Food Restaurant In Malaysia: Consumers

Chapter 1

Introduction

1.1 Introduction

This chapter serves as an introductory part of the study, which addresses the purpose and motives of the study. The study provides the understanding about the consumer’s decision making on fast food consumption and their behavior and attitudes towards the fast food restaurant. Section 1.2 provides an overview of the fast food restaurant in Malaysia. The background of the study is explained in Section 1.3. Following that, Section 1.4 will be talking about the research problem. Then, Section 1.5 underlies the objectives to be achieved through the study. The significance of the study is elaborated in Section 1.7; while 1.8 will be discussed about the scope of study. The last section states the chapter outline.

1.2 Overview of fast food restaurant in Malaysia

Nowadays, the fast food restaurants have been popping up, as the Chinese saying goes, its emergence like ‘bamboo shoots after a spring rain’ (Lee, n.d.). Fast food restaurant also considered as one typical form of business which can grow globally (Emerson, 1990). The network of fast food restaurants keep expanding throughout the year as it attracts more and more franchisees to invest and participate in the business chain and thus encourages the expansion of branches throughout whole Malaysia. It has become an essential part in the youth’s lifestyle because they are looking for something which is convenience, time saving and relaxing when patronizing foodservice outlets (Kueh & Voon, 2007).

According to the past statistic, Asia-Pacific fast food market generated total revenues of $47.1 billion in 2008, representing a compound annual growth rate (CAGR) of 10.3% for the period spanning 2004-2008. The Quick Service Restaurant, QSR segment was the markets most lucrative segment in 2008, generating a total revenue of $28.5 billion, equivalent to 60.5% of the market’s overall value (www.datamonitor.com). All of these statistics proof that the market for fast food restaurant had well developed through recent years. Besides, the growing number of fast food chains and restaurants in newly established shopping canters and hypermarket complexes are the evidence for this newly emerging demand.

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There are several reasons for customers to patronizing a fast food restaurant. From the research, the reasons which participants agreed most frequently were that fast-food restaurants are quick (92%), easy to get to (80%), and serve good-tasting food (69%). Participants agreed least frequently with the reasons of eating fast food is a way of socializing with family and friends (33%), they have nutritious foods to offer (21%), and they are fun and entertaining (12%) (Rydell, Harnack, Oakes, Story, Jeffrey & French, 2008). The reasons for people who frequently visit fast-food restaurants appear differ depending on several factors also such as age, sex, education, employment status, household size, and frequency of eating at fast-food restaurants. United State National dietary survey and food disappearance data showed that the energy intake of the US population has risen during the past decades, which resulted from the trend of eating more meals and snacks away from home (Rydell et al., 2008). This can be proved by the proportion of total food expenditures spent on food-away-from-home increased from 34% in 1972 to 49% in 2006. The study is carried out by involving larger proportion of females (59.4%) compared to males (40.6%) participation. Approximately three fourths of participants were non-Hispanic white. Most reported eating at fast-food restaurants three or more times per week.

Fast food restaurant which also called as quick service restaurant (QSR) have been gaining popularity with the increasing population of Malaysians since the last 10 years, coupled with the need to dine in a more comfortable environment (Anonymous, n.d.). Anyhow, the current fast food restaurants’ concept differs with that of the conventional restaurants. We can see that it has undergone evolution within a short period of time. Moreover, a new and faster pace of life in big cities has also led people to opt for a quicker meal as the solutions for their shortened lunch hours (Hanson, 2002). It has no longer restricted to the traditional way of dine-in experience. The modern fast food restaurants have been offering different types of services such as drive-thru, 24-hour, online order services and delivery services which will provide additional value and conveniences to the customers (Anonymous, n.d.).

The fast food market has different target market. According to the income, the researchers found out fast-food restaurants to be more popular in the neighbourhood that belongs to the second and middle-income population (Morland, Wing, Diez & Poole, 2002). In South Los Angeles, less populated neighbourhoods had the higher proportions of fast-food restaurants distribution (25.6%) compared to more affluent areas (11.2%) (Lewis, Sloane & Nascimento, 2005). However in Malaysia, we obviously observed that the fast food restaurant is densely distributed around the cities or those commercial areas where population is high. The fast food restaurants nowadays appear as a common restaurant which provides additional conveniences dining experience for their customers.

However, fast food restaurants offer only limited selection of dishes or menus, providing standardized products and services to the customer (Jekanowski, Binkley, & Eales, 2001). Generally, the food is served quickly and can be either taken away or eaten at the fast food restaurant as there is minimal level of customizations involved. All the menu of the same fast food restaurant will be the same everywhere depends on the country, therefore, the specialisation and standardisation of each brand will be maintained.

The fast food restaurants customize the marketing mix strategies in order to adapt into the globalizations and internationalization elements according to cultural, regional and national element differences of each country (Hussin, 2004). The fast food in Korea is successful because of there are some unique cultural differences is adapted in Korean fast food even though fast food restaurants considered as representative of western culture (Park, 2003). Different eating cultures had to be adopted in the menus for different countries. For examples, the offers of McDonald’s Co. (Japan) Ltd are: chicken tatsuta, teriyaki chicken, and the Teriyaki McBurger. Burgers are garnished with a fried egg. Beverages include iced coffee and corn soup. The offers of McDonald’s Malaysia are: McChickenTM, Filet-O-FishTM, Bubur Ayam McDTM, Ayam Goreng McDTM and others while the beverages included Carbonated Drink, Ribena®, hot drinks and others. The fast food restaurants should formulate the marketing mix strategies which are suitable or match to the perceptions or preferences of the customers across different countries and cultures. In other words, this helps to serve the specific target markets to satisfy different preferences or requirement of different customers across different countries.

Fast food restaurants seem to be growing and becoming more and more competitive throughout the years (Hassan, 2007). There are various brands of fast food restaurant available in Malaysia, which included Kentucky Fried Chicken (KFC), Pizza Hut, McDonald’s, A&W, Nando’s, Shakey’s Pizza, Dominos, Kenny Rodgers, Burger King and so on. Besides, fast food restaurants have become everyone’s choice for dining which included families, working adults, adolescents to hang out or even the revision places for students. At no doubts, in order to be successful, each fast food restaurant should have project its own special image or brand to the right target market with some standing out attraction.

In recent years, consumers are increasingly value ‘‘efficiency, calculability, predictability and control,” due to the changes in lifestyle, demographic factors and technology in restaurant consumption (Ritzer, 2001). The takeaways segment contributed revenues of $13.5 billion in 2008, equating to 28.6% of the market’s aggregate revenues (www.datamonotor.com). The parents who have busy lifestyle today often overloaded with their jobs as they wants to earn more money in order to survive in this realistic and materialistic world. This is one of the reason for which the number of housewives who will be staying at home to preparing the meals for their beloved family had decreased. The precious time for the family members to gather and have meals all together has decreased throughout the year. This unhealthy trend will cause some negative effects in the children’s personality development however is neglected. As an alternative, the students or the children will be having their meals at fast food restaurants because of its popularity and the wide coverage and of course it’s relatively affordable price (McCullough, Jones and Vignali, 2003). In addition, the younger generation who are easily influence by western lifestyles portrayed through the television and mass media, exhibit a preference towards fast food restaurants (Akbay, Tiryaki,Gul, 2006).

In addition, convenience is the main asset and attraction point of the fast food restaurant (Fiona et al., 2003). It does not require the customers to wait for a long time or queue up in a long waiting line. For example, for those who are in hurry can simply take away their meals at drive-thru of McDonald’s without getting down from their own vehicles. Furthermore, the time spent in food preparation of fast food restaurant also shortens because the efficiency and effectiveness of the workers and the low level of customization involved due to standard menus. The workers of fast food restaurants are normally compulsory to attend the training course if there were any new beverages in order to update themselves about the new menus. Undoubtedly, the fast food restaurants have been successfully satisfied the customers’ the important requirement, which it is speed. Fast food restaurant can reduce the average time of customers spend in the outlets and hence avoid the high customer volume, long queuing lines, and crowding problems that will leads to customers’ dissatisfaction.

The fast food restaurants also formulate and employed some of promotion campaigns and advertisement in their marketing strategies with the purpose of promoting their reputation towards their brands or increase products awareness to their customers (Claudio Vihnali, 2001). For example, McDonald’s in Malaysia launch its promotion plan such as McValue lunch, limited edition glasses and other while McDonald’s in United State launch its promotion such as McDonald’s Dollar Menu featuring some of the customer favorite-tasting McDonald’s foods for only a dollar every day. It can be add something to customer’s Extra Value Meal, customizing their own meal or enjoy as a snack. The marketing strategies bring both positive and negative impact to the customers.

In addition, Ministry of Health (MOH) has regulated the advertising for fast food on December 10, 2007. This is due to the excessive consumption of fast foods had recognized as one of the risk factors which associates with the problem of obesity and diabetes (Batul Nafisa Baxamusa, 2009). Those children who took fast food as their meals, compared with those who did not, consumed more energy in total which includes, more total fat , more total carbohydrate, higher sugar contained, more sugar-sweetened beverage, less fiber, less milk, and fewer fruits and nonstarchy vegetables. ( Bowman SA, Gortmaker SL, Ebbeling CB, Pereira MA, Ludwig DS, 2001). Some of the guidelines for fast food advertising for which the main targets is children is that fast food advertisements are not allowed to provide nutrition information which may confuse the consumers, fast food advertisements shall not challenge or belittle the Malaysian Dietary Guidelines published by the Ministry of Health Malaysia and others (Tee, 2008).

1.3 Research problems

As in other rapidly emerging markets in Asia, food consumption in Malaysia has shifted away from starchy staples toward wheat-based and livestock products (Warr, Rodriguez & Penm, 2008). Besides the rapid growth of the net income per person (at around 5 per cent a year), aggregate food consumptions in Malaysia has been supported by relatively high population growth (around 2.5 per cent a year) and changing consumer preferences toward western styles in the world.

Therefore, the needs and wants in the customers’ mind are started to shift towards the fast food in the modernization trends. Hence, fast food restaurant requires a careful research and study about the customers need and want to understand the preferences in consumer mindsets and this is a critical successful keys for the business.

There are many changes in food consumption demands in Malaysia are due to increase in per capita income and population (Tee & Thiam, 1975; Hussein, M.A., Mohayidin, M.G. & Shariff, S.K., 1986; Baharumshah and Mohamad, 1993). This statement proof that increase of the income of Malaysian will actually lead to the changes of demand of the consumers towards the food such as the demand for higher quality food, convenience to get the food, shorter waiting time for food and others. In fact, there are other demographic factors changes through time as well, such as migration from rural to urban regions, changes in the country’s and household’s demographic structures, and improvements in education, transportation, communications and marketing infrastructure in Malaysia which will shift the demands for the food quality (Tey, 2008). There are increasing numbers of female workforce in Malaysia, it is 36% of the total population and there are 81% of the female workforce are from the age group of above 25 years old female (Labour force statistics, Malaysia, 2008). So, the trend of traditional way that women become housewife nowadays is no longer applicable as the roles of women in the workforce have insufficient time to prepare the meal. Besides, all the others who live in the hustle and bustle city’s life also prefer for a quick, convenience and filling food as well.

Nowadays, people are desired or expecting everything can be obtained in a convenience, quick or innovative way. So, the fast food restaurants have been developed all the ways to fulfill those needs and wants of the customers. Different types of the fast food restaurants provide different services themselves. Therefore, we should look into the business strategies or what the innovative marketing plan that are employed by the fast food restaurants to run its business in order to attract or retain its customers.

Prior and during the current financial crisis that hit the Asian region, the chain of fast-food establishments continues to grow while there is expected a slowdown in other business sectors (Liu & Chen, 2000). Due to the global economic slowdown, the Malaysian economy is expected to contract by 3.5% during 2009 after registering a growth of around 4.6% in 2008 (www.datamonitor.com). This global financial meltdown also brings a huge effect to Malaysia’s economy. The rate of unemployment keep on increasing and the recession caused many of factories, shops or restaurants faced difficulties and have to be close down at the end. Every customer is trying to cut down all their expenses in order to save the money for emergency use at this recession period, and this applied even in their food expenses. Hence, the food industry also feels the impacts caused by the recession. Consumers tend to opt for something which can fill up their stomach for which they can pay less most importantly. Therefore, fast food restaurants also face the problems of sales decreases and they must try to strengthen their strategies in order to fulfil the needs and wants of the consumers in these recession period to maintain the business.

Through this study, we will try to understand the perceptions of the consumers towards the fast food restaurant and how the fast food restaurants use their marketing mix strategies to attract and retain their current in the recession period efficiently. Besides that, the fast food restaurants can compare their strengths and weaknesses themselves with each other in order to enhance or improve their pros and try to lessen the cons itself. So, the fast food restaurants can develop more competent marketing strategies which standing out and compete with other competitors in the food service industry. The fast food restaurant also should understand the effective way of advertising with media which is suitable to approach the market especially the broadest market for fast food, students market.

Competitions in attracting the customers in food market are becoming more furious. It is very important to look for the key considerations of student before they make their fast food decision. This study is aimed to figure out what is the student expectation and perception towards the fast food restaurants. In short, the research is designed to answer the following doubts.

* To what extent the factors identified influence the consumers’ choice towards the fast food restaurant?

* To what extent is the consumers’ satisfaction degree towards the services, price, location, quality and variety of products?

* To what extent is the difference between each of the fast food restaurant in terms of the promotion campaigns?

* What is the perception of the consumers towards the fast food restaurants?

1.4 Research Objective

The perception of consumers’ in choosing fast food restaurants had been changed over time. A study on consumers’ selection criteria about the fast food restaurant, therefore become a necessity. The specific objective of this study is:

* To study on the consumers’ perception towards satisfaction level of the fast food restaurants with respect to relevant variables.

In the marketing literature, customer satisfaction is regards to be part of an overall model of customer behavior that evolves over time (Law & Hui, Zhao, 2004). Teenagers and students had occupied the majority proportion of the total fast food restaurants’ target markets, so there is no doubt that the feedback about the satisfaction level of students and teenagers toward the fast food restaurants is of highly important. In other words, the research seeks to determine the needs and wants of consumers that desirable to be fulfilled. Some of the criteria or variables that will affect the satisfaction level of the consumers towards the fast food restaurants which included pricing, customer services, location, promotion, quality or variety of products offered and others.

* To examine the relationship between the main consideration and the satisfaction level.

It is important to find out whether the consumers’ actual experience about fast food restaurant is meets or exceeds expectation. Therefore, the research’s goal is mainly to determine the relationship between the consumers’ choice factors and satisfaction level. Furthermore, the fast food restaurant must understand well about their strengths and weaknesses in order to improve their weakness and enhance their strengths to provide high level of satisfaction to the customers’ need and wants in the accurate way.

* To determine consumers’ loyalty towards the fast food restaurant.

Brand loyalty refers not only to one’s tendency to repurchase the product of the same brand time after time, but also include the psychological commitment or attitudinal bias toward the brand (Schoenbachler, Gordon and, Aurand, 2004). So, this research can help to determine which elements that delivers the most valuable services to consumers and which one is the most important criterion for satisfying customers’ want and need. This is because the criterion can be one of the important points to form the consumers’ brand loyalty towards the fast food restaurants and refuses to switch even when a better offer comes along. Besides, the customer loyalty is one of the assets to the fast food restaurants because creating and maintaining loyal customers has become increasingly difficult in today’s competitive environment. For example, the customers loyal NIKE and like to buy NIKE shoes because of the comfortably of wearing the shoes. It also can help to determine the effective and efficient loyalty program that can be used to reward and value those loyal customers.

· To determine the relative importance of the selection criteria from the perspective of consumers.

There are a few factors influence the consumers’ decision to visit fast food restaurant. Among the factor, some of them appear to be more prevalence than others and this research is to find out the relative importance of the selection criteria from consumers’ perspective. By knowing the most prevailing selection criteria, the fast food management can use the criteria to attract more potential customers to their store. For example, if one of the consumers’ selection criteria is the promotion of fast food, so the fast food restaurant can try to develop some of attractive promotion in order to catch the attention of those consumers.

* To measure the frequency of consumers visit to the fast food restaurant.

The outcome result can be used to determine the frequency of the consumers visiting their restaurant and measure the consumers’ preference for particular days and for the particular meals. As a result, the fast food restaurant can gauge the perception and understand the purchasing intention of the customers. For example, the fast food restaurant can do the promotion campaign on the lunch hours in order to attract the customers to visit to their restaurant. The fast food restaurant also can prepare or develop more variety of food menu based on the preference of the customers.

1.5 Significance of the study

Firstly, the main purpose of doing this study is to investigate and understand about the factors that influence consumers’ perception and purchasing tendency towards the fast food restaurant such as price, location, promotion, process, quality of products, physical environment and others. Some of the factors above are elements of the marketing mix which can help the restaurant blends to produce the response it wants in the target market and help to influence the demand for the particular restaurant’s products or used to develop its marketing strategy. Some of the elements are from the extended marketing mix which is customer oriented can help the restaurant to understand the importance of the services quality to the consumer nowadays.

Besides, the fast food restaurant can further explore on the satisfaction level of consumers towards fast food restaurant. The result outcome of the research can be used to compare whether the actual experience of the consumers meets, exceeds or less than the expectation. So, the fast food restaurant can formulate an effective marketing strategy which can manipulate the influencing factors in order to achieve the best gaining satisfaction in the customers about the needs and wants of the population. Therefore, it is a must for a company to understand what factors influence customer satisfaction and repurchase behavior, and then try to make improvements in the critical area so that they can provide high level of satisfaction and at the same time gain the loyalty from customers (Law et al., 2004).

A great load of researches and surveys had been carried out worldwide but literatures concerning individual decision on the choice of fast food restaurant are hardly found in Malaysia. Even thought the research is not done in Malaysia, due to the trend of globalization, the research result can still be employed as the references and resources for the fast food restaurant. The fast food restaurant can understand about their strengths and weaknesses of each competitor, so that they can revise their marketing strategy in order to compete among themselves in the fast food industry. The fast food restaurant needs to project its right image or brand to the right customers for the fast food restaurant if it is desire to be outstanding in this competitive market.

Through this study, the fast food restaurant can improve the quality of services and performances or adapted learning skills to attract new customers and at the same time retain its existing customers in order to increase their sales and profits. In view of the fact that improving service quality has become one of the most important strategies for which a service provider can use to differentiate from its competitors and thus position itself more effectively in the marketplace (Cronin and Taylor, 1992). The restaurant could understand more about the preference or behavioral intention of the customers towards the fast food restaurant such as their preference meals, preference pricing or promotion campaign and others. The outcome result also useful for measuring the frequency of customers visit to the fast food restaurants and reasons they visit to the fast food restaurant.

We also can let the fast food restaurants know about the determinant of success or failure such as location, price of the products, advertising and promotions for positioning of retail brand, quality of products and others. This understanding provide a very strong fundamental for the fast food restaurant to target their target market effectively in order to promote the consumption of food and increase the customer demand (Yap, 2003).

Lastly, this marketing research about fast food is useful for franchisees who wish to know about the purchasing behaviors of consumers in the local market. It is helpful for them in the decision making in evaluate whether they should invest or participate in the franchise agreement in the particular market.

1.6 Scope of the study

This study is conducted in the fast food restaurant in Jaya Jusco and Mahkota Parade which both located in Malacca. Then, the target respondents of the study are consumers of the fast food restaurants. 400 consumers will be randomly selected. The reason for the selection of the respondent in this two places are because the fast food restaurants in Jaya Jusco and Mahkota Parade have crowded with consumers from different target markets which is fitted in this research. Hence, there is no doubt that the research on those consumers about their perception and decision making towards the fast food restaurant for the purpose of gaining a good and precise results to help the fast food business to stand more market share in this competitive market.

1.7 Operational Definition

Variables

Definitions

Sources

Prices

Amount of money that the consumers willing to pay for the products and services

Kotler, 2008.

Promotions

Activities that used to communicate the products to its various publics

Kotler, 2008.

Location

Activities that make the right products available to customers at the right location and at the right time.

Kotler, 2008.

Products

The combination of the goods and services which offered by the company

Kotler, 2008.

Process

The procedures, mechanisms and flow of activities by which the service is acquired.

Booms, B.H., Bitner, M.J., 1981, pp.47-51.

People

Performance of the staffs or people in the company which will influence the quality of serviced delivered and the customer’s perceived value towards the company

Booms et al., 1981.

Environment

Any tangible evidences or visible cues that will help to facilitate the performance and influence the quality of the services to be delivered.

Booms et al., 1981.

Consumers’ perception

Consumers’ belief concerning the service they received or experienced service

Gale, 1994.

Consumers’ decision making

A road map of consumers’ minds that marketers and managers can use to help guide product mix, communication and sales strategies

Blackwell, Miniard, and

Engel, 2006, pp.70.

1.8 Organisation of the Study

The present study is organized into five chapters. The first chapter provides the background related to the topic, the problem statements, the objectives, and the significance of the study. Then, Chapter Two examines the consumers’ choices towards the fast food restaurants and the related literature review. After that, Chapter Three will explain about the theoretical framework. Chapter Four will discuss about the statistical outcome and the main findings, while the final chapter as the last section of the study which will be the summaries of the study and the recommendation parts.