THE RELATIONSHIP BETWEEN MARKETING MIX AND INTENTION TO

PURCHASE TOWARDS COOPS 1 MALAYSIA PRODUCT IN PUTATAN

DISTRICT

by

ARDIANA BT AMRAN

PE 2011 7001C

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CHAPTER I – INTRODUCTION

1. BACKGROUND OF STUDY

This study explores the relationship between selected marketing mix

elements and the customer intention to purchase Coop 1Malaysia

products. For a good understanding of the study, a case study on Coop

1Malaysia products has been used by considering the lack of theoretical

studies being conducted on the sales of Coop 1Malaysia products.

2. PROBLEM STATEMENT

Nowadays, because of the globalization, prices of food increase rapidly

and have a direct effect on developing countries where the citizens of the

country began to feel the burden of the cost of living is rising. This

followed with the attitude of some traders take advantages to also

increase their prices, particularly on the grounds of lack of food supplies to

profiteer. (Dewan Ekonomi,2013).

Cooperatives Commission of Malaysia has taken appropriate action to

introduce Coop 1Malaysia. Coop 1Malaysia product offer a cheaper price,

from 30 to 40 percent and should not doubt halal status. By using existing

cooperative network throughout Malaysia to sell these products, they can

reduce the cost of manufacturing and marketing. As a result, consumer

may enjoy savings and the Coop1Malaysia product channelled directly to

users so that the users can enjoy quality products but with a cheaper

price.

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Although the price is very low, there are still many who do not know about

the existence of this product. In addition, there are also individuals who

are not responsible for disseminating negative perceptions about this

product. Among the negative perception is a product sold at a cheap price

because the product is manufactured without quality. In addition, this

product also has an unattractive packaging due to want to save costs in

order to be sold at a cheap price.

3. RESEARCH OBJECTIVE

In general this study is to determine the intention to purchase the Coop

1Malaysia products. Specifically, this study will explore Coop 1Malaysia brand

from the following aspects:

1. Marketing mix relation with the product. How the marketing mix can

help to market the product?

2. Strategies and processes, including product positioning, expansion

channel, improvement of product quality, loyalty to the product, and identity.

What are the strategies used to compete with other products?

3. Human resources and organizational structure and arrangement of style

created in the production process, including the management structure

products, advertising and marketing. Use of human resources, organizational

structure and order management style created also emphasized.

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4. Product performance in the area by looking at benchmarks, statistics

and the index used to measure the success or failure. How to measure the

performance of the product in Putatan area?

4. RESEARCH QUESTION

More specifically, this study is conducted to ravel out the following

questions:

4.1 What are the marketing mixes that influencing intention to

purchase towards Coop 1Malaysia products?

4.2 Is there any relationship between price and intention to purchase

towards Coop 1Malaysia products?

4.3 Is there any relationship between promotion and intention to

purchase towards Coop 1Malaysia products?

4.4 Is there any relationship between place and intention to purchase

towards Coop 1Malaysia products

4.5 Is there any relationship between promotion and intention to

purchase towards Coop 1Malaysia products?

5. SIGNIFICANT OF STUDY

This section will provide brief description on the various significances of

the study given the two categories Educational and Economic.

To Cooperative Commission of Malaysia .

The proposed study serves the Cooperative Commission of Malaysia as

their reference or guide in creating their program. It will also help the

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Cooperative Commission of Malaysia to enhance their program to identify

the best product that been choose by customer.

To Customer.

The proposed study will help customer to buy a product by choosing price

or quality. By this study they will come up with good decision making.

To Future Researcher

The proposed study will benefits and help the future researcher as their

guide. The study can also open in development of this study. 

6. LIMITATION

As with most research, this research is also subject to limitations despite

its contribution to some interesting findings. Due to the time and cost

constraints, people in this research were confined only to one district, that

is Putatan district, with a sample size of only 300 respondents. This may

limit the generalizability of the findings as intention to purchase towards

Coop 1Malaysia of people in Putatan may differ from those other district in

the state. Furthermore, intention to purchase towards Coop 1Malaysia

product of the people in Putatan district may also be different across race.

Such differences could be important for marketing strategies in a

multiracial state like Sabah. However, due to the time constraint no

comparison of brand purchase influences across race was attempted in

this study. Another limitation of this research is the inclusion of only for

Coop 1Malaysia products. Different product may have different response

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from the people and I have to bear in mind that not all off the people have

intention to purchase Coop 1Malaysia products. In addition, some of the

respondents may not be honest and sincere in answering the

questionnaire. The results of this study should also be interpreted with

care. The development of a process measure for referent influence would

add to the strength of the findings and is a limitation of this study. Despite

these limitations, the study makes some contribution by providing

important information regarding to factors that affect Coop 1Malaysia

product in Sabah for marketing strategies and promotional planning.

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CHAPTER II – LITERATURE REVIEW

1.0 INTRODUCTION

Malaysia is no exception to this phenomenon in the face of an immediate

initiative step taken by the Government to reduce the burden to be borne

by the citizens. Ministry of Domestic Trade, Cooperatives and

Consumerism, take opportunity together with the participation

Cooperative Commission of Malaysia and Felda Investment Cooperative in

Coop1Malaysia products. According to Cooperative Commission of

Malaysia (2010), Coop 1Malaysia is brand new to the commonly purchased

products (Common Household items). According to Cooperative

Commission of Malaysia (2011), Coop 1Malaysia products are everyday

household products most of which are co-operatives and local

entrepreneurs gathered and repackaged and distributed by Felda Trading

Sdn. Limited. (FTSB). Memorandum of understanding (MoU) between FTSB

and MGS FTSB sealed since 2010 and was appointed as a consultant to

implement a pilot project Retail Shop Transformation (Change) on retail

stores owned cooperatives. Up to now there are about 89 types of

products on the market 1M COOP brand and this brand will market 150

products COOP 1M next year.

Coop 1Malaysia product is not a rival to products sold Kedai Rakyat

1Malaysia (KR1M). This mission is to meet the government's efforts to

ease the burden of the citizen due to rising prices of essential goods and

cost of living. Coop 1Malaysia product brand are an alternative to the

branded items available in the market. With the quality and appearance

comparable to products from well-known brands Coop 1Malaysia product

offer a cheaper price, from 30 to 40 percent and should not doubt halal

status (Utusan Malaysia, 2012). By using existing cooperative network

throughout Malaysia to sell these products, they can reduce the cost of

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manufacturing and marketing. As a result, consumer may enjoy savings

and the Coop1Malaysia product channelled directly to users so that the

users can enjoy quality products but with a cheaper price. Coop1Malaysia

product quality is also same with other branded products available in the

market. (Cooperative Commission of Malaysia, 2012)

2.0 LITERATURE REVIEW

2.1 Coop 1Malaysia Products

In line with Malaysian government transformation program to emphasize

on the citizen through the official slogan “Rakyat Didahulukan”, the

national brand of “Coop 1Malaysia” products was introduced not just for

the sake of unity of various races, but also to provide basic fast moving

consumer products necessities at affordable prices. The low costs in

advertising and packaging incurred by local entrepreneurs have made

their products sellable at low prices. Prices that are between 30 to 50

percent lower than other well-known manufacturing brands have

enlightened societies especially those price-conscious shoppers and low

income earners in the urban areas. The products are available at Kedai

Rakyat 1 Malaysia (KR1M) (Utusan Malaysia, 2012) and selected

hypermarkets.

2.2 Marketing Mix

The marketing mix is defined as 4P’s namely the product, price, promotion

and place (Kotler & Armstrong, 2006). They are often designed to

influence consumer decision-making and lead to profitable exchanges.

Each element of the marketing mix can affect consumers in many ways (Peter

& Donnelly, 2007). The marketing mix is the set of marketing tools a firm

utilizes to pursue its marketing objectives in the target market (Borden, 1984).

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When a store markets its products, it needs to create a successful mix of

the right product, sold at the right price, in the right place and using the most

suitable promotion. According to the American Marketing Association,

marketing mix is “a systematic function and as a sequence of processes for

originating, conveying and transporting importance to the clients and for taking

care of customer associations with means which help the company and its

stockholders.” Marketing mix can also be defined as “a set of controllable,

tactical marketing tools that work together to achieve company’s

objectives”. The marketing tools of product, price, place and

promotion (4P’s) are the variables that marketing managers can

control in order to best satisfy customers in the target market. Marketing mix

refers to the four major areas of decision making (4P’s) in the marketing

process that are blended and mixed to obtain the results desired by the

organization to satisfy the needs and wants of consumers. Reference is

also made to the ‘Black Box’ model of Howard, J. et.al. This model is

related to the black box theory of behaviorisms and is different from

Schiffman et al. (2006) ‘Customer Preference Formation’ model which

studies the behavioral processes inside a consumer. Instead, Howard et al.

(1969) ‘Black Box’ model studies the interaction of stimuli, consumer

characteristics, decision process and consumer responses. According to

this model, environmental factors are the source of stimuli. Stimuli are

categorized under marketing stimuli and environmental stimuli. Marketing

stimuli is planned and projected by companies and comprise the marketing

mix (4 Ps) of product, price, place and promotion. Companies strive to

align product quality and attributes, pricing, place or channel of distribution and

promotional efforts to meet customer’s needs and preference by identifying

them through market research. Environmental stimuli are the result of social

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factors based on economic, technical, political and cultural circumstances of a

society. Economic factors affect purchasing power which in turn will influence

customer’s preference and buying decisions especially pricing. Technical factors

like new inventions and new technology products will also affect customer’s

preference and buying decisions. Political factors for example, in a country

which is facing internal fighting, will necessitate the preference and priority of

basic food, shelter, safety and amenities. Cultural factors such as religious

beliefs, cultural values and practices will also influence customer’s

preference and buying decisions. The environmental factors comprising

both the marketing stimuli and environmental stimuli will then impact the

buyer’s black box. The buyer’s black box contains the buyer characteristics and

the decision process which determines the buyer’s purchase intention.

2.1.1 Price

According to Cadogan and Foster (2000), price is probably the most

important consideration for the average consumer. Consumers with high

brand loyalty are willing to pay a premium price for their favoured brand, so,

their purchase intention is not easily affected by price. In addition, customers

have a strong belief in the price and value of their favourite brands so much so

that they would compare and evaluate prices with alternative brands (Evans

et al., 1996; Keller, 2003). Consumers’ satisfaction can also be built by

comparing price with perceived costs and values. If the perceived values

of the product are greater than cost, it is observed that consumers will

purchase that product. Loyal customers are willing to pay a premium even if

the price has increased because the perceived risk is very high and they

prefer to pay a higher price to avoid the risk of any change (Yoon and

Kim, 2000). Basically, long-term relationships of service loyalty make

loyal customers more prices tolerant, since loyalty discourages customers from

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making price comparison with other products by shopping around. Price

has increasingly become a focal point in consumers’ judgments of

offer value as well as their overall assessment of the retailer (De Ruyter et

al., 1999). According to Bucklin et al. (1998), price significantly

influences consumer choice and intention to purchase. He emphasized

that discount pricing makes households switch brands and buy products

earlier than needed. Price is described as the quantity of payment or

compensation for something. It indicates price as an exchange ratio

between goods that pay for each other. Price also communicates to the

market the company’s intended value positioning of its product or brand. Price

consciousness is defined as finding the best value, buying at sale prices or

the lowest price choice (Sproles and Kendall, 1986). Additionally, consumers

generally evaluated market price against an internal reference price, before

they decide on the attractiveness of the retail price.

2.1.4 Promotion

Promotion is a marketing mix component which is a kind of

communication with consumers. Promotion includes the use of advertising,

sales promotions, personal selling and publicity. Advertising is a non-

personal presentation of information in mass media about a product,

brand, company or store. It greatly affects consumers’ images, beliefs and

attitudes towards products and brands, and in turn, influences their purchase

behaviours (Evans et al., 1996). This shows that promotion, especially

through advertising, can help establish ideas or perceptions in the

consumers’ minds as well as help differentiate products against other brands.

According to Rowley (1998), promotion is an important element of a firm’s

marketing strategy. Promotion is used to communicate with customers with

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respect to product offerings, and it is also a way to encourage purchase or

sales of a product or service. Sales promotion tools are used by most

organisations in support of advertising and public relations activities, and

they are targeted toward consumers as final users. She also states that

promotion has a key role in determining profitability and market success and is

one of the key elements of the marketing mix which includes advertising;

direct marketing; sales promotion; public relations and publicity; personal selling

and sponsorship.

2.2 Purchase Intention

Morwitz et al., (2007) defined purchase intention as a situation in which

consumer is propelled to purchase a product according to certain

conditions. Prior literature has studied the relationship between purchase

intention and advertisement effectiveness. For this purpose Baker and

Churchill, 1977 have developed a scale to measure advertisement

effectiveness. Kwek et al., (2010) identifies purchase intent to be one

attribute concerning with cognitive behaviour. Some researcher’s states

customer consideration in buying to be a measure of purchase intention.

Intentions and attitudes are two distinct measures. Attitudes can be

referred as summary evaluations, while intentions represent “the person’s

motivation in the sense of his or her conscious plan to exert effort to carry

out a behavior”. Purchase intention refers to the customer’s willingness to

buy the brand, increase and continue its usage. Research conducted by

(Walgren, et al., 1995) examines brand equity, brand preference and

purchase intention, where relationship of brand equity with purchase

intention still remains to be explored.

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Consumers’ buying decision is very complex. Usually purchasing intention

is related with consumers’ behavior, perception and their attitude.

Purchase behavior is an important key point for consumers during

considering and evaluating of certain product (Keller, 2001). Ghosh

(1990) stated that purchase intention is an effective tool use in predicting

purchasing process. Once the consumers decide to purchase the product

in certain store, they will be driven by their intention. However, purchase

intention might be altered by the influence of price, quality perception and

value perception (Zeithaml, 1988) and Grewal et al (1998). In

addition, consumers will be interrupted by internal impulse and external

environment during purchasing process. Their behavior will be driven by

the physiological motivation that stimulates their respond which bring

them to the retail store to fulfill their need (Kim and Jin, 2001).

Intentions are different from attitudes where attitudes are summary

evaluations while intentions represent the person’s motivation in the sense of

his or her conscious plan to exert effort to carry out a behavior (Eagly &

Chaiken 1993). In Fishbein and Ajzen’s (1975) formulation, attitudes

influence behaviour through behavioural intentions. Past studies indicate that

the link between attitude toward the object and behaviour is not always

clear. In some cases, attitudes have a direct effect on behaviours (Bagozzi &

Warshaw 1992) but no effect in Bagozzi (1992). An intention to buy a brand

is based on a consumer’s attitude towards buying the brand as well as the

influence of social norms about what other people expect. At times, intention is

also difficult to measure. For instance, Bagozzi, Baumgartner and Yi

(1989) commented that when an individual is unclear about his or her

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intention in regards to some action, there is strong tendency for him to

react based on their past actions. Here, the individual is likely to report his

or her habit rather than intention when responding to the intention

(Warsaw & Davis, 1985). Despite issues, purchase intention is an

important construct in consumer behavior (Kotler & Armstrong, 2003).

CHAPTER III – METHODOLOGY

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9.1 Methodology

Based on literature review of past studies, a theoretical framework for

marketing mix and intention to purchase was formed. For an overview of the

research model refer to figure 1 below. In accordance with the research

question, the conceptual framework (see Figure 1) was developed to guide this

study.

Figure 1: Proposed Theoretical Framework

RESEARCH DESIGN

The questionnaire will be divided into two parts. The first is concerned with

the demographic. The second part is thirty variables associated with the

marketing mix. A Likert-scale of 1 to 5 was adopted for all the marketing mix

measures with the anchors ‘strongly disagree’ (1) and ‘strongly agree’ (5). The

items were developed with reference to the empirical studies of Yoo and

Donthu (2001) and Lassar et al (1995). The reason for referring to their scale

development studies is that their scales are the most commonly accepted

measure of customer-based brand equity (Washburn and Plank, 2002).

9.2 PRICE

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MARKETING MIX

- Price

-Promotion

-Place

-Product

Intention to Purchase Coop 1Malaysia

Product

Price is the amount of money that consumers pay to obtain the product.

Pricing decisions should take into account profit margins and the pricing

response of competitors. Pricing includes list price, discounts, allowances, and

payment period and credit terms. Price is an important element in the

marketing mix structure because low prices may not generate enough profits

for the organization and worse still cannot cover costs. Too high prices may

drive away customers. This is because the amount of money that is

demanded in exchange for a product is entirely dependent on the customer’s

means, preference and needs.

According to Sherden (1997), in an article for small business reports,

customer defections may be related to price increases. Zeithaml (1988) is of

the view that monetary cost is one of the factors that influence consumer’s

perception of a product’s value. Gale (1999) used a technique called

Customer Value Analysis (CVA) to measure perceived value. This perceived

value metric was used to link performance of companies to the firm’s relative

market share. The value metric was defined as customer’s response to a

‘worth what paid for’ question. Gale posed a value question ‘considering the

products and services that your vendor offers are they worth what you paid for

them?’ Price becomes an important element in the marketing mix that retains

Coop 1Malaysia products. In this study, we will be examining the negative

relationship between price and customer retention. Therefore, this study will

examine the likelihood that lower prices will increase intention to purchase

and higher prices will reduce intention to purchase. In other words:

H1: Price has a positive relationship with intention to purchase

9.3 Promotion

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Promotions are activities that persuade target customers to try the

product. Promotion decisions are those related to communicating and selling

to potential consumers. Promotion decisions involve advertising, sales

promotion, sales force, public relations, direct marketing, media types, word of

mouth and point of sale. Promotion is a very important element in the

marketing mix because it is a means of communication to the customer to

promote product awareness, product knowledge, product attributes and

benefits and persuade the customer to buy the product. It provides the

stimulus to which customers’ response. Chung et al. (2003) in his study

also mentioned that promotion is an important factor in the marketing mix.

Promotion yields great influences on intention to purchase for Coop

1Malaysia products. This study will examine whether more effective

promotional activities will result in higher intention to purchase for Coop

1Malaysia products.

Therefore, the study will examine whether:

H2: Promotional activities are positively related to intention to purchase.

9.4 Place

Place refers to the company activities that make the product available.

Place decisions are those associated with channels of distribution that serve as

the means for getting the product to the target customers. The distribution

system performs transactional, logistical and facilitating functions. Distribution

decisions include market coverage, channel member selection, assortments,

locations, inventory and transport. Place is an important aspect of the

marketing mix because obviously the location of your business and the

availability and accessibility of your products should be as convenient as

possible for the customer to reach. Based on the study by Chung et al. (2003),

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site image or place is therefore, another important factor in the marketing

mix which affects intention to purchase for Coop 1Malaysia products. This

study will examine the likelihood that the more accessible and available the

product to the customer, the higher will be intention to purchase for Coop

1Malaysia products. Therefore, the study will attempt to establish:

H3: There is a positive link between place and customer retention.

9.5 Promotion

Promotions are activities that persuade target customers to try the

product. Promotion decisions are those related to communicating and selling

to potential consumers. Promotion decisions involve advertising, sales

promotion, sales force, public relations, direct marketing, media types, word of

mouth and point of sale. Promotion is a very important element in the

marketing mix because it is a means of communication to the customer to

promote product awareness, product knowledge, product attributes and

benefits and persuade the customer to buy the product. It provides the

stimulus to which customers’ response. Chung et al. (2003) in his study

also mentioned that promotion is an important factor in the marketing

mix. Promotion yields great influences on intention to purchase for Coop

1Malaysia products. This study will examine whether more effective

promotional activities will result in higher customer intention to purchase

for Coop 1Malaysia. Therefore, the study will examine whether:

H4: Promotional activities are positively related to customer retention.

Sample

A total of 300 respondents were selected from customers who have

potential to purchase Coop 1Malaysia products from grocery and supermarket

in Putatan, Sabah.

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Measurement

In general, the measurement employed in this study was modified from

previous research in order to reflect situational conditions. The five-point

Likert scale was developed to measure perceived price, promotion, place and

product towards Coop 1Malaysia products. As the Likert scale is an interval-

scale instrument, it is, therefore, appropriate for measuring the above

continuous variables.

The measurements for gauging respondents’ perceived price, promotion,

place and product towards Coop 1Malaysia products were adapted from the

studies of N.Hafizah (1999), W.M. Jasmin (1999) and L. Pebrianti (2005).

Methods:

Samples and procedures:

A survey instrument in the form of close-ended questionnaire was

developed for the purpose of data collection. The people of Putatan district

were chosen as the target population of the study in order to reflect the

actual user of Coop 1Malaysia products.

In addition, the people of Putatan district are normally households and

comprehending the knowledge towards their buying behavior and their

loyalty towards a brand would be beneficial for marketers who wish to

target this market segment. Furthermore, this segment will have their own

purchasing power in the next 2 to 4 years. Thus, understanding their current

behavior is crucial for the company to exploit future opportunities.

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A total of 300 respondents from one Putatan district were selected as a

sample of the study. The respondents were selected from households to have

a mixture of races and study background. The actual field survey was conducted

in within one month period.

Statistical tools:

Data on demographic variables are processed and reported in descriptive

analysis. Descriptive analysis refers to the transformation to describe a set of

factors that will make them easy to understand and interpret.

Frequency distribution of the respondents, according to age, gender, race,

family monthly income, and budget for monthly shopping will be

presented.

Hypotheses:

A hypothesis is a statement or proposition that can be tested by referring

to a collection of empirical studies. Hypotheses are usually stated in a form

that predicts either the differences or association between two variables

under study (Churchill and Brown, 2004). Development of a hypothesis

involving causal ordering where possible and measurable would be useful in

guiding the analysis strategy. Often such hypotheses can be made if the

meaning of an item is carefully analyzed within a chronological context.

(Arcelo et al., 1987)

A null hypothesis predicts there is no difference between the tested

groups in relation to some variable, or that there is no relationship between

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two variables (Malhotra, 2004). Null hypothesis in this research is noted

as H0 while alternate hypothesis is noted as H1. It is important to note that a

researcher can never actually prove that an alternate hypothesis is true

(Malhotra, 2004) because of the many potential errors, either known or

unknown, involved in the measurement of variables and the selection of

research subjects. It is usual for the researcher to test whether the null is

probably true or probably false to accept the alternate hypothesis as the

alternate logical solution of the research problem (Churchill and Brown,

2000)

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