Customer Satisfaction In The Automobile Industry Marketing Essay

1. INTRODUCTION

1.1 Background

We are now living in a society where the demands on business are so much greater than ever before (Kandampully, 1997). No business, unless it is a state monopoly, can stay in business without satisfied customers. As people who cannot live without eating, corporations cannot continue to exist without satisfying their customers. (Gould, 1995) Moreover, due to the fact that customer expectations are continuously increasing, corporations are now required to go outside of their main need of satisfying the customers, to exceed their expectations. (Kandampully, 1997) Corporations therefore decided to focus more on customer loyalty in the long term business rather than just focusing customer satisfaction in the short term. (Galbreath, 2002)

Although corporations understand the value of keeping customers loyal, no one knows how to do it. Corporations measure customer satisfaction, and hope that if the satisfaction scores are good, the customers will stay with the firm. But the truth is that even satisfied customers leave for the attractive offer from competitors. (Mittal & Lassar, 1998)

Loyal customers would have several advantages. They usually lead to increased revenues for the company and are more likely to purchase additional goods and services (Gremler & Brown, 1998). Furthermore, customers who are purchasing specific brand are more likely to introduce it to their friends and tend to be concerned in the feedback and evaluation of the product, which is very important in today’s business environment. Loyal customers also tend to buy from other channels, for example through the Internet, which would eliminate middle men and may increase the total consumption and reduce the costs of sales. (Duffy, 2003)

The concept customer loyalty can be defined and measured in a number of ways (Zins, 2001), In a business context, loyalty can be described as customer commitment to do business with a particular corporation and purchasing their goods and services repeatedly.

Customer loyalty also holds many different concepts, for example customer relationship management and customer retention marketing. These concepts are important because of the benefits of keeping customers involvement in activities, which is companies aim to developing long-term relationships (Duffy, 2003). Managers need to realize that all relationships are based on trust, which is hard to achieve but easy to destroy. It does not occur within a moment; instead it requires many interactions within a long time. In addition, the most important and necessary thing for business is loyalty. (Galbreath, 2002)

Nowadays driving an automobile is one of the most important demands for us whether to show image or as a useful instrument. Lots of types of automobile are now moving in the streets of the world and lots of people are driving them. Sometimes people who driving, show that are not satisfy with their vehicle. In Malaysia, like other developing countries, there are lots of models of vehicles with different brands and shapes.

One of the companies who is offering different types of vehicle and try to meet the customer’s satisfaction is Proton. This company founded in 1983, it was Malaysia’s only carmaker until the establishment of its competitor and arch-rival Perodua in 1993. Its name is a Malay acronym for Perusahaan Otomobil Nasional. Over 42% of its equity is owned by a government-owned company Khazanah Nasional Berhad, making it government-linked. For more than a decade since its establishment, this stake was equally owned by Mitsubishi Motors Corporation and Mitsubishi Corporation until they sold its stake in that company.

Proton was established in 1983 under the direction of the former Prime Minister, Dr. Mahathir Mohamad. Since then, it was Malaysia’s dominant carmaker until the constitution of Perodua in 1993. Based on technology and parts from Mitsubishi Motors, production of the first model, the Proton Saga began in September 1985 at its first manufacturing plant in Shah Alam, Selangor. Initially the components of the car were entirely manufactured by Mitsubishi but slowly local parts were being used as technologies were transferred and skills were gained. The 100,000th Proton Saga was produced in January 1989.

1.2 Statement of problem

Although there are a lot of different choices to have a vehicle, some people prefer to be loyal to the previous product. Some people believe that previous products have been tested and would be more reliable. Despite low quality of some products, some people still are loyal to them and do not change. Some believe Proton Saga was one of the successful models in Malaysia during previous decades but now, other products are more reliable and also quality of manufacturing this model is become lower and lower. The aim of this paper is to measure customer satisfaction of Proton Saga drivers and understand how much they would be loyal for this product.

The automobile industry was previously described by product orientation, while today the industry focuses on establishing long-term customer relationships at all levels of the distribution channel. However, the creation of long-term relationships is a difficult process in an industry distinguished by mass production. As a result of this, knowledge about customers and a focus on their needs is considered to contribute to a car dealer’s competitive advantage. (Mittal & Lassar, 1998)

In comparing to other industries, where customer contacts usually for small purchasing volumes, the monetary value of the automobile industry will appear by just a few customer contacts. The profit margin is high and each customer is worth much more than only the sales price for a car.

Due to the fact that the automobile industry is distinguished by having customers with high level of profit potential, companies who are involve in this industry are probably willing to maintain customer relationships and therefore focus on customer loyalty. Moreover, because this industry is famous for having loyal customers, involved companies try to have proper plan to have long term relationship with the customer. For these reasons the aim of this study is to analyze satisfaction of customers from Proton Saga which is one of the most well-known and successful models of the Proton company and investigate the level of loyalty among them.

1.3 Purpose & Research Questions

The purpose of this paper is: to gain a better understanding of how customer would be satisfies from a product and how could be a loyal customer for the company.

This purpose has resulted in three research questions as stated below:

Research question one: How much the customer is satisfied from product?

Research question two: How can describe customer loyalty in the automobile industry?

Research question three: How can evaluate the customer satisfaction and customer loyalty in the automobile industry?

In connection with research question three, it is significant to point out that it covers both the evaluation of customer satisfaction and customer loyalty.

Service Satisfaction

Customer Loyalty

Customer Satisfaction

Product Satisfaction

2. LITERATURE REVIEW

The Concept of Customer Loyalty

There are several definitions of customer loyalty. However, most of them refer to a customer’s commitment to do business with a particular company, buying their products and services frequently and recommending the corporation’s offerings to friends and relatives (Uncles et al, 2003). Behavioral loyalty attempts to define brand loyalty in terms of the actual purchases observed over a time period, whereas attitudinal loyalty measures are based on stated preferences, commitment or purchase intentions (Rundle-Thiele & Bennett, 2001).

The concept of customer loyalty includes many different concepts that enclosed the process of keeping customers longer, for example, customer relationship management, customer relationship marketing and customer retention marketing. (Duffy, 2003)

These concepts are concerned with customer loyalty because of the benefits of retaining and keeping customers, which has a direct impact on corporate profit. Past researches strongly emphasize and claim that keeping a customer is five times cheaper than finding other one. (McIlroy & Barnett, 2000)

Evaluating customer loyalty

There are establishment costs, enrollment costs, IT hardware, database creation and maintenance costs, servicing costs, management costs, editorial and production costs of specific magazines, direct costs of rewards as well as the opportunity costs of spending money on a loyalty program instead of on other marketing initiatives. (Uncles et al., 2003)