The Effect of Marketing Mix, Service Quality, Islamic Values and Institutional Image on Students’ Satisfaction and Loyalty

KeywordsInstitutional Image Islamic Values loyalty Marketing Mix satisfaction service quality Students

JEL Classification M31

Full Article

1.Introduction

Competition in the education sector among state universities (PTN) and private universities (PTS) fighting to attract students is quite high. This high competition requires knowledge and good marketing strategies from all universities to attract prospective students from various high schools in Indonesia. The interest of prospective students to choose Higher Education is strongly influenced by their perceptions of the College. Students choose Universities they already know and have a good image. Kotler (2009) states that a person's attitude and actions towards an object are largely determined by their belief in the object's image. Imagery is a set of beliefs, ideas, and influences that one gets from a particular object (Kusdiyanto, 2008).

The success of image forming for universities is influenced by several factors, such as the history of the university, the facilities and infrastructure, and the success in providing educational services to students. The image appears based on the knowledge and information a person receives regarding an object. If the information is good, it will create a positive image, but if the information is badly received, it will cause a negative image. Information obtained is, for example, regarding how are the services provided by the university, how are the facilities and infrastructure of the university, how is the quality of human resources at the university level. Institutional image according to student assessment will influence students to be loyal to their college (Novianti, 2009). Higher Education will highlight its advantages so that the community has its own assessment of the image of the university. Universities as educational service providers cannot be separated from maintaining the quality of services provided to students as consumers. Service quality plays a central role in today's business and non-business organizations, both those engaged in services or manufacturing. For improving the quality and satisfaction of students, universities must really pay attention to what are the needs and desires of students and improve the existing deficiencies. The improvement may be by running an academic service program that is able to meet the demands and satisfaction of students. Anderson et al. (1994) states that if a customer is satisfied with the quality of the service provided, it will cause customer loyalty so that the customer's buying interest increases and makes the customer loyal to the company's product. However, the decrease in the number of customers is likely to occur due to customer switching to competing companies, due to customer dissatisfaction. According to Anderson et al. (1994), if the customer is satisfied with the goods or services provided, it will cause an increase in customer loyalty.

According to Hannig-Thurau et al. (2001), customer loyalty is widely accepted as a major factor that helps companies to achieve long-term success. Therefore, in the context of marketing, consumer loyalty is the main objective that the company wants to achieve. According to Palmatier et al. (2006) loyalty is the result of a combination of factors or a multidimensional relationship between various interests, attitudes, sales achievements, and customer behavior. According to Hannig-Thurau et al. (2001), a student who is loyal to his college should not only use the institution but must have a positive attitude and cognition towards the institution as a basis for motivation to behave. In other words, student loyalty should not only provide benefits or benefits to universities when students are actively studying on campus; but of course, a bigger advantage is after students graduate from college. To achieve this loyalty, Gilmore (2008) suggested that universities match their programs to students who experience obstacles in their education or business professionals. Gilmore (2008) also stated that universities need to reduce ties and problems that hamper successful student graduation (such as granting scholarships and health programs) and appoint staff who are able to assist social and extracurricular work. The quality of teaching positively can be increased by the active participation of students in the service delivery process. This can be done, for example by giving the opportunity to engage in lecturer discussions and jointly develop the classroom atmosphere to stimulate teaching, encourage students to play a role in research activities by actively assisting in designing and collecting research data. After graduation, students can continue to support their tertiary institutions, such as (a) financial donations, (b) verbal promotion to prospective students, current students, and alumni, (c) offers or job placements, and (d) visiting public lecture.

2. Literature Review

2.1. Loyalty

Consumer loyalty is one of the main success factors for companies to obtain sustainable competitiveness (Lee and Cunningham, 2001). Companies need to know why consumers make repurchases after using their products. This information is the basis for the company in determining marketing strategies. Generally, companies use a measure of consumer satisfaction as a standard for monitoring consumer loyalty. But satisfaction alone will not create consumer loyalty without trust (Lee and Cunningham, 2001). Consumer loyalty is an asset and has an important role in a company. According to Hurriyati (2008) "Loyalty is defined as noon random purchase is expressed over time by some decision-making units". Based on this understanding that loyalty refers more to the form of behavior of decision-making units, it is more likely to make continuous purchases of goods or services of a selected company. Thus, loyalty is formed because of the experience in using an item or service. Having loyal customers is the ultimate goal of all companies, but most companies do not realize that consumer loyalty is formed through different stages starting from looking for potential customers to customer advocates that will bring long-term benefits to the company. Before discussing further about what things need to occur to develop loyalty, here is the definition of loyalty (customer loyalty) according to Oliver (1997), namely the “commitment to repurchase or re-subscribe to selected products or services consistently in the future, although the influence of the situation and marketing efforts has the potential to cause behavioral change”.

Loyalty is an important concept in marketing because loyalty is one factor that is able to determine the market share of a company. The market share itself is an asset of a company since the company entered a market, the company will face an obstacle or entry barrier because the company does not have a market share (Faria, 2003). In general, loyalty is something that causes consumers to choose a particular brand, service, shop, product, and activities. Loyalty is more a feature that is owned by consumers, and not only something related to a brand (Uncles, 2002). Loyalty is a way for consumers to express their satisfaction with the performance of the product or service they receive (Ballester and Alleman, 2001).

2.2.Marketing Mix Service

According to Kotler and Keller (2009), the marketing mix is “a set of marketing tools used by marketing to achieve its marketing objectives in the target market”. Based on the description above, it can be said that the marketing mix has no limits to the number of marketing variables. Therefore, the number of variables does not rule out the possibility of developing and expanding according to the needs of the company. Furthermore, according to Lupiyoadi (2013), that “as a marketing mix, these elements (product, price promotion, place, people processes, services) influence each other so that if one is not exactly right for customers, it will affect the overall marketing strategy”. The service marketing mix as stated above consists of seven elements, namely: product, price, distribution (place), promotion, people, physical evidence, and process. According to Kotler (2009), for service marketing, the variable marketing mix of 4Ps includes an additional 3Ps so that the marketing mix implies 7Ps. Likewise Kotler and Fox (2003); Goncalves (1998) state that the marketing strategy in education in the world, which leads to a suitable marketing strategy are, known as 7Ps: program, price, place (location and delivery system), promotion, processes, physical facilities, and people.

2.3.Service Quality

Service is an activity that cannot be defined independently because it is essentially intangible, and represents the fulfillment of needs and does not have to be tied to the sale of other products or services. Services can also be said to be the benefits and satisfaction activities offered for sale. This is because the purchase of a service often also involves items that complete it, such as food in restaurants, guests staying at hotels, telephones in communication services, books sold in bookstores, electricity usage by electricity customers and so on. Quality is a word that for service providers is something that must be done well. Quality applications as the nature of product performance or performance are the main strategic parts of the company in order to achieve sustainable excellence, both as a market leader or as a strategy to continue to grow and develop. Tjiptono (2008) states that service quality is the expected level of excellence and control over the level of excellence to meet customer desires. Whereas Yamit (2001) stated, that in general, the quality of service is reflected in the comparison between consumer expectations and service performance.

From some of the opinions above it can be concluded that the quality of service is a level of excellence and is a formless output that benefits the customer and the high level is determined by the customer's expectations. According to Tjiptono (2008), the total service quality consists of three components, namely technical quality, functional quality, and corporate image. Based on the above components, it is known that the service output and delivery method are the factors used in assessing service quality. Because customers are involved in a service process, often the determination of quality becomes very complex. Tjiptono (2008) succinctly says that superior quality benefits include greater customer loyalty, greater market share, higher stock prices, higher selling prices, and greater productivity.

2.4.Institutional Image

The image is the consumer’s perception of quality related to the brand/company name. A company or product/service that has a good image in the community will get a better position (Tjahjaningsih, 2013). Kotler (2009) defines an image as a set of beliefs, ideas, and influences gained by an object. A person's attitude and actions towards an object are mostly due to the object's image. Other studies, Howard (1998) explains that image has a role in marketing an organization because it has the potential to influence consumer perceptions and expectations about the goods or services offered and ultimately affect consumer satisfaction. The Corporate image has an influence on customer satisfaction because the company's image is seen as the success of marketing activities. Images can have an influence on customer purchasing behavior, especially for service companies where when services are difficult to evaluate, the company's image is believed to be an important factor affecting service quality, customer evaluation of customer perceived satisfaction from services provided (Wuryan and Legowo, 2009). An image is a reputation and achievement, although the image is something that is abstract and cannot be measured systematically, its form can be felt from the results of good and bad research that comes from the public or the wider community. This assessment can be related to respect, good impressions rooted in the values of trust. Harrison (2005) states that information about the company's image includes the following four elements: Personality, Reputation, Value, Corporate Identity.

2.5.Islamic Values

Islamic values are essentially a collection of living principles, teachings about how humans should live their lives in this world, one principle with another interrelated to form one whole which cannot be separated. The most important thing in the form of Islamic values must be transformed into the field of human life. In the division of other dimensions of Islamic life, there are dimensions of monotheism, sharia, and morals, but in general Islamic values are more prominent in the form of moral values. Faith or akida, Worship, Morals.

2.6.Consumer Satisfaction

Satisfaction is a basic need that can be described as a pleasant thing. This basic need arises because of certain impulses must be channeled. Satisfaction will arise if the urge can be channeled and vice versa, the consumer will feel dissatisfied if these impulses cannot be channeled. Johnson and Fornell (1991) stated that consumer satisfaction is the result of a thorough evaluation of consumers on the performance of the product they consume. Yi (1991) identified two different concepts of customer satisfaction, namely transaction-specific satisfaction and overall satisfaction. Transaction-specific satisfaction is a concept that refers to the assessment of customer satisfaction after purchasing a particular product or brand. While overall satisfaction is a concept that measures the satisfaction (dissatisfaction) of consumers towards a particular product or brand based entirely on their experience in consuming the product or brand. Thus overall satisfaction can be seen as a function of all transaction-specific satisfaction that occurred before. In this study, the concept of customer satisfaction that is used is overall satisfaction (overall customer satisfaction). In the last few decades, consumer satisfaction has always been the focus of attention of academics and marketing practitioners. This attention comes from a philosophy that states that to achieve company success depends on the company's ability to provide what its customers want. In other words, customer satisfaction is the key to a company's success (Kurtz and Clow, 1993). Furthermore, Shin and Elliot (1998) explained that consumer satisfaction creates consumer retention, which in turn can increase the company's profits, considering the cost of maintaining existing customers is cheaper than the cost of finding new consumers. Besides, that satisfaction not only encourages the tendency of consumer behavior to repurchase but also encourages them to do positive word of mouth (Reicheld and Sasser, 1990; Boulding et al., 1993). According to Howard and Shets (in Tjiptono, 2008) revealed that consumer satisfaction is the cognitive situation of the buyer with respect to the equivalence or incompatibility between the results obtained compared to the sacrifices made.

Furthermore, Kotler and Keller (2007) define that satisfaction is a feeling of pleasure or disappointment someone who appears after comparing the performance (results) of the product that is thought about the expected performance (or results). If performance is below expectations, customers are not satisfied. If performance meets expectations, customers are satisfied. If performance exceeds expectations, customers are very satisfied or happy. Tjiptono, (2012) states that the creation of consumer satisfaction can provide several benefits, including the relationship between the company and consumers to be harmonious, provide a good basis for repurchase and create consumer loyalty, and provide word of mouth recommendations that are beneficial for the company. Irawan (2003) states: satisfied consumers are consumers who feel they get value from suppliers, producers or service providers. This value can come from a product, service, system or something that is emotional. Satisfied consumers are consumers who will share satisfaction with producers or service providers. In fact, satisfied consumers will share experiences with other consumers. This will be a reference for the company concerned.

3. Methodolgy

The sample size can be calculated from the magnitude of the indicator multiplied by 5 to 10. Because this study uses 3 construct variables whose total number of indicators is 30, therefore the sample needed in this study is at least 10 x 30 = 300 people. The location of this study was carried out in several Private Islamic Higher Education Institutions in Medan City such as North Sumatra Muhammadiyah University (UMSU), North Sumatra Islamic University (UISU), Nusantara Muslim University (UMN) and Alwasliyah University (UNIVA). Data collection techniques used in this study include interviews and questionnaires applied to related parties. The data analysis technique in this study is both descriptive and involves an Structural Equation Model.

4. Results

4.1. Structural Model Analysis

Analysis of the structural model includes several criteria, namely:

Tabel 1. Goodness of Fit Structural Equation Model (SEM)

In table 1 above, we can see that the chi-square value 2301.22 shows a good fit category, then GFI value 0.71 and AGFI 0.69 fall into the marginal fit category. RMSEA value, NFI, and RFI NNFI, IFI, and CFI fall into the good fit and marginal fit. So it can be concluded that the overall suitability of the model is good.

4.2. Causal Relationship Analysis

After analyzing the results of the goodness of fit of the research model, the next analysis conducted involves analyzing the causal relationships in the model. Statistical testing for causal relationships of structural models is carried out with a significance level of 5%, so that the critical value of the t-value is ± 1.96. The estimation results of all causal relationships of research can be seen in the results of the following LISREL output 8.80.

Figure 1. Structural Model (t-value)

From the output LISREL result 8.80 (Figure 1), for causal relationship equation, we can note that:

1) T-value and Structural Equation Coefficient

From the causal equation above, t-value which the absolute value >1.96 means that the trajectory coefficient is significant (Wijanto, 2008). The following table is the summary of t-value and the coefficient in the structural model: From the table above, it can be seen that, there are 9 significant trajectory coefficients. The interpretation of the trajectory coefficient will be explained further in the hypothesis testing.

2) Determination Coefficient (R²)

Structural Equations

- SEM results for the model with satisfied as dependent variable

SAT = 0.22*MM + 0.31*SQ + 0.20*IV + 0.27*II,

Errorvar. = 0.67, R² = 0.33

Table 2. SEM results for the model with satisfied as dependent variable

- SEM results for the model with loyalty as dependent variable

LOY = 0.47*SAT + 0.21*MM + 0.23*SQ + 0.15*IV + 0.24*II,

Errorvar. = 0.29 , R² = 0.71

Table 3. SEM results for the model with loyalty as dependent variable

From the structural form equation above it can be seen the R² for each equation. The value of R² function is to show how big each independent variable is able to explain its independent variables, this following is structural form equation above:

1. Student Satisfaction has R² of 0.33, this number show that Marketing Mix, Student Satisfaction, Islamic Values, and Institution Image can explain 33% variance from Student Satisfaction, while the rest is explained by other factors.
2. Student Loyalty has R² as 0.71, this number show that Marketing Mix, Student Satisfaction, Islamic Values, and Institution Image can explain 71% variance from Student Loyalty, while the rest is explained by other factors.

4.3. Hypothesis Testing

As the previous explanation, in this research there are 9 hypothesis. Hypothesis Testing Analysis is done with a level of significance 5%, so that produce critical t-value as ± 1.96. Hypothesis is accepted that t-value ≥ 1.96. The following table is testing hypothesis table for answer the entire of research questions:

Table 4. Research Model Hypothesis Testing

5. Discussion

From the results of this research, it was found that the variables which influence student loyalty in this study are marketing mix, service quality, institution image, Islamic values, and student satisfaction. The following aspects presented linkages between variables.

5.1.The Effect Of Marketing Mix on Student Satisfaction

Based on the data processing results from the structural model, we noted that marketing mix has a positive effect and significant for student satisfaction in Private Islamic Religion College in Medan city. This gives the meaning that a good marketing mix from Private Islamic Religion College in Medan city will give effect to the student satisfaction increasing.

Empirically, the findings of this study support the opinions expressed from the results of research by several researchers Bloomer, et al. (1998), who states that the better the quality of services provided will increase customer satisfaction. This research result supports the previous research that was done by Soedjati (2006) who concluded that the seven sub-variables of the marketing mix had an effect on student satisfaction in three Private Islamic Religion Colleges in Bandung city. As well as research result of Subagiyo and Adlan (2017) who concluded that marketing mix influence to the student satisfaction. This results of this study are in line with several studies conducted by Lili et al. (2011), Athyaman (1997) and Nguyen (2012) that show that the marketing mix of a college takes positive effect to student satisfaction.

5.2. The Effect of Service Quality on Student Satisfaction

Based on the data processing from the structural model, it can be known service quality variable directly take positive effect and significant to student satisfaction in Private Islamic Religion College in Medan city. This gives a meaning that a good service quality will have an impact on increasing student satisfaction. This shows that the availability of sufficient number of lecture rooms that are quite comfortable, the lecturer’s ability in delivering material is good enough, employee responsiveness in provided service when needed and help the student in difficulty in a fast manner, the lecturers have many teaching experiences and graduated from reputable universities, and the academic part of providing services without distinguishing students has given satisfaction to students of Private Islamic Religion College in Medan city.

This research shows the same result with research conducted by Pratito dkk (2012) that show the quality of academic administration services has a positive effect and significant effect on student satisfaction. The results of this study also strengthen the results of previous studies conducted by Ghozali (2010), Noviasari dkk (2015), ), Mekic and Mekic (2016), Chandra et.al, (2018), Dora (2017), Jiewanto et al. (2012), Lunarindiah (2016) and Ratnasari (2016) service quality take effect to the student satisfaction. Asaduzzaman et al. (2013) states that there is a significant relationship between the constructs of service quality and student satisfaction.

5.3.The Effect of Islamic Values on Student Satisfaction

Based on the data processing from the structural model, it can be noted that the Islamic Values variable directly exhibits a positive effect and significant to the student satisfaction for Private Islamic Religion College in Medan city. This gives a meaning that a good application of islamic values will have an effect in increasing the student satisfaction. This research support Usman and Rizwan’s (2010) research who state that spiritual values are able to increase satisfaction. Halik (2016) mentions that religiosity has a positive and significant effect to customer trust. Then, Amaliyah et. al (2015) conclude that islamic values impact satisfaction. Furthermore, the results of the study of Gultom and Jufrizen (2016), and Qomariah (2012) conclude that islamic values display a positive effect and significant to student satisfaction.

5.4.The Effect of Institution Image on Student Satisfaction

Based on the data processing from the structural model, it can be known that institution image directly take a positive effect and significant to the student satisfaction in Private Islamic Religion College in Medan city. This research gives a meaning that the better institution image in student view, the more increasing student satisfaction. The results of this study also strengthen the previous research that was done by Wuryan and Legowo (2009) showing that, there are significant effects and positive effects between institution image and student satisfaction. A good institutional image will give a perception of satisfaction to the student. The results of the study of Alves and Raposo (2010), Azoury et al. (2014), Effendi (2016) and Qomariah (2012), Noviasari dkk (2015) show that institutional image uncovers a positive effect on consumer satisfaction. Likewise, the results of Sugianto and Hartono’s research (2018) conclude that the more proeminent the institution’s image is, the more increasing a satisfaction student. Institutional image can affect the satisfaction of students where the image has a strong effect on student satisfaction (Wantara, 2008).

5.5.The Effect of Marketing Mix on Student Loyalty

Based on the data processing from the structural model, it can be known that marketing mix variable directly takes a positive effect and significant to the student loyalty in Private Islamic Religion College in Medan city. The results of the study mean that the better application of marketing mix the more increasing the student loyalty. Empirically, findings of the results of this study support the research was done by Ogunnaike, et al. (2014), Thalib (2015) and Nina and Brooks (2008) show that there is an effect of a marketing mix to the student loyalty.

5.6.The Effect of Service Quality on Student Loyalty

Based on the data processing from the structural model, it can be noted that service quality is directly related to student loyalty in Private Islamic Religion College in Medan city, showcasing a positive and significant effect. These results of this study show that the better the service quality in the student view, then the higher their student loyalty will be. This research is in line with the research results that were achieved by Fares et al. (2013), Usman and Mokhtar (2016) and Ganic et al. (2018) who show that a service quality has a significant effect on student loyalty. Likewise, the research of Noviasari (2015) shows the same effect of service quality on student loyalty.

5.7.The Effect of Islamic Values on Student Loyalty

Based on the results of data processing from the structural model, it is known that the variables of Islamic values directly have a positive and significant effect on the loyalty of students in Private Islamic Religion Universities in Medan City. This gives the meaning that the application of good Islamic values will have an impact on increasing student loyalty. The Islamic values embedded by leaders and lecturers were able to increase student loyalty. This finding supports research conducted by Usman and Rizwan (2010) which states that spiritual values can increase loyalty. The results of this study are not in line with the research of Qomariah (2012) which concluded that Islamic values had no effect on student loyalty.

5.8.The Effect of Institution Image on Student Loyalty

Based on the results of data processing from the structural model, we have noticed that the variables of an institutional image directly impact the loyalty of students at Private Islamic Religion Universities in Medan. The results of this study mean that the better the image of the institution in the eyes of students, this it will increase the loyalty of the student.

The results of this study are in line with the results of research conducted by Jiewanto et al. (2012), Fares et al. (2013), Alves and Raposo (2010), Usman and Mohktar (2016), and Barusman (2014) which show that institutional image significantly influences student loyalty. Likewise, research conducted by Noviasari et al (2015) shows that institutional image has a significant effect on student loyalty.

5.9.The Effect of Satisfaction on Student Loyality

Based on the results of data processing from the structural model, it is known that the variable of student satisfaction directly has a positive and significant effect on the loyalty of students at the Private Islamic Religion College in Medan City. This means that a high student satisfaction will have an impact on increasing student loyalty. The results of this study are in line with the results of research conducted by Alves and Raposo (2010), Mekic and Mekic (2016), Usman and Mokhtar (2016), Barusman (2014), Chandra et.al, (2018), Dora (2017) and Thalib (2015) which show that student satisfaction has a significant effect on student loyalty. Likewise, the results of research conducted by Qomariah (2012) and Noviasari et al (2015) concluded that satisfaction affects student loyalty.

6. Conclusion

Based on data analysis and previous discussion, we can formulate the following conclusions: Marketing Mix variables have a positive effect on Student Satisfaction in Private Islamic Religion Universities in Medan City. Thus, a proeminent Marketing Mix will lead to a higher the Student Satisfaction.

Service quality variables have a significant positive effect on Student Satisfaction in Private Islamic Religion Universities in Medan City. Similarly, Islamic Values have a positive effect on Student Satisfaction significantly in Private Islamic Religion Universities in Medan City. In this paper, we have also noticed the positive impact of institutional image pn on Student Satisfaction

Regarding the dependent variable of student loyalty, the marketing mix has a positive effect on Student Loyalty in Private Islamic Religion Universities in Medan City. Similarly, all the other variables explored in this paper, namely service quality, Islamic values, institutional image, and satisfaction, have a direct and significant impact on student loyalty for the students who participated in this research. Thus, as each variable records an increase, that same increase will have a similar effect on student loyalty.

6.1. Suggestions for Future Research

Based on the conclusions above, there are several suggestions that can be provided, namely, the University needs to pay attention to the factors that shape student loyalty, such as students who have a high loyalty to the University, students’ loyalty for their chosen study programs or subjects. Because to gain a favorable reputation, students must feel satisfaction first. To achieve student loyalty, the University needs to improve the marketing mix of its services, the service quality and the University needs to have a good reputation and have resonanting values. This research is only limited to 2015 students, therefore there is a need for further research involving students from other generations.

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