RELATIONSHIP BETWEEN MARKETING MIX STRATEGY AND CONSUMER MOTIVE: AN EMPIRICAL STUDY IN MAJOR TESCO STORES

RELATIONSHIP BETWEEN MARKETING MIX STRATEGY
AND CONSUMER MOTIVE: AN EMPIRICAL STUDY IN
MAJOR TESCO STORES


Jayaraman Munusamy
Faculty of Business Administration
University of Tun Abdul Razak


Wong Chee Hoo
Assistant Marketing Manager
See Hua Marketing Sdn Bhd



ABSTRACT


This paper investigates the relationship between Marketing Mix Strategy and Consumer Motives at
major TESCO stores in Malaysia. A quantitative approach was used and the survey was
conducted at TESCO stores in Puchong, Klang, and Mutiara Damansara in the Klang Valley.
Previously, there has been no empirical research on private labeled fast-moving consumer
products in Malaysia. Hence, this research is the first of its kind. A simple regression analysis was
conducted to test the relationship between the 4P’s and consumer motives. The findings show
that only the pricing strategy has a positive impact on consumer motives, while the promotion
strategy has a significant negative impact on consumer motives. The product and place strategies
do not influence consumer motives. These findings suggest that consumers do not look for product
characteristics and store location when buying TESCO’s private labeled fast-moving consumer
products. Consumers are motivated to purchase TESCO private labeled fast-moving consumer
products solely based on the low pricing strategy. The implication is that all TESCO stores in
Malaysia should focus their efforts on “Everyday Low-Pricing” when it comes to selling private-
labeled fast-moving consumer products.

KEY WORDS: Consumer Motives, Marketing Mix, Private Label, National Brand, Retailing,
Malaysian Retailers Association



INTRODUCTION


The Malaysian Retailers Association (MRA), (2006), predicts that the retail industry is expected to
grow about 6% in 2007 as it did in the previous year. The increased fuel prices, toll and utility
rates have reduced consumers’ disposable income and also affected their purchasing power.
MRA (2006) reports that the Malaysian retail industry, which is worth about RM50 billion, has been
experiencing a roller coaster ride in terms of growth since the Asian Financial Crisis in 1998. MRA
represents 100 major foreign and local retailers in Malaysia including TESCO. In Europe, retailers
such as J. Sainsbury have achieved dominance over national brands in many product categories
(Fitzell, 1992). Recent research shows that the private labeled market share is largely dependent
on the degree to which retailers are successful in communicating quality rather than a low price
image to consumers (Richardson et al., 1994). Indeed, researchers now note that the price gap
between national and store brands holds no significant predictive power in determining the private
labeled market share at the aggregate market level (Hoch, 1996).

What matters more is the extent to which manufacturers are successful in convincing consumers
that absolute levels of real quality differ or that variation in quality presents consumers with risk if a
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store brand is selected over its “high quality” national brand counterpart (Hoch and Banerji, 1993;
Richardson et al.,(1996). In short, the “battle of the brands” is a war fought over consumer
perceptions (Quelch and Harding, 1996). Both parties employ different weapons in this struggle.
With this in mind, this study will examine what local store TESCO has done to compete with
national brands and what factors motivate customers of TESCO when buying private labeled
brands especially fast-moving consumer products.



OBJECTIVE OF STUDY


The objective of this research is to examine whether there is a significant relationship between
marketing mix strategies and consumer motives toward the purchase of private labeled fast-
moving consumer products at TESCO Stores in Malaysia.



LITERATURE REVIEW


Consumer Motive

According to Duncan, 2005, consumer motive is defined as “internal impulses that when simulated
initiate some type of response.” Consumers are continuously reacting to their internal impulses as
well as the external environment. Since internal impulses and the external environment also
interact, resulting in psychological motivations to fulfill needs and wants, Kim and Jin (2001) argue
that consumer motives are known to be the drivers of behaviour that bring consumers to the retail
store.

Based on past research, consumer motives can be categorized from four perspectives. Firstly, the
social influences on consumer motives such as the culture, sub-culture, social class, reference
groups and families (Peter & Donnell, 2007). Secondly, the situational influences on consumer
motives such as physical features, social features, time, task features and current conditions (Belk,
1975). Thirdly, psychological influences on consumer motives include product knowledge and
product involvement (Peter & Olson, 2005). Finally, the marketing mix influences on consumer
motives such as product, price, promotion and place (Peter & Donnell, 2007). This study will only
focus on marketing mix influences on consumer motives.

Other research espouses a different approach, one that emphasizes peripheral cues which could
enhance consumers’ motivation to deeper information processing. Mooy & Henry (2002) theorize
the defining motivation factor as “the arousal directed at the processing of brand-related
information”. According to Alreck & Robert (1999) a product or brand preference might be built
through one or more of the theories behind the promotion strategies which motivate and stimulate
consumer brand preference through the ideas of Maslow’s hierarchy of needs. Simple brand
preference building is an effective mechanism to present the product or brand name and a
particular need through constant and simultaneous repetition. Hence, through exposure to such
conditioning, consumers will eventually learn to associate the brand with the need and motive
since consistent repetition is important (Alreck, 1990). This simple brand preference-building mode
is still effective for creating brand name awareness today.

According to Knowles (1993), this remains a popular consumer preference-building technique
today. As a result of repeated, simultaneous presentation, consumers will closely associate with
the brand or product. But rather than associating goods with needs, the mood association
mechanism requires the brand to be associated with a particular form of pleasant condition such
as relaxation, achievement, or a state which can impart pleasant moods and feelings through very
brief, simple messages. Price is the main motive in buying as illustrated by Gitomer, J. (2005).
Morschett, D. et. al. (2005) show that the influence of shopping motive has a much more profound
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effect on the attitude towards retail stores than towards perception of store attributes. Product-
related considerations (eg. assortment and quality) and pricing appear to be the most critical
aspects of consumer motives (Kim & Jin, 2001). Stem, Barbara. B. (2001) indicates that
knowledge is located between past achievements and future promise.


Marketing Mix Strategy

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). 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.


Product Strategy

Kotler & Armstrong (2006) define a product as anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a want or need. They further define a
consumer product as the product bought by the final consumer for personal consumption.
Consumers buy products frequently, with careful planning, and by comparing brands based on
price, quality and style. According to Ferrell (2005), the product is the core of the marketing mix
strategy in which retailers can offer consumers symbolic and experiential attributes to differentiate
products from competitors. However, it is also concerned with what the product means to the
consumer. Product is about quality, design, features, brand name and sizes (Borden, 1984).

Many attributes of a company’s products, including brand name, quality, newness, and complexity,
can affect consumer behaviour. The physical appearance of the product, packaging, and labeling
information can also influence whether consumers notice a product in-store, examine it, and
purchase it. One of the key tasks of marketers is to differentiate their products from those of their
competitors and create consumer perceptions that the product is worth purchasing (Peter &
Donnally, 2007).

Brand equity reflects consumers' belief that the brand is looking out for them, will do whatever it
takes to make them satisfied, and is responsive to their needs (Hess, 2005). The ability of a
product to perform its functions includes the product’s overall durability, reliability, precision, ease
of operation and repair, and other valued attributes (Kotler & Armstrong, 2006). Brand trust is
affect-based, referring to a feeling that is the outcome of a communal relationship with a brand.
According to Duncan (2005) brand trust is created through brand messages that provide the
benefits promised.

Kim and Jon (2007) report that the affective response overrides the cognitive under all
experimental conditions in forming product-trial attitude. Croft (2003) found that control practices
and information systems influence consumer motives. Miquel (2002) proposes that individuals
show as much interest in the product type as the brand and actively seek out information in their
decision-making. Shugan and Ramarao (2001) reveal that rapid changes in technology have a
significant effect on consumer purchases. Thus, past researchers have clearly suggested that
product influences have a significant impact on consumer motives.


Pricing Strategy

Pricing is one of the 4 P’s outlined in the marketing mix strategy of a company. The price of
products and services often influences whether consumers will purchase them at all and, if so,
which competitive offering is selected. Stores such as TESCO, which are perceived to charge the
lowest prices, attract many consumers based on this fact alone. For some offerings, higher prices
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may not deter purchase because consumers believe that the products or services are of higher
quality or are more prestigious. However, many of today’s value-conscious consumers may buy
products more on the basis of price than other attributes (Peter & Donnely, 2007)

Among retail stores, the pricing strategy has become the pivotal point as they need to compete in
terms of pricing to lure more customers. Berman (1996) reports that among the pricing policies
which are of major concern to retail store outlets are the ‘High-Low Pricing’ and Every Day Low
Pricing (EDLP) strategies. The concept outlines that buyers tend to associate a higher price with a
premium quality and thus there are certain circumstances where they might purchase a higher-
priced product as an indicator and assurance of higher quality.

According to Skoras (2005) this association has been investigated extensively through a number of
empirical studies that tend to provide mixed results. Wulf et.al. (2005) found that private label
products can offer even better quality than national brands but at a lower price. The domestic
competitor reacts to the intensifying price competition by engaging in selective price changes
(Uusitalo, O. and Maija, R.,2007). Cataluna, Francisco. J. R. (2004) shows that there is no
difference in the price and promotional selling variations for non-durable goods in Spain. The
differences in product quality do not significantly affect the brand preference as shown in the
research by Wood, Lias. M. and Barry, J.P (2006).

A review of the major literature shows that significant attention has been given to consumer
perceptions about the price and quality of private labels since these factors have been identified as
two of the important reasons for purchasing private label goods (Jin, 2005). The dimensions of
price are list price, discounts, allowances, payment term and credit terms (Borden, 1984). Hence,
the earlier literature confirms that pricing has a significant effect on customer motives.


Promotion Strategy

Promotion is defined as sales promotion, advertising, personal selling, public relations and direct
marketing (Borden, 1984). According to Duncan (2005), promotion is the key to the market
exchange process that communicates with present and potential stakeholders, and the general
public. Every firm or store must cast itself into the role of communicator and promoter. Hakansson
(2005) reports that promotion appears as an issue of how to create an optimal mix of marketing
communication tools in order to get a product's message and brand from the producer to the
consumer.

Advertising, sales promotions, personal selling and publicity can influence what consumers think
about products, what emotions they experience in purchasing and using them, and what
behaviours they perform, including shopping in particular stores and purchasing specific brands.
Since consumers receive so much information from marketers and screen out a good deal of it, it
is important for marketers to devise communications that (1) offer consistent messages about their
products and (2) are placed in media that consumers in the target market are likely to use.
Marketing communications play a critical role in informing consumers about products and services,
including where they can be purchased and in creating favourable images and perceptions.

Promotions pertaining to price offers are important tactics used to influence consumer behaviour in
retailing both with regard to retailer and manufacturers’ brands. According to Grunert (2006),
several empirical studies have shown that price information is important for the consumer decision-
making process, and these consumers are very price conscious. Ferle and Steven (2006) find that
the effectiveness of product advertisement in television is still doubtful. Ailawadi, et. al (2006), find
that the net impact of promotions is still negative. In another research, Gendek, K. and Scott
(1999) report that in-store price promotions are associated with negative purchase event feedback
compared to non-promotion purchases. Promotions such as price discounts and buy one get one
free are effective promotional tools for encouraging consumers to buy more (Shi, Ka-Man and
Gerald, 2005). Hung, Le Hong (2005) recommends that plans for promotions should be top-down
strategy built plans with tactical bottom-up purchase analysis and that they should be monitored
frequently. Steinberg, Jules (2001) points out that a successful promotion often comes from a
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good imagination. There are mixed findings from past research that promotion considerations
either have an impact or no impact on customer motives in retail store purchases. It all depends
whether the promotions support private-labeled or national brand products.


Place Strategy

Kotler and Armstrong (2006), define place or distribution as a set of interdependent organizations
involved in the process of making a product available for use or consumption by consumers. Place
strategy calls for effective distribution of products among the marketing channels such as the
wholesalers or retailers (Berman, 1996). Place strategy in retail stores includes more than the
question of how consumers access the stores, it also includes the availability of products in such
stores (Kotler, 2003). A store can position or reposition a product by locating that product within a
store.

Products with high traffic volume are placed near the payment counters and low-traffic volume
products at distant locations. Warnaby and Dominic (2004) highlight the advantages of shopping
in town centres. Beverages are not just soft drinks, water, isotonics and milk but include emerging
categories (Feil, 2003). The dimensions of place are channels, coverage, assortment, location,
inventory, and transport (Borden, 1984). Thus, the above studies imply that place or distribution
considerations play a major role in influencing consumer motives.

A marketer’s strategy for distributing products can influence consumers in several ways. First,
products that are convenient to buy in a variety of stores increase the chances of consumers
finding and buying them. When consumers are seeking low-involvement products, they are unlikely
to engage in an extensive search, so ready availability is important. Second, products sold in
exclusive outlets such as ISETAN or Jaya Jusco may be perceived by consumers as having a
higher quality. In fact, one of the ways marketers create brand equity - that is favourable consumer
perceptions of brands - is by selling them in prestigious outlets. Third, offering products by non-
store methods, such as on the Internet or in catalogues, can create the consumer perception that
the products are innovative, exclusive, or tailored for specific target markets.


Private-labeled Brand

Private-labeled brands, also known as store brands, contain names designated by wholesalers or
retailers, are more profitable to retailers, are better controlled by retailers, are not sold by
competing retailers, are less expensive for consumers, and lead to customer loyalty to retailers
(Berman and Evans, 2004). Retailers’ interest in private labeled brands is growing because
retailers have autonomy in selecting suppliers, arranging for distribution and warehousing,
sponsoring ads, creating displays and creating opportunities for better margins.


National Brand

The national brands, also called the manufacturers’ brands, are produced and controlled by
manufacturers. They are unusually well known, supported by manufacturer ads, somewhat pre-
sold to consumers, require limited retailer investment in marketing, and often represent maximum
quality to consumers. Such brands dominate sales in many product categories (Berman and
Evans, 2004).








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RESEARCH METHODOLOGY


Figure 1

The Research Framework
Product
Strategy
s

s
i
on
e
n
i
m
Pricing
Strategy
y D
e
g

Consumer Motive
t
r
at
i
x S
Promotion
Strategy
g M
e
t
i
n
k
ar
M
Place
Strategy


Source: Kotler, Philip and Amstrong, Gary (2006). Principles of Marketing. Pearson International
Edition, 11th Edition.


Conceptual Framework

The conceptual framework of this study focuses on the development of a model to measure the
relationship between marketing mix strategy and consumer motive. Examining the relationship
between marketing mix strategy and consumer motive, should contribute to our knowledge of the
relationship that exists between them. The link between the dimensions of marketing mix strategy
and consumer motive is illustrated in Figure 1 above.

In this framework, the marketing mix strategy dimensions are independent variables and consumer
motive is the dependent variable. The present study thus attempts to bridge the gap by providing a
basis for a thorough and insightful discernment of marketing mix strategy and consumer motive.
The model suggests that there is a strong relationship between the dimensions of marketing mix
strategy and consumer motive.


Hypotheses Development

The extensive study of previous research would suggest that the marketing mix strategy enhances
consumer motive toward the purchase of fast-moving consumer products. As such, the following
hypotheses are proposed:


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H1: There is a significant positive relationship between price consideration and
consumer motive in the purchase of fast-moving consumer products.

H2: There is a significant positive relationship between product consideration and
consumer motive in the purchase of fast-moving consumer products.

H3: There is a significant positive relationship between place and consumer motive in
the purchase of fast-moving consumer products.

H4: There is a significant positive relationship between promotion and consumer
motive in the purchase of fast-moving consumer products.


Sampling Procedure

The target population of this study was retailing organizations in Malaysia. The sample for this
survey was comprised of respondents who are customers of TESCO Stores at Puchong, Klang,
and Mutiara Damansara in the Klang Valley. TESCO was selected as the unit of analysis for this
study because it is considered to be one of the major forces in the retailing industry. TESCO is
also considered to be one of the major contributors to the Malaysian economy. This research
examined the degree of application of marketing mix strategy dimensions, and then investigated
their relationship with consumer motive.

The questionnaires were distributed to customers at the entrance of the TESCO Stores involved. A
total of 120 respondents participated in the research. For this research, the convenience sampling
technique was used. The measurement used in this paper is the Likert Scale Method of summated
ratings. It consists of statements where respondents indicate their degree of agreement or
disagreement on a five- point scale -Strongly Disagree, Disagree, Neutral, Agree, and Strongly
Agree.



FINDINGS


The demographic variables used in this study are; ‘age’, ‘gender’, ‘race’, ‘monthly household
income’, ‘monthly household expenditure’, ‘education background’, ‘how often one shops at
TESCO’, ‘if the consumers have bought a TESCO private-labeled brands before’ and ‘marital
status’. The respondents’ demographic profile is shown in table 1 on the next page. The target
respondents were customers at Tesco stores located in Puchong, Klang, and Mutiara Damansara.
Once information had been gathered from the questionnaires, a series of data analyses was
conducted on the information.
Based on the demographics and other personal background information obtained, we can deduce
that for Age – the majority of respondents were within the ranges of 21-31 (30.8%) and 31-40
(35%) years, therefore 65.8% of respondents were from 20-40 years old. For Gender – there were
more female respondents at 55.8%, which is a significant majority. For Race – the majority of
respondents were Chinese at 42.5%, therefore they are more willing to purchase fast-moving
consumer products than other races. For Educational background – the majority of respondents
were qualified with a Bachelor degree (42.5%) followed by diploma holders (24.2%) and SRP /
SPM (19.2%).
Therefore, a huge majority of customers were professionals with education. In terms of monthly
household income, the survey indicates that the bell curve of respondents was from ‘Less than
RM2,000’ to ‘RM2,001 to RM5,000’ to ‘RM5,001 to RM8,000’ which is 26.7%, 35% and 24.2%
respectively. In terms of marital status, there were more married respondents at 55.8%, which is a
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significant majority, therefore married people have a greater tendency to purchase fast-moving
consumer products.
The monthly expenditure on groceries indicates that the majority of respondents spend 20% (or
less) of their monthly expenditure on groceries at 77.5% (combined figures for 10% of income and
20% of income on expenditure). Therefore, it is possible that they could be very selective when
choosing what they buy or that they are high-net individuals who do not need to spend a lot on
groceries.
In terms of how often they shop at TESCO, the majority of buyers shop from once in a week to
once in every 2 weeks at 29.2% (once a week) and 32.5% (once every 2 weeks) for a total of
61.7%. For the category ‘have bought TESCO brand products before’, the majority of respondents
have bought TESCO products before and are familiar with the product quality (85%)



Table 1

Respondents’ Demographic Profile

Respondents’ profile
Classification
Frequency
Percent
Age
Under 20
5
4.2
21 to 30
37
30.8
31 to 40
42
35.0
41 to 50
28
23.3
51 & above
8
6.7
Gender
Male
53
44.2
Female
67
55.8
Race
Malay
36
30
Chinese
51
42.5
Indian
27
22.5
Others
6
5
Educational background
Secondary
7
5.8
SRP / SPM
23
19.2
Diploma
29
24.2
Bachelors
51
42.5
Master’s / PhD
10
8.3
Monthly
household Less than RM2,000
32
26.7
income
RM2,001 to RM5,000
42
35.0
RM5,001 to RM8,000
29
24.2
RM8,001 to RM10,000
9
7.5
RM10,001 & above
8
6.7
Marital status
Single
53
44.2
Married
67
55.8
Monthly expenditure on 10% of income
48
40
groceries
20% of income
45
37.5
30% of income
18
15
More than 30% of income
9
7.5
How often they shop at Everyday
3
2.5
Tesco
Once a week
35
29.2
2-3 times a week
20
16.7
Every two weeks
39
32.5
Once a month
23
19.2
Have
bought
Tesco Yes
102
85
brand products before

No
18
15


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Factor Analyses and Reliability

Table 2 shows the results of Factor Analysis. From the factor analyses of the variables, five factors
were generated. Factor one is named Consumer Motives (dependent variable) with 6 items
carrying a factor loading of more than 0.6. Factor two is named Product Consideration with all five
tested items loading more than 0.6. Factor three is called Place Consideration with four items
having a factor loading of more than 0.6. Factor four is named Price Consideration with three
items higher than 0.6 loading. Promotion Consideration did not become a factor since it had only
one item that loaded higher than 0.6 and this is considered weak for this study.


Table 2

Factor Analyses of Variables.

Rotated Component Matrix
A
Items

F1
F2
F3
F4
F5
Pricing2



.830

Pricing3



.640

Pricing4



.820

Product1

.847



Product2

.797



Product3

.734



Product4

.662



Product5

.765



Promotion4




.611
Placement1


.630


Placement3


.818


Placement4


.810


Placement5


.818


Motive2
.756




Motive5
.757




Motive7
.699




Motive8
.796




Motive9
.808




Motive10
.836




Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 10 iterations.





Reliability Testing

Although pre-testing of the questionnaires was done earlier to enhance reliability, this was done
again for the entire survey, where the collected data were keyed in and the Cronbach Alpha was
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calculated. With values at an acceptable level of significance for Alpha being 0.70 (Huck and
Cormier,1996), we can conclude that the final survey is reliable.

Table 3

Cronbach Alpha Values

Factors
Cronbach Alpha
Price
0.787
Product
0.854
Placement
0.814
Promotion
Nil
Motivation
0.879

Retailers will not promote their private brands in order to lower or to maintain low costs and pass
the saved cost to consumers. Cronbach alpha for promotion is not available as only one item was
utilized for this factor for further analysis.


Pearson Correlation


Table 4

Correlation Coefficients among Variables

Correlations
Motiveall
Pricingall
Productall Placementall Promotion4
Motiveall
Pearson Correlation
1
**
**
N
120
Pricingall
Pearson Correlation
.410**
1
*
**
Sig. (2-tailed)
.000
N
120
120
Productall
Pearson Correlation
-.092
-.190*
1
**
**
Sig. (2-tailed)
.318
.038
N
120
120
120
Placementall Pearson Correlation
.071
.012
.265**
1
**
Sig. (2-tailed)
.439
.897
.003
N
120
120
120
120
Promotion4
Pearson Correlation
-.270**
-.341**
.565**
.275**
1
Sig. (2-tailed)
.003
.000
.000
.002
N
120
120
120
120
120
**. C
orrelation is significant at the 0.01 level (2-tailed).
*. C
orrelation is significant at the 0.05 level (2-tailed).



The correlation coefficients among the variables such as pricing consideration, product
consideration, place consideration, promotion consideration and consumer motives are shown in
table 4 above. The results above reveal that there are significant correlations existing between
Marketing Mix Variables and Consumer Motives. The correlation between Promotion and
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