which the index value is adjusted for the number of parameters.
AGFI is bounded by one, which indicates a perfect fit. The AGFI is given by
Where,
TLI:
The Tucker-Lewis coefficient in the notation of Bollen (1989) was discussed by Bentler & Bonett
(1980) in the context of analysis of moment structures, and is also as the Bentler and Bonett non-normed fit
index. It is given by
Where, and are the discrepancy and the degrees of freedom for the model being evaluated, and as
well as are the discrepancy and the degrees of freedom for the baseline model. The typical range for TLI
lies between zero and one, but it is not limited to that range. TLI values close to 1 indicate a very good fit.
Content validity:
Content validity is a systematic evaluation (Malhotra, 2007). It is related to the accuracy of the
measurement or valid scale measure what it is designed for and what it is supposed to measure (Bollen, 1989;
Davis & Cosenza, 1993). The content validity is associated with the degree in which the content of the indicator
ponders the proposed concept (Parasuraman, Berry, & Zeithaml, 1991; Burns & Bush, 2000). On the other hand,
the construct validity is the stage where it achieves theoritical and emperical evidence (Steemkamp & Trijp,
1991). The study by Hair et al (2006) posited that construct validity provides the confidence that represents the
accurate score. In this study, a strong content validity in variables was measured based on literature review.
Table 3: The results of model fit.

Factor indicator X2 df P value GFI AGFI CFI RMSEA Alpha
Service quality 16.716 8 0.103 0.981 0.950 0.987 0.061 0.852
SQ1
SQ2
SQ3
SQ4
SQ5
SQ6
Product quality 25.238 9 0.117 0.971 0.932 0.980 0.079 0.863
PQ1
PQ2
PQ3
PQ4
PQ5
PQ6
Price strategy 10.206 5 0.109 0.986 0.959 0.992 0.060 0.879
PS1
PS2
PS3
PS4
PS5
Store attributes 7.905 4 0.205 0.990 0.961 0.992 0.058 0.756
SA1
SA2
SA3
SA4
SA5
Customer satisfaction 9.296 4 0.214 0.987 0.952 0.988 0.067 0.794
CS1
CS2
CS3
CS4
CS5
Customer loyalty 4.509 2 0.115 0.992 0.960 0.994 0.066 0.821
CL1
CL2
CL3
CL4
Convergent validity:
The convergent validity is the point of association between two measurement scales which measure the
equal concept (Davis & Cosenza, 1993). According to Hair et al. (2006) demosntrated that convergent validity
is used through factor loadings, reliability and unidimensionality. CFA can be used to evaluate convergent
validity. The staudy by Bentler (1992) posited that Normed Fit Index values equal to or greater than 0.90
indicates an adequate model fit.
In this survey, the questionnaires were distributed to the respondents and they were accordingly developed
and modified upon receipt of the results or feedback. In a validity perspective, briefly it can be defined that the
content validity is achieved through careful research design but convergent validity is achieved when multiple
indicators functions consistently. Multiple elements are used to measure all the constructs that can lead to
accurate convergent validity. Construct validity occurs when data are statistically analyzed, examined, and
described.
The important factors of the customers‟ satisfaction and customer loyalty were in detail and its validity and
reliability scale was verified in the analysis. The factors can be considered as significant when they are
determined by a factor loading greater than 0.5 and the eigenvalue equals to or greater than 1.0. The Cronbach‟s
alpha coefficient is also very important to test the reliability of the scale. The confirmatory factor analysis is
applied to check the validity and reliability of the measurement scale in the data analysis for measuring
customers‟ satisfaction and loyalty in the Malaysian hypermarket perspectives. The study by Byrne (2010)
stated that the confirmatory factor analysis is the multivariate statistical method and it is evaluated by statistical
means to identify the adequacy of its goodness of fit.
According to Fornell & Larcker (1981) posited that discriminatory validity is achieved when the ratio of
variance removed in each construct exceeds the square of the coefficient which represents the correlation with
other constructs. In terms of reliability, the evaluation of an instrument can be made by using the construct
validity and internal validity. The Cronbache‟s alpha coefficient is used to examine the reliability of the scale
that is accepted on the lower limit from 0.60 to 0.70 (Hair, Anderson, Tanthan, & Black, 1998).
Hypothesis Testing:
Turning to the assessment of the hypothetical paths analysis in the statistical structural model, it is
important to know that whether the process of the path coefficients is significant in the hypothesized direction.
Five hypotheses were determined for this study. Table 5 demonstrates the standardized regression weight of the
variables of the hypothesis testing and the result shows that there is positive coefficient of all constructs. The
structural equation model was employed to examine the relationship among the variables. The full model is fit
well statistically and shows that Chi-Square/df=1.282 (Chi-Square=546.336, df=426); RMSEA=0.051;
CFI=0.917; GFI=0.902; AGFI=0.900; TLI=0.910. Generally, the fit indices illustrated the good fit between
proposed model and data as Chi-Square statistics=1.282 (Chi-Square=546.336, df=426); RMSEA=0.051
determine a good fit and most indices achieved greater acceptable range which is illustrated in Table 4. The
fitness indexes assessment for the structural model in according to the Fig. 2 which draws the full model of the
five paths hypothesized model and all the paths were significant at p < 0.05. The hypothesized model with items
indicating the construct service quality, product quality, price strategy, store attributes, customer satisfaction and
customer loyalty. In this model, service quality, product quality, and price strategy and store attributes have
significant relationship on customer satisfaction and overall customer satisfaction has strong effect on customer
loyalty. Especially, product quality is more significant on customer satisfaction with compare to other
constructs. Therefore H2 is accepted at p < 0.000. Customers‟ attention to product quality can change
dramatically due to build up experiences, cost of quality and information accumulate (Rahman et al, 2010;
Quelch & Hoff, 1986). In terms of H1, service quality has significant impact on customer satisfaction therefore
H1 is accepted at p < 0.000. According to some philosophy who found that service quality has a significant
impact on customers (Tu et al., 2011) as service quality based on the perception and expectation of customers
(Rahman et al., 2010; Wal, Van, & Bond, 2002). The result indicates for H3 is also accepted at p < 0.000, since
price strategy has positive relationship with customer satisfaction. According to Hellstrand (2010) posited that
customers‟ expectation and loyalty are closely related with the fair price strategy. Consequently store attributes
has significant relationship to customer satisfaction and overall customer satisfaction has direct relation to
customer loyalty which is seen in Fig. 2.
However, according to hypothesized model, RMSEA is 0.051 and the normed chi-square gives very good
value 1.282. CFI, GFI, AGFI and TLI both are greater than or equal to 0.90 respectively as recommended by
Awang (2012). The result found that the product quality is considered very important in Malaysian
hypermarkets as perceive by customers (beta=0.67) as compared to service quality (beta=0.61). On the other
hand, overall customers‟ satisfaction has strong relationship on customer loyalty (beta=0.75). Therefore, the
result of the analysis, the hypothesis model as demonstrated in Fig. 1 which has indicators for each of the
construct.
Fig. 2: Customers‟ perception towards service quality, product quality, price strategy and store attributes of
Malaysian hypermarkets and their effect on customer satisfaction and loyalty.
Table 4: The fitness indexes assessment of main model.

Name of the category Name of index Index value Comments
(1). Absolute fit RMSEA 0.051 The required level is achieved
Absolute fit GFI 0.902 The required level is achieved
(2). Incremental fit CFI 0.917 The required level is achieved
Incremental fit AGFI 0.900 The required level is achieved
Incremental fit TLI 0.910 The required level is achieved
(3). Parsimonious fit Chisq/df 1.282 The required level is achieved
Table 5: Standard estimation of the main model.

Structural path (Standardized regression weight) Estimate S.E C.R P
H1 Customer satisfaction <--- Service quality .612 .081 6.329 0.000
H2 Customer satisfaction <--- Product quality .677 .087 6.965 0.000
H3 Customer satisfaction <--- Store attributes .472 .064 3.056 0.001
H4 Customer satisfaction <--- Price strategy .530 .076 4.357 0.000
H5 Customer loyalty <--- Customer satisfaction .754 .098 7.305 0.000
Conclusion And Implementation:

The study focused on the customers‟ satisfaction and loyalty of Malaysian hypermarkets from customers‟
behavioral perception. Generally, customers‟ perception is widely varied, which mostly associated with service
quality, price (Rahman et al., 2010), product quality and store attributes of retail industry. This research is also
identified the overall customer satisfaction has strong significant relationship with customer loyalty. Customer is
the king of a business organization. Customer satisfaction and loyalty is deeply interrelated with customers‟
purchase behavior. Indeed, customer satisfaction is very important, since the finding of the research is examined
that service quality, product quality, price strategy and store attributes have significant impact on customer
satisfaction and overall customer satisfaction has direct impact on customer loyalty. Therefore, customer
satisfaction is an antecedent to the customers‟ loyalty in hypermarkets context and it is recommended by Dahesh
et al. (2012) demonstrated that customer satisfaction is the key and real determinant to the customers‟ loyalty to
a particular industry. The author also point out that managerial strategy is an important indicator to the
customers‟ loyalty in every business firm.
To investigate the customer satisfaction in Malaysian hypermarkets, the research provides exploratory study
by distributing research questionnaires among Malaysian hypermarkets (Giant, Tesco and Carrefour) consumers
involving professionals, students, practitioners and other consumers of hypermarket industry. The result found
that service quality and product quality is more significant than other factors of hypermarket setting.
Consequently, price strategy as well as store attributes is verified significant with customer satisfaction.
Customer loyalty can be sustained through developing customer satisfaction. In this study, the result found that
customer satisfaction is the mediating construct which has strong relationship to customer loyalty. The previous
study Abdullah (2012) recommended that the higher customers‟ satisfaction level will result in a higher
customers‟ loyalty.
According to literature review, there was illustrated a vast of customer satisfaction and customer loyalty
dimensions under the different constructs. In this study, four constructs (service quality, product quality, price
strategy and store attributes) are verified to important for developing customer satisfaction. Under the construct
of service quality, five dimensions are most important for customer satisfaction such as staff‟s courteousness,
product warranty or guaranty, sales personnel‟s skills, wider range of product offer and price tag on products are
the important dimensions. In terms of product quality, six dimensions are most important for customer
satisfaction including different qualities product offer, product durability, high quality food product offer,
accurate product information, wider range of product offer and innovative product offer. Consequently, price
discount, reasonable price, promotional price on various product, product variety offer at different prices,
quantity discount on product purchase are the important dimensions for developing customer satisfaction and
customer loyalty. Finally, store attributes is also important construct that is verified to significant with customer
satisfaction. However, in terms of store attributes, the result found the five dimensions that are impressive
music, car parking facilities, cleanness and freshness, store decoration and location are the most important for
developing customer satisfaction and building customer loyalty in the retail business industry in Malaysian
hypermarket context.
Limitation and Direction for Future Research:

The limitation of the study is encountered on the total process of this research. The sample size of this
survey may not demonstrate total population owing to limited financial resources and time consuming. In
addition, two hundred and ninety two (292) samples from Kuala Lumpur area may not enough to illustrate
properly total Malaysian hypermarkets‟ consumers who are aged above 18 years. This limitation does not affect
the overall result of this study because Kuala Lumpur areas such as Batu cave, Wangsamaju, Sri Rampai, Kota
Damasara and Puchong are the highest number of outlets in Malaysia. However, the findings of the study are
constructive, for further verification and implementation by the practitioners of hypermarkets organization. In
terms of future research, this is beneficial and practical as well as discussion relating to the limitation of the
research. The researchers are encouraged to conduct for future study especially throughout the whole Malaysia.
The research should be conducted nationally that covered entirely all area of Malaysia to clarify the customer
satisfaction and customer loyalty. The results of this study from different customers‟ background can aid to
generalize the overall population as well as developing intensive research. For further research, researchers
should look into other construct like managerial strategy, value of products, needs of customers and others.
Particularly, Malaysian hypermarket industry should emphasis and implements properly the customer service
sector, product quality, price strategy and store attributes, as these are verified to significance relationship with
customer‟s satisfaction and loyalty in Malaysian hypermarkets. In addition, diversity research is very important
and it will provide more accurate information as well as solution of the problem to Malaysian hypermarkets for
implementing the effective marketing strategy to develop customer satisfaction and customer loyalty.
Furthermore, different types of languages (English, Tamil and Malay) are necessary for constructing the
questionnaires for future researcher.
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Australian Journal of Basic and Applied Sciences, 8(7) May 2014, Pages: 304-322

Journal home page: www.ajbasweb.com

Factors Affecting Customer Loyalty through Satisfaction towards Retail Marketing

ARTICLE INFO ABSTRACT

© 2014 AENSI Publisher All rights reserved.

Product Quality Customer Satisfaction

Store Attributes Customer Loyalty

Fig. 1: Conceptual framework.

RESULTS AND DISCUSSION

Table 1: KMO and Bartlett‟s test.

Reliability, validity and unidimensionality:

Comparative Fit Index (CFI):

Goodness of Fit Index (GFI):

Adjusted Goodness of Fit Index (AGFI):

Table 3: The results of model fit.

Table 4: The fitness indexes assessment of main model.

Table 5: Standard estimation of the main model.

Conclusion And Implementation:

Limitation and Direction for Future Research:

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