A study of marketing strategy of shopping centre for customer retention in Hong Kong

1.4 Goals and Objectives 2 Chapter Two - Literature Review/ Background 2.1 Definition and Concept of Shopping and Shopping Centre 2.1.1 Shopping 2.1.2 Shopping Centre 2.2 Background of

Title A study of marketing strategy of shopping centre for customer retention in Hong Kong

Author(s) Chu, Ka-wai; 朱嘉慧

Citation

Chu, K [朱嘉慧] (2009) A study of marketing strategy of

shopping centre for customer retention in Hong Kong (Thesis) University of Hong Kong, Pokfulam, Hong Kong SAR Retrieved from http://dx.doi.org/10.5353/th_b4440065

Issued Date 2009

URL http://hdl.handle.net/10722/128605

Rights The author retains all proprietary rights, (such as patent rights) and the right to use in future works.

A STUDY OF MARKETING STRATEGY OF SHOPPING CENTRE FOR CUSTOMER RETENTION IN HONG KONG

DECLARATION

I declare that this dissertation, entitled A study of marketing strategy of shopping centre for

customer retention in Hong Kong, represents my own work, except where due

acknowledgement is made, and that is has not been previously included in a thesis,

dissertation or report submitted to this University or other institution for a degree, diploma

or other qualification

ACKNOWLEDGEMENT

I wish to express my sincere gratitude to my supervisor, Dr Eddie Hui, for his professional

guidance and support He has provided many valuable advices and opinions during my

preparation of this research paper

Moreover, I would like to thank my interviewees for their valuable time to fill in the

questionnaire They made a lot of contributions in my data collection I also want to

take this opportunity to thank my friends, family and colleagues for their unfaltering

support and assistance

1.4 Goals and Objectives

2 Chapter Two - Literature Review/ Background

2.1 Definition and Concept of Shopping and Shopping Centre

2.1.1 Shopping

2.1.2 Shopping Centre

2.2 Background of Shopping Centre Development

2.3 Classifications of Shopping Centre

2.3.1 Territorial Shopping Centre

2.3.2 District Shopping Centre

2.3.3 Neighbourhood Shopping Centre

2.4 Definition and Concept of Marketing and Marketing Strategy

2.4.1 Marketing

2.4.2 Marketing Strategy

2.4.3 Marketing Mix

2.5 Definition and Concept of Customer Retention

2.6 Shopping Centre Marketing Mix Framework

2.6.1 Place – Location/ Accessibility

2.6.2 Physical Evidence - Exterior Design

2.6.3 Product - Interior Design, Tenant Mix and Leisure Attractions 2.6.4 Promotion - Communications Mix

2.6.5 Price - Cost of Access

2.6.6 Process - Customer Service

2.6.7 People - Customer Participants

3 Chapter Three - Methodology

3.2.3 New Town Plaza

4 Chapter Four - Data Analysis and Results

4.3 Analysis For Customer Satisfaction of Shopping Centre

4.4 Analysis For Customer Spending Behavior of Shopping Centre

4.5 Analysis of the Relationship between Marketing Strategy, Customer

Satisfaction and Customer Retention of Shopping Centre

Chapter Five – Conclusions and Recommendations

ABSTRACT

This paper examines the relationship between the marketing strategy and the customer

retention of shopping centre industry in Hong Kong and identifies the major components of

marketing strategy for enhancing and sustaining the customer retention to the shopping

centre The economic development had grown rapidly in the past decades The

shopping behaviour of the customers has also changed a lot from purchasing in a general

store to the enclosed shopping mall with comfortable environment and air-conditioning

facility, which created a good condition and atmosphere to the fast growth of shopping

centre industry Following to the violent competitions among the shopping centres and

the awareness of the importance of customer retention in the shopping centre industry, the

shopping centre manager put more focus to assess how the marketing strategy can help to

retain the existing customers so as to increase the patronage and rental income of the

shopping centre

The literatures have been reviewed to identify the major components of the marketing

strategy of the shopping centre industry In order to further investigate the customers’

opinions on various marketing components which will affect their decision making to

re-visit the shopping mall, the customer survey of large scale shopping centres in different

districts i.e ifc mall, apm and New Town Plaza has been carried out The results of the

survey indicate there are a close relationship between the marketing strategy and the

customer retention of Hong Kong shopping centre industry Good marketing strategy

can retain the repeated customers in the shopping centres The data of survey also

indicates that the components of “Tenant Mix & Leisure Attractions”,

“Location/Accessibility” and “Customer Service Provided” play the essential roles for

sustaining the customer retention in the shopping centre industry Besides, the survey

shows the relationship between customer satisfaction and customer retention that the

customers who visit the shopping centre more times per week felt more satisfactory to the

services of shopping centre, which points out that the satisfactory feeling of customers can

assist to retain them in the shopping centre Since the results of survey reflect the

repeated customers are willing to spend more money for shopping, the success to retain the

existing customers can improve the performance and return of the shopping centres

Through this paper, the shopping centre managers, the private developers and business

owners can have further insight and knowledge to the importance of marketing strategy and

customer retention in their shopping centre development They understand that the

effective marketing strategy can achieve and sustain the customers’ needs and their

satisfactory feeling, which enhance customer retention and the competitiveness to the

shopping centre as a result

Further studies are required to explore a more comprehensive spectrum of shopping malls

so as to fully understand the extent of variation in marketing orientation across various

types of shopping centres when the sample size is not big enough to examine the topic

CHAPTER ONE INTRODUCTION

The “shopping centre” concept was begun in the United States and was grown rapidly in

the 1950s This concept was then expanded to other countries in the world afterwards

Many different types and sizes of shopping centre were thus appeared to fulfill different

needs In recent years, there are many new shopping arcades opening in Hong Kong

The competitions among the shopping centres become violent Traditionally, location is

the major factor to determine the success of shopping center However, due to the change

of customer behavior and demand, the shopping centre is now not only a place for

shopping, but also for a form of family entertainment and satisfying a social need The

effective marketing strategy implementing by the shopping centre manager becomes a

critical element to achieve and sustain the customer needs, which can retain the customer

and enhance the competitiveness to the shopping centre

Recently, the developers and investors are conscious of the benefits of retaining current

customers, which are essential leading to the success of shopping center development

The effective marketing plan can draw more people and repeated customers to visit the

shopping arcade again and as a consequence enhance the sales revenue to the tenants and

achieve stable and high rental income to the investors Therefore, the developers are

willing to put more financial and manpower resources to implement marketing strategy so

as to enhance the attractiveness of the arcade and build up a good relationship with

customers

In this research paper, it is going to explore the relationship between the marketing strategy

of shopping centre industry and the customer retention in Hong Kong What are the

major components of the marketing strategy for shopping centre development? How

important are these components in sustaining the customer retention? There are the

questions that this paper attempts to answer

1.3 Significance

Most marketing theory and practice center focus on the analysis of attracting new

customers, but less examines on retaining existing customers (Kotler, 2001) However, in

today’s turbulent and fiercely competitive retailing environment, the shopping centre

manager faces the tasks not only to attract shoppers patronizing the mall but also to

maximize retention of current patrons (Yavas, 2003) This is a worthy topic to be

discussed because this research has put more focus on assessing the relationship between

marketing strategy and customer retention

Besides, the results of this study offer further insight for private developers and business

owners to understand the importance of marketing strategy and customer retention in their

shopping centres investments, so that they can establish or re-structure their existing and

future development strategies and planning

The analysis of the study is also valuable to the shopping centre manager to get more idea

on improving the marketing and management of the shopping centre in order to build up a

good customer relationship and enhance the customer retention rate

1.4 Goals and Objectives

marketing strategy of shopping centre affecting customer retention in Hong Kong

The essential components of marketing strategy for shopping centre development are

identified followed by a review of relevant literatures In addition, this paper analyzes the

relationship between each marketing component of shopping centre and customer retention,

and explores which marketing components have more impacts on customer retention It

attempts to find out how these marketing components enhance and sustain the customer

retention to the shopping center

Besides, the dissertation further investigates and proves the scholars’ points of views on the

above matters by analyzing the customers’ opinions through the questionnaires The

survey focuses to search the customers’ opinions on various marketing components

affecting their decision making to visit the mall repeatedly, which provides useful

information in assessing different components of marketing strategy affecting the customer

retention and assist to analyze which marketing components are the significant elements for

the customer retention of shopping centre industry The shopping centre manager can

further improve the performance of shopping centre by strengthen these marketing

components so as to attract the repeated customers visiting the shopping centre again

CHAPTER TWO LITERATURE REVIEW/ BACKGROUND

In the past forty years, the shopping centre industry has experienced unprecedented growth

There are many changes of shopping centre development in the aspects of size, amenities

and tenant mix over the years and the industry has had to overcome recessions,

overbuilding and major shifts in anchor tenants’ economic situations and space

requirements as well as changes in the characteristics of shoppers (Alexander and

Muhlebach, 1992)

The role of the marketing strategy is also increasingly important to entertain the shoppers’

needs and establish well-planned services to the shoppers in order to attract and retain them

to visit the shopping centre This is essential to maintain the stable income from the

shopping centre and achieve a good rate of returns on investments for private developers

and business owners

2.1 Definition and Concept of Shopping and Shopping Centre

2.1.1 Shopping

“Shopping is a primary human activity in which almost every individual in civilized society

takes part…” as described by Beddington (1982) Hui (2007) mentions that “Shopping

perhaps is one of the most exciting activities in life As the taste and the preference of

shoppers change constantly, retail facilities have evolved in response.” Nowadays, the

environments of many shopping centres are changed constantly and they are included

comprehensive services, facilities and entertainment so as to fulfill different needs from the

customers

2.1.2 Shopping Centre

There are a wide range of definitions developed for “shopping centre” in the past decades

According to Yuen (2005), the formal one was developed by Urban Land Institute in 1977

which defines the shopping centre “as a group of architecturally unified commercial

establishments built on a site that is planned, developed, owned and managed as a unit,

with on-site parking provided on the property, and related in location, size, and type of

shops to the trade area that the unit serves.”

Guy (1994), quoted by Warnaby et al (2005), describes the shopping centre “as planned

retail developments comprising various retail outlets which are under one freehold

ownership and managed and marketed as unit.” He indicates the fundamental differences

compared to traditional high street retail locations i.e planned developments that are

managed and marketed as a unified whole He also implies the shopping centres are

coherently and proactively marketed and so they have a strong marketing profile (Kirkup

and Rafiq, 1999)

As mentioned by Wee & Tong (2005), shopping centre is defined as “a group of retail and

other commercial establishments that is planned, developed, owned, and managed as a

single property” in accordance with the International Council of Shopping Centres (ICSC),

one of the largest and most authoritative organization on shopping centers in the world

2.2 Background of Shopping Centre Development

Over the past century, retail shopping behaviour has changed dramatically Before the

industrial revolution, retail purchases were often made close to the residence in a general

store due to high transportation costs In the mid-1920s, the development of shopping

centre was grown very fast as a result of the invention and popularization of the automobile

causing a lower price of traveling costs (Eppli and Benjamin, 1994) People became easy

to travel and more mobile and they are willing to travel further to shop It caused the rise

of the suburbs in the United States and provided the developers an opportunity to create “a

revolutionary retail experience” - the shopping center It caused the out-of-town shopping

centres built since 1920s (Alexander and Muhlebach, 1992) The creation of a national

highway system also gave the shopping centre industry a huge jump start (White and Gray,

1996)

The trend of shopping mall with enclosure during the 1950s till 1970s also push the

development of this concept further when the enclosed mall can provide a pleasant and

comfortable atmosphere to the shoppers (Alexander and Muhlebach, 1992) Moreover,

shopping centres now include many of the services and entertainment, which become a part

of American life In addition to purchasing retail and necessity goods, they go shopping

centres for community activities, fashion shows or educational displays Besides,

shopping centres have thousands of repeated customers who tend to have an emotional

attachment Thus, the shopping centre management is now more important that it can live

up to its end of the bargain and provide a clean, safe, exciting place to shop and fill with the

range of merchandise appropriate for that particular market (White and Gray, 1996)

2.3 Classifications of Shopping Centre

Different countries have different classifications of shopping centres In the United

States, the suburban shopping centre is the dominant form of retail space It divided to

five major types i.e the regional centre (including super regional centre), the community

centre, the neighborhood centre, the specialty centre (including outlet and off-price centre)

and the convenience centre The types are defined by their dominant or anchor tenants,

their gross leasable area and the population or trade area that they serve The new types

of shopping centre had also been developed e.g the megamall which is three or four times

larger than an ordinary regional centre and the power centre designed for a higher ratio of

anchor tenants (Institute of Real Estate Management, 1990)

This concept is also extended to Hong Kong and affects the development of shopping

centre industry There are different types of shopping centre including regional and smaller

size shopping mall nowadays to accommodate various needs of people for shopping in

Hong Kong According to the Hong Kong Planning Standards and Guidelines, the

Planning Department had completed a study in November 2005 called the “Review on

Shopping Habits” and based on the shopping preferences of consumers to classify the types

of shopping centre into a three-tier retail hierarchy i.e Territorial Shopping Centres,

District Shopping Centres and Neighbourhood Shopping Centres (Planning Department,

website)

2.3.1 Territorial Shopping Centre

Territorial Shopping Centres are located within well-developed urban areas and are

supported by good transportation networks with other districts in Hong Kong They serve

the territory as a whole and provide the greatest variety of high order comparison goods

and dining, leisure and entertainment services The districts of Mongkok, Causeway Bay

and Tsim Sha Tsui are classified as the shopping areas with territorial significance which

can attract consumers from other districts and provide a high concentration of shopping

malls of various sizes with supporting commercial facilities such as offices and hotels

Examples of Territorial Shopping Centres include Langham Place at Mongkok, Times

Square at Causeway Bay and Harbour City at Tsim Sha Tsui

2.3.2 District Shopping Centre

District Shopping Centres are located at the locations with district-wide significance

They mainly serve the population within the district providing variety of household durable

goods, personal consumer goods, personal durable goods, leisure and entertainment

facilities as well as dining services District Shopping Centres are located next to the

public transport nodes in the districts to make convenience to the consumers when they

interchange between public transport modes at these nodes Examples include at Telford

Plaza at Kowloon Bay, Tuen Mun Town Plaza at Tuen Mun, and Citygate Shopping Center

at Tung Chung

2.3.3 Neighbourhood Shopping Centre

Neighbourhood Shopping Centres are located within walking distance from nearby

residential areas including private and public housing estates They mainly serve the local

populations living nearby and provide convenience goods, household retail services,

personal retail services and dining services to the customers Example of Neighbourhood

Shopping Centre includes Chi Fu Landmark in Pokfulam

2.4 Definition and Concept of Marketing and Marketing Strategy

2.4.1 Marketing

At the initial stage, the concept of Marketing is only applied to consumer products in the

field of automobiles, health care and soft drinks in the United States Due to the

effectiveness in achieving success of these companies through the marketing tools, other

fields of companies such as services providers, professional firms, public institutions and

even non-profit institutions also adopted this concept to promote their brands (Tam, 2007)

There are numerous definitions of marketing, but their meanings are similar Kolter (1994)

defines the term of marketing is “a social and managerial process by which individuals and

groups obtain what they want through creating and exchanging products and value with

others”

Another definition from The Chartered Institute of Marketing is that marketing is “the

management process responsible for identifying, anticipating and satisfying customer

requirements profitably”

The American Marketing Association, as quoted by Kolter (1994), defines “Marketing is

the process of planning and executing the conception, pricing, promotion, and distribution

of ideas, goods, and services to create exchanges that satisfy individual and organizational

goals.”

Kolter (1994) mentions that the aim of marketing is to know and understand the need of

customer so as to make the product or service fits him and sells itself “Ideally, marketing

should result in a customer who is ready to buy.” It holds the key to achieving the

company’s goal in creating, delivering, and communicating customer value to its chosen

target markets, which is more effective than its competitors

2.4.2 Marketing Strategy

Marketing strategy is increasingly important in the shopping centre development when the

competition become keen in the industry as illustrated by Alexander and Muhlebach (1992)

Kolter (1988) states that “Marketing strategy defines the broad principles by which the

business unit expects to achieve its marketing objectives in a target market It consists of

basic decisions on total marketing expenditure, marketing mix, and marketing allocation”

It is an overall marketing plan aiming to achieve the customers’ needs by influencing the

marketing mix in relation to expected environment and competitive condition (Kotler and

Armstrong, 1994) The definitions indicate that there is a close linkage between

marketing works and customers’ needs

Walker et al (2006) explains that the marketing strategy is “to effectively allocate and

coordinate marketing resources and activities to accomplish the firm’s objectives within a

specific product market”

The Middle East Council of Shopping Centres (MECSC), which is a voluntary non-profit

association based in Dubai and established in 1994 representing shopping mall owners,

developers, marketing managers, leasing managers, retailers, property managers and

government officials, highlighted in the seminar for the importance of re-visiting marketing

strategies to the shopping centres under the current intensely competitive environment It

explains that the shopping centre managements have recognized the need for the re-visit

marketing strategies to keep pace with consumer behaviour that is constantly evolving

The re-visiting marketing strategies can increase sales, productivity and efficiency, and

develop insights into marketing trends that will define the future (Feimster, 2007)

As illustrated by White and Gray (1996), “Effective marketing strategy requires that every

element of the marketing mix fits together to deliver a coordinated and integrated appeal to

the target customers group.” I agree this point of view that the elements of marketing mix

are essential to develop a successful marketing strategy to meet customers’ needs or wants

and for the company to achieve its goal

2.4.3 Marketing Mix

McCarthy (1964) defines marketing mix “as a combination of a set variables related to

fulfilling customers’ needs” McCarthy and Perreault (1990) further define marketing mix

“as the controllable variables that an organization can co-ordinate to satisfy its target

market” Marketing mix is also described as the core concept of marketing theory and as

the tools and techniques to implement the marketing concepts (McDonald and Tideman,

1993)

The traditional concept of marketing mix is 4Ps (i.e Product, Price, Place and Promotion),

which is proposed by McCarthy’s in 1964 and focused for product marketing Booms and

Bitner (1981) extend the 4Ps concept to specific adaptations for service marketing i.e 7Ps

service marketing mix model by including the additional 3Ps (i.e People, Physical

Evidence and Process) Then, Kirkup and Rafiq (1999) and Warnaby et al (2005) further

developed the Booms and Bitner’s 7Ps service mix to re-label and sub-divide some

elements comprehensively so as to cater for the uniqueness of shopping centre

2.5 Definition and Concept of Customer Retention

Previous studies focuses on examining the marketing theory and components of shopping

centre industry on attracting new customers, but less on retaining existing customers

(Kotler, 2001) It appears rather insufficient without paying attention to the importance of

customer retention This paper aims to bridge this gap by investigating the relationship

between the marketing components and customer retention Some other literatures

concentrate on this particular issue

Customer retention means “keeping the customer for obtaining the economic benefit of a

long-term relationship” (Lowenstein, 1995) “Customer retention is becoming increasingly

important as developed countries move toward service economies” as mentioned by Brown

and Shoemaker (1998), quoted by Widzer (2001) More companies recognize the benefits

of retaining the customers One of the reasons is that it costs less to retain an established

customer than to acquire a new one As mentioned by Kotler (2001), the cost for

acquiring new customers can be five times more than the cost for retaining current

customers Besides, the importance of the retention of current customers can be

recognized by the reasons that across service industries profits climb as customer defection

rates fall (Crutchfield, 1998) and the growth of the number of new customers becomes

lower (Ahmad and Buttle, 2002)

The companies begin to restructure the marketing strategy to give more attention to their

current customers (Ahmad and Buttle, 2002) Ahmad and Buttle (2002) attempt to

examine the theoretical positions relating to customer retention management emerged from

the service marketing perspective and observe that the improvement of customer service

quality is the main way to retain customers (Berry and Parasuraman, 1991; Zeithaml and

Bitner, 1996, quoted by Ahmad and Buttle, 2002) Lowenstein (1995) also indicates that

customer service, product, promotion and communication performance attributes will

impact customer retention directly

2.6 Shopping Centre Marketing Mix Framework

Kirkup and Rafiq (1999) suggest the key elements of a shopping centre marketing strategy

to attract and retain customers Warnaby et al (2005) attempts to relate 7Ps services

marketing mix to the key elements suggested by Kirkup and Rafiq (1999) They include

location/ accessibility (i.e Place), exterior design (i.e Physical evidence), interior design,

tenant mix and leisure attractions (i.e Product), the communications mix (i.e Promotion),

the cost of access (i.e Price), the customer service provided (i.e Process) and the

interaction between centre, store and customer participants (i.e People) Kirkup and

Rafiq (1999) illustrate that “The complexity of the mix elements reflects the “bundle of

benefits” sought by consumers in relation to tangible merchandise, psychological and

physical requirements, and social, escape, exploration, flow, epistemic and aesthetic

benefits of consuming a mall experience” Some elements e.g customer service, tenant

mix and leisure attraction, communication and customer participants have more impact on

customer retention

2.6.1 Place – Location/ Accessibility

The literatures always emphasize that location is the major and significant element causing

the success of shopping centre development Dawson (1983), as quoted by Kirkup and

Rafiq (1999), explains that location is probably the single most important determinant of

success for a shopping centre According to Ghosh and McLafferty (1987), the shopping

centres located at good locations can attract large numbers of customers and enhance

potential retail sales Slightly location difference of shopping centres can have great

effect on market share and profitability especially within the area with high level of

competition

Accessibility is one of the critical elements to indicate whether the shopping centres are

situated at perfect locations For example, is it located at easy walking access from

existing shopping areas, residential/commercial areas or public transport stations? Any

footbridge and walkways are connected to the shopping centre? Does it provide sufficient

carpark spaces to the customers? A shopping centre located close to the public

transportation can enjoy a benefit of bigger catchment population and draw more people to

the shopping centre (Seah, 2003, quoted by Wee and Tong, 2005) Good customer

interchange among various stores within the trade area is a sign of a well chosen location

that different stores can generate business for each other and customers can traffic

throughout the area smoothly (Institute of Real Estate Management, 1990) It can attract

higher volume of pedestrian traffic passing through the malls when there are the bridges or

walkways connecting various malls together Besides, easy accessibility can minimize the

searching time and psychological costs of consumers including stress and frustration, as

explained by Levy and Weitz (1998), quoted by Sit et al (2003), and attract people coming

back again for visiting and shopping A review of the literature reveals that the main

significance of good location and accessibility is to attract high pedestrian traffic to the

shopping centre

2.6.2 Physical Evidence - Exterior Design

“External design offers a clear basis for differentiation…A key principle is to project an

external presence and authority, which include high visibility, and appropriate signage and

cladding to convey the status of the centre and the type of consumers targeted” as

illustrated by Guy (1994), quoted by Kirkup and Rafiq (1999)

The element of exterior design is now important to create image of the shopping centre and

achieve high visibility through appropriate signage and lighting, which can draw more

customers’ attention to the mall It can remind the customers the location of the shopping

centre even when they have no immediate need to shop (Alexander and Muhlebach, 1992)

Thus, the key function of this element is to attract more customers when the shopping

centre can differentiate itself from other shopping centres through exterior design (Yuen,

2005)

2.6.3 Product - Interior Design, Tenant Mix and Leisure Attractions

According to Kirkup and Rafiq (1999), interior design can create a particular atmosphere,

quality and personality to the shopping centre by the decorative features, lighting,

air-conditioning and floor finishes, which can enrich the atmosphere and enhance

differentiation Moreover, this environment can be further achieved through careful

location of the tenants, the leisure facilities and movement facilitators such as lifts,

escalators, ramps between levels and signage Yuen (2005) highlights that the shop front

design and displays also impact the shopping centre image and environment that customers

do not like to stay in the mall with poor layout and circulation, dead-end corridors and

confusing signage This element will affect the impression of both potential customers

and existing customers to the shopping centre A good shopping atmosphere can make the

customers having great experience and fun during shopping and encourage them to stay

longer and come back again

Tenant mix is another critical element to retain the customers McGoldrick (1990), as

quoted by Kirkup and Rafiq (1999), indicates that “the range or assortment of tenants in the

shopping centre is widely recognized as a key factor in determining the image of a

centre…and attracting and retaining customers.” The attractive mix can be established

through the choice of anchor tenant, multiples, independent traders and service providers

It can offer one-stop shopping destination when the centre includes a variety of stores, that

work well together to enhance the performance of the centre and perform successfully as

individual businesses (Yuen, 2005)

In addition, the shopping centre can be integrated with leisure attractions e.g cinema, ice

rinks and large food courts to act as marketing differentiators, which can retain the

customers and attract them to re-visit the centre (Kirkup and Rafiq, 1999) Sit et al (2003)

raises out the point that “entertainment can be a means of image differentiation for

shopping centres”, which is one of the critical determinants in consumer patronage

decisions Northlands Shopping Centre in New Zealand had built a reputation as a great

place for families to shop when it made fun and entertainment being a core element in its

marketing strategy, that established a strong sense of loyalty with customers (The Press,

1999) Basically, entertainment of shopping centre could be categorized into special event

entertainment and specialty entertainment Special event entertainment is offered on an

occasional or seasonal basis for a short period of time including fashion show, bridal fairs,

etc Specialty entertainment is incorporated for a longer duration including movie

theatres, food court, etc The integration of entertainment into the shopping centre’s

marketing mix can enhance the ambience of a centre conductive to an exciting and pleasant

experience for shoppers and encourage them to visit the shopping centre again

2.6.4 Promotion - Communications Mix

Communication strategies are essential for customer retention to the shopping centre

Kirkup and Rafiq (1999) elaborate this point that the success of a shopping centre requires

a change in the customers’ shopping habits and communication is critical to encouraging

and sustaining such change Yavas (2003) illustrates that the shopping centre should

engage in integrated communications campaigns including advertisements in the local

media, publicity featuring testimonials from shoppers and news stories in the local

newspapers and TV stations to countervail the negative perceptions Advertising through

common media e.g local press, TV, radio, posters, mail shots and cinema can directly pass

the messages to the customers According to Alexander and Muhlebach (1992),

“promotion” represents the marketing communication of the product with the goal of

generating a positive customer response It aims to improve the image of the company in

general for establishing a unique brand in the minds of customers (Yuen, 2005) LeHew

and Fairhurst (2000), quoted by Parsons (2003), also point out that the promotional

activities of the shopping mall are being used increasingly to differentiate the mall through

image communication, increase patronage, and stimulate merchandise purchases under the

competitive atmosphere of shopping centre industry due to over capacity and declining

customers

MECSC highlights the need for effective marketing and promotion as well as the

importance of re-visiting strategies to the shopping centre, when today’s customers owe no

loyalty to a shopping centre unless it meets their high expectations and offers a unique

shopping experience (Feimster, 2007) Shopping centre manager can co-ordinate different

organizations or tenants’ marketing departments to contribute and perform sales promotion

on events and entertainment, and carry out community-related activities as a key

PR-oriented long term tool Besides, customer loyalty program including promotions can

create the incentive of customers and stimulate repeat visits to the shopping centre (Kasrel,

1998)

2.6.5 Price - Cost of Access

Customers still incur costs though no entrance fee or “Price” for using the facilities will be

charged to the customers in the shopping centres The costs including time and effort

expended in acquiring the service, the parking fees involved and transportation fees to the

mall Some methods can be used to minimize the cost of access so as to retain the

customers Free bus services can help to make access as quick, efficient and cheap as

possible Free parking can also be a major attractive element to the customers to choose

the shopping mall Shopping centre manager should constantly obtain updated

information in regard of the customer costs to the shopping centre which are competitive

relative to other forms of shopping (Kirkup and Rafiq, 1999)

2.6.6 Process - Customer Service

The element of customer service plays an important role to the customer retention of the

shopping centre According to Lichfield (1990), quoted by Kirkup and Rafiq (1999), the

customer service can be distinguished to “relief’ and “distraction” services Both of them

can enhance the process of shopping significantly Relief services is referred to lighting,

visual features, trolleys, seating, food outlets, toilets, and telephones, which can make

shopping less tired and encourage a longer stay and greater expenditure Distraction can

be defined as a higher level of relief through creches, fixed toys and entertainment In

addition, tangible process services are critical like maps, guides and information points as

well as services for particular consumer groups e.g disabled parking area All of them

can be the basis of an effective differentiating tool and the significant attraction for the

repeated customers

As explained by Sit et al (2003), customer service is one of the “big four” attributes of

shopping centre image that can add value to the total shopping experience of customers

Goldfarb (1989) also illustrates that service can keep customer loyalty, which will translate

into leverage Customers now have an expectation not only to the product itself, but also

to the process and all subsequent contacts or other service providers which become an

enjoyable experience Good shopping centres assist to improve the quality of life of the

population Thus, the good management and customer service are vital to achieve this

purpose

2.6.7 People - Customer Participants

This element is referred to all “participants” with whom the customers come into contact

during service delivery These participants include customer service staffs, operational

staffs, cleaners, security officers, store staffs and other shoppers, who can affect the

customer perception of the service A friendly and consistent service of the operation

staffs can build good image of the shopping centre The quality and visibility of security

staffs can provide symbols of reassurance (Kirkup and Rafiq, 1999) Yuen (2005)

mentions that knowledgeable, efficient, effective management personnel and services can

add significant value to the total service and establish customer loyalty as well as

encourage repeat visits This factor can make a good impression on the customers and

encourage them to come back to the shopping centre

After reviewing the literatures, we observe that the signature of marketing strategy in the

shopping centre development is increasing in past decade More developers also

recognize the benefits of the customer retention to the shopping centre performance

They put more effort to restructure the marketing strategy for retaining the current

customers There are a close relationship and linkage between the marketing strategy and

customer retention of the shopping centre industry 7Ps services marketing mix

framework is established and offers a more comprehensive coverage of key dimensions and

a useful basis for analysis in regard of the marketing strategy for attracting and retaining

customers in the shopping centre Some elements e.g tenant mix and leisure attraction,

customer service and communication are more essential in sustaining the customer

retention as illustrated by the literatures They will be further studied and proved through

the customers’ survey in the selected shopping centres

CHAPTER THREE METHODOLOGY

To be able to answer the research questions and reach the purpose of this research paper as

mentioned above, the following research methods are adopted for investigation

Both qualitative and quantitative methods were employed in this paper Qualitative

analysis can offer deeper and subjective approach to look for a relationship between

various marketing components being identified in the literature and the customer retention

to the shopping center A quantitative method can offer more objective approach to

analyze the collected data Through the quantitative method, it will manipulate numbers

based on the data being collected in survey, which can represent empirical facts to explore

the research questions

3.1 Research Methods

3.1.1 Documentation

Documentary research has been carried out to draw the ideas and views from scholars

Various components of marketing strategy for shopping centre development have been

identified and found out in the literatures, which are used to develop a framework for

analyzing the relationship between various components being identified and the customer

retention to the shopping centre The scholars’ opinions and experiences being captured

in the literature review are essential and valuable for establishing the fundamental

knowledge of the research topic and further analysis

3.1.2 Customer Survey

In this research, the data is mainly collected through a questionnaire that is the main tool to

obtain the first hand data for analysis and can give a picture of what the customers think or

report doing A questionnaire includes nine closed-ended questions and one open-ended

question which are designed to collect the data from the customers of shopping centres in

respect of their background information such as gender, age, educational and income

background, the frequency of shopping, etc Besides, it covers the question regarding

their views on the ranking of importance of various factors affecting their choices of

shopping mall The customers’ opinions about the satisfaction of the current facilities and

services of the shopping mall as well as what marketing components affect their decision

making to visit the arcade repeatedly are also obtained

The survey was conducted by face to face across the selected shopping centres in Hong

Kong so as to obtain higher response rates Data was collected from three large scales of

shopping centres named ifc mall, apm and New Town Plaza located in Hong Kong Island,

Kowloon and New Territories respectively, which consist more marketing elements and can

reflect the relationship between the marketing strategy and customer retention The

survey was carried out during the summer of 2009 Customers were intercepted

throughout the malls across the opening hours during holidays so as to reduce the chances

to interview some customers who visit the shopping centres for other purposes instead of

shopping 150 customers were initially randomly approached and invited to participate in

the study and participation was voluntary The method of random sampling can take an

advantage of giving every visitor an equal chance of being selected for the sample The

majority i.e 107 customers (about 71 per cent) agreed to contribute to the research and

completed all questions of questionnaire Of the sample, 52 per cent were females

Respondents’ age ranged from 15 to over 50, with approximately 58 per cent of the sample

representing the age group 20-40 All respondents were the educated persons, with

approximately 67 per cent of the sample having secondary and tertiary education levels

About 43 per cent of the sample was within HK$10,000 to HK$20,000 income level

Questionnaire items were comprehensive, and no complaint in terms of content and time