The Determinants of Morinaga Milk Customers Loyalty

in Aceh Province

Adnan Berdan

1,2

, Mukhlis Yunus

, Muhammad Adam

, Hafasnuddin

, Aiyub

and Jumadil Saputra

Postgraduate Program of Management Science, Syiah Kuala University,

Banda Aceh, Indonesia

Faculty of Business and Economics, Malikussaleh University, Indonesia

School of Social and Economic Development, University Malaysia Trengganu, Malaysia

Abstract. The purpose of this study is to develop the integrated model of Milk

customer loyalty in Indonesia. Method of analysis in the research uses literature

review. This study uses twenty seven references relates to product quality, brand

image, price, advertisement, decision making and customer loyalty. Several

studies discuss the relationship between product quality, brand image, prices and

advertisement on decision making. Besides that it also reviews the relationship

between these variables on customer loyalty. However, it presents the

shortcomings of current research and the trends for future study in healthy

industry.

Keywords: Product Quality∙Brand Image∙Prices∙Advertisement∙Decision

Making∙Customer Loyalty

1 Introduction

The dairy industry in Indonesia is one of the strategic food industries that has a great

potential to be developed. The milk processing Industry has an important role in

providing adequate nutrition for the community. Currently, the average consumption

has only reached 10.47 kg/capita/year which is still far below the average of ASEAN

countries such as Philippines 20 kg/capita/year, Malaysia 20 kg/capita/year, Thailand

20-25 kg/capita/year, and Singapore 32 kg/capita/year.

The tight competition between dairy companies causes producers to look more

closely at market conditions, such as by segmenting products based on ages (baby milk,

child milk, and adults). The condition of market demands for the milk contents of the

infant growth and children encourages milk producers to produce milk containing high-

value ingredients such as DHA, AA (arachidonic acid), vitamins, calcium, linoleic and

other ingredients. To supplement this nutritional need, growth milk plays an important

role in optimizing children growth and development.

Based on the data taken from the Central Bureau of Statistic of Indonesia (2015)

noted that female workers in Indonesia in February 2015 "increased by 1.39 million.

These data also include the high number of mothers working after maternity leave.

Mothers cannot spend their time to breastfeed (ASI) for their babies. Therefore, giving

Berdan, A., Yunus, M., Adam, M., Hafasnuddin, ., Aiyub, . and Saputra, J.

The Determinants of Morinaga Milk Customers Loyalty in Aceh Province.

DOI: 10.5220/0010598700002900

In Proceedings of the 20th Malaysia Indonesia International Conference on Economics, Management and Accounting (MIICEMA 2019), pages 817-822

ISBN: 978-989-758-582-1; ISSN: 2655-9064

817

PASI (Breastmilk Substitute) or formula milk cannot be avoided to increase nutritional

intake other than Breastfeed (ASI).

There are two factors that influence the decision of parents in giving formula milk

to children, including internal factors such as; a socio-economic background which

includes psychological, physical health, education and knowledge, lifestyle,

demography, and family income, [1]. Another internal factor is that the psychological

condition of the mother such as the breastfeeding could not come out. Besides, many

women do not want to breastfeed because of a lifestyle that views breastfeeding as the

cause of the bad shape of the body, [2] While the external factors are milk prices and

advertising influences. Toddlers are recommended to consume milk three times a day

to meet the important sources of calcium and phosphorus for bones, [3], with calcium

needs between 500-800 mg per day [4].

According to, [5], states that one of the factors that cause a mother not to breastfeed

her baby is due to the increased promotion of formula milk as a substitute for breast

milk. So, the promotion of formula milk can be said as the cause of the decrease in the

numbers of mothers who exclusively breastfed their babies. The increase in the use of

formula milk is caused by parents, especially mothers, who prefer to give their babies

breastmilk substitutes (PASI). This means that the respondents make a purchase

decision when they see a lot of advertisements,[6].

Advertising does not entirely provide true information to consumers. The results of

a research by [7], regarding the analysis of advertising claims and labels on food

products, shows that 9.8% of food advertisements are milk advertisements.

Advertisements for formula milk are considered excessive because good growth and

development of children can be achieved by consuming milk. Milk is not the only factor

that supports the growth and development of children. Similarly stated by [8],

advertising has influenced the purchase decision of consumers. Even in recent years,

the effect of advertising has had a lot of influences that focus on the effects of

advertising on purchase decisions [9, 10]. Advertising strategy is a tool that creates

awareness of products or services ultimately and results in consumer purchase

decisions[11].

Based on the description that has been explained, the problem is the need for milk

for children under five who have been the primary choice for children. ASI/breastmilk

is an expression of God's compassion and an extraordinary gift for every baby born into

the earth. In Surat Al-baqarah (2: 233), the wisdom of the verses contained in the Holy

Qur'an emphasizes that breastmilk (ASI) is very important. Breastmilk is the best food

that can be given to a child in the first six months of life.

The provision of formula milk for babies should be done after a two-year period of

breastfeeding. However, mothers or families must understand the content of formula

milk so that all children needs can be met. Formula milk products are products aimed

at the baby and children segment, but decisions in purchasing are dominated by parents,

especially couples of childbearing age (EFA).

This study describes different viewpoints from previous researchers over the years

which state that satisfaction is a variable that mediates customer loyalty,[12],[13]. But

in this study, the researcher tries to examine further the role of purchase decision in

mediating customer loyalty such as a novelty offered by the authors.

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2 Literature Review

Faithful customers will act as information channels and will disseminate information

about products to their social networks, friends, and relatives,[14]. Customers will show

their loyalty in a variety of ways including repetitive purchases, increase the number of

purchases and also be a supporter of organizations that play a key role in shaping

customer decision making [15], [16], [17].

The customer decision-making process consists of five steps that have been widely

used by researchers,[18] and [19].The steps included in the model are; needs

recognition, information search, alternative evaluation, purchases and post-purchase

processes. While Stigler is in [20],states that a brand that is known by the buyers will

generate interest in making purchase decisions. The existence of a brand image does

not only affect how consumers see the product but also has a benefit in reducing the

risk in the purchase of the brand image,[21].

A strong and positive brand image not only helps companies to achieve a

competitive advantage but also encourages repetitive purchase decisions of

customers,[22]. These results are in line with the findings of [23] and [24], [25], that

there is a significant relationship between brand image and costumers purchase

decision. But, in contrast to a number of other empirical studies, such as stated by [26],

[27], and [28], there is no significant relationship between brand image and customer

purchase decision.

Price has played an important role in consumer purchase behavior and in the

decision-making process, [29] ;[30]. The key elements of price decisions are most

useful for seeing price decisions as a strategic thing, [31]. A research conducted by [32],

in dairy and processed products shows that price has the most influence compared to

the quality and safety. Meanwhile, the results of a research by [33], state that price have

no any effects on milk purchase decision.

The limited amount of research on price decision-making processes shows that there

are very different practices from retail marketing theory. Similarly,[34], very few of the

existing models offer clear support for understanding prices when making decisions.

The researcher places their efforts to learn how to create and maintain customer loyalty,

[35]. (Aaker, 1992). Furthermore, loyal customers are willing to pay premium prices to

stay connected with certain brands [36].(Bojanic, 1996).

3 Determinants of Customer Loyalty

Customer Loyalty is not only shaped by customer satisfaction but also formed by

purchase decisions. For more details, it can be seen from the following explanations:

1. The background to selecting purchase decision as the intervening variable, [37],

states that the relationship of satisfaction and loyalty is not simple and

straightforward as the level of elaboration of customers who must act out as a

moderator between satisfaction and loyalty.

2. Likewise, as stated by [38], that the relationship between satisfaction and loyalty is

non-linear.

The Determinants of Morinaga Milk Customers Loyalty in Aceh Province

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3. This study describes a different viewpoint from many of views of previous

researchers so far who state that satisfaction is a variable that mediates customer

loyalty, [12], [13].

4. Conclude that satisfying customers is not enough to keep them loyal because they

are free to make choices [39].

5. [40], concludes that it is wrong to put forward the assumption that satisfaction and

loyalty are moving together.

6. According to [16], suggests that from satisfied or very satisfied customers between

65% and 85% will move to the other products.

7. Customer satisfaction is very important for customer loyalty where satisfaction and

loyalty have a strong relationship and some authors claim that the relationship

between customer satisfaction and loyalty can be replaced,[41]. Martisiute et.al.,

(2010).

4 Suggestions for Future Studies

Based on the description above, the authors convey a new concept that might be

meaningful to enrich knowledge and to provide a contribution to the development of

science. The author tries to develop a new concept which will give a more meaningful

meaning in the treasury of science, namely by placing the purchase decision as the

intervening variable where the intervening or mediating variables between exogenous

variables and endogenous variables (loyalty) mostly used is consumer satisfaction

variables as intervening variables, such as [42]Zamora et al.(2004), [43],Baker-Prewitt

(2000), stated theoretically and empirically that consumer satisfaction increases one of

the loyalty factors. It means that there are other factors that can also be studied as factors

that can mediate between exogenous and endogenous variables, namely the purchase

decision variable.

Based on that, this research does repeat what has been accepted by the public and

has been hypothesized and even theorized by scientists. In this case, the authors

hypothesize that purchase decisions mediate between several elements of the marketing

mix towards customer loyalty. Customers Satisfaction is essential for the loyalty of

customers, and satisfaction has a strong relationship. Some authors claim that the

relationship between loyalty and satisfaction may be replaced, others think

differently,[41]. In addition, the use of purchase decisions as mediating or intervening

variables is based on the thoughts conveyed by [44], purchase decisions of customers

based on 5 (five) stages, fulfilling of needs (needs), understanding of needs

(recognition), searching process, evaluating process, and decision making. Usually,

consumers buy products both regarding product quality, price and other elements are

after they obtain information about a product and use that information to evaluate the

characteristics of merchandise sold, services provided, prices, convenience, personnel

and physical [45]. It means that purchase decision stages are very important for

consumers before they keep loyal to the products.

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