2011 International Conference on Sociality and Economics Development IPEDR vol.10 (2011) © (2011) IACSIT Press, Singapore
Factors influencing customer loyalty towards fast food restaurants Hossein Nezakati1*, Yen Lee Kuan2 and Omid Asgari3 1
Department of Management and Marketing, Faculty of Economics & Management, Universiti Putra Malaysia (UPM) 2 MBA student, Graduate school of Management (GSM), Universiti Putra Malaysia (UPM) 3 Founder & CEO, Delta Consulting Group (DCG), Tehran, Iran.
Abstract. The fast food industry is on in an upward trend. The demand for fast food product is now growing as it is convenience which suits the lifestyle of customers. With the changing lifestyle of Malaysian consumers, more educated people and affluent, people tend to eating-out especially in fast food restaurants. Along with the heavily promote through media and information technology exposure, customers has variety choice of fast food pattern and restaurants. Therefore, local fast foods restaurants have to be sensitive to these changing trends and to be innovative and get prepare to change accordingly to avoid from losing their existing and future potential customers. The aim of this study is to examine how the respondent’s perception will be influenced by factors of customer loyalty towards preferred fast food restaurants. With this important information, marketers or strategy planner can formulate or develop an appropriate strategy that able to outdo the competitors. Furthermore, they also can identify which factors will influence customer loyalty most and made innovative changes to keep track and add value to their fast food restaurants. Besides, this study will provide important information for Malaysia local fast food restaurant business to become more competitive in the current business practices circumstances. It is because this study will provide respondents’ perception towards their preferred restaurants. The findings of this study indicated that product quality, customer satisfaction and brand trust is the dominant variable that drives the customer loyalty to preferred fast food restaurants.
Keywords: fast food industry, consumer loyalty, halal food.
1. Introduction Malaysia is a multiracial and multicultural country that made up by several dominant groups such as Malay, Chinese and Indians. Malaysia is a rapidly developing country in Asia and economic growth is projected to moderate to 5.2% in 2011 [1]. According to the World Bank Group, Malaysia GDP per capita is US dollars 14, 215, which adjusted by purchasing power parity. This shows that the purchasing power and standard of living of the population in Malaysia is growing adequately. Consequently, Malaysians allocated largest amount of household expenditures to their food budgets. Owing to the changing lifestyle of Malaysian households, the trend towards greater consumption of take-away food outside the home is increasing. This gave birth to fast food sector. According to Bender and Bender (2001), fast food is a general term used for a limited menu of foods that lend themselves to production line techniques and that are typically hamburgers, pizzas, chicken or sandwiches [2]. According to ACNielsen (2005), there is 59% of adult population that eats at take-away restaurants at least once a week. This is due to convenience concept of fast food restaurant match the busy lifestyles and ease of access to a wide variety of fast food restaurants in the markets [3]. Fast food is now available at restaurants, shopping malls, airports, schools and universities, petrol stations as well as in hospital cafeterias. The fast food outlets that offer quality and variety western menus, modern comfortable ambience with air-condition and highly efficient catering services successfully created consumers awareness. Fast food industry origin from America, it began with
* Hossein Nezakati (Ph.D.), Tell; +60173724245; fax: +60389486188 E-mail address:
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selling hot dog and ham mburger in soouthern Caliifornia. Now w, fast food restaurants r exxtend to eveery region off the countriees [4]. Accoording to ‘Invvestment Annalysis’ (200 09), Malaysiia fast food industry beg gan in 1963,, when A&W W opened up its first outleet at Kuala Lumpur L Batu u Road whichh now knownn as Jalan Tu uanku Abdull Rahman. Malaysia M fast food industtry witnessedd growth on nce after othher western ffast food chaains such ass Kentucky Fried F Chickeen (KFC), Burger King, Mc Donald d, and Pizza Hut were began their operations o inn Malaysia [55].
2. Materrials and Methods With thhe rising of affluence andd education leevel, more women w involvving in the w working forcee which leadd to lack of time to preparre daily mealls for their faamily. Besid des, the numbber of peoplee dining out is i increasingg T fasst food restauurant might be their bestt due to moveement away from extendded family hoouseholds. Therefore, choice to dine d in becaause of the reasonable price, conv venience, quick servicess, comfortab ble with air-condition and a etc. Besiides, fast foood restaurannts are particcularly well liked by yooungsters, wh ho in turnedd influence thheir parents decision d of which w restaurrants to visit. As we know w, Malaysiaa is a multieth hnic society.. In Malaysiaa, around 600% out of thhe 28,274,7229 population n is Malay or o Muslim (IInternationall Data Base,, 2010). Meaanwhile, Malaysia is a Muuslim-majoriity country since s they aree 60% Malayysian will bee demand forr Halal food products. Thus, T local annd western fast f food resttaurants startted to segmeent Muslim markets. m Forr example, McDonald M in Malaysia aree certified Halal. To satissfy Halal cerrtification reqquirements, items i servedd in Malaysiaan McDonalld are withoout pork. Thherefore, most of the faast food restaaurants in Malaysia M aree certified Haalal (Debbie, 2007). Obbviously, fasst food restaaurants that provide p Halal food will be the bestt choice for those t Muslim m to dine inn as well as non-Muslim n m. Unfortunattely, the abillity of westeern fast foodd restaurant to t segment Muslim marrket createdd a huge im mpact to locaal fast food restaurant in Malaysiaa resulting thhey are moree dominant inn the marketts. Under th he 8th Malayysian Plan, thhe governmeent has beenn trying to proomote local fast food inddustry by offfering financiial and trainiing support. Besides, the governmentt estimates too establish around a 50 neew franchisees in future [6]. In fact, rivalry in tthe fast food d industry iss getting morre intense witth the arisingg of more fasst food comp panies and otther food inddustry such as a traditionall restaurant which w offer fresh, f varietyy of tasty foods and fulll services. Too compete inn the industrry, local fastt food restaurrant must keep track withh the custom mers, improvee and changee according tto their custo omers’ need.. Meanwhile,, local fast food restaurrants should increase their customerr loyalty annd market sh hare throughh customer reepurchase. Due D to the increase rivalrry in fast foo od industry, therefore, thhere is an urg gent need too investigate the factors influence cuustomer loyyalty to theirr preferred fast f food reestaurants wh hich in turnn atronage rate es of their pre eferred restau urants. The purpose p of th his study was s to develop a theoreticall increases pa framework to examine the t Factors influencing i c customer loy yalty towardss fast food reestaurants in Malaysia ass shown in Fiigure 1.
Fig. 1: 1 Conceptual Framework of o Customer Loyalty L 13
The research framework derived from [6], [7] and [8]. Two different consumer types will perceptions towards the factors of brand loyalty and seven factors that influence customer brand loyalty namely brand name, product quality, price, style, store environment, promotion and service quality [9]. There are nine factors construct loyalty; involvement, functional value, price worthiness, emotional value, social value, brand trust, customer satisfaction, commitment and repeat purchase. However, only brand trust and customer satisfaction is tested in this research [10]. These two models are selected because it was an important tool to better understand the customer loyalty. Whereas, other related literature are used as supporting references to strongly support the conceptual model of customer loyalty.
2.1. Hypothesis of the Study H1: Product quality has the significant influence on customer loyalty to their preferred fast food restaurants. H2: Product attribute has the significant influence on customer loyalty to their preferred fast food restaurants. H3: Brand name has the significant influence on customer loyalty to their preferred fast food restaurants. H4: Store environment has the significant influence on customer loyalty to their preferred fast food restaurants. H5: Service quality has the significant influence on customer loyalty to their preferred fast food restaurants. H6: Promotion has the significant influence on customer loyalty to their preferred fast food restaurants. H7: Price has the significant influence on customer loyalty to their preferred fast food restaurants. H8: Brand trust has the significant influence on customer loyalty to their preferred fast food restaurants. H9: Customer satisfaction has the significant influence on customer loyalty to their preferred fast food restaurants.
2.2. Research method According to Babbie (2008), purposes of research divide into exploration, description and explanation [11]. This study only conducts exploration and description research. Exploration research is conducted to explore a topic which is relative new or examines a new interest. This study chooses to use exploration research because fast food industry is in an upward trend together with government support. Thus, fast food will be the potential market for entrepreneurs. In the other hand, most of the researchers examine the relationship between loyalty with internet purchase, sportswear, newspaper and etc. There is less or limited research conducted in fast food industry with customer loyalty. Besides, this study also used description research. Description research is used to describing situation and events. This study aims to describe how the factors of loyalty influence the customer to be loyal to their preferred fast food restaurants. There are 230 self administrated questionnaires were distributed direct distribution to respondents and small portion of questionnaire are distributed through email. Before the respondents answering the questionnaire, researcher will briefly explain objective to conduct this survey. Brief explanation will be given to respondents face to face when self-administered questionnaire is distributed. There were 230 of questionnaire being distributed to the respondents and there were 217 returned back. From the 217 questionnaires returned, only 196 questionnaires were found to be free of response error and suitable for data analysis. In this project paper, non-probability sampling is used to conduct the survey. According to Babbie (2008), non-probability sampling refers to any technique in which samples are selected in some way not suggested by probability theory. Meanwhile, the sample in this study is mainly from members of the population who are conveniently available to provide information. Because of limited time and cost, this technique enable researcher to gather information quickly and efficiently. Questionnaires are distributed to respondents at Klang Valley areas and some of the universities in Selangor state. The questionnaire is distributed to respondents at Klang Valley areas during weekends. In the other hand, questionnaire will be distributed to universities students during weekdays. The questionnaire that had completed designed was being pre-tested to determine the feasibility and reliability of the questionnaire. There are 30 respondents been selected to complete the pilot test. The pilot test conducts twice which means the respondents need to answer the questionnaire twice to determine the feasibility and reliability of the questionnaire. The 14
questionnaire will be distributed to respondents two or three days after they completed the first questionnaire research. Finally, the data collected will be analyzed using SPSS software analysis.
3. Result and Discussion The main purpose of this study is to investigate how respondents will be influence by factors of customer loyalty. Throughout this research, three objectives have been answering. First, to examine consumers’ preferred fast food restaurants. Most of the respondents prefer to dine at western fast food restaurants. There are 161 respondents prefer western fast food restaurant while 35 respondents prefer local fast food restaurants. Obviously, western fast food restaurant still dominant in Malaysia fast food markets which create a huge impact to local own fast food restaurants. To compete with other competitors in the market, local fast food companies has to reformulate their strategic in order to keep track with current customer trends. Second, to examine the relationship of product quality, product attribute, brand name, store environment, service environment, promotion, price, brand trust, and customer satisfaction with customer loyalty. Based on the Pearson correlation result, it indicates that all the entire nine independent variables are significant at 0.01 levels. Meanwhile, the nine independent variables (product quality, product attribute, brand name, store environment, service quality, store environment, promotion, price, brand name and customer satisfaction) have a positive relationship with customer loyalty. The positive relationship means that, the higher the independent variables (product quality, product attribute, brand name, store environment, service quality, store environment, promotion, price, brand name and customer satisfaction), the higher the customer loyalty toward preferred fast food restaurants. From the analysis, product quality (0.586) has a strong positive relationship with customer loyalty while promotion (0.285) and brand name (0.219) has a weak positive relationship with customer loyalty. Other variables such as product attribute (0.407); store environment (0.326), service quality (0.300), price (0.361), and brand trust (0.455) and customer satisfaction (0.385) has a moderate positive relationship with customer loyalty. Third, to identify which factor is the dominant variable that influences the customers to be loyal to their preferred restaurants. Multiple regressions were used to determine the dominant variables that influence customer loyalty. The multiple regression result shows that, there are three variables, namely product quality, customer satisfaction and brand trust has contribute to a significant positive influence on customer loyalty towards preferred fast food restaurants. These three variables (product quality, customer satisfaction and brand trust) are significant at 0.05 significant values the findings indicate that Malaysian consumers are concern on product quality of a fast food restaurant. To be loyal to a fast food restaurant, they will consider how the fast food restaurants meet their quality expectation. If the perceived their preferred restaurants produce quality food that meet their expectation, they will loyal to that restaurants. From result analysis, customer satisfaction has a significant positive relationship with customer loyalty. The Malaysian consumers seem to be trust with their preferred fast food restaurants. Customer loyal to their preferred fast food restaurant because they believe the restaurant and product meets their expectations. Brand trust is the central construct for any long-term relationship. Thus, if the customers trust the preferred restaurants, it may be an important contributor that drives to long-term loyalty. Under the effort of Malaysia government to promote and encourage local own fast food restaurants, a number of local fast food successfully create consumer attention. The findings present a big gap between fast food industries. It is because customer aware of local fast food but they are not loyal. Therefore, understand the important of customer loyalty is relatively important in creating loyal patron customers. The findings of this study indicated that product quality, customer satisfaction and brand trust is the dominant variable that drives the customer loyalty to preferred fast food restaurants. Based on the finding, marketers can examine what are the strategies that enable western fast food restaurant dominant in Malaysia market. Besides, marketers also can concern with Secret Recipe management and strategies planning. Since Secret Recipe able to stay competitive with western fast food, other local own fast food companies or marketer can refer to Secret Recipe successful strategies and formulate an appropriate strategies to compete in the industry. As a result from the study, is hoped that the result could be benefit for future researchers or marketers to better understand how the customer loyalty works, which it is also a part of consumer behavior. Besides, the result finding is relatively important for local fast food companies to compete in this competitive edge by creating 15
customer loyalty and followed by repeated purchase in future. As a conclusion, to keep track with consumer purchasing behavior, it is essential to identify what is the main factors that may influence customer loyalty. Consumer purchasing behavior will change time to time but if marketers or businesses able to make their customer loyal to their product, for sure it will create a high return. To stay competitive in the market, customer loyalty plays an important role for the future success of this industry. Knowing the dominant factors that may influence the customer loyalty towards preferred fast food restaurant enable marketers to formulate or developing better marketing strategies to make their customer loyal patron to local fast food. Researchers hope that this study can be used as a guideline for local fast food restaurant to enhance their customer loyalty and consumer repeat purchase intention in future.
4. References [1]
Suzy, Malaysian Economic Outlook. http://www.mier.org.my. , 2010, Accessed on 16 January, 2011.
[2] Bender, D. A. and Bender, A.E. Bender’s Dictionary of Nutrition and Food, 2001. [3] AcNielsen, Consumers in Europe-Our Fast Food/Take Away Consumption Habits. http://www.acnielsen.com. Accessed on 17 January, 2011 Schlosser, E. 2000. Fast Food Nation. http://www.nytimes.com. , 2005, Accessed on 15 January, 2011. [4] Investment Analysis, Roy Allen @ Mr. A & W. http://investhunt.com/learn-from-the-best/roy-allen-mr-aw/, 2009, Accessed on 29 January 2011. [5] Opportunity Malaysia, Franchising Market. http://www.malaysiamission.com/. , 2005, Accessed on 15 January 2011. [6] Lau, M. M., Chang, M. s., Moon, k. and Liu, W. S. The Brand Loyalty of Sportswear in Hong Kong, Journal of Textile and Apparel, Technology and Management, 2006, pp.12, 94 – 107. [7] Wong, F. Y., and Yahyah, S. Influence of Brand Loyalty on Consumer Sportswear, International Journal of Economics and Management, 2(2), 2008, pp. 221 – 236. [8] Punniyamoorthy, and Prasanna, M. R. An Empirical Model for Brand Loyalty Measurement. Journal of Targeting, Measurement and Analysis for Marketing, 2007, p. 15. [9] Lau, M. M., Chang, M. s., Moon, k. and Liu, W. S. The Brand Loyalty of Sportswear in Hong Kong, Journal of Textile and Apparel, Technology and Management, 2006, pp. 12, 94 – 107. [10] Punniyamoorthy, and Prasanna, M. R. An Empirical Model for Brand Loyalty Measurement. Journal of Targeting, Measurement and Analysis for Marketing, 2007, pp. 222 – 233. [11] Babbie, E. Introduction to Social Research. 5th Edition, International Edition, 2008.
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