E-ISSN: 2963-3699
P-ISSN: 2964-0121
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EXPLORING THE DYNAMICS OF CUSTOMER LOYALTY: A CASE STUDY
ON THE GREEN RAPID TEST BRAND INVESTIGATING THE ROLES OF
SERVICE QUALITY, PRODUCT QUALITY, AND PROMOTION WITH
CUSTOMER SATISFACTION AS AN INTERVENING VARIABLE
Yusuf Suhardi
1
, Antaiwan Bowo Pranogyo
2*
, Ahmad Afif
3
STIE Indonesia Jakarta, Jakarta, Indonesia
1,2,3
antaiwan.bowo@stie.ac.id
2
ABSTRACT
This study aims to evaluate the impact of service quality, product quality, and promotion on customer
loyalty, with customer satisfaction as a mediator, on consumers of green brand rapid test products in 10
hospitals in Bekasi City. Involving 74 respondents, this study uses a quantitative approach and
associative strategy, with data collected through purpose sampling techniques and analyzed using the
SmartPLS 3.0 application. The results showed that service quality and product quality had no significant
effect on customer satisfaction, while promotion had a significant positive impact. Although promotion
positively affects customer loyalty, service quality and product quality have no significant impact on
customer loyalty. Furthermore, customer satisfaction does not significantly mediate the relationship
between these factors and customer loyalty. These findings provide important insights for companies in
developing more effective marketing strategies to increase customer loyalty for green brand rapid test
products.
Keywords : Service Quality; Product Quality; Promotion; Customer Satisfaction; Customer Loyalty
INTRODUCTION
In maintaining the quality of its services, PT Ardevon, among others, provides after-sales
services that allow service users to communicate effectively so as to create solutions for all
interested parties. PT Ardevon also provides a thorough understanding to all human resources
about the importance of health for a person. Health-related mastery is provided, especially starting
from selective product selection, stock availability, concern for the quality and cleanliness of
medical devices, and information-oriented marketing.
Product quality is something that needs the main attention of the company or manufacturer.
(Zacharias, 2022). Given that product quality is related to customer satisfaction issues. Where
customer satisfaction is one of the objectives of marketing activities carried out by producers.
Product quality is also important for customer satisfaction and loyalty (Taufik et al., 2022). So,
product quality is anything that can be offered to the market to get attention, buy, use, or consume
that can satisfy wants or needs.
PT Ardevon uses Green branded products in developing its services in the health sector.
Green itself is a product of several foreign companies that have a very good reputation and long
experience in the field of research and production of medical devices, especially for health
laboratory diagnostic needs.
Consumer loyalty needs a promotion in order to attract consumers to buy products (Fitria
Hermiati et al., 2022). Promotion is one of the marketing variables used by consumers as a reference
in choosing the desired goods or services. The relationship between promotion and customer
satisfaction is to introduce and communicate the benefits of a product or service and invite
consumers to use the products offered.
Customer satisfaction is as follows "the extent to which the perceived performance of the
product or service meets the expectations of the buyer". If the product performance is lower than
the customer's expectations, the customer is not satisfied, if the product performance matches or
exceeds customer expectations, the customer is satisfied (Naini et al., 2022).
In carrying out business activities or businesses in the field of pharmaceutical and medical
device distribution, there must be a challenge. One of them is how the company gets as many
customers as possible and these customers have loyalty to the company (Cai et al., 2022). Customer
loyalty is a major factor expected by every company in maintaining business continuity.
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Consumers who are loyal to a brand are those who always make repeated purchases of the same
brand on an ongoing basis (Aulia & Briliana, 2017).
The determinants of product purchasing decisions include analysts who work in hospital
health laboratories, laboratory leaders / coordinators, pharmaceutical warehouse leaders /
coordinators, leaders / coordinators of hospital finance departments, and leaders / coordinators of
hospital medical support equipment purchasing departments. So that on the basis of the
background that has been described previously, the researcher wants to conduct research on the
effect of service quality, product quality, promotion on customer loyalty with customer
satisfaction as an intervening variable. For customers of green brand rapid test products in the
Bekasi City area.
The main objective is to explore the extent of the direct influence of service quality, product
quality, and promotion on customer satisfaction related to Green Ardevon brand rapid test
products. In addition, to understand the direct impact of these factors on customer loyalty. An
equally important aspect is the exploration of the indirect effects of service quality, product
quality, and promotion on customer loyalty, with customer satisfaction acting as an intervening
variable. This exploration aims to provide an in-depth understanding of the interaction dynamics
between service quality, product quality, promotion, customer satisfaction, and customer loyalty
in Green Ardevon rapid test products.
RESEARCH METHOD
Sample and Procedure
Not all populations are considered capable of representing populations. This study uses a
non-probability sampling technique with purposive sampling techniques, namely using criteria
that have been selected by researchers based on the use of Green Ardeyon brand rapid test in
hospitals in Bekasi city, West Java. The research instrument uses questionnaires in the form of
statements that are disseminated directly.
The dataset comprised 74 valid responses from hospital visitors, who constituted the target
population. A questionnaire served as the research instrument, distributed directly to these visitors
during the study period. Carried out across 10 hospitals in Bekasi City, all registered as customers
of the Green Ardevon brand rapid test product, the data collection process involved several
methodical steps. Initially, it entailed identifying the population and sample, with the 10 hospitals
constituting the primary population and the 74 respondents forming the sample. Subsequently,
primary and secondary data were collected through questionnaires and various sources such as
journals, books, websites, and records from hospitals and PT Ardevon. Operational variables,
including independent variables like service and product quality, promotion, mediated by
customer satisfaction, and the dependent variable, customer loyalty, were delineated. The variable
measurement scale ranged from 1 to 4. Path analysis, utilizing the Partial Least Square (PLS)
program, was employed to test research hypotheses. Finally, statistical analysis using Smart PLS
3.0 focused on outer model analysis for instrument validity and reliability, and inner model
analysis for testing relationships between latent variables.
Research Design
In the development of the PLS SEM model is the search or development of models that
have strong theoretical justifications. The research design in this study uses analytical tools used
in analyzing SEM modeling and hypothesis testing using Partial Least Square (PLS) with
SmartPLS software version 3.0, which is the initial form of the research model used in this study.
Evaluation of Measurement Model (Outer Model)
Results of PLS external models: data analysis model outside models with SmartPls 3.0.
The following is a description of the results of the outer model analysis of the outer model analysis
based on convergent validity, discriminant validity, composite reliability and collinearity value.
Convergent Validity, is one of the criteria in analytical testing using SmartPLS. Convergent
validity at the indicator level is called indicator reliability indicator or loading for initial
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examination of the matrix a loading factor of approximately 0.3 for a minimal level and for a
loading factor of about 0.4 is considered better, and for a larger loading factor of 0.5 is generally
considered significant. This study used a loading factor of 0.5.
Discriminating Validity, at this stage it is useful to find out whether the construct has
adequate discrimination power. The assessment is submitted in two ways, namely looking at two
ways, namely looking at cross loading and Fornell-Lacker criteria. The cross-loading value of the
indicator variable against the latent variable must be greater than the other latent variable.
Composite Reliability, is a stage used to test the reliability of indicators of a variable. An indicator
can qualify as reliable if it has a composite value of composite reliability > 0.6. Reliability tests
with the composite reliability method can also be strengthened using Cronbach's Alpha value. A
variable must have a value of Cronbach's Alpha > 0.7, and can be said to be reliable. Collinearity,
aims to determine whether there is a correlation between independent variables. To analyze the
level of collinearity by evaluating the tolerance value, indications
RESULT AND DISCUSSION
Characteristics of Respondents:
a. By Type of Field of Work
Table 1 Types of Fields of Work
Types of Fields of Works
Number of
Respondents
Percentage
Health Laboratory Analyst
34
46%
Health Laboratory Coordinator
10
14%
Pharmaceutical Warehouse Coordinator
10
14%
Medical Support Coordinator at the hospital
10
14%
Financial Coordinator at the hospital
10
14%
Total
74
100%
b. Based on Length of Work
Table 2 Long time working in the field
Length of
Work
Number of Respondents
(People)
Percentage
≤ 1 Year
3
4%
1-5 Years
36
49%
≥ 5 Years
35
47%
Total
74
100%
From the data above, it can be seen that the sample number of 74 respondents. Where the
respondents are included in dalf product customers who are in the population of 10 hospitals
permanent customers of Ardevon products in the Bekasi City area.
The results of the hypothesis using PLS SEM are shown:
1. Model Conceptualization: describes exogenous latent, endogenous, exogenous latent
mediation, endogenous, mediation and indicators. This study has three exogenous variables,
namely: Service Quality, Product Quality and Promotion. Endogenous variable latent
variable is Customer Loyalty. And the Mediation Variable is Customer Satisfaction.
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2. Converging Validity and Composite Reliability
Table 3 Reliability test results and validity analysis
Variable
Cronbach's
Alpha
Composite
reliability
Average Variance
Extracted (AVE)
Quality of Service
0.851
0.894
0.628
Product Quality
0.886
0.912
0.635
Promotion
0.768
0.862
0.677
Customer Satisfaction
0.835
0.889
0.667
Customer Loyalty
0.862
0.907
0.709
Based on the table above, it can be seen that the overall value of the AVE variable > 0.5.
Thus, these results show that the measurement model can be said to be valid. And it can also be
seen that the value of each variable in Composite Reliability is above 0.6 and the value of
Cronbach Alpha is above 0.7. Thus, the results show that each research variable meets the criteria
so that it can be concluded that all variables are said to be reliable.
Table 4 R-Squares Value
Variable
R Square
Customer Satisfaction
0.522
Customer Loyalty
0.825
Table 4. above shows that the R-Squares value of the customer satisfaction variable is
0.522. This value means that the variability of customer satisfaction constructs can be explained
by independent variables of service quality, product quality, and promotion by 52.2%, while the
remaining 47.8% is explained by other variables outside those currently studied. It can also be
concluded that the value of 0.522 indicates the value of R-Squares in the moderate model
category.
While the R-Squares value of customer loyalty variables is 0.825. This value means that
the variability of customer loyalty constructs can be explained by independent variables of service
quality, product quality, promotion and consumer satisfaction moderation variables of 82.2%,
while the remaining 18.8% is explained by other variables outside the current study. It can also
be concluded that the value of 0.522 indicates that the value of R-Squares in the model category
is strong.
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Figure 1 Bootstrapping results with smartPLS
The results and analysis of research using PLS-SEM are as follows:
1. The Effect of Service Quality on Customer Satisfaction
The first hypothesis shows that service quality has no significant effect on customer
satisfaction (β = 0.093), with the calculated t value (0.411) smaller than the table t (1.96) and
the p value (0.681 > 0.05).
The marginal contribution of service quality to customer satisfaction is practically
insignificant, implying that the company needs to reevaluate its focus on service
improvement. Customers judge the quality of service according to their expectations.
Customer satisfaction is achieved when the company is able to fulfill its wishes and
expectations (Bungatang & Reynel, 2021). Consideration of other factors such as price,
convenience, or product innovation may have a greater impact on customer satisfaction.
In the strategy of increasing customer satisfaction, companies can concentrate more
on diversification such as price optimization, product quality improvement, or better
customer service. The use of client information to understand preferences and needs may
also be important in designing more effective strategies.
2. The Effect of Product Quality on Customer Satisfaction
The second hypothesis test showed that product quality had no significant effect on
customer satisfaction (β = 0.166), because the calculated t value (0.648) was lower than the
statistical t (1.96) and p-value (0.517 > 0.05).
These results suggest that product quality may not be a key variable that substantially
affects customer satisfaction levels. Customers will have a hard time leaving products that
are already related to brands they are familiar with. Product quality affects customer
satisfaction and provides good benefits (Syafarudin, 2021).
Therefore, in order to improve customer satisfaction, other aspects such as improved
customer service, competitive pricing or further product innovation also need to be
considered by the company to meet customer expectations and needs more effectively.
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3. The Effect of Promotion on Customer Satisfaction
The results of the third hypothesis test showed that promotion had a significant effect
on customer satisfaction (β = 0.510), with the calculated t value (2.381) higher than the table
t (1.96) and the p value (0.018 > 0.05). With this strong influence, promotion becomes a key
factor in shaping positive customer perceptions of products or services.
Promotion as a flow of information or persuasion designed to encourage individuals
or organizations to perform actions that create an exchange in marketing. Promotion is part
of the marketing mix that focuses on efforts to inform, convince, and remind consumers
about the Company's brand and products (Suharyono & Mifta Elfahmi, 2021).
Therefore, companies are advised to improve the effectiveness of their promotional
strategies such as the use of smarter promotion methods, tailoring promotional messages to
customer needs or proper utilization of media platforms.
4. The Effect of Service Quality on Customer Loyalty
The results of the fourth hypothesis test showed that service quality did not have a
significant effect on customer loyalty (β = 0.016) with a calculated t value (0.098) lower than
the statistical t (1.96) and p-value (0.922 > 0.05). A customer's loyalty is not only affected
by the quality of service they receive, and a change in quality has little effect on their loyalty
to a particular company. Some of the advantages of customer loyalty, include the fact that
having loyal customers reduces the cost of services, their availability to pay more for
products or services, and free word-of-mouth marketing (Haghkhah & Asgari, 2000).
Therefore, companies need to adjust their strategic focus by considering other, more
significant factors including competitive pricing, product innovation, or overall customer
experience. In addition, there may be a need for programs that are more focused on discounts,
rewards, or other incentives that are more attractive to customers.
5. The Effect of Product Quality on Customer Loyalty
The results of the fifth hypothesis test showed that product quality did not significantly
affect customer loyalty (β = 0.345), with the calculated t value (1.709) higher than the
statistical t (1.96) and p-value (0.088 > 0.05).
Although there is a positive relationship, it is weak because changes in product quality
only contribute moderately to changes in customer loyalty. Less quality products can have a
negative impact on a brand. Disgruntled consumers may move on to a competing brand and
may even advise others not to use the brand, to the detriment of their reputation (Rane et al.,
2023). Therefore, companies need to pay more attention to other factors that have a greater
impact on customer loyalty such as competitive prices, effective promotions, or a satisfying
customer experience.
Concentrating on customer experience innovation may be a worthwhile approach were
providing a unique and satisfying experience for customers can be seen as important in
building loyalty even though product quality is not a major factor.
6. The Effect of Promotions on Customer Loyalty
The findings of the sixth hypothesis test reaffirm that promotions have a large impact
on customer loyalty (β = 0.386). With a t-value greater than the t-statistic (2.830 > 1.96),
marketers consider promotion as a tactical tool within the framework of marketing concepts
for building preferences and gaining loyalty.
Investing in promotions can be an effective strategy to increase customer loyalty.
Companies can implement dynamic pricing strategies and promotions tailored to customer
behavior data to stimulate purchases, increase average order value, and optimize overall
revenue (Mirsya et al., 2023).
Therefore, companies can design more efficient promotional campaigns by
considering these findings. Strengthening promotional programs such as special offers,
discounts, or loyalty programs can encourage customer participation and foster long-term
loyalty.
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7. The Effect of Service Quality on Customer Loyalty through Customer Satisfaction
The results of the seventh hypothesis test see that customer satisfaction is not
significant to mediate the effect of service quality on customer loyalty which is shown by
the value of the beta coefficient of service quality on customer loyalty through customer
satisfaction mediation of 0.022. Expressed t-value calculated > t-statistic (0.080 < 1.96) with
p-value (0.936 > 0.05).
Customer satisfaction hardly contributes significantly in explaining the relationship
between service quality and customer loyalty. The mediating effect of customer satisfaction
on service quality and customer loyalty cannot be considered a reliable result. Customer
satisfaction can trigger loyalty because people tend to stick with service providers that
provide a good experience. Customer satisfaction is considered an essential element to
achieve customer loyalty (Ngo Vu & Nguyen Huan, 2016).
Customer satisfaction may not be an effective mediator in bringing influence from
service quality to customer loyalty. Likely, other aspects such as price, ease of access, or
personal interaction can have a greater and more direct impact on customer loyalty.
Therefore, business strategies oriented towards increasing customer loyalty should consider
these factors more and not only depend on increasing customer satisfaction.
8. The Effect of Product Quality on Customer Loyalty through Customer Satisfaction
The eighth hypothesis test showed that customer satisfaction did not significantly
mediate the relationship between product quality and customer loyalty, as evidenced by a
beta coefficient of 0.062 indicating the relationship between product quality and customer
loyalty through mediation of customer satisfaction. With the lower t count (0.319) than the
statistical t (1.96), and the p-value (0.750 > 0.05), changes in customer satisfaction did not
fully explain the relationship.
The difference between the group exposed to mediation and the group not exposed to
mediation was not significant. Therefore, customer satisfaction is not a major factor or a
strong mediator that links product quality with customer loyalty. Other factors such as price,
service or emotional elements may be more dominant in shaping consumer loyalty. Product
quality can be expressed as a comparison between the products expected by customers and
the products they receive due to company goals, such as creating and retaining customers
(Timo et al., 2019).
Therefore, improving product quality may be a more effective approach to increasing
consumer loyalty than concentrating on increasing satisfaction levels alone. These findings
can guide companies in allocating resources more efficiently and aligning business strategies
to achieve customer loyalty goals.
9. The Effect of Promotion on Customer Loyalty through Customer Satisfaction
The ninth hypothesis test shows that customer satisfaction is not significant as a
mediator in the relationship between product quality and customer loyalty, which is indicated
by the beta coefficient of promotion to customer loyalty through customer satisfaction
mediation of 0.004. With t-test values (0.021) lower than t-statistically (1.96) and p-values
(0.983 > 0.05), this relationship was not very significant.
A company's ability to satisfy customers is not significantly related to their
performance in creating customer loyalty. Promotional activities must be honest, based on
true information, transparent, and wholehearted to increase customer satisfaction (Lena
Ellitan, 2023).
Therefore, other factors that have not been revealed in this study may also affect
customer loyalty. Nonetheless, this does not diminish the importance of satisfied customers
for the company. On the contrary, satisfied customers still remain an important aspect of
promoting a product or service and encouraging customers to come back and buy it again.
10. The Effect of Customer Satisfaction on Customer Loyalty
The results of the tenth hypothesis test show that customer satisfaction has no
significant effect on customer loyalty as indicated by a beta coefficient of 0.200 between
customer satisfaction and loyalty. In addition, the calculated t value (1.289) is lower than the
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statistical t (1.96) and p-value (0.198 > 0.05), thus indicating the existence of possible factors
other than satisfaction such as service, product quality and other value-added components
that complicate the relationship between customer satisfaction and loyalty.
Satisfaction has a direct influence on loyalty. Consumer satisfaction causes consumer
retention and influences purchase intent. Therefore, an increase in the level of satisfaction
will result in an increase in the volume of purchases and recommendations of products or
services to other potential consumers which will certainly have a long-term impact on the
sustainable profitability expected by the Company (Haeruddin & Haeruddin, 2020).
It is possible that customer satisfaction is not directly related to loyalty because
additional factors such as price, quality of goods or emotional factors also play an important
role in shaping customer loyalty behavior. Therefore, understanding the interactions among
these variables is key to developing effective strategies to strengthen relationships with
customers and maintain high levels of loyalty.
CONCLUSION
Based on the results of the analysis, it can be concluded that the quality of services and
products does not have a significant impact on the level of customer satisfaction. Conversely,
promotions are considered to have a significant influence on the level of customer satisfaction. In
addition, it was found that the quality of services and products did not have a significant effect on
the level of customer loyalty, while promotions had a significant impact on the level of customer
loyalty. The analysis also concluded that customer satisfaction cannot mediate the effect of
service quality, product quality, and promotions on customer loyalty levels. Therefore, to achieve
a higher level of customer loyalty, it is necessary to focus on more effective promotional strategies
and improvements in product and service quality.
Companies need to increase responsiveness to customer complaints to improve service
quality. Focusing on product durability, including expiration, can increase user confidence in
product quality. Providing attractive discount offers in accordance with customer expectations
can be applied to enhance promotions. In addition, to achieve better customer satisfaction,
companies need to continuously improve the quality of product performance to meet customer
expectations.
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