CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

This Chapter includes the introduction, theoretical framework, statement of the problem, hypothesis, scope
and limitation, conceptual framework, significance of the study and the definition of terms used.

Introduction
Just getting many people to come to store or website is not enough. If they are not the target users, will
experience a very low conversion rate and a big part of the marketing efforts will be wasted because the
people will simply leave, get irritated, and not come back. If I want visitors to turn into customers, what
they want to always do is try to market to the target audience.

Sometimes having a large volume of people who learn about the product or service can benefit to the
consumer they are trying to raise general awareness or are in a stage of the business where are looking to
grow and scale the company.
Today, customers are very important factors in companies’ management with the power to change their
short-term and long-term policies and strategies. The study concluded that marketing strategies of the retail
stores is playing a major role in customer retention/customer satisfaction. It also improves customer loyalty.
Marketing performance relates to the marketing activities undertaken by a company within the production
year and its overall positive impact on profitability. The objectives of the marketing activities is to have
satisfied customers who will become repeat clients and also build customer loyalty ensuring that the
company can charge a premium for their products because of the trust and perceived quality (Schramm-
Klein & Morschett, 2007). Schramm-Klein and Morschett (2007) further otlines three dimensions to
marketing performance.

Marketing is believed to be a critical success factor to the growth and ultimate survival of a firm and is
therefore viewed as one of the most important aspects of a business (Mokhtar & Wan-Ismail, 2012).
Marketing can be defined as the process an organization goes through in developing the concept of a product
or service, implementing the idea, determining the right pricing model, selecting the promotion avenue and
deciding on the distribution channels. The goal is to get the end user to consume the product, leading to
sales, leading to performance and profitability (Mokhtar & Wan-Ismail, 2012).
Marketing is also not static but greatly dynamic. The reason being that since the marketplace is constantly
changing and shifting, there are always new issues for companies to deal with. Marketers therefore must be
come up with new and varied solutions to counter the challenges (Varadarajan, 2010). Such solutions are
based on 4 strategic process either formal or informal planned or intuitive in a way that the management
goes about searching for and adopting the best way to compete within their business environment (Weber
& Polo, 2010). In different environment, companies maily design, develop and implement their own
makreting strategy based on the business environemtnt within which they operate. However all marketing
strategy braodly falls within the four Ps of Prodcut, Placing, Packaging and Promotion (Ebitu, 2014).
Market dorminance strategy is the action of ensuring that the companies prodcuts or services are at the top
of competitor prodcuts and service at the marketplace (Ebitu, 2014). According to Alderson, from the
1950’s customers started to actively look for products and services that catered to their greatest needs and
expectations opening up the market to opportunities to differentiate products and services to meet the
customers’ satisfaction (Weber & Polo, 2010). The dynasim of clients needs, change in environment and
the need for companies to be always flexible on its market strategy based on Prodcut, Placing, Packaging
and Promotion is capital, human capital and time intensive.
The purpose of this study is to examine the relationship between Marketing Strategies of the retail stores
and Customer Satisfaction.
Background of the Study

Wilcon is market leader in home improvement retailing and is a Hall of Fame awardee of the Philippine
Retailers Association. He shares insights of his entrepreneurial journey, culminating in Wilcon’s planned
initial public offering in March 2017 in support of the planned P8 trillion expected construction spending
of the government in the next 6 years, as well as growth from the private sector.
In 1977, Wilcon started as a 60-square meter shop along Quezon Avenue. It carried an extensive array
of the latest building and finishing materials from international and local markets. A few years after its
successful yet humble inception, more and more branches were established across the Metro and in various
provinces in the country.
In 2003, Wilcon launched its first big-box format depot store in Las Piñas, with complete selection of
products and unsurpassed services. Through the years, it continues to expand and provide home-building
solutions by directly offering in-house brands and renowned international and local brands to Filipino
homeowners and builders.
In 2009, Wilcon established Wilcon Home Essentials, a mall-based format retail store, which caters the
needs of DIYers. It offers the customers with home must-haves in an organized, clutter-free manner store.
To date, Wilcon has 17 branches spread all over the Metro, 35 stores in the provinces, and 8 of which
are Home Essentials – with a total of 52 operating stores nationwide, and is now known as the country's
leader in home improvement and construction retail store.
It has been the company’s goal to offer consumers not only with top-grade quality products, but also,
with utmost customer satisfaction. Wilcon revolutionized the construction-supply industry as it committed
itself to providing convenient shopping and excellent services such as air-conditioned shops, ample parking
spaces, and coffee shops for depot outlets, delivery services, interior design consultation, and recreation
corner for children, tile-cutting services, product installations, and repairs.
These helped Wilcon in having a strong reputation and industry leadership that made the company a
household name for construction-supply industry for over 40 years.

The aim of the research is to explore the importance of marketing strategies of Wilcon in retail industry
and the biggest advantage is no secret to wilcon customers as they are able to experience them with
fulfilment of brand promise. As part brand proposition wilcon commit excellent customer experience
through well trained and knowledgeable personnel.
To customers, wilcon is committed to delivering products and solutions of superior quality and providing
excellent and reliable service.

To partner’s, wilcon is committed to nurturing a winning network of suppliers in order to create mutual
and enduring value.

To employees, wilcon is committed to create an environment that respects their dignity as persons,
cultivates knowledge and talent, and empowers them to be the best they can be through continuous career
and development opportunities.

To shareholders, wilcon is committed to maximize long – term returns to shareholders that can enable
growth and prosperity in the business, and in turn, provide more opportunities for wilcon employees and
more solutions to wilcon customers.

To the society, wilcon is committed to contributing the best expertise, knowledge, skills, and resources to
promote stronger, safer and more sustainable homes and buildings for all kinds of people.
To Retail Companies. This study can help retail companies to identify and target their best customers.

To Consumers. This study can be used as a source of information to educate them about Marketing
Strategies.

To Future Researchers. This study can be used as a reference to a similar study and will be a great help to
finish their research.
Theoretical and Conceptual Frameworks of Customer Satisfaction
Various theoretical and conceptual frameworks have been developed around the concept of Customer
satisfaction and have espoused measurement criteria; drivers as well as variables that can be used to
determine Customer Satisfaction (Al-Hersh, Aburoub, & Saaty, 2014). For a business to be successful,
whether it is dealing in a physical product or a service, it must satisfy their customers. This will be mainly
in two ways: retaining its current customers and increasing its customer’s base significantly. Both the
current and prospective customers are the stakeholders and the determinants of the product or services
success (Sabir, Irfan, Akhtar, Pervez, & Rehman, 2014). In 2001 Parker Mathews described two
fundamental ways of interpreting satisfaction; as a process or as an outcome. As a process, satisfaction
could be viewed as the emotional response of the customer to his evaluation of the difference or not of his
prior experience with the product and or service and his current experience. If the perception is that the
prior experience was more satisfying than the latter, then the end result is dissatisfaction; if however the
perception is vice versa then the end result is satisfaction (Al-Hersh, Aburoub, & Saaty, 2014).

The degree to which a customer is satisfied by the products or services offered can be measured by the way
of a directed survey on an organization’s client base. To achieve an enhanced level of satisfaction firms can
utilize marketing strategies, which can be targeted at the dimensions such as product, price, place and
promotion (Ebitu, 2014). Traditional marketing strategies include the following: product branding and
improvement, pricing and price adjustment, placing or location, packaging and promotion (Ebitu, 2014).
One of the determinants of customer satisfaction is service quality, which is not an easy concept to quantify
because it hinges on the evaluation of the user and the comparison of perception and actual experience
(Sabir, Irfan, Akhtar, Pervez, & Rehman, 2014). A firm’s customers look to the organization to meet their
needs and wants through the product and services produced. In order to accomplish this, companies must
research and understand the customer expectations; they must also produce high quality goods that are
perceived to be of great value. This will increase the willingness of the end-consumer to pay more for the
product or service (Brito & Santos, 2012)
Table 1.1: Performance Dimensions and Indicators Selected
Dimensions Selected Indicators
Profitability Return on Assets, margin, Return on Investment, Net income/Revenues, Return on Equity,
Economic value added Market Value Earnings per share, Stock price improvement, Dividend yield, Stock
price volatility, Market value added (market value/equity), Tobin’s q (market value/replacements value of
assets)

Market Value Earnings per share, Stock price improvement, Dividend yield, Stock price volatility, Market
value added (market value/equity), Tobin’s q (market value/replacements value of assets)
Growth Market-share growth, Asset growth, Net revenue growth, Net income growth, Number of
employees’ growth

Employee Satisfaction Turn-over, Investments in employees development and training, Wages and
rewards policies, Career plans, Organizational climate, General employees’ satisfaction
Customer Satisfaction Mix of products and services, Number of complaints, Repurchase rate, new
customer retention, General customers’ satisfaction, Number of new products/services launched

Environmental Number of projects to improve/recover the environment

Performance Level of pollutants emission, Use of recyclable materials, Recycling level and reuse of
residuals, Number of environmental lawsuits.

Social Performance Employment of minorities, Number of social and cultural projects, Number of
lawsuits filed by employees, customers and regulatory agencies.
Source (Brito & Santos, 2012, p. 103)

From the table 1, there are six indicators that can be linked to overall Customer Satisfaction for both mix
of Products and Services; the number of complaints; the rate of repurchase of the product or service; new
customer retention; general customer satisfaction and number of new products or services launched (Brito
& Santos, 2012). Due to the dynamc nature of competition worldwide and the shifting desires, preferences
and needs of consumers, firms must put resources into undersatnding their customer and 12 innovating the
products and services to suit these needs. Customer satisfaction can therefore be regarded as a key success
factor in the retention of cusomters, brand loyalty which lead to greater market share and overall company
profitablity (Al-Hersh, Aburoub, & Saaty, 2014). In this research, Customer Satisfaction was selected as
the measurement of firm performance (Schramm-Klein & Morschett, 2007). It should however be noted
that it is fairly difficult to measure the satisfaction of the customer. This is due in part to the varied emotional
reactions from end users and the unit of measurement will depend entirely on individaul businesses (Dudek-
Burlikowska, 2011).

Product Strategy for Customer Satisfaction

The end result of all business ventures is a product or service. This product is how firms create and deliver
value to their end users, which if executed correctly produces customer satisfaction (Saquib, Khan, &
Ahmed, 2013). One of the definitions of product strategies is that it’s the way a firm uses various products
to achieve its organization goals. The strategy involves the following product items, lines, mixes and
consistency/quality (Longenecker, Petty, Palich, & Hog, 2012). Product strategy can be divided broadly
into two categories: those concerning product penetration within a specialized market or one that focuses
on both growth and protection from competitors (Paley, 2016). An organization can employ various
strategies concerning its product such as deliberating altering the attributes, reducing the unprofitable lines,
expanding the breadth and depth of the item, determining the ideal position or if all fails deciding to
eliminate the product (Bose, 2010)
Organizations have long used focus groups as a method of research to understand customer requirements
especially during the product development stage. This method enables the organizations to explore the
emotional and psychological subtitles in understanding the roots of customer satisfaction (Ferrell &
Hartline, 2013). In a business environment that has become more competitive, companies must pay
attention to the significance of quality of their product and services offerings. Consumers are now spoilt for
choice by the wide array of fairly similar products to choose from and this forces the producers to create
acceptable levels of product quality or lose out to the competition. The Customer then makes a choice of
the product based on what will give the maximum the delivered value. The delivered value can be described
as the difference between the total value of the product and the cost at which he will have to pay
(DudekBurlikowska, 2011).
Product Life Cycle
Involving the end user at inception and throughout the life of the product or service is essential to ensuring
that the organization is listening to the customer. For Strategic purposes when examining market
competition, focus needs to be on quality as it has a way of guaranteeing customer loyalty. Quality can be
viewed from many angles as it affects all aspects of an individual’s activity and includes work and life, and
is said to be the compliance with a particular specification. For this purpose, it shall be defined as the quality
of a product or service (Dudek-Burlikowska, 2011). The key success factor of any marketing campaign or
activity is to attract new customers and increase their need and desire for a certain product or service (Ebitu,
2014). Therefore it is very crucial for marketers to ascertain the consumer’s expectations of the product or
service in order to satisfy them (Ebitu, 2014). Customer quality demands can be determined by the answers
customers give to these five questions: What can I expect, when I buy this product or service? Is this what
I expected? Does this product or service measure up to my expectations, all the time? How much do I pay
for the product or service? When will I get this product or service? (Dudek-Burlikowska, 2011).
In order to formulate an appropriate marketing strategy, Hofer in 1975 argued that it is important to know
the stage the product is within its life cycle (Horvat, 2013). Customers tend to equate product quality and
safety by what is known of the particular brand and the overall look of the product (Mohan & Aagasthiya,
2015). One of the marketing strategies implements perceived concerns of clients, the company’s product
branding improves. This strategy is employed so as develop a product or service that can satisfy the
customers, ensuring steady and increased sales and profits to the organization (Ebitu, 2014)
Consistency Theory
In 2007 Anderson explained an individual’s cognitive comparison between product expectations and
product performance in the Assimilation approach to consistency theory. In addition, Mattila and O’Neill
(2008) then elaborated about the dissonance that comes from the perception Vis a Vis the reality of
consuming the product and how consumers use two techniques to resolve this. One, it reduce the resulting
tension by lowering their 14 expectations for the product to the actual level of the products satisfaction.
Secondly they minimize the overall importance of the product satisfaction thereby eliminating the
discomfort felt during the experience. Both coping mechanisms may lead to depressed brand loyalty from
lessened customer satisfaction (Ebitu, 2014). However critics to this theory say that it assumes that there is
an expectation for every product consumed that is used to compare to the satisfaction level when the product
is actually consumed. It also assumes that customers are willing and able to adjust either the expected
satisfaction or performance satisfaction for a product. Youjae in 2010 that a positive relationship between
perceived expectation and actual satisfaction can be found through controlling the actual product
performance. Meaning that dissonance may not occur unless the evaluation started with a negative
consumer expectation (Ebitu, 2014)

Product Mix
According to Ebitu (2014), marketing strategies employed by organizations concerns the company’s
product branding and improvement. Such strategies are discussed. Market leader is one of the strategies.
The first element of market leader strategy is to ensure that the product or service is at the top of the market
as compared to competitor products and services, thereby dominating the market and emerging market
leader. The market leader will therefore channels its resources to areas such as brand proliferation, product
diversification, unmatched customer service and corporate image through CSRs. Marketing Mix is another
strategy: A second element could be developing the right marketing mix to ensure the products and services
satisfy the consumer needs. This must be through creating the right product at the right place sold at the
right price using the suitable promotions. Innovations as a strategy may include product or service
innovations that are aimed at improving the performance of the product and thus customer satisfaction.
Lastly, expansion as a strategy involves a number of options according to Anyanwu (1999); horizontal
integration aims to increase market presence by selling more of the existing product in the market while
vertical integration concerns reducing costs of distribution to increase profit margins per product. Further,
diversification in marketing is key as it is the investment and development of new products, patents, and
licensing. Similarly, intensification is key and focuses on increasing customer loyalty by offering incentives
to existing and target consumers (Ebitu, 2014). Since satisfaction comes from the customer experiencing
exceeded standards, therefore the quality of the product or service and the price and purchase conditions
play a big role. The quality relates to surpassing the expectation mark of the customer, whereas the price
and purchase conditions look at areas such as the competence of the seller, the availability of the product
and information about the product that is found at the place of purchase (Dudek-Burlikowska, 2011).
Products in service based organizations, the key elements in the mix include: people, processes and physical
evidence. Also other product attributes such as image, prestige or brand, which fall under the symbolic and
experiential, have also been found to have significant impact on customer satisfaction and differentiation.
(Marketing Strategy) For instance in different cultures the relative importance of one product attribute may
be high than in another. Therefore it is prudent for organizations to identify from the consumers perceptive
the level or degree of importance of each attribute to the overall customer’s satisfaction (Kruger, 2016).
Conversely, when dealing with products categorized under luxury, the rules of product strategy will differ
as the way value is defined goes beyond use or exchange value of standard products to a more symbolic
value, which is social in nature (Kapferer & Bastein, 2012).
Promotion Strategy for Customer Satisfaction
Promotion can be defined as the various avenues a corporation uses to inform people about their products,
educate them on the distinctive features of their product vis a vis the competitors and ultimately influence
or persuade the customers to purchase the said product. Promotion is also used by organizations to maintain
long-term relationships with their customers and build brand loyalty (Mahajan & Mahajan, 2015).
Communication in promotion has the end-goal of either modifying or completely changing consumer
behavior (Lamb, Hair, & McDaniel, 2013). Promotion can also be used to stimulate the demand for the
product and make the customers believe they have made the right choice. It can be achieved by tools such
as media, leaflets, brochures and more (Janetta, 2013). Without Promotion, no product can succeed in the
marketplace and organizations therefore need to use a combination of the five elements of promotion, which
are advertising, personal selling, public relations, social media and sales promotions, to develop a well-
coordinated plan targeting the market. This plan is referred as an organization’s promotion strategy (Lamb,
Hair, & McDaniel, 2013). Organizations may have differing objectives for the promotion strategy, which
could then inform mix of elements used. For instances if the product’s distribution channel is through
middlemen such as brokers or wholesalers then promotion may be through large purchase discounts, co-op
advertising and special deals. It is therefore important on the onset to outline the specific goals for the
promotional campaign and then prioritize which comes first. Once the goal is identified, then a clear
description of what specific elements to employ (Smith, 2013) The elements of the promotional mix will
be determined by whether the organization is using a push or pull strategy, the type of product and the stage
of the product’s life cycle (Solomon, Hughes, Chitly, Marshall, & Stuart, 2014). A Pull strategy is used by
an organization to influence the end consumers to demand of the product from the retailers, who in turn
stimulate the wholesalers to increase the stocks of the product from the manufacturer or organization. When
using a pull strategy the firm will focus on using the promotion elements of advertising and sales promotions
to stimulate the demand. This is typical of well-known brands, which have achieved high differentiation
from the competitors and have a loyal customer base. The product is then “pulled” down the distribution
channel (Mahajan & Mahajan, 2015). In instances where the organization uses a push strategy, then the
stimulation focus is on the distribution channel where the organization pushes the product through the
wholesaler onto the retailers and to the end consumers. This would involve the use of a lot of personal
selling and trade promotions to motivate the stocking and selling of the product. A push strategy is used
when brand loyalty is low or non-essential and there is no loyal customer base (Mahajan & Mahajan, 2015).
Having a better understanding of who your customer, both existing and prospective, is will help in the
formulation of more effective communication ultimately leading to higher retention and acquisition rates
(Wahab, Elias, Al Momani, & Noor, 2011).
Promotion Mix
Public relations can be defined as the marketing function used by organizations to help evaluate the current
image and attitude customers have towards it. Then using the information gathered the organization can
then educate the customers about its new product offerings or changes to aid the current sales effort (Lamb,
Hair, & McDaniel, 2013).
When using this element of promotion it is difficult to measure the singular impact of public relations on
the increased demand for a product. This is in part because public relations is used as a support to other
activities and so is hard to quantify and also there are no agreed metrics to gauge the effectiveness of a
campaign (Solomon, Hughes, Chitly, Marshall, & Stuart, 2014).
Personal selling uses person to person or person to technology interface to attempt to influence the consumer
to accept a particular point to view or take an action. Traditionally this involved leveraging the relationship
developed between sales person and buyer, however in this electronic age, the relationship depends on the
attractive and user-friendly elements of the company website to encourage the consumer to make a purchase
of the said product.
Sales promotions are used to stimulate the market demand leading to increased sales in the short run. This
is normally by the use of either free samples, contests, giveaways, coupons or tradeshows. If the
organization has a major promotion then a combination of some or all these activities can be employed
(Lamb, Hair, & McDaniel, 2013). A word of caution when using sales promotions, the consumers may tend
to only buy the product during the low price or two for one deals and as such does not translate to longterm
customer loyalty (Solomon, Hughes, Chitly, Marshall, & Stuart, 2014). Social Media is a tool that is used
to communicate with customers or potential customers online. This tool brings empowerment to the end
users who can communicate to each other and to the organization about their needs, likes and dislikes.
Various aspects of Social Media include blogs, micro blogs, vlogs, podcasts, vodcasts and social networks
such as Facebook and LinkedIn. Firms use this avenue mainly to manage their image, connect with their
consumers and generate interest and demand for their products (Lamb, Hair, & McDaniel, 2013).
Advertising can be said to be the conveying of crucial information about an organization’s products and
services to the end user using different media or channels. The aim is to create advertising effects such as
brand awareness and product loyalty leading to increased purchases. (Chang & Chang, 2014). However,
when marketing products and services relating to professional bodies, consideration must be taken into the
distribution and communication channels that would best suit the targeted customers. Products and services
that require the seller to “push or encourage” the client to purchase may benefit more from response media
such as directed emails (Rossell, 2009).
Due to the great strides made in technology in the recent past, most organizations have accepted that the
internet has become the most direct channel of communication and advertising when it comes to introducing
products and services to consumers (Chang & Chang, 2014). According to Mirchevska and Sekulovska
(2013), the Internet is a multifaceted and acts as a communication channel for advertising but can also act
as a distribution and transactional channel making it easier for the consumers to access and purchase the
product or service. This makes it an ideal chennel for communication, advertisment and e-commerce.
However, more companies are looking to social media and social networks as an essential avenue through
which to increase their organizational visibility and reach their prospective clients. With a daily increase in
social media users, companies have seen the importance of including or even prioritizing the Internet in
their communication strategies (Ros-Diego & Castello-Martinez, 2011).
The benefits of social media being part of overall company advertising strategy include the cost
effectiveness. The message to consumers can be targeted to various niches; it can also be segmented with
the groups to more specific needs and interests. The consumers also have the ability to interact with the
brand through social media and give the organization real-time measurements on interest and uptake (Ros-
Diego & Castello-Martinez, 2011).
New digital environments such as: websites, blogs, vlogs, mobile marketing, etc., are based on customer
interaction and work best for companies whose have a customer-first philosophy. This is principally due to
the fact that the social branding, message personalization, segmentation and subscription come all target
customer engagement with the product, service and organization, leading to customer satisfaction and
increased sales. (Ros-Diego & Castello-Martinez, 2011)
Disadvantages of the Promotion Elements
Public relations is an effective tool and can be used to enhance the corporate image through the varied
avenues available for example using famous personalities to identify with the product or organization.
However its effect is short term and costly, and could end up being detrimental to the overall brand image.
With Advertising, numerous advertisements are constantly bombarding the consumers so chances that a
costly advert will be forgotten by the target audience is high. In addition a large part of the viewing audience
may not be part of the organization’s target audience. In some instances, where professional services are
concerned, advertising may be considered to be unethical or even unlawful. Sales promotions provide the
challenge that price related discounts might have a negative effect on the overall brand and company image.
They are also relatively easy to replicate by a competitor (Chandraseker, 2010).
Statement of the Problem/Research Questions
What is the level of Customer Satisfaction?
Which Product Strategy can be used to enhance Customer Satisfaction?
Which Promotion Strategy can be used to enhance Customer Satisfaction?
Hypothesis

Scope and Limitation

Significance of the Study

The significance of this study is to help Firms in formulating marketing strategies and use the most
effective Advertising channel to enhance Customer Satisfaction.

Definition of Terms
Customer Satisfaction: defined in this study as comprising of the following: mix of products and services,
number of complaints, repurchase rate, new customer retention and general customers’ satisfaction and
number of new products/services launched (Brito & Santos, 2012).
Marketing Strategy: defined as the utilization of the traditional mix of product branding and improvement,
pricing and price adjustments, placing or location, packaging and promotion (Ebitu, 2014).
Product Strategy: defined as the creation of the right product at the right place sold at the right price using
the suitable promotions. It includes product/service innovations that are aimed at improving the
performance of the product and thus customer satisfaction (Ebitu, 2014).
Promotion Strategy: defined as the way a firm advertises seeking to educate the consumers on the
products offered and thus stimulate demand. It include the various tools such as social media, media,
leaflets, brochures and more (Janetta, 2013).
 ABSTRACT

The Ultimate purpose of the study was to know the effectiveness of marketing strategies of wilcon in
retailing industry. This study shows that the marketing strategies of wilcon is to become the preferred
company in industry for all key stakeholders: customer. Partners, employees, shareholders and the society
live in.
Marketing Strategies of wilcon is a combination of Product, Price, Place, Promotion, People, Process
and Physical evidence And wilcon have a responsibility to be a reliable, trustworthy and excellent source
of innovative solutions for the homes and buildings of wilcon customers.

Today, customers are very important factors in companies’ management with the power to change their
short-term and long-term policies and strategies. The study concluded that marketing strategies of wilcon
is playing a major role in customer retention. It also improves customer loyalty.