UNIVERSITI TEKNOLOGI MARA
MARKET ORIENTATION, SERVICE QUALITY AND BUSINESS PERFORMANCE
OF HOTELS IN KLANG VALLEY OF MALAYSIA
MUHAMMAD BONNIE LOPEZ
Thesis submitted in fulfilment of the requirements for the degree of
Master of Science
Faculty of Hotel & Tourism Management
January 2010
ABSTRACT
Market orientation (MO) is one of the major research streams in strategic marketing developed during the past ten years. Since its inception in the early
1992, the major thrust of research in market orientation has been to study the relationship between market orientation and business performance with service quality as the mediator. Although it is acknowledged that market orientation and business performance (BP) are likely correlated, this paper directs attention to what may lie beneath the relationship. From both conceptual and empirical perspectives, it is argued that future research should focus on the mechanisms by which market orientation contributes to business performance. Market orientation is positioned as marketing's contribution to business strategy and is considered an important strategic orientation position market orientation as marketing's explanation of performance differentials between firms. These advantages of market orientation are generally argued to be a consequence of improved market-sensing capabilities and thus improved market responsiveness, particular in more hostile and unpredictable environments. In relation to the above arguments, this study attempts to investigate the relationship between market orientation and service quality (SQ) and the implication on business performance. The determinant of the of the study framework model of market orientation, service quality and business performance adopted by Chang and Chen, (1998) is used as grounded theory for this study. Samples comprised of 41 hotel managers from four and five star hotels in the Klang Valley of Malaysia and were obtained through a mail survey questionnaire. The measurement technique used was the Likert Scale of five points scaling. Market orientation was measured using the adopted 20-item MARKOR scale by Kohli et al. (1993).
The market orientation items include 1) intelligence generation (IG), 2) intelligence dissemination (ID), and 3) responsiveness to market intelligence (RMI). The 22-item SERQUAL scale by Parasuraman et al, (1988) was adopted as the instrumentation for service quality for this study. The service quality variables include 1) tangibility (Tang), 2) responsiveness (Res), 3) reliability (Rel), 4) accuracy (Ace), and 5) empathy (Emp). As for the business performance, three performance measures were used in this study; 1) occupancy
%, 2) return of assets (ROA), and 3) return of sales (ROS). The research hypotheses were tested using the multiple regression analyses. The stepwise regression results revealed that 1) there is a significant relationship between market orientation and service quality, 2) there is a significant relationship between market orientation and business performance, 3) there is a significant relationship between service quality and business performance, and 4) service quality mediates the relationship between market orientation and business performance.
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ACKNOWLEDGEMENTS
In the name of Allah SWT, I thank You for providing me with necessary strength, blessing perseverance, energy and good health for the completion of this study. First and foremost I would like to express my deepest gratitude to my immediate supervisor, Dr. Salleh Mohd Radzi from the faculty of School of Hotel and Tourism, UiTM Shah Alam, whom has been extremely supportive every step of the way. The confidence he showed in me helped me pursue the route and the topics of my interests and made the whole process, surprisingly, enjoyable. He gave me guidance when I encountered certain issues and problems. He gave words of encouragement and showed tremendous understanding when 1 could not break through. His knowledge and experience helped set the course and made it possible for me to continue my research. He has not only been a good advisor but rather a good friend. I could not have asked for a better advisor. God willing I shall continue on later in the near future to pursue my PhD if possible under his supervision. Thank you for being an outstanding mentor.
I wish to gratefully acknowledge the faculty members of the Hotel and Tourism Management of UiTM for their words of encouragement and kind assistance rendered throughout my course of study. My sincere gratitude also goes to the following individuals for their academic rigor and advise: Assoc. Prof. Dr.
Rahmat Hashim, En Ahmad Nizam, Assoc. Prof. Dr. Sallehuddin Mohd Zahari, Assoc. Prof. Dr. Artinah Zainal and also to all my classmates undergone the same course as me.
Also I wish like to take this opportunity to thank my Vice President; Dato Dr.
Sothi Rachagan, Edward Joseph, Haslin Hasan and the rest of my colleagues from Nilai University College for their enthusiasm, encouragement, genuine
TABLE OF CONTENTS
Page TITLE PAGE
AUTHOR'S DECLARATION ii
ABSTRACT iii ACKNOWLEDGEMENTS iv
TABLE OF CONTENTS vi
LIST OF TABLES xiii LIST OF FIGURES xiv
CHAPTER 1: INTRODUCTION
1.1 Introduction 1 1.2 The Malaysia Hotel Industry 2
1.3 Research Issue 4 1.3.1 Problem Statement 5
1.3.2 Research Objectives 7 1.3.3 Research Questions 7 1.3.4 Research Hypotheses 8
1.4 Scope of the Study 9 1.5 Significance of the Study 9 1.6 Theoretical Underpinning 10
1.6.1 Market Orientation 10 1.6.2 Service Quality 13 1.6.3 Business Performance 14 1.6.4 Market Orientation and Service Quality 14
1.6.5 Market Orientation and Business
Performance 15 1.6.6 Service Quality and Business
Performance 16
CHAPTER 1
INTRODUCTION
// is far more difficult to implant marketing-orientation in an organization culture, than textbook authors and university professors usually realise.
- E Gummesson (1987)
1.1 Introduction
Hospitality firms, such as hotels, are an ideal example of a market, which could benefit from the implementation of market orientation and enforcing better service quality. First, from a customer's perspective, the hospitality market is perpetually inundated by many similar, often easily substitutable service offerings. This should be an ideal effort for hotel managers to attempt to differentiate an individual hotel from its competitors. One solution to this challenge may be to offer new market orientated methods or procedures and better service quality features to customers.
The hospitality industry is rapidly changing due to accelerations in information technology on the market orientation aspect and hotel managers will need to make proactive changes focus even more intensely on customers preferences, quality and market technological interfaces in order to stay competitive in such a dynamic environment in Malaysia.