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Procedia - Social and Behavioral Sciences 130 (2014) 354 361

INCOMaR 2013

Customer Relationship Management (CRM) Strategies Practices in

Malaysia Retailers
Mohd Azizul Sulaiman*, Mohd Amli Abdullah @ Baharum, Arifi Ridzuan
Universiti Teknologi MARA Pahang, Bandar Tun Abdul Razak Jengka, 26400 Pahang, MALAYSIA

Abstract
The retailer and customer relationship is favourable for organizations to flourish in any economic condition and for customers to
receive quality products and services. Therefore, the right Customer Relationship Management Strategies practiced is able to
create a strong relationship with customers and at the end of the day it will creates loyal customers. This will subsequently
increase companys profitability regardless of economic condition. This study was conducted to examine the CRM strategies
practices among retailers. A total number of 420 questionnaires were distributed to four selected retail companies in Shah Alam
and 304 (72%) questionnaires were returned and used for the analysis. Based on the findings, it was found that Operational
Excellence is the most effective CRM Strategies that led to customer loyalty in retail industry in Shah Alam, Malaysia. Whereby,
product leadership less used by the retailer in CRM strategies. The researcher believes that the customer felt that they need to
trust the company first before they can really commit and be loyal to the company. The findings of this study benefit the
organization in many ways such as by using this study as a guideline to conduct business to achieve organizational goals and at
the end of the day, creating customer loyalty. However, future research should include other the retail companies in Selangor and
other states in Malaysia.
2014
2014 The
The Authors.

Authors. Published
Publishedby
byElsevier
ElsevierLtd.
Ltd.Open access under CC BY-NC-ND license.
Selection and
and peer-review
Committee
of of
INCOMaR
2013.
Selection
peer-reviewunder
underresponsibility
responsibilityofofthe
theOrganizing
Organizing
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Keywords: Customer Relationship Management; Operational Excellence; Product Leadership; Customer Intimacy; Customer; Trust; Customer
Satisfaction; Customer Loyalty

* Corresponding author. Tel.: 09-4602441

E-mail address: [email protected]

1877-0428 2014 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and peer-review under responsibility of the Organizing Committee of INCOMaR 2013.
doi:10.1016/j.sbspro.2014.04.042

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355

1. Introduction
Customer relationship has become the main medium in gaining profits by all kind of business in Malaysia.
Roberts (2005) stated that, the 1980s saw the emergence of database marketing, which was simply a catch phrase to
define the practice of setting up customer service groups to speak individually to all of a companys customers.
Businesses started to see that the importance of having a good relationship their customers in gaining more profits.
Effectively designed customer relationship program gives a lot of benefits to the consumers as well as profits to
the retailing businesses. Roberts (2005) clarified that Customer Relationship Management (CRM) is one of those
magnificent concepts that swept the business world in the 1990s with the promise of forever changing the way
businesses small and large interacted with their customer bases. The importance of designing effective customer
relations program should be the first thing in mind of the retailing industry managers., The retailer need to know the
exact stage of any given sales process, they need to know their best prospects and leads, they need to know the
strengths and weaknesses of each member of their mobile sales team, and they need to know all this, or any part of
it, instantly Syed Ali (2007). That's where the importance of CRM comes into its own whether it's offering discounts
or freebies; these are geared towards maintaining continued customer patronage and giving the customers 100%
satisfaction from the purchase of company product or services (Wingard, 2008). In Masterson (2007) study,
managing your customer relationship is important, but is critical for Service Businesses who rely on repeat
customers, ongoing contracts and referrals. While in Anisimova (2007) study, it mentioned that retail companies
need to know the type of customer they have. Retail companies need to know what's important to their customer.
Retail companies also need to know whether your customer is transactional or long term.
It is important to distinguish the differences between long term and transactional customers because if managers
ask a transactional for too much information they will see it as an invasion of the retail companies privacy, whereas
long term customers will see it as creating a more personal relationship. Businesses need to create a balance between
these two customers.

1.1. Problem Statement

A close relationship between the customers and retail companies is the key factors towards the profitable
relationship between them. Long term relationship between retail companies and customers will give benefit to both
sides. This is because customers are the main source of profits for retail companies and retail companies are the
main places where customers can get their groceries. Companies measure customer commitment by their
transactions. But that often has little to do with how people genuinely feel about the business (McKee, 2007).
Customers loyalty will bring more profits to the retail companies where they are willing to keep coming to their
preferred shopping place. In order to measure the customers loyalty, companies should do it by measuring
customers willingness to come again and give good review about the business. The most difficult part is keeping
the customers. Consumers have many motivations for choosing a product or service provider: quality and variety of
products and services, price, location convenience, and quality of customer service all factor into why a consumer
chooses to patronize a particular merchant at a particular moment (Szuts and Toth, 2008). A number of past studies
discussed the relationship between CRM and customer satisfaction but fewer studies were conducted to examine the
CRM strategies practices.

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1.2. Research Objectives

This study was to examine the CRM Strategy practice in retail companies in Shah Alam, Selangor,
MALAYSIA. Specifically, this research was to examine which of the Customer Relationship Management
Strategies has the most influence on customer loyalty.
1.3. Significance of the Study
The competition in retailing industry has become major concern when the competitive advantage in the eyes of
customers will give extra impact on their profit margin. Customers today have lots of option and choices in their
spending habits. There are many retail companies in Shah Alam that they can choose to spend. This is why the
managers and business person in retailing industry in Shah Alam should be aware. In order to maximizing profits,
they need to alert and aware the spending habits and customers preference. Customers nowadays are looking
forward to close relationship, discounts, vouchers, and willing to take part in the marketing and CRM Strategy
conducted by businesses. The researcher believes that this research has contributed to improvement in developing
the most effective CRM Strategy in order to get customer loyalty. This study may benefits institutions of higher
learning and it can provide feedback to the need of an organization.
1.4. Limitation of the Study
This study has its own limitations. First limitation of the study was the area of population for the study. The
study will be conducted on the customers of the selected retail companies in Shah Alam, Selangor Darul Ehsan. The
second limitation of the study was the questionnaires as a tool for data gathering and collection. The validity and
reliability of the data was depending largely on the respondents honesty and truthfulness in answering the
questionnaire. The result depends mainly on the respondents opinions and perceptions which were beyond the
control of the researcher.
2. Literature Review
2.1 Customer Relationship Management
Osarenkhoe and Bennani (2007) stated that CRM was developed in order to secure and manage the relationship
between businesses and customers. In Schierholz, Kolbe, and Brenner (2007) study, CRM was defined as a
complex set of interactive processes that aims to achieve an optimum balance between corporate investments and
the fulfilling of customer needs in order to generate maximum profit. While, in Chen and Popovich (2003) study,
(CRM) identified as a combination of people, processes and technology that seeks to understand a companys
customers by using integrated approach (information technology and customer-centric process) to managing
relationships by focusing on customer retention and relationship development. In the study also identified that
companies that successfully implemented CRM will have the rewards in customer loyalty and long run profitability.
Chen and Popovich (2003) also cited in their work that CRM business strategy leverages marketing, operations,
sales, customer service, human resources, R&D and finance, as well as information technology and the Internet to
maximize profitability of customer interactions. Through the above studies, all agrees that customer is the main
focus in CRM and also, business need to build capabilities and use resources to retain and develop a good
relationship with customer.
In Malaysia, awareness and acceptance of CRM solution is becoming more widespread. According to Lim
(2008), Malaysia moved out from agriculture and lean more towards customer centric business that focus on B2C
business and is the nicer place for CRM solution to hold in Malaysian industry. Economy in Malaysia is growing
and leads the retailers and businesses to explore more on how to gain more attention from customers and getting
business profits. It is strongly believed that successful Malaysian companies will be those that continue to invest in
CRM initiatives and shift their efforts from customer acquisition to customer retention. Malaysian companies are

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357

now more aware of CRM and have a positive view on its market growth.

2.2 Value Discipline Theory (Treacy and Wiersema 1996)

An organization need to find a suitable approach in maintaining CRM in organization. Value Discipline Theory
that developed by Michael Treacy and Fred Wiersema (1996) can be used as element of approach as the theory that
describes three generic value disciplines. In this theory suggest that company need to choose one of these value
disciplines and act to it consistent and vigorous.
There are three disciplines in this theory that the firms can adopt which are Operational Excellence, Product
Leadership and Customer Intimacy. This theory suggested that in a business context, firms must select and excel at
one of these discipline as a core operating model, while remaining adept at the other two. Eichen (2006) states that,
the ability to choose and excel at one value discipline and communicate this choice so that employees understand
and carry it out effectively marks the difference between success and failure.
2.2.1 Operational Excellence
Companies that employ an operational excellence strategy attempt to find a combination of price, quality, and
ease of purchase that none of their competitors are capable of matching. They do not spend a great deal of time on
innovation or one-to-one relationship with customers. They offer their customers a guaranteed low price and
problem-free service. The idea behind the operational excellence is that the companies focus on the price and
convenience where the companies normally fight the lowest price in the industry. Furthermore, the companies
constantly were taking the rewards from that cost-leadership position and reinvesting them to further drive the costs
down or to increase the convenience of doing business with customer (Soderlund and Vilgon, 1999). Sheth (2002)
stated that operational excellence is the key success in determining the loyalty of customer where most companies
has forgotten while focusing too much on the IT. Companies that pursue operational excellence provide consumers
products at the lowest total cost. The products line is standardized, and limited, with highly reliable products.
Operational Excellence demands zero defects (Zineldin, 2006). Cost leaders appear to be no more or less reliant
than either kind of differentiator on CRM system (Valos , Bednall & Callaghan, 2007).
2.2.2 Product Leadership
Organizations which aim for product leadership constantly work hard to implement innovation and renewal.
These companies want to amaze customers, push limits and discover the unknown. These will be involving risks
and challenges since they introduce new products and services which have not yet accepted by customers. Zineldin
(2006) stated that, Product Leadership companies entail producing an ongoing stream of cutting edge products or
services. Firms that engaged in product leadership strategy continue to innovate and stay ahead of their competition.
Product differentiators appear to favor intuitive decision making over market research on their product innovation
decision making (Valos , Bednall & Callaghan, 2007). Brand performance such as awareness, reputation and loyalty
can affect a firms financial performance. When customers are aware of the product or services available to them,
the firm has opportunities to convince target customers to try its services and products (Wong and Meriless, 2007).
Soderlund (1999) also stated that product leadership can be explained as the most innovative company on the block
where the companies are constantly providing the most innovative solutions to your customers. In order to become
product leadership, the needs on technology advancement and financially excellent is crucially needed. To become
product leadership, the investment on the effort has made most companies prefer to go for other strategy rather than
to become product leadership.
2.2.3 Customer Intimacy
The customer intimacy strategy is characterized by the fact that companies build up a relationship with
customers. A great deal of attention is focused on the development of the desired customer based, which customer

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they want as their customer. The company is built up based on the knowledge of the individual customers and their
preferences. Firms that pursue customer intimacy strategy will customize solution, install this solution and take
responsibility for the customers success (Zineldin, 2006). Zineldin (2006) also mentioned that, customer-intimate
companies invest in a highly skilled work force and give them great latitude to solve customers problems in the
field.

3. Research Methodologies
Conducting a research involving hundreds or thousands of elements, so it is practically impossible to collect
data from or test or examine every element. The results of the research are more consistent because tiredness is
reduced and less error will therefore result in collecting data, especially when a large number of elements were
involved. According to Sekaran (2006), the sample should be small enough to provide a manageable volume of
data, but the sample must accurately represent the population if any valid inferences are to be drawn from the
sample results. A few phone calls have been made in order to get the population of the study. Due to the strict
policy in giving out customers information, none of these selected retail companies revealed the information needed
by the researcher.
The researcher has decided to use quota sampling. According to Sekaran (2006), quota sampling ensures that
certain groups are adequately represented in the study through the assignment of the quota. Generally, the quota
fixed for each subgroup is based on the total numbers of each group in the population. Table 1 shows the
distribution of the respondents as the 400 respondents were chosen at the retail companies. The 400 respondents
taken are based on the similar previous research conducted by Che Chik, Rosidah, Che Wan Faridah (2005).
Table 1. Number of the respondents
Retail Companies
Tesco Hypermarket

Number of respondents
105

Giant Hypermarket

105

Bintang Supermarket

105

The Store Supermarket

105

TOTAL

420

3.1 Survey Instrument

The questionnaire was modified from HaoYuan & Zhang (2009) to meet the objective of the research
questions. In development and modification of this questionnaire to meet the research objectives, the researcher
adopted back translation technique. It consisted of three sections. In the first section namely Section A, it was used
to gather the demographic information such as, gender, age, level of education, and marital status, the most visited
retail companies, and the frequencies of visiting retail companies. In Section B, the questions were asking the
respondents about their perceptions and knowledge on Customer Relationship Management Strategies which were,
Operational Excellence, Product Leadership, and Customer Intimacy. This section used the five point likert-scales
with the values: 1 = Strongly Disagree, 2 = Disagree, 3 = Neither Agree/Disagree, 4 = Agree and 5 = Strongly
Agree.
A pilot test has been conducted which the result showed that the questionnaire was able to meet the research
objectives and can be preceded. Researcher has also conducted test for face validity was done through discussion
with faculty members who is the regular customer of selected retail industry in Shah Alam, Selangor. The test for
validity is very important in order to ensure that the compliance of research objective and questionnaire. The content
validity test was done by a CRM expert from the faculty.

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4. Findings
4.1 Description of sample
The sample of the study involves responses from 420 responses representing four (4) retail companies in Shah
Alam, Selangor. However, only 304 completed surveys was returned which made up 72% from the proposed
number. The participating responses were the customer of respective retail companies involved. The 44 survey
responses collected from Bintang Supermarket which represented 15% of total respondent. Table 2 shows the
distribution of the respondents as 420 respondents was chosen at the retail companies. The 400 respondents taken
were based on the similar previous research conducted by Che Chik, Rosidah, Che Wan Faridah (2005).
Table 2. Summary of the distribution of retail companies in Shah Alam.
Retail Companies
Tesco Hypermarket
Giant Hypermarket
Bintang Supermarket
The Store Supermarket
TOTAL

Returned/
Completed

Number of respondents
105
105
105
105
420

Response Rate (%)

98
101
44
61
304

32
33
15
20
100

4.2 Demographic Analysis

Demographic data were gathered through the use of section A in the questionnaire developed by researcher to
obtain general information about the respondents such as gender, age, level of education, occupation, marital status
and frequencies of visiting the selected retail companies.
From 304 total respondents participating in the study, 108 (35.5%) are male, while 151 (64.5%) are female. On
the other hand, most of the respondent which 102 (33.6%) are age between 21-25 years old and only 8 (2.6%) are
age older than 40 years old. The respondents level of education mostly is Diploma with total 130 (86.5%) and least
is PMR holder which is 7 people only (2.3%). The respondents also were asked to respond on their current
occupation. 137 out 304 respondents which contribute to 45.1% are not working and only 39 (12.8%) respondents
are self-employed. Besides, 201 (66.1%) of the respondents are single, 30.6% (n=93) are married while 3.3%
(n=10) are widowed. Last but not least, the table shows the frequencies of visiting on the selected retail companies
among the respondents. Most of the respondents which is 119 (39.1%) claimed that they go to the selected retail
companies once in a week and least of the respondents which is 14 (4.6%) twice in two weeks.
4.3 Descriptive Statistics of Customer Relationship Management Strategies
Table 3 below showsthe overall summary of descriptive statistical analysis for all customer relationship
management strategies practiced in retail companies in Shah Alam. The analysis involved the use of descriptive
statistic which comprised the minimum (Min), maximum (Max), mean (M) and standard deviation (SD). The data
of this study were interval and continuous, therefore the researcher decided to use the mean instead of the median in
describing the data. The most practiced was operational excellence (M=3.75) and the least practiced was product
leadership (M=3.68) as perceived by the customer.
Table 3. Customer Relationship Management Strategies Practiced in Retail
Variables

SD

Operational Excellence

3.75

.48

Product Leadership

3.68

.43

Customer Intimacy

3.73

.47

Companies in Shah Alam.

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Table 4 below shows the summary of descriptive statistical analysis for all customer relationship management
strategies (Operational Excellence). For the overall sample, the variable means ranged between 4.09 (The layout of
the products helps me in purchasing the products I wanted) to 3.53 (The speed of service delivery at this store is
very good).
Table 4. Descriptive statistics of operational excellence (n=304)
Operational Excellence
M

SD

The layout of the products helps me in purchasing the products I

wanted.
The product information displayed is very helpful.

4.09

.64

3.80

.75

The speed of service delivery at this store is very good.

3.53

.69

There is sufficient information about the product location.

3.58

.80

Table 5 shows the overall summary of descriptive statistical analysis for all customer relationship management
strategies (Product Leadership). For the overall sample, the variable means ranged between 4.03 (This store sells
products that meet my necessity and needs) to 3.02 (The products and items sold at this are unique and cannot be
found at anywhere else).
Table 5. Descriptive statistics of Product Leadership (n=304)
Product Leadership

Mean

SD

The products and items sold at this are unique and cannot be found
at anywhere else.

3.02

.77

The quality of the products sold is very good and reliable.

3.87

.58

The products sold here meet my needs and expectations regarding

its quality and performance.

3.91

.52

I am very happy with the usefulness of the products sold at this

store.

3.91

.62

I can find all the products which I wanted at this store.

3.79

.81

Table 6 below shows the overall summary of descriptive statistical analysis for all customer relationship
management strategies (Customer Intimacy). For the overall sample, the variable means ranged between 3.92 (The
store provides customer service center so I can refer to them if I have any problem or inquiry) to 3.51 (The frontline
employees of this store are always willing to help me).
Table 6. Descriptive statistics of Customer Intimacy (n=304)
Customer Intimacy

Mean

SD

This store is consistent in providing good quality service.

3.92

.62

The frontline employees of this store are always willing to help me.

3.51

.73

This store provides timely information when there are new products
and services.

3.83

.69

I am happy with the helpfulness of the staff at this store.

3.66

.64

5. Conclusion
From the findings, it can be seen that the customer relationship management strategies that most used in retail
companies in Shah Alam as perceived by the customer was operational excellence (M=3.75) and the least practiced
was product leadership (M=3.68). According to Soderlund, 1999, the idea behind the operational excellence is that
the companies focus on the price and convenience where the companies normally fight the lowest price in the
industry. Furthermore, the companies constantly were taking the rewards from that cost-leadership position and

Mohd Azizul Sulaiman et al. / Procedia - Social and Behavioral Sciences 130 (2014) 354 361

361

reinvesting them to further drive the costs down or to increase the convenience of doing business with customer.
On the other hand, Soderlund, 1999 also stated that product leadership can be explained as the most innovative
company on the block where the companies are constantly providing the most innovative solutions to your
customers. In order to become product leadership, the needs on technology advancement and financially excellent is
crucially needed. To become product leadership, the investment on the effort has made most companies prefer to go
for other strategy rather than to become product leadership. This idea has supported this study whereby it can be
clearly seen than product leadership is the least practiced strategy in retail companies in Shah Alam.
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