Relationship Between Marketing Mix Elements

Relationship Between Marketing Mix Elements Business today is very competitive, any organizations are facing with many pressures: Changeable and unpredictable business environment, very fast change of technology, to be survival, developed and successful requires company have to move from a product and selling philosophy to a customer and marketing philosophy(Kotler et al., 2005). All companies try to gain the best of the customer satisfaction to maximize the profit because they believe that customer satisfaction is very important for the survival of any organization. Many research shows that consequences of customer satisfaction are numerous: Customer satisfaction leads to positive word-of-mouth (Anderson, 1998; Swan and Oliver, 1989; Hoyer and MacInnis, 2001)à ¢Ã¢â€š ¬Ã‚ ¦), customer satisfaction leads to customer retention (Curtis et al., 2012; Hennig, 1997; Kotler, 1994, p.20; Bitner, 1990), customer satisfaction leads to loyalty (Curtis et al., 2012; Singh, 2006), Customer leads to repurchase attention (Anton, 1996). The question for companies is how to enhance the customer satisfaction? Which factors impact on customer satisfaction and this relationship is negative or positive? To answer all these questions, companies will have the appropriate strategies for success. Many researches show that there are many factors that affect customer satisfaction. According to Hokanson (1995), these factors including friendly employees, courteous employees, knowledgeable employees, helpful employees, accuracy of billing, billing timeliness, competitive pricing, service quality, good value, billing clarity and quick service impact on customer satisfaction. It is obviously that all these factors belong to Marketing mix. Moreover Doyle also recommends that Most marketing professionals would answer that the right marketing mix is the one that maximizes customer satisfaction and results in the highest sales or market share (Doyle, 2003) also suggests that customer satisfaction and sales can always be increased if c ompanies offer more product features, lower prices than competition, higher promotional budgets and the immediate availability of the product, of outstanding customer service and support (Doyle, 2003). Ford Motor Company is global automotive industry leader in the world based on US. Ford has its history of 109 years for existing and developing. Fords strategy is focus on developing vehicles that deliver exceptional value to our customers across global markets. Ford product vehicles sport bold exterior designs, while offering great handling and performance. Not only are they great to drive with interior enhancements in comfort and connectivity but fuel economy across every vehicle in our portfolio is a reason to buy(Ford, np) Ford worldwide market share reported end of 2011: 7.3%, regional Ford North America: 17.3%, Ford Europe 8.3%, Ford Asia South Pacific: 2.7%, South America 8.3% Ford Vietnam is a joint venture established in 1995 between Ford Motor Company (75%) and Song Cong Diesel Company (25%). Cumulative market share up to SEP 2012 is in fifth position with 5.3%, meanwhile, two market leaders, Truong Hai and Toyota gain 30.9% and 29.1%. Fords market share in Vietnam is nearly double in comparison with its regional market share Asia South Pacific. But the gap between Ford and two market leaders in Vietnam is very huge. Since, Fords products are diversified ranging from low end to high end compared with its big competitor that is Toyota. Fords products are known as full family of vehicles offering leading quality, fuel efficiency, safety, smart design and value (Ford, np). This big gap excites the researcher to evaluate the level of customer satisfaction of Ford Car users in Vietnam, explore what factors impact on this customer satisfaction by testing the relationship between marketing mix elements and customer satisfaction of Ford Car users in Vietnam. Beside some reasons above, marketing mix and customer satisfaction are two theories that researcher is very interesting to study. Finally, topic of research can be named as below: Exploring the relationship between marketing mix elements and customer satisfaction of Ford Car users in Vietnam 1.2 Research objectives The researcher intends to study on Ford auto customer satisfaction in Vietnam to evaluating the level of customer satisfaction and testing the relationship between marketing mix elements and customer satisfaction of Ford auto users with below objectives: To study the knowledge of marketing mix, its element and customer satisfaction concept. To examine the relationship between marketing mix elements and customer satisfaction of Ford auto in Vietnam To measure the level of customer satisfaction of Ford auto in Vietnam To recommend some effective solutions to improve the marketing mix to gain higher level of customer satisfaction. 1.3 Research questions In order to have a clearly understand of all queries about the topic regarding to relationship between marketing mix and Ford users customer satisfaction. This research tries to answer below questions: Is there possible relationship between marketing mix and customer satisfaction of Ford Car users in Vietnam? What is the level of customer satisfaction of Ford auto in Vietnam In what way is the marketing mix can be improved to enhance Fords customer satisfaction in Vietnam. 1.4 The significance of study Many academic research are conducted in testing the relationship between marketing mix and customer satisfaction in different areas, especially in service sector such as: Tourist, university, cafà ©, banking,..But a few of them are found the automobile industry. Moreover, most of academic research is out of Vietnam market. Although the study result reflects somewhat the real situation of level of customer satisfaction on Ford users in Vietnam, but the target population is quite small and limited in small region, so that the research findings and result only is used for reference or partly apply in the customer satisfaction enhancement for Ford Motor Vietnam or suggesting for further research in future. 1.5 Boundary of the study Auto market in Vietnam is quite huge, due to geographical dispersion and time constraint, the researcher only conducts the survey on customers who own Ford Car in Ho Chi Minh City. Furthermore, the respondents seem very busy with the things. The study focuses on 4 elements of marketing mix and their impact on customer satisfaction. So the result only presents partly for auto market in Vietnam. 1.6 The organization the study à ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦Ãƒ ¢Ã¢â€š ¬Ã‚ ¦.. Chapter 1, the introduction part of research including background of study, why the researcher choose this topic, the research aims and objectives is given, the research questions is identified, the significant of study is discussed, Finally how this research can be applied in practices, the boundary of study and structure of study are presented. In the Chapter 2, the literature review related to marketing, marketing mix and its elements, customer satisfaction, the relationships between customer satisfaction and marketing mix, the recommended solutions for improving marketing mix elements in order to gain high level of customer satisfaction The Chapter 3 provides the methodology and procedures which used to collect data for the study. The researcher will perform the surveys with the customers who are using Ford Car in Vietnam, by this survey, researcher will measure the level of customer satisfaction, to explore the relationship between marketing mix elements and customer satisfaction. By this study, the author will use quantitative method to design the questionnaires and use them during the surveys. These data will be the main data to support the answer of the second and third research question. The researcher will conduct one survey which will be conducted with customers who are using the car of Ford to evaluate the level of customer satisfaction and explore the relationship between marketing mix and customer satisfaction. The purpose of this survey is to get the quantitative data to support the answer for the second and third research questions, whereby to give the best solutions for improving marketing mix effectively for Ford Vietnam in enhance its customer satisfaction. In the chapter 4, Microsoft excel 2007 and SPSS 16 software will be used to input all the raw data of the respondents and do the analysis, statistic and present them using table, charts, or graphic. Then the researcher will analyse and discuss the findings base on the responses. And present the meaning and reason of the result as well as link with the knowledge in the literature review to support the answers for the research questions and achieve the research objectives. Chapter 5 contains a summary of the findings of this research; providing the conclusions for the findings and discussion and suggest for further research. The reflective statement will be in the Appendix A which provides the reflection on research results and personal development that the researcher had gained from this study. The following pages will present the chapter Review of the Literature that will review all existing literatures and knowledge to support data to achieve the objectives of this research. Chapter 2 LITERATURE REVIEW Chapter Introduction According to Saunders et al. (2007) A critical review of the literature review is critical part of any research. It is necessary to help the researcher to develop a thorough understanding of and insight to previous researches that related to research questions and objectives. By critically discussing, evaluating what are strengths and weakness, referencing works or studies that has already been undertake, drawing out key points and presenting them in logically argued way. To complete the literature reviewing, the researcher has not only the skill of search relevant knowledge but also appraise it. Sharp et al. (2002 cited in Saunders et al. 2007) suggests that there are two major reasons exist for reviewing the literature: Firstly, the preliminary search that help to generate and refine the research ideas. Secondly, often referred to as the critical review or critical literature review, Moreover, Saunders et al. (2007) emphasizes that any researches and finding will be judged in relation to others peoples research and finding. Main purpose of literature review is to help researcher to develop a good understanding and insight into relevant previous research and the trends that have emerged. Gall et al (2002, quoted in Saunders et al.,2007) provides some other purposes of literature review such as: To help researcher refine further the research question and objectives To highlight research possibilities that has been overlooked implicitly in research to date, To discover explicit recommendations for further research To help researcher avoid simply repeating work that has been done already, To sample current opinions in newspapers, professional and trade journals, thereby gaining insight in to the aspects of the research questions and objectives that are considered newsworthy, Discover and provide an insight into research approaches, strategies and techniques which are appropriate to own research questions and objectives. It could be said that most of researches argue that the critical review is very necessary. Briefly, review the literature relates to: Searching academic research, theories which must be relevant to research questions and objectives. Profound understanding, critical review, give arguments, appraisal, evaluating, discussing, referencingà ¢Ã¢â€š ¬Ã‚ ¦ But it is not just descript and list down the any literatures. Comment: the above paragraph is not necessary! This chapter aims to provide a theoretical background bases on existing academic knowledge for research topic Exploring the relationship between marketing mix elements and customer satisfaction of Ford auto in Vietnam. By doing this, the researcher could further refine three research questions and four research objectives which had been specified in Chapter 1 to highlight research possibilities that have been overlooked, discover explicit recommendations for further research. It helps to avoid repetition to sample current opinions, provide an insight into appropriate research strategies and methodologies. A good literature review expands on the reasons behind selecting a particular research question. Thus the researcher plans to find a strong theoretical foundation provided for the study from a wide range of sources which relates to previously published researches: Books, journals, some ideas in newspaperà ¢Ã¢â€š ¬Ã‚ ¦, then assess the strengths and weaknesses of previous works, jus tifying arguments by referencing previous researches. The sources of literatures were cited following the required standard. In this Chapter, some hypotheses will be proposed for testing to answer research questions and archive research objectives in Chapter 1. Marketing Marketing is very critical for every business. Kotler, (2002) suggests that the scope of marketing relates to ten types of entities: Goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. It shows that marketing gets involved to all activities of the business from identify the customers and customer needs, creating product and services, communicating to customers, sell its products to target customers, making its customers satisfiedà ¢Ã¢â€š ¬Ã‚ ¦ The researches and studies regarding marketing are numerous. Below are some definitions about marketing concept. An earliest definition of marketing is the performance of business activities that direct a flow of goods or services from producers to consumers (AMA,1935). This concept generally mentions about performance of activities, but these activities were not clarified, the concept is quite wide with simply mention about goods and services from producer to consumers. Since marketing becomes an interest topic that many scholars get involved to study. A lot of definitions were come up by researchers: Perreault McCarthy (2002), Kotler P Levy SJ (1969); Kotler et al. (2005) Another concept of marketing which get many opposed debates is that Marketing is simply figuring out what you have to do to sell your product or service for a profit Keefe (2004 p.17). Generally, the most accepted recently is the newest definition of AMA is that Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, cli ents, partners, and society at large (AMA,2007). 2.2 Marketing mix concept The term of marketing mix firstly developed by Bornden (1964), the sources of his inspiration come from the concept of his colleague Jame Culliton (1948, cited in Borden, 1984) which described the business executive is a mixer of ingredients, the marketing elements are the same with ingredients and marketing manager mixes some of these together to become the marketing mix strategy. Borden (1964) also identified twelve controllable elements of marketing mix: Product planning, pricing, branding, channel of distribution, personal selling, advertising, promotion, packaging, display, servicing, physical handling, fact finding and analysis. This is a list of elements or ingredients to make up a marketing program. Depending on each situation, the marketing manager will blend the number of these elements to constructing and formulating an appropriate marketing program to satisfy their customer needs and wants in target market. By this way, both company and customers objectives are achieved. McCarthy (1964) regroups twelve elements of Borden to four categories or usually called 4Ps now: Product, price, promotion, place. Each of these elements comprises some of 12 elements of Borden. And some research also suggested that if manage this mix properly, company will be successful. Mccarthys concept of marketing mix rapidly began to appear in marketing text. Judd (1987) suggested one more new important P is People. Furthermore, Boom Bitner (1981) extend 4Ps to 7Ps, he argues that product and service are different, so 4Ps is inadequate, so it is new marketing mix paradigm for service is: Product, Price, Place, Promotion, People, physical evident and process. The later definition is that marketing mix is the controllable variables the company puts together to satisfy its target group (Perreault MCCarthy, 2002). This definition is similar with definition is tha marketing mix is the set of controllable tactical marketing tools product, price, place and promotion that the firm blends to produce the response it wants in the target market (Kotler et al., 2005). Both definitions mentioned about controllable factors to satisfy the customer in target market. Each mix element includes its factors as below Product: Variety, quality, design, feature, brand name, packaging, service, warranty. Price: List price, discount, allowance, payment period, credit term. Place: Channel, coverage, assortment, location, inventory, transport. Promotion: Advertising, promotion, personal selling, publicity. Kotler et al. (2005) also suggested that: An effective marketing program blend marketing mix elements into a coordinated programme design to achieve the companys marketing objective. When marketing mix concept is introduced, there are many researches to evaluate and criticise on it. Constantinides (2006) identified two significant limitations of marketing mix is internal orientations and lack of personalization. Both Gronroos (1989) and Popovic (2006) suggest that the 4 Ps and the marketing mix are production-oriented definitions, companies focus much on internal product, the market may be neglected. According to Mà ¶ller (2006) marketing mix too focus internally instead of customer behavior. Many researches show that the limitations of marketing are on: Production-oriented or too focusing on internal instead of standing on customer point of view. Therefore, Kotler et al. (2005) recognizes that 4Ps represent sellers view of marketing tool available for influencing buyer, it is not from customer point of view. In fact that each marketing tool must deliver a customer benefit, company should view 4Ps as customers 4Cs: Product: Customer need and want, Price: Cost to the customer, Place: Convenience, Promotion: Communication. Doyle (2000) argues that marketing mix approach leads to unprofitable decisions, because it is coordinated with financial objectives such as: Increasing shareholder value. Kotler (1984) proposes two additional Ps of political power and Public Relation to the marketing mix to cover more factors that is important for business as well, those are Political power and Public Relation. According to Schultz (2001) the 4 Ps are increasingly less relevant in todays market, despite of what they are still learned in marketing courses, academics write and res each about them Since marketing becomes a vital role in success of any business. Many researches are conducted on marketing mix and its element, more extend elements are suggested, it is obviously that marketing mix or some researches show many limitations or debates, but marketing mix is still the practice model to deploy company strategies effectively. And up to date, there is no any new models can completely replace for marketing mix 4P. 2.3 Marketing mix elements 2.3.1 Product A product as defined by Armstrong and Kotler (2005) that is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. The latter can be best understood in terms of the manner of delivery of the particular service. Ferrell (2005) opines that the product is the core of the marketing mix strategy where retailers can offer unique attributes that differentiates their product from their competitors. According to Borden (1984) product is characterized by quality, design, features, brand name and sizes Also from Kotler et al.,( 2005) product can be divided into two categories: Tangible and intangible product, the tangible product is a merchandise that can be touched, hand, feel it, the intangible product or normally call service, which could not be touched or hand, unobservable. Product concept in this research refers to tangible product that is a car of Ford auto Vietnam. According to Kotler et al, (2005), product concept is including: Core product, augmented product and actual product. Core product regarding to main problem solving benefit or core benefit that consumer really wants to buy. When they obtain, this product will resolve their problems. The main purpose of buying a car is for travelling, safety and protection for health. The actual product is related to: Parts, features, design, product quality, styling, brand name and packaging or some more attribute that combined to core benefit of product. For a car, these attributes are most important for manufacturer attract and retain its customers The augmented product which including: Additional consumer service or benefit build around the core and actual product: Solution, warranty and repair service, instruction how to install or using, help desk, call center, free delivery. In those attributes, customer service and repair is more important that auto manufacturing have to pay attention. In order to satisfy the need of customer, the product designer have to consider all three components of product, because customer expect to buy three of benefit and they feel happy or satisfy when gain enough all the benefit. Many researches tried to find down the impacts of all above attributes of product to customer satisfaction. Kotler et al. (2005) suggested that Outstanding marketing companies go out of their way to keep their customers satisfied. Companies know that satisfied customers make repeat purchases and tell others about their good experiences with the product. Regarding to product quality and customer service factors in automotive industry in India, Asghar et al. (2011) found that the quality of products in Tata Motors Company enhances customer satisfaction, and also found that there is a positive relationship between customer satisfaction and customer loyalty in the context of the Indian automotive industry. Product quality is one of factor of Product in marketing mix. The research shows that the more customers satisfied with quality of product, the more loyal they are with this product. And this may lead to the repurchasing companys product. Customer service is also a factor of Product element, since it becomes very important for any manufacturing company, especially in auto industry. Bastos and Gallego (2008) also provide evidence that customer service quality directly affects satisfaction and satisfaction directly affects the positive behavioral intentions. Rodoula (2005) finds that consumers perceiving a product being of high quality are more satisfied with the product than consumers perceiving a product being of low quality. There are a positive relationship between perceived quality and customer satisfaction in Shoes industry. It is suggested by Lien-Ti and Yuching (2001) that there is a positive relationship between product quality and customer satisfaction on automotive industry. Yelkur (2000) also finds that the critical elements in the services marketing mix influence and positively effects customer satisfaction. Moreover, the relationship between marketing and customer satisfaction is highly expressed among researchers (Zineldin Philipson, 2007). Cengiz and Yayla (2007) find that marketing mix having a positive effect on satisfaction and loyalty on word of mouth communication from accounting offices in Turkey. Mohammad et all (2012) suggests that Product and tourists Satisfaction are positively related to each other. Although not all attributes of product such as: Quality, designà ¢Ã¢â€š ¬Ã‚ ¦ were tested if any relationship or impact on customer satisfaction, but at least, there are so many studies show that product generally positive impact on customer satisfaction, and quality of product, customer service were tested, especially in automotive industry. So far there are no any research found that no any relationship between Product element or its factors with customer satisfaction. Or the negative impact of Product on customer satisfaction. So in this research the author tries to do the research the relationship between Fords product which were sold in Vietnam market and its customer satisfaction. So the hypothesis will be proposed as below: H1: There is a positive relationship between Fords Product and its customer satisfaction. 2.3.2 Price Price is one of very important element in marketing mix and the only element that produce the revenue to company. Price is very the most flexible element in mix, it can be change very fast to adapt with every stage of product life cycle, or to stimulate demand in short time, or can reduce to support selling of other product in production line or set to keep loyalty of customer. So that pricing may play an important role in helping to accomplish the companys objectives at many levels. (Kotler et al., 2005. p.668). Price decisions must be coordinated with product design, distribution and promotion decisions to form a consistent and effective marketing program. The definion of price that is the amount of money charged for a product or service, or the total values that consumers exchange for the benefits of having or using the product or service(Kotler et al, 2005) Similarly with Product element, Price also gets many scholars involved to study the relationship with customer satisfaction. A research of Oliver Swan, (1989) shows that perceptions of price unfairness lead to dissatisfaction and the purchase intention is influenced by satisfaction. This was consolidated by later search of Campbell (1999) that perception of price unfairness may trigger consumers negative emotions such as dissatisfaction, disappointment, and anger. So as a result, customers do not come back for repurchasing this product any more. Augene (1996) investigated the association between customer satisfaction and willing-to-pay or price tolerance, the finding shows that negative association between level of customer satisfaction provided by company and the degree of Price tolerance. In the telecommunication sector, Muzammil et al. (2010), also finds that both the factors Price fairness and customer service significantly contributed to explain customer satisfaction but compar atively price fairness had the larger impact on customer satisfaction than customer services. In another study of Herrmann et al.,(2007) on automobile concludes that customer satisfaction is directly influenced by price perceptions while indirectly through the perception of price fairness , demonstrate the influence of perceived price fairness on satisfaction judgments, Buyers price perceptions positively influences their perceptions of the fairness of price offers. Price is an important element in consumers purchases; therefore it has a large influence on consumer satisfaction judgments. Homburg et al., (2005) investigates the effects of price increases at an individual level, the authors argued that customers react to price increases are strongly driven by two factors: the magnitude of the price increase and the perceived fairness of the motive for the price increase. Soedijati Pratminingsih (2011) indicated that marketing mix has significant and positive relationship with students decision making for selecting a university for marketing mix. Another research of Muala Qurneh (2012) on Tourist sector shows that product, place, personnel and process significant impact on tourist satisfaction. It is less impact of Price on customer satisfaction, or it could be said that there is no any relationship with customer satisfaction. Because the tourists usually expect more on quality of tourist, instead considering price carefully. Martin Consuegra (2007) finds price fairness influences price acceptance indirectly through customer satisfaction and loyalty. According to Cheng et al (2011, consumers perceived price has a negative impact on customer satisfaction, which is that the higher the fast food industry product price is, the more it will reduce customer satisfaction. This result is consistent with the study result of Dargay (2007), and Hopkins (2007). Moreover, Cheng and Wu (2011) finds that when price increase reduces customer satisfaction in the global service market. Price increases as same as customers perceived price increase, it means that price fairness reduces. As a result, customers become dissatisfied with company goods or service. Kotler and Lane (2009) also proposed that there is a positive relationship between perceived price fairness and satisfaction. The more consumers perceive a price as gain, the higher their satisfaction. These findings also supports the idea that higher price may reduce customer satisfaction or consumption capacity. Martin-Consuegra et al. (2007) asserts that decision of customers to accept parti cular price relate directly to satisfaction level. Research on how price impact on customer satisfaction is very huge, most studies show that having the strong impact of Price and customer satisfaction in many areas, and this is the positive relationship. The more customer perceived fairness (or less customer perceived price), the more increase in customer satisfaction. The hypothesis will be tested at below: H2: There is the positive relationship between price of Ford auto and its customer satisfaction. 2.3.4 Place According to Kotler et al.,(2005) Place related to all the company activities that make the product or service available to target customers. Place refers to channel, coverage, assortment, location, inventory, transport. In the service sector, Place decisions refer to the ease of access which potential customer to a service such as location (distance to services sites) and distribution (e.g., home delivery, 24-hour availability) (Hirankitti et al., 2009). As same as with Product and Price, there are many previous researches to test the relationship between Place and customer satisfaction. Cheng et al., (2011) found that convenience has a positive impact on fast food industry customer satisfaction. It indicated that the more convenient, the more customer satisfaction will increase. This study result has corresponded with the study conclusion of Mahon et al. (2006) and Martinez-Ruiz et al. (2010). Gilaninia et al. (2012) also finds that the supply chain management has direct relationsh ip with customer satisfaction. Mohammad et all (2012) points out that Place and customer satisfaction are positively related to each other. According to Kotler and Amstrong (2010) when channel is used in marketing system that maximizes efficiency, effectiveness, maximizes costs and delivers the great customer satisfaction for companies, because the channel is link between producers and final consumers. Palmer (2000) also believes that physical distribution (order processing, warehousing, inventory, transport) affect on customer satisfaction. Ryu Han (2009) proposed that customers perception of physical environment factors: facility aesthetics, lighting, layout, and social factors had significant effects on disconfirmation and disconfirmation directly influence to cust