Risca Mokalu and Helena Pongoh The mediation effect of customer satisfaction in relationship between service quality, service orientation and marketing mix strategy to customer loyalty. Adji Achmad Rinaldo Fernandes, Solimun Solimun. Summary One of the keys to the success of a company is the provision of high-quality service to customers. To be able to successfully survive and compete in the competition, companies must include a service quality approach in the company's strategy. In the business, competition will motivate companies to improve quality to avoid failure to compete. Companies must pay attention and continue to develop service quality where this must be measured by customer perceived quality (Kotler, 2007: 9). Customer loyalty will be the key if the company wants to win the competition including in the telecommunications industry. The company should strive to provide its best features and services to customers in order to maintain its existence in the growing competition. The basic thing that should be a priority for mobile phone providers is how to build a competitive strategy oriented to customer needs to create satisfaction and loyalty. The tight competition in the world of telecommunication makes some companies want to fulfill what customers want so that customer satisfaction becomes their main goal. Based on the background above, the purpose of this case study is to investigate the mediation effect on customer satisfaction in relationship between service quality, service orientation and marketing mix strategy to customer loyalty at a mobile phone provider company in Indonesia, located in Malang, who used telecommunication services product of mobile phone provider with various features as the research object. Novelty for this paper consists of: (1) the mediation effect (using the Sobel test) of Customer Satisfaction on the effect of Service Quality, Service Orientation, and the Marketing Mix Strategy on Customer Loyalty, and (2) research site (no previous research investigating this relationship): Telecommunications Services in Malang, Indonesia. Meanwhile, the results of this study show thatnot all variables (service quality, service orientation and marketing mix strategy) are directly involved and affect customer loyalty but they must first go through customer satisfaction. This means that the Company must comprehend first what customers need through the variables of Service Quality, Service Orientation, and the Marketing Mix Strategy and thus Customer Loyalty can be achieved after the level of Customer Satisfaction has been determined. The service quality provided by the telecommunications industry needs to be improved in order to expand customer satisfaction with and loyalty towards mobile phone provider services, particularly in Malang. Analysis Customer satisfaction conceptualise in measure of how product/services supplied by a company meet or beyond customer expectation, (Wikipedia), as transaction-specific value intensive on the experience of the customer on specific service encounter (Cronin & Taylor, 1992), also based on the overall assessment of service experience (Jones & Suh, 2000). For example, in the case of mobile phone provider services in Malang, there is some relationship between customer, service provider and customer satisfaction based on assessment of several interaction. Kotler (2003) describes that satisfaction is the sense of someone who designated feeling content or disappointed that the result of associating a product's perceived performance to the expected product performance is. If performance fails to meet expectations, then the customer will feel disappointed. If the performance can meet the expectations, then the customer will feel satisfied. If the output meets what is expected, the customer should feel extremely satisfied. In this study, service quality can be defined as the difference between the expectations of customers about service performance before the service encounter and their perception of the service received. Kotler (2003) explains that the quality should start from customer needs and end with the perception of the customer this means that good understanding of quality is not dependent on service provider but dependent on the customer's point of view or experience. Quality varied definitions such as “fit for use”, “fulfilment of requirements”, and “variation” (Kotler, 2007). There are three quality orientations: (1) Consumer Perception, (2) Product/Service, (3) Process. For goods these three orientations are always clearly divergent but not for service. The product and process may not different even the product is the process itself. The consistency of the quality of service can contribute to the success of company in term of customer satisfaction, employee satisfaction, and profitability. In business, customer loyalty acting an important part in the company as preserving customers which is refining financial performance and the feasibility of the company, that is why really important to maintain the customer. H1 H2 H7 H3 H4 H5 H6 See in figure 1, The analysis shows that Service Quality, Service Orientation, and the Marketing Mix Strategy have a significant effect on Customer Satisfaction, which means that Hypotheses 1, 3, and 5 are accepted. Likewise, Service Orientation and Customer Satisfaction have a significant effect on Customer Loyalty, which means that Hypotheses 4 and 7 are accepted. On the other hand, Service Quality and Marketing Mix Strategy do not have a significant effect on Customer Loyalty (direct effect). Based on the Sobel Test to investigate the mediation effect, Customer Satisfaction serves as a mediation variable in the relationship between Service Quality, Service Orientation, and the Marketing Mix Strategy and Customer Loyalty, which means that Hypotheses 2, 4, and 6 are accepted under some conditions (by using the mediation effect). Mediation model seeks to identify and explain the mechanism or process that causes an observed relationship between an independent variable and a dependent variable via the inclusion of a third hypothetical variable, known as a mediator variable. Rather than a direct causal relationship between the independent variable and the dependent variable, a mediation model proposes that the independent variable influences the mediator variable, which in turn influences the dependent variable. Thus, the mediator variable serves to clarify the nature of the relationship between the independent and dependent variables. In this study case service orientation of Telecommunications services has a positive relationship with and a significant effect on customer satisfaction. It means that if mobile phone provider always conducts service orientation, it can improve customer satisfaction. The strong effect of service orientation on customer satisfaction is because the service orientation provided by mobile phone provider is perceived positive by its customers. The marketing mix strategy of Telecommunications services, especially for mobile phone provider, has a positive relationship with and a significant effect on customer satisfaction and since the resulting effect is significant, the indicators of the marketing mix strategy applied by the Company influence the customer satisfaction of users of mobile phone provider products. It means that when the indicators of the marketing mix strategy applied by the Company to the customers of mobile phone provider products, the customers are satisfied with what they feel. Conclusion The result of this study shows that not all variables can directly affect customer loyalty. It has been revealed that the application of three important factors, the service quality, service orientation and marketing mix strategy variables, significantly relate to customer satisfaction. The company should understand what customer need through service quality and marketing mix strategy then customer loyalty can achieve after level customer satisfaction has been determined. We agreed with the researcher that the service quality provided by the telecommunications industry needs to be enhanced in order to improve customer satisfaction with and loyalty towards mobile phone provider services, predominantly in Malang. However, because this research was conducted in 2016, it needs to be restructured again by adding variables related to digitalization where there are already many services in telecommunications companies use chatbots. Similar or more multifaceted research should also be conducted to further collaborate these findings in other cities or even outside Java Island which we know is still have problem with internet network. Recommendation Based on the findings and conclusion of the study, we agreed the following recommendations can be presented. First, the service quality provided by the telecommunications industry requirements to be enhanced in order to improve customer satisfaction and loyalty, especially for mobile phone provider in Malang. Second, customer satisfaction and loyalty can be enhanced by refining service orientation of mobile phone provider, aware of its limitations and responds to such a condition by fixing them immediately, it means that service orientation is needed in order to improve customer satisfaction and loyalty. Third, in order to sustain and expand customer loyalty through enhanced service quality, the management of mobile phone provider should pay attention to the special directly-related process of services to the customers such as ease in terms of administrative services, good networks, addition of BTS and, more importantly, enhancement on customers’ confidence towards the programs offered by mobile phone provider. Fourth, determination of the marketing mix strategy adapted to the service quality offered is among the solutions to increase customer satisfaction and loyalty from the aspect of the marketing mix. Efforts made by mobile phone provider to win the competition, especially in the telecommunications business are to apply an efficient marketing mix strategy and to provide services which are both satisfying and decent. Lastly, restructured multifaceted research should also be conducted with more variables related with digitalization further collaborate these findings in other cities or even outside Java Island which we know is still have a lot of problem with internet network. References Cronin, J. J. Jr., & Taylor, S. A. (1992). Measuring Service Quality: A Re-examination and Extension. Journal of Marketing, 56, 55-68. https://doi.org/10.1177/002224299205600304 Jones, M. A., & Suh, J. (2000). Transaction-Specific Satisfaction and Overall Satisfaction: An Empirical Analysis. Journal of Services Marketing, 14(2), 147-159. https://doi.org/10.1108/08876040010371555 Kotler, P. (2003). Marketing Management (11th ed.). New Jersey, USA Prentice Hall Pearson Education International Inc. Kotler, P. (2007). Marketing Management. Edition Twelve. PT. Indeks. Jakarta. Wikipedia Customer satisfaction definition https://en.wikipedia.org/wiki/Customer_satisfaction Wikipedia Mediation Statistic https://en.wikipedia.org/wiki/Mediation_(statistics)
