Advances in Economics, Business and Management Research, volume 75

1st International Conference on Materials Engineering and Management - Management Section (ICMEMm 2018)

Analysis of Effect of Service Quality,

Physical Environment And Customer
Experience To Customer Loyalty Through
Customer Satisfaction of Visitor Starbucks
Coffee In Samarinda
st nd th
1 Besse Asniwaty 2 Muhta Sehe2 3 Bobby Siswanto
Business Administration Department, Business Administration Department, Business Administration Department,
Marketing Study Program Business Administration Study Program Marketing Study Program
Samarinda State Polytechnic, Samarinda State Polytechnic, Samarinda State Polytechnic,
E-mail : [email protected] E-mail : [email protected] E-mail : [email protected]
th
4 Satryawati
Business Administration Department
Business Administration Study Program
Samarinda State Polytechnic
E-mail : [email protected]

Abstract-This study aims to determine the effect of service quality, customer. One of the franchises that are engaged in coffee
physical environment and customer experience to customer loyalty shops that are currently developing, is Starbucks Coffee.
through customer satisfaction on Starbucks coffee visitors in
Samarinda ,. The research data obtained were then analyzed using Starbucks Coffee has more varied coffee beverage products.
the structural equation modeling (SEM) analysis tool using the
Starbucks Corporation is a coffee shop network from the
analysis of moment structure (AMOS) software. The result of this
research shows that service quality and physical environment have United States based in Seattle, Washington. Starbucks is the
significant influence directly to customer satisfaction and to largest coffee shop company in the world, with 15,012 outlets
customer loyalty, other districts of customer experience have not in 44 countries. Starbucks Coffee was first opened in 1971 in
significant effect either directly on customer satisfaction and Seattle by Jerry Baldwin, Zev Siegle, and Gordon Bowker. In
customer loyalty, and customer satisfaction as intervening variable the 1990s, Starbucks opened many new stores, this growth
significantly customer loyalty, thus very precise research puts continued until the 2000s. At the end of March 2008,
customer satisfaction as variable intervening Starbucks had 16,226 outlets, 11,434 of which were in the
Keywords: Service Quality, Physical Environment, Customer United States.
Experience, Customer Satisfaction, Customer Loyalty
Starbucks in Indonesia has also spread in large cities such as in
Jakarta, Bandung, Surabaya, Medan, and Bali. In Indonesia
Starbucks competes with other Coffee Shop networks from the
I. INTRODUCTION United States, such as The Coffee Bean and Excelso.
Starbucks offers a variety of beverage menus for customers,
The company always innovates for customer satisfaction and namely non-coffee drinks, snacks and beautiful souvenirs.
this applies to all types of companies including companies Starbucks Coffee market target: in terms of age 16-40 Years,
engaged in services or retail that have adopted a strategy that students, entrepreneurs, and private employees to families.
can maintain satisfaction and create customer loyalty like [19] Based on the Top Brand Award data in Indonesia in the last 5
found in their research that maintaining and maintaining years from 2013-2017 Starbucks excelled from other
customers will have an impact on cost efficiency that is competitors in the field of coffee café franchise in Indonesia
cheaper than the costs used to find new customers. and occupied the Top Brand position for 5 consecutive years.
In fact, it can be witnessed that more and more retail As in the following data:
businesses are currently competing in the market and showing
great development, this is not an obstacle for retail companies
to always add outlets in various regions. This business is better
known as a franchise, which is widely developed in developed
and developing countries. Franchising is also known to have a
very effective distribution to bring products closer to each

Copyright © 2019, the Authors. Published by Atlantis Press.

This is an open access article under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/). 122
 Advances in Economics, Business and Management Research, volume 75

Table 1 distributing goods or services that can satisfy the needs of both
Top Brand Award Café Coffee 2013-2017 existing buyers and potential buyers.
Percen- Infor According to [12] "Marketing mix is the set of tactical
NO Brand Year marketing tools that the company blends to produce the
tage mation
1 2013 47,3% response it wants in the target market." The marketing mix
consists of 4 (four) components called 4P , namely: (1)
2 2014 48,6% Product is an item, service, idea designed and offered by the
Star- TOP
3 2015 47,8% company for consumer needs. (2) Price is the amount of
bucks BRAND
4 2016 44,0% money the customer must pay to get the product, (3) Place is
the placement of a product to be available to target consumers,
5 2017 39,5% and how to deliver products to consumers. (4) Promotion is the
In 2013-2014 Starbucks Coffee in Indonesia increased by activity of communicating and conveying information about
around 1.3% from 47.3% to 48.6%. However, from 2015 to products to consumers, and persuading target consumers to
2016 to 2017 Starbucks successively decreased from 48.7% to buy products. Then [15] adding another 3P to 7P, namely (5)
47.8% then from 47.8% to 44.0% and lastly from 44.0)% to Process is the service, creation, design and implementation of
39.5%, in that position Starbucks Coffee. In the following year effective processes (6) Physical environment is the design of
in 2016 and 2017 Starbucks was still the Top Brand Award in building appearance, landscaping, interior furniture,
the coffee segment in Indonesia. Decreasing the percentage equipment, staff uniforms, signs, printed materials, which are
percentage of Starbucks Coffee reported by the Top Brand visible and provide tangible evidence of the quality of service
Award website is the number of other Coffee Cafés in of the company, (7) People are individuals who interact
Indonesia that make Starbucks Coffee consumers begin to directly with consumers, which require good interpersonal
slowly move to Café Coffee, such as The Coffee Bean and skills and positive attitudes.
Excels. Other variants in Indonesia Marketing Services according to [18] Services are activities
that can be identified individually and are not palpable, to meet
Variables that are suspected to be part of the achievement of needs and not have to be tied to the sale of other products or
Starbuck to become a top brand during this time, namely services. Furthermore [11] stated that services are all actions
Service Quality, where the quality of service provided to or performance that can be offered by one party to another
consumers every time buying products includes physical party which is essentially intangible and does not produce any
facilities, equipment or equipment, prices, and personal ownership. Various research and service marketing literature
appearance and written material that is Starbuck, providing reveals that services have a number of unique characteristics
fast, precise, polite and sensitive services to customer needs. that differentiate from goods and have an impact on how to
The variable Physical Environment includes strategic location market them. The characteristics of services according to [6]
selection, layout, interior design, aesthetics, tables and chairs, are Intangibility, Inseparability, Variability, Perishability
sound system, air condition and cleanliness, then Customer [11] said that, "Consumer behavior is the study of how
Experience includes experiences that create a sense of comfort individuals, groups, and organizations select, buy, use, and
through the quality of drinks and food that is presented with dispose of goods, services, ideas, or experiences to satisfy their
vision, touch, taste, hospitality to meet the needs and desires of needs and desires". In line with [22] which says consumer
customers. behavior can be defined as behavior in which consumers show
(searching for), purchasing, using, evaluating, and disposing of
Customer Satisfaction is an intervening variable that covers products and services that they will satisfy their needs
customer satisfaction with the services provided, products [13] that "Retailing is a series of business activities to add
offered to consumers and facilities provided by Starbucks value to goods and services sold to consumers for personal or
outlets in Samarinda to create the comfort and satisfaction of household consumption". So consumers are the target of
each customer. Furthermore, variable Customer Loyalty is retailing as the end consumers who buy products for
indicated through repurchase, a statement of positive things consumption own. Retail mix is a variable used to satisfy
about the product. and also has a commitment to always be customer needs and influence customer purchasing decisions.
loyal to Starbucks products. Based on the facts described, a [16] says there are 6 retail mix variables including: (1) location
research title can be drawn, namely "Analysis of the Effect of (2) merchandise (3) Price (4) Promotion (5) Service (6)
Service Quality, Physical Environment and Customer Atmosphere
Experience on Customer Loyalty through Customer [11] states that "Quality is the totality of features and
Satisfaction on Starbucks Coffee Visitors in Samarinda City". characteristics of a product or service that depends on its
ability to satisfy expressed or implied needs." Meanwhile,
II. LITERATURE REVIEW according to Lewis and Booms in [24] "quality services as a
measure of how well the level of service provided is in line
Some experts argue about the notion of marketing as expressed with customer expectations. [1] argues that Service Quality
by [11] that marketing is the realization of potential exchanges can be measured by using the following 5 indicators: (1)
with the intention of satisfying human needs and desires. Then Tangible is the appearance and capability of the company's
[14] states that marketing is an overall system of business physical facilities and infrastructure that can be relied on in the
activities aimed at planning, pricing, promoting and surrounding environment and is tangible evidence of services
provided by service providers. (2) Reliability is the ability of

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the company to provide services in accordance with what is indicators, namely: (1) Service Satisfaction, is a feeling of
promised accurately and reliably. (3) Responsiveness is the satisfaction that consumers feel about the services provided.
company's ability to provide fast and appropriate services to (2) Pleasant Experience, which is a pleasant experience felt by
customers by delivering clear information (4) Assurance is consumers both in using the product or service they buy. (3)
knowledge, politeness of compensation, and the ability of Transaction Service, which is the ease of service in making
company employees to foster customer trust in the company. transactions. (4) Leisure Facilities, namely a facility provided
(5) Emphaty is giving sincere and individual or personal to consumers to enjoy leisure time or in a waiting state such as,
attention given to customers by trying to understand customer the features of games facilities and others.
desires.
According to [10] loyalty is defined as a strong commitment to
[20] Physical environment is everything that covers all non- buy or subscribe to certain products or services in the future
human aspects of the field where consumer behavior occurs. even though there are influences of marketing situations and
Almost all aspects of the physical environment can influence efforts that have the potential to cause behavior change, then
consumer behavior, and measuring Physical Environment by [26] measure Customer Loyalty with 3 indicators namely Say
using the following 6 indicators: (1) Aesthetics Facility, Positive Things, Recommend Friend, Continue Purchasing,
namely all architectural designs, interior designs, and according to [4] Customer Loyalty is measured by the
decorations that contribute to the attractiveness of the dining following 3 indicators: (1) Word of Mouth (WOM), (2)
area environment (2) Ambience, which is an intangible Repurchase Intention, (3) Commitment, In this study,
element that aims to influence the senses in a non-visual way researchers adopted indicators according to [4] because the
that unconsciously gives effect to consumers (3) Lighting, indicators are in line with what researchers are researching.
which is different lighting that can affect individual
consumers' perceptions of the size of the room and change HYPOTESIS TEST
consumer sensitivity in terms of physical , psychology and
emotional will be an area and influence consumer buying H1: Service Quality has significant influence on Customer
behavior (4) Layout, which is an element that gives pleasure in Satisfaction at Starbucks Coffee visitors in Samarinda
a middle to upper restaurant. (5) Table Settings, that is. how to H2: Physical Environment has a significant effect on
design a table by putting flowers or candles as decorations to Customer Satisfaction at Starbucks Coffee visitors in
make consumers feel they are in a good environment. (6) Samarinda.
Service Staff, that is. refers to employee performance, number H3: Customer Experiencer significantly impacts Customer
of employees, and employee gender. In line with [3] which Satisfaction on Starbucks Coffee visitors in Samarinda.
measures Physical Environment with 5 indicators, namely H4: Service Quality has significant influence to Customer
Layout Accessibility, Facilities Aesthetics, Comfort Seating, Loyalty of a Starbucks Coffee visitors in Samarinda
Electronic Equipment, Facility Cleanliness, H5: Philosophical Environment significantly affects the
customer loyalty of visitors to Starbucks Coffee in
According to [17] customer experience is customer responses Samarinda
internally and subjectively as a result of direct and indirect H6: Customer Experience significantly influence Customer
interactions with the company, further [21] suggests that Loyalty of Starbucks Coffee visitors in Samarinda
consumer experience involves the five senses, heart, mind , H7: Customer Satisfaction significantly affects Customer
who can place the purchase of a product or service in a larger Loyalty of Starbucks Coffee visitors in Samarinda.
context in life. [23] argues that Customer Experience can be
measured by 5 indicators, namely (1) Sense, namely the senses III. RESEARCH METHOD
that are owned by humans as a tool to feel the products and
services offered. (2) Feel, which is the feeling displayed This study uses SEM (Structural Equation Model) for data
through the idea, pleasure, and reputation of the consumer processing and analysis in which SEM is a statistical technique
service. (3) Think, namely the experience of demanding that can analyze the relationship between latent constructs and
intelligence with the aim of creating cognitive experiences and indicators, latent constructs with each other and direct
problem solving by engaging consumers creatively. (4) Act, measurement errors. SEM allows direct analysis between
which is designed to create a consumer experience that relates several dependent and independent variables [9]. The causal
to physical psychology (5) Relate, namely the existence of relationship between research variables can be constructed
relationships with other people, other social groups (such as from one or several exogenous variables with one or several
work, lifestyle) or wider social identities endogenous variables. Each endogenous variable or exogenous
variable can be constructed from several indicators that can be
Associated with customer satisfaction [7] states that customer measured directly. Data Processing and Procedure Analysis by
satisfaction is a feeling that is owned by the customer if the Structural Equation Model (SEM) is carried out through the
needs are real or only perceived fulfilled or exceeded stages of correlation calculation, confirmation factor analysis,
expectations, [11] argue that "customer satisfaction is a feeling and the determination of direct and indirect effects between
of pleasure or disappointment someone who appears after exogenous and endogenous variables. [2] Software used for
comparing the perceptions or impressions of the performance moment structure analysis (AMOS) 5.0.
or results of a product and service and its conformity with
expectations [5] measuring Customer Satisfaction with 4

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Structural Equation Model (SEM), referring to opinion [8] e5 X1#5

.70 e16 e17 e18 e19
e4 X1#4 .71
which uses seven stages: (1) the development of theory-based e3
.58
SQ Y1#1 Y1#2 Y1#3 Y1#4
X1#3 .72
models with confirmatory techniques (2) regression path e2 X1#2 .61 .50 .85 .93.87 .88

diagrams for research testing models (3) flow chart conversion e1 X1#1 CS
e23
into a series of structural models and measurement of e10 X2#5
.64
.63
e9 X2#4 .70 .25
specification equations (4) or covariance data input matrix .78
PE
e8 X2#3 .69 .57
correlation matrix (5) Possible identification problems (6). e7 X2#2 .69 .06

Evaluation of the criteria for goodness of fit (7) The e6 X2#1

.25
e24
interpretation and modification model of the sample was 154 e15 X3#5
.89
e14 X3#4 .83 .08 CL
.93 .76 .79
e13 X3#3 CE .82
IV. RESULTS AND DISCUSSION e12
.79
.63
X3#2
Y2#3 Y2#2 Y2#1
e11 X3#1
4.1 Hypothesis Testing Results e22 e21 e20

The results of testing the hypothesis in this study after being

tested using AMOS then obtained the data as in the following
table: Figure 1
Pathway Chart of Hypothesis Testing Results
Table 2
Hypothesis Testing Results In structural equations this involves many variables and path
Variab Standardi C.R. Probability Information of inter variables which include direct influence, indirect
les zed Path (Critical influence and total influence. For that, we will discuss in detail
Coefficie Ratio) each of these influences.
nt

SQ  CS .498 4.663 *** Significant Direct Effect of Inter variables of Research

PE  CS .626 5.826 *** Significant Direct relationships occur between Service Quality (X1) and
CE  .064 .881 Not Physical Environment (X2) variables and Customer
CS .378 Significant Experience (X3) against Customer Loyalty (Y2). The direct
SQ  CL .251 2.224 .026 Significant relationship of the variable is described in the table as follows:
PE  CL .250 2.020 .043 Significant
CE  CL .077 1.133 .257 Not Table 3
Significant Direct effect of Research Variables
CS  CL .572 3.912 *** Significant Endogen
Source: Data processed by Researchers Variables
Direct effect
Customer
After the data is analyzed and hypothesis testing is performed Loyalty
using SEM analysis tools through AMOS software, shows Service Quality .251
(table 2). that of the 7 hypotheses previously thought, overall 7 Exogen
Physical Environment .250
positive hypotheses are accepted, namely service quality has a Variables
Customer Experience .077
significant effect on customer satisfaction, physical intervening Customer Satisfaction .572
environment has a significant effect on customer satisfaction, Variables
customer experience has no significant effect on customer Source: Data processed by Researchers
satisfaction, service quality has a significant effect on
customer loyalty, physical environment have a significant Based on table 3, above can be explained by the direct
effect on customer loyalty, customer experience has no influence of exogenous variables on endogenous variables,
significant effect on customer loyalty and customer namely Service Quality variable (X1) has a direct influence on
satisfaction has a significant effect on customer loyalty. The Customer Loyalty (Y2) variables of .251. Meanwhile in the
results of testing the hypothesis are as follows: Physical Environment variable (X2) gives a direct influence on
Customer Loyalty (Y2) variables of .250. Meanwhile the
Customer Experience variable (X3) gives a direct influence on
Customer Loyalty (Y2) variables of .077.

Indirect Effect and the Total Effect of Research Inter

Variables

An indirect relationship occurs between Service Quality (X1)

and Physical Environment (X2) and Customer Experience
(X3) variables towards Customer Loyalty (Y2). Because the
variable relationship through the variable Customer

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Satisfaction (intervening variable), so there is a total influence Ratio value. (CR) of 5.826, greater than the critical value of ±
as shown in table 4 as follows: 1.96 and obtained a significant probability (p) of *** which is
smaller than the error level (α) of 0.05.
Table 4
Indirect Effect and Total Effect of Research Inter Effect of Customer Experience (X3) on Customer
Variables Satisfaction (Y1) Hypothesis 3
Intervening Endogen Total
Variables Customer Customer effect The results of the third hypothesis (H3) test can be stated as
Satisfaction Loyalty Customer Experience (X3) which has not significant effect on
SQ (X1) .572 Customer Satisfaction (Y1) visitors to Starbucks Coffee outlets
.285 .857
CS(Y1)CL(Y2) in Kota Samarinda (Table 4.1). This is indicated by the
PE (X2)
.358 .572 Standardized Path Coefficient of .064 and the Critical Ratio
CS(Y1)CL(Y2) .930 (CR) value of .881, smaller than the critical value of ± 1.96
CE (X3)
.037 .572 and obtained a significance probability (p) of .378 which is
CS(Y1)CL(Y2) .609 greater than the specified error level (α) of 0.05. The findings
Source: Data processed by Researchers of this study indicate that Customer Experience (X3)
influences Customer Satisfaction (Y1). This means that
Based on table 4 above shows that the relationship between customer experience is not a determinant key to determining
Service Quality (X1), Physical Environment (X2), and customer satisfaction. In this context every customer has a
Customer Experience (X3), on Customer Loyalty (Y2), thought in assessing their level of satisfaction gained from the
through Customer Satisfaction (Y1) as intervening variables, is experience of visiting the Starbucks Coffee store. In addition,
respectively (X1), 285, (X2), 358 and, (X3), 037. The the majority of respondents surveyed were students / students
influence of Customer Satisfaction (Y1), on Customer Loyalty with the dominant visiting frequency, namely once/inevitably,
(Y2), is .572. Thus obtained the total effect of Service Quality therefore from that experience is not the focus or value taken
(X1), on Customer Loyalty (Y2), through Customer by the respondents of this study.
Satisfaction (Y1) amounting to .857, Physical Environment
(X2), on Customer Loyalty (Y2), through Customer Effect of Service Quality (X1) on Customer Loyalty (Y2)
Satisfaction (Y1), amounting to .930 and Customer Experience Hypothesis 4
(X3) to Customer Loyalty (Y2), through Customer Satisfaction
(Y1), amounting to .609. The use of Customer Satisfaction The results of the fourth hypothesis test (H4) state that Service
(Y1) as an intervening variable is very appropriate because it Quality (X1) has a significant effect on Customer Loyalty (Y2)
can increase and increase the influence of the mass of each on visitors to Starbucks Coffee outlets in Kota Samarinda
related variable (Table 4.1). This is indicated by the Standardized Path
Coefficient of .251 and the Critical Ratio (CR) value of 2.224,
IV. RESULT AND DISCUSSION greater than the critical value of ± 1.96 and obtained a
Statistical test results show the causality relationship that significant probability (p) of .026 which is smaller than the
occurs as a proof of the hypothesis in this study, based on data error rate (α) which is set at 0.05.
used and theoretical studies. As well as the results of empirical
research that supports, and or rejects the results of hypothesis Effect of Physical Environment (X2) on Customer Loyalty
testing conducted in this study. (Y2) Hypothesis 5
Effect of Service Quality (X1) on Customer Satisfaction The result of testing the fifth hypothesis (H5) can be stated that
(Y1), Hypothesis 1 Physical Environment (X2) has a significant effect on
Customer Loyalty (Y2) on visitors to Starbucks Coffee outlets
The results of the first hypothesis test (H1) states that Service in Kota Samarinda (Table 4.1). This is indicated by the
Quality (X1) has a significant effect on Customer Satisfaction Standardized Path Coefficient of .250 and the Critical Ratio
(Y1) on visitors to Starbucks Coffee outlets in Kota Samarinda (CR) value of 2.020, greater than the critical value of ± 1.96
(Table 4.1). This is indicated by the Standardized Path and obtained a significant probability (p) of .043 which is
Coefficient of .498 and the Critical Ratio (CR) value of 4.663, smaller than the error rate (α) of 0.05. . The results of this
greater than the critical value of ± 1.96 and obtained a study support the previous research conducted by [25] in
significant probability (p) of *** which is smaller than the Taiwan with a sample of 931 respondents. Where the previous
specified error level (α) of 0.05. research stated that Physical Environment had a significant
effect on Customer Loyalty.
Effect of Physical Environment (X2) on Customer
Satisfaction (Y1) Hypothesis 2 Effect of Customer Experience (X3) on Customer Loyalty
(Y2), Hypothesis 6
The results of the second hypothesis test (H2) stated that
Physical Environment (X2) had a significant effect on The test results of the sixth hypothesis (H6) can be stated as
Customer Satisfaction (Y1) on visitors to Starbucks Coffee Customer Experience (X3) has no significant effect on
outlets in Samarinda City (Table 4.1). This was indicated by Customer Loyalty (Y2) visitors to Starbucks Coffee Big Mall
the Standardized Path Coefficient of .626 and the Critical

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outlets in Samarinda City (Table 4.1). This is indicated by the satisfaction where products and services offered provide
Standardized Path Coefficient of 0.77 and the Critical Ratio satisfaction to Starbucks Coffee outlets in Samarinda.
(CR) value of 1.133, smaller than the critical value of ± 1.96
and obtained a significance probability (p) of .257 which is Recommendation
greater than the error rate (α) of 0.05 .. Based on the conclusions of this study, it is advisable for the
company to maintain and or improve Service Quality and
Effect of Customer Satisfaction (Y1) on Customer Loyalty Physical Environment variables because these two variables
(Y2) Hypothesis 7 have a direct and significant effect on Customer Satisfaction as
an intervening variable and on Customer Loyalty and
The results of testing the seventh hypothesis (H7) can be stated Customer Satisfaction variables also have a direct and
that Customer Satisfaction (Y1) has a significant effect on significant effect. Towards Customer Loyalty so that Customer
Customer Loyalty (Y2) on visitors to Starbucks Coffee outlets Satisfaction variable is recommended to be maintained and / or
in Kota Samarinda (Table 4.1). This is indicated by the improved
Standardized Path Coefficient of .572 and the Critical Ratio
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