FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM
NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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CHAPTER 1: INTRODUCTION 1.1 STUDY BACKGROUND The concept of satisfying customers is rooted deep in the philosophy of marketing and is a key element in most marketing definitions. The researcher will explain why customer satisfaction is important to this Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunnaan (KPDNKK) then discuss customer satisfaction of services case of KPDNKK. Measuring and understanding customer satisfaction are important elements in the organization. Customer satisfaction has a significant influence on friendly atmosphere and speed of feedback. Then, expectations are important comparison standards that help consumers to evaluate the perceived performance of the services that offer throughout and at the end of the service counter. Customers are satisfied if the experience matches or exceeds their expectations, and dissatisfied if the service performance fails to match their expectations. Customer satisfaction is important to KPDNKK because to measure the level of satisfaction weather is bad or good. Then, it also important for KPDNKK because the organization can make improvement or make any adjustment towards their services provided. If the customer satisfied, so it can give impact positive word of mouth and can also create loyalty for the organization. FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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To managing and measuring customer satisfaction it takes continuous effort to maintain high customer satisfaction levels. Kevin Cacioppo (2000), measuring customer satisfaction is a relatively new concept to many companies that have been focused exclusively on income statements and balance sheets. Companies now recognize that the new global economy has changed things forever. Increased competition, crowded markets with little product differentiation and years of continual sales growth followed by two decades of flattened sales curves have indicated to today's sharp competitors that their focus must change.
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1.1.1 Background of Company Kementerian Perdagangan dalam Negeri, Koperasi dan Kepenggunaan (KPDNKK) was established on 27 October 1990, with the aim towards encouraging ethical trade practices and to protect consumer interest. The role and functions of the Ministry have been expanded in 2009 to include the franchise and cooperative sectors. 1.1.1 Vision The vision of KPDNKK is a leader in the development of domestic trade, co-operatives and consumerism 1.1.2 Corporate Mission Statement The missions are to provide a conducive business environment for the development of domestic trade and to steer the nation towards a more consumer conscious and empowered society. Other missions like to develop competitive, progressive and resilient co-operatives and also to foster creativity and innovation through an effective IPR engine 1.1.4 Objective The main objective of the establishment of the Ministry is to promote and encourage the development of domestic trade that is competitive and ethical while protecting the interests of consumers at large. Other objectives of KPDNKK are to enforce and protect intellectual property rights and to enforce and eradicate exploitation in subsidized goods. Then, the objective to enforce trade laws for consumer protection and also to enforce and monitor the supply and price of essential goods.
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1.2 PROBLEM STATEMENT The agencies do not have enough knowledge on the level of customer satisfaction regarding the service that provided by their staff when the customer come to make their complaint. Therefore the study will attend to examine whether friendly atmosphere and speed of feedback have any impact on customer satisfaction. There are several factors that contribute customer satisfaction like friendly atmosphere, personal attention, and speed of feedback and also complete form. So, the organization can know what the factor that can influence customer satisfaction and how to improve customer satisfaction. However, this study will only consider friendly atmosphere and speed of feedback. Friendly atmosphere is a feeling or mood that has in a particular place or situation, and a feeling between two people or in a group of people .It also defines the air in a room or in a confined space whether is comfortable or not. If the organization did not have the friendly atmosphere for customer, so the customer not satisfy or not comfortable for make any complaint regarding the situation The speed of feedback means how the employee handles the problem or any situation like the customer want to renew their business license or they want make a redress regarding they purchase any product. If the procedure is a quick, so the customer will happy and satisfy in the organization. The speed of feedback also like the time for waiting for serves, whether their speed of feedback from employees are slow, or quickly.
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1.3 OBJECTIVE OF STUDY Normally, the research study should have objective first. It seems like an important compass for researcher in guiding to achieve the purpose of doing the research. The objective should be specific, measurable and realistic. Here are several objectives that uses by the researcher to measure the factors that influence customer satisfaction of services case of Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan (KPDNKK) in Kota Bharu area.
1. To examine the weather friendly atmosphere influence customer satisfaction 2. To examine the weather speed of feedback influence customer satisfaction
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1.4 RESEARCH QUESTION According to Malhotra (1999), research question are refining statements of the specific components of the problem. In this study, the researcher has come out with two research question to answer the objective of study. The research questions are following:
1.4.1 Research Question 1 To what extent friendly atmosphere influence the customer satisfaction?
1.4.2 Research Question 2 To what extent speed of feedback influence the customer satisfaction?
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1.5 THEORITICAL FRAMEWORK The research was conducted to study the relationship between the independent and dependent variables. The focus is on the dependent variable that is customer satisfaction as the factor that influences customer satisfaction of services provided by KPDNKK. The factors that cause customer satisfaction are friendly environment and speed of feedback. Each of the components is selected based on the literature review and the research of other models. This variable is interrelated to each other and is elaborated below.
1.6.1 Dependent variable This variable changes depending on the related factor for certain things. It will be affected by any changes on other factors, which are independent variable. In this study, customer satisfaction is the dependent variable and other factors that influence customer satisfaction of services provided by KPDNKK are friendly atmosphere and speed of feedback.
1.6.2 Independent variable According to Uma Sekaran (2003), independent variable is one that influences the dependent variables in either a positive or a negative way. That is, when the independent variable is present, the dependent variable is also present, and with each unit of increase in the independent variable, there is an increase or decrease in the dependent variable also. In another word, the variance in the dependent variable is accounted for by the independent variable. The independent variables in this study included friendly atmosphere and speed of feedback. FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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Theoretical Framework
Figure 1: Relationship between dependent variable and independent variable.
Customer Satisfaction is a degree of satisfaction that provided by goods and services of a firm as measured by the number of repeat customer. Satisfaction itself also can refer the number of different facts of the relationship by customer like satisfaction about quality of a particular product or services and satisfaction with ongoing business relationship itself.
Friendly atmosphere is showing kindly interest and goodwill or serving a beneficial that helpful purpose Speed of feedback is a response to an inquiry or experiment and also the process in which part of the output of a system is returned to its input in order to regulate its further output The dependent variable using a Kano Model while independent variable using a Peters- Moore-Holmberg theory that will be discussed on chapter two. Friendly Atmosphere Speed of feedback Customer satisfaction FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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1.6 RESEARCH HYPOTHESES Hypotheses 1 Ho : There is a positive relationship between friendly atmospheres with customer satisfaction Ha : There is no positive relationship friendly atmospheres and customer satisfaction
Hypotheses 2 Ho : There is a positive relationship between Speeds of feedback with customer satisfaction Ha : There is no positive relationship Speeds of feedback and customer satisfaction
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1.7 SIGNIFICANCE OF STUDY 1.7.1 To the researcher This researcher is mostly significant to the researcher. The researcher can apply the theory that is learned at classroom into practical manner. The researcher will also exposed with firsthand experience in carrying out research to meet both academic and industry requirements that contribution the academician.
1.7.2 To the organization The study also important to the organization like KPDNKK, Kelantan because the findings of research will play a vital role in making this service management and the organization also can also get the opportunity for improvement in making successful management. Other than that, the organization can know the extent the level of customer satisfaction of services provided by them.
1.7.3 To the customer Through the questionnaire contributed, the customers can express their feelings, ideas and comments on the subject matter. These in whole would benefit KPDNKK, Kelantan in the long term understanding and the need and expectation of their customer
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1.7.4 To policy maker or government The government can make the new policy in order to guide the organization that can develop or establish their policy for increase the services provided by KPDNKK.
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1.8 SCOPE AND LIMITATION Scope This section describes the overall context of the research areas. The aim of this study is to know the factors that influence factors that influence customer satisfaction of services case of KPDNKK. The factors included friendly atmosphere and speed of feedback. The unit of analysis is individual and the respondents covered are the customer area Kota Bharu.
Limitation 1.8.1 Time constraints Four month to do this research is not really enough, but the data has been obtained and the results are sufficient. In addition, the researcher had to go for practical training while doing the research. To overcome this problem the researcher had managed and used time precisely to gain as much information as possible.
1.8.2 Poor feedback The respondent not totally gives the good feedback because they not give the cooperation during to distribute the questionnaire. So, it difficult to researcher for collects the actual data. Some respondent did not answer the question sincerely. Some were rush, thus the simply answered the question without revealing the true information. Other than that, the FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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sample is small because the customer did not really know about services that provided by KPDNKK.
1.9.2 Budgeting In term of budgeting, the researcher also has the lack of budgeting because the researcher cannot get the allowance to back up all the expenses.
1.9.3 Lack of experience This is the first time the researcher conducted a research. The researcher faced some difficulties in analyzing the data and using SPSS to come up with result findings
1.10 SUMMARY AND CONCLUSION In this chapter, the researcher discusses about the background of the study, problem statement, objectives, hypotheses, scope of study, significance of study and the limitations faced by the researcher while conducting this research.
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1.11 DEFINITION OF TERMS KPDNKK: Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan that provided service like supervision of domestic trade, supervising the price items of necessities, licensing and controlling the manufacturing and sales such time and manage the consumer protection. Customer Satisfaction: Degree of satisfaction that provided by goods and services of a firm as measured by the number of repeat customer. Satisfaction itself also can refer the number of different facts of the relationship by customer like satisfaction about quality of a particular product or services and satisfaction with ongoing business relationship itself Friendly atmosphere: Showing kindly interest and goodwill or serving a beneficial that helpful purpose
Speed of feedback: A response to an inquiry or experiment and also the process in which part of the output of a system is returned to its input in order to regulate its further output
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CHAPTER 2: LITERATURE REVIEW 2.1 Customer Satisfaction Customer satisfaction is defined as an "evaluation of the perceived discrepancy between prior expectations and the actual performance of the product" (Tse and Wilton, 1988, Oliver 1999). Satisfaction of customers with products and services of a company is considered as most important factor leading toward competitiveness and success (Hennig-Thurau and Klee, 1997). Customer satisfaction is actually how customer evaluates the ongoing performance (Gustafsson, Johnson and Roos, 2005). According to Kim, Park and Jeong (2004) customer satisfaction is customers reaction to the state of satisfaction, and customers judgment of satisfaction level. Customer satisfaction is very important in todays business world as according to Deng et al., (2009) the ability of a service provider to create high degree of satisfaction is crucial for product differentiation and developing strong relationship with customers. The Kano et al. (1996) model of customer satisfaction classifies product attributes based on how they are perceived by customers and their effect on customer satisfaction (Kano, Seraku et al. 1996). According to the model, there are three types of product attributes that fulfil customer satisfaction to a different degree: 1) basic or expected attributes, 2) performance or spoken attributes, and 3) surprise and delight attributes. FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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A competitive product meets basic expected attributes, maximizes performances attributes, and includes as many excitement attributes as financially feasible. In the model, the customer strives to move away from having unfulfilled requirements and being dissatisfied.
Figure 2: Kanos Model
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The performance or spoken attributes (the central line of the model) are those expressed by customers when asked what they want from the product or services. Depending on the level of their fulfillment by a product or a service these requirements can satisfy or dissatisfy consumers. The basic or expected attributes (lower curve in the model) are basic attributes, which customers take for granted and they are so obvious that they are not worth mentioning. While the presence of these attributes is not taken into account, their absence is very dissatisfying .The surprise and delight attributes (upper curve in the model) lay beyond customers expectations. If they are present they excite the customer, but their absence does not dissatisfy, as customers do not expect them. A successful combination of expected and exciting attributes provides a company with an opportunity to achieve competitive advantage. A successful company will correctly identify the requirements and attributes and use them to document raw data, user characteristics, and important service or product attributes. Customer satisfaction makes the customers loyal to one service provider. Previous researchers have found that satisfaction of the customers can help the brands to build long and profitable relationships with their customers (Eshghi, Haughton and Topi, 2007). Though it is costly to generate satisfied and loyal customers but that would prove profitable in a long run for a firm (Anderson, Fornell and Mazvancheryl, 2004). Therefore a firm should concentrate on the improvement of service quality and charge appropriate friendly atmosphere in order to satisfy their customers which would ultimately help the firm to retain its customers (Gustafsson, Johnson and Roos, 2005).It is a common phenomenon that the services a brand offers and the price it charges actually determine the level of satisfaction among its customers, than any other FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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measure (Turel et al. 2006). Customers involvement is also important as when buyer consider the product important and invests time to seek information then it ultimately enhances the satisfaction level (Russell-Bennett, McCollKennedy and Coote, 2007). This satisfaction may influence the concerned company by repurchase, purchase of more products, positive word of mouth and willingness of customer to pay more for the particular brand. Any business is likely to lose market share, customers and investors if it fails to satisfy customers as effectively and efficiently as its competitors is doing (Anderson, Fornell, and Mazvancheryl, 2004).
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2.2 Friendly atmosphere Friendly atmosphere meant the styles and appearance of physical environment for service giving and the part experienced by customers on the occasion of service transferring (Bitner, 1992). The atmosphere, smell and music expressed by the physical environment would affect customers' perception and behaviours. The overall atmosphere filled with inspiring delight affected customers to stay longer organization. It could enhance the willingness for customers' to interact and to communicate with service providers and business performance of stores could be improved (Donavan and Rossiter, 1982; Donavan, Rossiter, Marcoolynn and Nesdale, 1994). Thus, when customers implemented touch with service providers, the service providers' service quality to customers included manual attitude and behaviors. Also, the atmosphere of service environment would affect customers' perception of service performance. . The friendly atmosphere based on the Peters-Moore-Holmberg theory because the atmosphere and style of helpful face-to-face style. It is generally accepted that friendly atmosphere, helpful suggestions and encouragement support study motivation and facilitate success. The medium used to bring about empathy is normally friendly conversation. The friendly atmosphere is essential also in the interaction between organization and customer. The organization helping the customer is the main purpose of this interaction. Customers reaction towards service counter communication practices that were incompetent, not smooth lacking in terms of friendliness and also with difficulties in terms of courteous and professional interaction are often presented in the newspapers and the internet. FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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The service environment includes numerous dimensions that can be classified into two main themes and they are internal environment and external environment. Literature on the internal environment primarily focuses on organizational culture and the overriding philosophy brought to service provision by management. The external theme focuses primarily in the physical ambience of service setting. Fisk, Brown and Bitner (2000) stated that, correct workplace conditions are important factors for health and performance and are profitable and beneficial in every way. Meanwhile, Rust and Oliver (1994) stated that, improving workplace conditions and health standards would assure employees performance. To create a physical infrastructure to satisfy internal and external customers and to obtain higher workplace performance and profit will have a direct impact on an organizations success and on the wealth of the community.
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2.3 Speed of feedback Time spent in communications between the service worker and the customer in the service encounter (measured in seconds) is the first element. Time of the encounter was conceptualized in the original customer contact model (Chase & Tansik, 1983) as a key ingredient. Time is an absolute measure and represents some active behavior of the service employee. Communications time alone captured 71% of the variability that the service experts felt differentiated one episode from another on a magnitude dimension (Kellogg & Chase, 1995). The second element is information richness (Daft & Lengel, 1984); a concept that addresses the value of the service exchange that is not correlated with time (Kellogg & Chase, 1995). Information richness is a complex measure including feedback (the speed at which feedback between service worker and customer is received: 1. very slow (days), 2. slow (hours), 3. fast (minutes), 4. immediate), the communication channel (1. limited visual, 2. audio, 3. visual and audio), the source of communication (was the major theme of the interaction 1. personal or 2. impersonal) and the language used (1. numeric, 2. natural, 3. body, natural). Kellogg (1991) suggests that the information richness concept parallels an early customer contact example of face-to-face, telephone, and mail communication. Face-to-face is high in feedback; uses visual and audio communications channels, is personal and has the advantage of including the full natural range of body language. In contrast, mail communication has very slow feedback, only limited visual usage, is impersonal and uses only written (numeric) language. Telephone communication falls in the middle with immediate feedback, only audio, may be either personal or impersonal, and generally natural in language. FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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This leads to the third element of the measurement model which is intimacy. Intimacy provides a qualitative assessment of the service encounter and is something that is beyond mere humanistic behavior (Kellogg, 1991). Intimacy in the study was defined as mutual confiding and trust as measured by a 5 point Likert scale with anchors no intimacy and the highest degree of intimacy. The amount of feedback provided sends messages about the importance of the customer survey to everybody in the organization. Rather than providing superficial feedback through newsletters, notice boards or e-mail, the results should be personally presented via feedback workshops, preferably to all employees but at least to those who have a role in delivering satisfaction. For large organizations, feedback workshops may be costly, but will be less expensive than the cost of failing to improve customer satisfaction (Nigel Hill,1999)
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CHAPTER 3: RESEARCH METHODOLOGY AND DESIGN 3.0 Research Methodology This chapter is important for the researcher as to make a decision on how to collect data and where to obtain it. Besides that, it helps the researcher to select and determine the appropriate research design in providing the framework to conduct the study. This section discusses about the procedures, style and steps taken to fulfill the research objective requirement. The objective of this chapter is to describe about the process and techniques involved in the study. For this study, the researcher used qualitative and quantitative research. Through qualitative research, the researcher obtained information from face to face interview with KPDNKK staff. Besides the direct interview, the researcher used a survey method by distributing questionnaires to the respondents. 3.1 Research Design In conducting the research, the researcher used descriptive and correlation study to clarify and define the nature of factors that influence customer satisfaction services provided by KPDNKK include friendly atmosphere and speed of feedback.
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3.2 Administration Questionnaire The structured question is used in gathering data for the completion of this study. The questionnaire is designed properly in order to ensure compatibility of the data, increase speed and accuracy of recording and facilitate data processing. In the questionnaire, it is divided into four (4) sections which consist of Section A that represents Demographic, Section B for Customer Satisfaction, Section C for Friendly atmosphere, and Section D for Speed of feedback. This type of questions constructed with questionnaire which is: Likert Scale This type of question allows the researcher to indicate how strongly agree or disagree the respondents are with the asked questions.
Sangat tidak setuju Sangat setuju
1 Saya berpuas hati terhadap perkhidmatan yang disediakan I am satisfied with the services provided 1 2 3 4 5 6 7 8 9 10 FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU
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3.3 Data Collection All the data needed for this research collected from primary and secondary data. Data is gathered for the purpose of analysis, testing hypothesis, interpret the relationship that exists between variables and answer the research objectives and questionnaires. For the primary data, the data is gathered and assembled specifically for the research project at hand. The researcher created and distributed the questionnaire to the respondents. Other than that, the researcher in getting the information from companies conducted several interviews. For the secondary data, the resource of information are journals from internet, magazine, newspaper, journals, reference book, the documentations of the company and other related articles. The researcher focused on customer in Kota Bharu. There were 120 sets of questionnaire distributed to the respondents to get the information and the researcher distributed the questionnaire in two languages, Malay and English language. 3.4 Sampling Sampling is useful in determining and representing the whole large of population. The researcher used non-probability method that is convenience sampling. This is because the researcher cannot get the specific list of the samples. Only 120 respondents were taken to the sample for the study, which is adequate and good enough for the research. According to Roscoe (1957), sample size should be larger than 30 and less than 500 for most research.
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3.5 Procedures of Data Analysis The procedures of data analysis were done after the data collection. The data collected was keyed in and analyzed through the Statistical Package for Social Science (SPSS) program after coding. All the questionnaires are coded to ensure all results will be recorded and analyzed by the researcher in other to get accurate result. Some of the statistical techniques that are used in the hypothesis testing and data analysis are as follows: 3.5.1 Frequency Distribution Analysis After the data was collected, the researcher used descriptive statistical tool from SPSS program to analyze the data in which the data is tabulated. Tabulation consists simply of counting the number of cases that fall in various categories. From the tabulation of the data, the researcher aimed to determine the frequency distribution of the variable in the question and calculated the descriptive statistic. Frequency distribution is a mathematical distribution where the researcher tries to obtain and count the number of responses associate with difference values of variable and expresses them in percentage term. A frequency distribution also indicates the shape of empirical distribution of the variable. The frequency data may be use to construct pie charts, or a bar graph in which the values are stated in the graph.
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HYPOTHESIS STATISTICAL ANALYSIS 1 H 1 : : There is a significant between friendly atmospheres with customer satisfaction T-Test 2 H 1 : There is a significant between Speeds of feedback with customer satisfaction T-Test
3.5.2 Cross-Tabulation In determining the objective, the researcher used cross-tabulation technique in knowing the relationship between variables. It allows the researcher in determining the association between dependent and independent variables; marketability of the product and the factors that influence it. Cross tabulation is a statistical technique that describes two or more variables simultaneously and results in table that reflects the joint distribution of two or more variables that have limited number of categories or distinct values. It is the simplest techniques for describing the size of relationships.
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3.5.3 Correlation Coefficient In order to indicate the relationships that formed between variables and to test the hypothesis, the researcher used correlation coefficient .Correlation is used to support the result of the hypothesis that has been tested. The researcher used a Bivarate Pearson Product Moment Correlation to examine the correlation between the dependent and independent variables. The correlation coefficient, r, ranges from +1.0 to -1.0. A correlation coefficient indicates both magnitude of the linear relationship and the direction of the relationship. Thus, by using this method, the researcher is able to clarify factors that contribute to the marketability of life insurance products and to identify whether the relationship is strong, weak, positive or negative.
3.5.4 Hypotheses Testing The research questions create the hypotheses, as the hypotheses are the probability answers. Hence, this research wants to identify which hypothesis is accepted. According to Zikmund (1993), hypotheses are stated into two: a null hypothesis and alternative hypothesis. A null hypothesis is a statement about the status qou. Alternative hypothesis is a statement indicates the opposite of the null hypothesis. The purpose of hypothesis testing is to determine which of the two is accepted. The cross-tab (eta statistic), correlation and regression are used to test the hypotheses
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3.6 The research schedule for the study Item No ACTIVITIES INVOLVED MONTH January MONTH February MONTH Mac MONTH April 1 Refining : Statement of problem Objective of the study Research question Research hypothesis
2 Design validate, and testing for reliability of measuring instruments
3 Fieldwork and data collection 4 Data management, editing, coding, and input data
5 Data analysis and writing final report
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