Proposal for Largest Retail Competition in Indonesia (Alfamart Vs Indomaret)

Proposal for Largest Retail Competition in Indonesia (Alfamart Vs Indomaret)

Sendy Thahir
Kebon jeruk no 61
West Jakarta
25 January 2008

Mr Nanang Halim
Inti College Indonesia
Jln Arjuna Utara no 31
Duri Kepa, west Jakarta

Dear Mr Nanang,

My name is Sendy Thahir from DB 4 students, Inti College Indonesia, In order to accomplish my research assignment on “Alfamart and Indomart”. I would like to identify the Alfamart and Indomaret, customer satisfaction level for the research purpose. Hoping the assignment will provide us information about the comparison of the customer satisfaction level between both of the company. I would like to ask permission to accomplish my marketing research for the academic purposes.

Finally thank you very much for helping and leading us to finish the assignment project.

I hope the proposal will be accepted as the assignment project.


Yours truly,

Sendy Thahir


Company profile

Alfamart

PT Sumber Alfaria Trijaya (SAT) or Alfamart is a national company that move in trading and retailing services that provide the basic and daily needs with the area of the building less than 250 m². The company was built on 27 June 1999 and the main office was located at Jl. MH. Thamrin No.9 Cikokol, Tangerang.
Nowadays we can see, there are more than 1750 Alfamart mini mart in Indonesia (December 2006)

Alfamart was granted the certificate of ISO 9001:2000 and the MURI Record at 22 January 2007 at Shangri La Hotel Jakarta.

ISO (International Organization for Standardisation) is the institution that consists of organizations from the entire world that responsible to fulfill the international standard on every nation.
With the acceptance of ISO certificate meaning Alfamart have successfully practice the international standard in every unit of their enterprise and show that the company are capable to compete on international scale.

MURI (Museum of Indonesian World Record) is the first institution in Indonesia that specifically collecting the record data in Indonesia. On this cases, MURI gives the appreciation for Alfamart because the company have successfully be the first national company that successfully be the first mini mart network in Indonesia that successfully obtain the ISO certificate.
Alfamart aims to deliver the most desired satisfaction by focussing with the product and services quality. With the motto “satisfy purchase, exact prices“
(Alfamart 2007)

Indomaret

Indomaret is the mini mart network that provides the basic and daily needs with the area of shop less than 200 m². The company was Manage by PT Indomarco Prismatama that was built on November 1988 and now the main office was located at Ancol, Jakarta.

With the total of more than 2425 mini mart that spread in Indonesia. Indomaret can be found everywhere at office building, house area and public facility. The company was strengthened by the company under the flag of INTRACO that is Indogrosir, Finco, BSD plaza and Charmant.

Indomaret was granted “Franchise Company 2003” by Megawati Soekarnoputri, because on 1997, the company develop the first franchise business in Indonesia, after the company was tested with more than 230 shops.

Indomaret aiming to deliver the most desired satisfaction for the customer in the society, with the motto “Easy and Economic”.
(Indomaret 2007)

Problem Definition

-As the occurrences of Alfamart and Indomaret, which of these service categories will the customer prefer?

We know that the mini mart can be found everywhere at our surrounding area in example at our house area, office, public facility area and any other places.
Both of the mini mart offer the similar basic and daily needs for every of the customer and targeted the same segment of customer in the society such as family.

The strategic location, shelves that are arrange in order with so many variant of the product, the easy payment with the cashier, Full air conditioning room, competitive prices and the benefits offered. No doubt that people would be grateful to come to mini market.
The researcher agrees that most of Indonesian know that both of the mini marts are standing at the top in the mini mart competition. Starting from the town until the small village, the mini mart can be found. Sounds unfamiliar, when one of the mini mart, take Indomaret/Alfamart as an example, opened up a new shop in an area, only the matter of time, Alfamart/Indomaret will open their shop near, around, beside or across the Indomaret. We take Greenville area at West Jakarta for example; Alfamart was built beside the Indomaret.

There is also possibility that the consumers go to the mini mart for their needs and they don’t care about which mini mart they would go. “Consumerism means getting what you can and luxury is for someone else”. (Taylor, C 1995)

If we do the research more detail, actually there will be reason about the preference of the consumer choosing one of the mini marts and people evaluation might be different, there will be question, what factors can be measure in deciding which mini mart to be chosen?

Situational analysis

The competition in retailing services in Indonesia in the smaller scale are Indomaret and Alfamart, both of the mini mart offer the daily needs for the people in the society,
“To survive in highly competitive market organization need to provide goods and services that yield highly satisfied and loyal customer when customers are satisfied” (Gilbert, G Ronald 2000)
Both of the mini mart are aggressively doing the promotion to attract the society to come and purchase some item there, because their brand had already recognize well by the society, that result the guarantee for the customer to come.

Alfamart had done many social activities by their Alfamart Care, they increase the public awareness by doing the social activities, they help to renovate the mosque, and they do the fogging activities to prevent the Aides Aegepty mosquitoes. The action done by Alfamart will be the characteristic in every of the Alfamart, to build the good relationship with the people and their care for the society and environment.
More than 1000 of children suffered by the earthquake disaster have a happy time together with Indomaret at Yogyakarta. Another action done by Indomaret to increase the public awareness and to build the good relationship with them, Indomaret provide the free facility for rest, drink and eat for free for the up streamers. Building rapport, trust, and relationships with customers may be essential (Rodie, A, R & Martin, C, L 2001)


The competition doesn’t end only on the two mini marts, Even though hyper mart like Carrefour, Giant and Marko don’t compete directly because of the different scale of the business, but with the bigger amount of product variety, hyper mart cause the mini mart sales decrease, according to Krisgianto (The Regional senior manager of PT Indomarco Prismatama) with the occurrences of hyper mart this recent time, 32 of Indomaret mini mart at Bandung had decreased 15%-20% of their income because of that situation. Once more, they are not a direct competitor, because the sales commodity also includes the mini mart commodity. The senior manager though the product that are sold at hyper mart can be 30.000 item where as at mini mart only about 3500 item, with the priority of daily needs product only. There are also possibilities that the product that are usually bought at mini mart are bought at the hyper mart in a time. This result the manager change the strategy to expand the network by more selective in deciding which area to be covered at Jakarta and Bandung. By developing own advantages is the best ways to minimize the threats from outside
Source: (Pikiran Rakyat)

Specific Research objectives

When people need something as their daily needs, they will directly goes to the mart to obtain what they need and wants. They might be going to the mart, super market, hyper mart and traditional mart or even they will go to small shop, to obtain what they need. The first specific objectives of the research is to compare the level of customer satisfaction on both of the mini mart, that is Alfamart and Indomaret,

By this research the people who need the information can get the information about the company. “The understanding that services are somewhat unique and that their unique characteristics provide challenge to upper management to marketers and to entrepreneurs.”(Rodie, A, R & Martin, C, L 2001)

The second research objective are the research will provide the information about what factors that result the preference of the customer in the society to choose one of the mini mart, by recognizing the factors, the management, marketers and entrepreneurs can have the research result for their future strategies and quality improvements.

The third research objective will be determining whether the discounted price offer by the mini mart will affect in influencing customer satisfaction.

Research Question

1. What will be the added value for Alfamart?
2. What will be the added value for Indomaret?
3. from both of the mini mart, which do you prefer the most?
4. Which mini mart are the nearest to your area?
5. How about the services at Alfamart?
6. How about the services at Indomaret?
7. How often do you spend your time to go to the one of the mini mart?
8. Which of the mini mart deliver you the highest satisfaction level?
Research Hypothesis
RQ: Is there any relationship with the discounted price offers with customer satisfaction?
H0: There is relationship with the discounted price offers and customer satisfaction at Indomaret
H1: There is no relationship with the discounted price offers and customer satisfaction at Indomaret
H2: There is relationship with the discounted price offers and customer satisfaction at Alfamart
H3: There is no relationship with the discounted price offers and customer satisfaction at Alfamart
Adopted from the journal “Benchmarking operational performance: the case of two hotels” (Parkan, C 2005)

Key variables

The research purpose is to research the comparison of customer satisfaction on Alfamart and Indomaret. There are several independent variables to measure the customer satisfaction that is adopted from journal of services marketing, “The effects of obtaining one's preferred service brand on consumer satisfaction and brand loyalty”
The dependant variable will be customer satisfaction and the independent variable will be services, price, repeat purchase, brand loyalty, changes in live event.

Customer satisfaction = service levels + price + brand loyalty + repeat purchase + changes in live event.
The variables that will be used are service levels, price, brand loyalty and repeat purchase.
Customer’s satisfaction in general is the satisfaction that obtain by the customers when they deal with the companies or an organization, the customers satisfaction are very important in the success of every of the organization. The factors of customer satisfaction may be varying.
The services should be offered politely, respect and friendly. The employees have to deal with the customers in an appropriate manner to have the mutual understanding to solve the problem.
Brand loyalty is also the part of customer satisfaction where the satisfied customer will be loyal to the brand offered. “Brand loyal consumers might purchase a competing brand when the preferred (first choice) brand is not available” (Paswan, A, K, Spears, N & Ganesh, G 2007)
The product qualities that match to the prices of the product and the discounted price offers will result the customer preference to have the product, when the customers are satisfied with the product or services, there will be the tendency for them to come and purchase the product again.

The variables are adopted from (Paswan, A, K, Spears, N & Ganesh, G 2007)

Research design

There are three types of research design that is descriptive, exploratory and causal research design. On measuring the comparison between the level of customer satisfaction on Alfamart and Indomaret the researcher will use the descriptive research design, because the problem had already existed before the researchers do the research.
There are two ways to obtain the data, by using the primary data and secondary data.

Secondary data

The secondary data for the research will be obtained from journals (www.emeraldinsight.com), that is

Journals tittle Author
“The Case for Customer Satisfaction” Chris Taylor

“Measuring Internal Customer Satisfaction” G Ronald Gilbert

“Competing in the Service Sector-Entrepreneurial Challenge” Amy Risch Rodie and Charles L. Martin

“Benchmarking operational performance: the case of two hotels” Celik Parkan
“The effects of obtaining one's preferred service brand on consumer satisfaction and brand loyalty” Audhesh K. Paswan, Nancy Spears, and Gopala Ganesh

Pikiran rakyat Internet Sites
Consumer Behaviour book by Michael R. Salomon.
Marketing Research book written by Aaker, Kumar and Day.

Primary data

The primary data will be obtained by spreading the questionnaires to 50 students at Inti College Indonesia and 50 students at Pelita Harapan University. The purposes of distributing the questionnaire in this two university was because there are many students that come from different places that can filled up the questionnaire based on their opinion. Another reason is the journals are also using questionnaire to obtain their primary data.

The population will be all the students that go to Alfamart and Indomaret to purchase the product.

The sample size will be 100. The researcher is distributing those amounts of questionnaires because the research is for academic purposes only, if the research is for business purposes, the researcher will distribute bigger amount of questionnaires.
50 questionnaires will be distributed for Inti College Indonesia students and 50 for Pelita Harapan University.

The researcher will use the non probability sampling method as the sampling method, because there is no equal chance to choose the respondent to fill up the questionnaires.
(Aaker, David A, Kumar, V & Day, George S, 2004, p. 387-392)

The sampling procedure will be the quota sampling and snowball sampling, because the researcher limited 100 of respondents to fill up the questionnaires, by dividing 50 respondents from Inti College Indonesia and 50 respondents from Pelita Harapan University and the researcher need someone helps to spread the questionnaires.
(Aaker, David A, Kumar, V & Day, George S, 2004, p. 288-230)

The data from primary sources will be collected by self administered questionnaires, because the researcher will spread the questionnaires to the respondent without explain to get the information.
(Aaker, David A, Kumar, V & Day, George S, 2004, p. 244-245)
The data from secondary sources will be collected by reading, discussing and analyzing the journals, consumer behaviour, and marketing research text book.
Data analysis method

The data that will be used to analyze are frequency, cross tabulation and chi square. To test the relationship between two variables, the researcher has to use the cross tabulation method. The frequency will be used to determine the data that are categorized in a manner. Chi square method will be used to compare the similarities on the variables with the frequency.

Limitations

Change in live event will not be used as the variables for the research of both of the mini mart, even though there is the changes in the live event, people would still go to the store or mart to obtain what they need as their needs. Changes in live event will be used when the researchers are researching about the hotel or hospital, whereas when there’s a change in live event people will come to the places.

Project Budget

Print and binding expense	Rp 70.000,-
Internet and electricity expense	Rp 100.000,-
Photocopy for 100 questionnaires	Rp 10.000,-
Transportation	Rp 20.000,-
Total	Rp 200.000,-

Gantt chart

Week

Work Activities	1	2	3	4	5	6	7	8	9	10	11	12	13	14
Finding Topic	.
Finding More Information	.	.	.	.	.	.	.	.	.	.	.	.	.	.
Revise Topic		.	.
Submit the Proposal				.
Starting Chapter 1					.
Questionnaire design						.
Questionnaire Distribution							.	.
Questionnaire Collection								.
Loading to SPSS								.
Starting Chapter 2									.
Starting Chapter 3										.
Starting Chapter 4											.
Starting Chapter 5												.
Revision for the Final Report												.	.
Presentation														.
Submit the Final Project														.

Referencing

Aaker, David A, Kumar, V & Day, George S, 2004, Marketing Research, 8th Ed, John Willey & Sons, River street, Hoboken, New Jersey.

Alfamart, Alfamart Company Profile <http://www.alfamartku.com/> Viewed 19 January 2008

Gilbert, G Ronald 2000, 'Measuring Internal Customer Satisfaction' , 'Managing Service Quality' , Vol.10, No.3, pp. 178-186.

Indomaret, Indomaret Company Profile <http://www.indomaret.co.id/idm/mod.php?mod=userpage&page_id=3> Viewed 19 January 2008

Omset Minimarket Merosot (n.d.), viewed 17 January 2008

Parkan, C 2005, ‘Bench marking operational performance: the case of two hotels’, Productivity and Performance Management, Vol.54, No.8, pp. 679-696.

Paswan, A, K, Spears, N & Ganesh, G 2007 ‘The Effects of Obtaining One's Preferred Service Brand on Consumer Satisfaction and Brand Loyalty’, Services Marketing, Vol.21, No.2, pp. 75-87.

Rodie, A, R & Martin, C, L 2001, ‘Competing in the Service Sector-Entrepreneurial Challenge’, Entrepreneurial Behaviour and Research, Vol.7, No.1, pp.5-21.

Taylor, C 1995, ‘The Case for Customer Satisfaction”, Managing Service Quality, Vol.5, no.1, pp. 16-29.