MARKETING PERFORMANCE AS THE IMPACT OF MARKETING MIX STRATEGY (7P) WITH DETERMINATION OF MARKET ATTR

MARKETING PERFORMANCE AS THE IMPACT OF

MARKETING MIX STRATEGY (7P) WITH DETERMINATION 

OF MARKET ATTRACTION AND COMPANY’S RESOURCES

SURVEY ON PERFORMERS OF TOURISM INDUSTRY IN TIMOR LESTE

 

H. Suherly  

Doctor Program of Economic Sciences in Business Management Concentration  of Economics Faculty, University of Padjadjaran, Bandung, Indonesia

 

Faisal Affif

Doctor Program of Economic Sciences in Business Management Concentration  of Economics Faculty, University of Padjadjaran, Bandung, Indonesia

 

Helmi Arief 

Doctor Program of Economic Sciences in Business Management Concentration  of Economics Faculty, University of Padjadjaran, Bandung, Indonesia

 

Alexandre Desousa Guterres  

Student of the Doctor Program of Economic Sciences in Business Management Concentration of Economics Faculty, University of Padjadjaran, Bandung, Indonesia aldesg@yahoo.com  

 

Abstract

The theme of this research is the marketing performance as a impact of the marketing mix strategy (7p) with determination of market attractiveness and resources on Timor Leste’s tourism service industry. The purpose of this study was to find and produce new studies on the effects of market attractiveness and resources partially on the marketing mix strategy/7p and simultaneously influence the market attractiveness and resources to the marketing mix strategy/7p with implications for marketing performance. The hypothesis in this study was the positive influence the market attractiveness and the resources partially on the marketing mix

strategy/7p and simultaneously implicates on marketing performance. The methodology used in this research is descriptive quantitative with Amos analysis tools. The results showed that the partially and simultaneously effects of market attractiveness and resources on marketing strategy/7p, which provides the most dominant influence are the company's resources. The conclusion of this study is that the tourism service company in Timor Leste wants to have a good marketing performance such that it is necessary to conduct resource development continuously, because the testing showed that the resources have some dominant effects in influencing the marketing performance as independent variable, so that resources must be absolutely developed maximally.

 

Keywords: Market Attraction, Resources, Marketing Mix Strategy, Marketing Performance

 

INTRODUCTION

As one of the youngest countries of Asian countries, "Republica Democratica de Timor Leste" seeks to develop the tourism industry considered as one of the drivers of economic growth. The Timor Leste tourism industry realized that Tourism should be developed as a profitable product and has a very bright prospect in the future which could impact the overall tourism growth. Realizing the tourism industry an important battle in meeting and facilitating the needs of the travel itself from providing resources, entertainment and sports facilities, public infrastructure and public services. Government and tourism industry Timor Leste began trying to encourage existing business activities as possible. These efforts can be seen from the start the development of various types of tourism industry in Timor Leste such as hotel accommodation, restaurant, travel agencies, catering and craft industries. The following table displays the total number of the tourism industry by the Ministry of Tourism and Timor Leste in 2007-2015:

 

Table 1. Total Number of Tourism Industry in Timor Leste (12 districts)

Sector      Sum

Hotel, Apartement dan Guest House	116
Restouran, Bakery, Cafe, Bar & Catering	109
Travel Agency	38
Dives Center/Diving Center	3
Small industries (crafts)	51
Total	317

Sources: Tourism Ministry of Timor Leste in 2015.

From the table above can be explained that the development of hotels, restaurants, travel agencies, catering, commerce and crafts ranging from 2007 to 2015 to grow and develop. However, in 2015 the development of the tourism industry has not changed or are stagnant growth. The reason is due to several hotels and restaurant revenue decline due to declining demand for tourism products by travelers.

Despite the decline in demand of tourists will travel products, Actors Timor Leste's tourism industry continues to strive to maximize marketing performance through the implementation of various strategies in order to foster the demand of tourists in order to achieving the objectives of the tourism industry can be realized. Marketing performance any previous tourism industry in 2001 and 2010 provide foreign exchange of U $$ 2.1 million (in both categories). Instead ranging from 2014 to 2015 the marketing performance industry are unchanged and even declined. It is due to that Internally drop in sales of products (services), where many empty lodging rooms, the declining demand for food and beverage in restaurants, declining purchasing travel tickets and the declining demand for tourist souvenirs. On the other hand external factors also provide enormous influence in affecting the marketing performance of every tourism industry as tourism industry faced with slow system and for tourism policy (symbol operationalization of industrial policy, tourism policy and the rights of travelers that are not clear).

Timor Leste's tourism industry continues to thrive despite the many challenges faced in the operationalization of the industrial work in the market, such as the handling of resources and implementation planning of the marketing mix. As a producer profits, the industry is still trying to apply the right marketing strategy to promote tourist travel products in order to bring in tourists of the observations made by the researchers showed that the supply of the marketing mix/7p and the provision of basic facilities (product quality is low) and supporting facilities of tourism is still the standard (number of products is still small) and some have not implemented at all. Inconsistence of the application of the marketing mix/7p this could trigger a decline in service quality accommodation and even affect tourism marketing appeal Timor Leste in general.

The attractiveness of the market will provide a greater opportunity to the industry to the development of lines of other industry. From the table above general terms of the economy, the potential demand and supply of inferior products, competition in terms of investment by the business world is not so high and also the difficulty of bureaucracy entry of foreign investors to the market. The low attractiveness of the market in general above can affect the performance of the tourism industry in general. Where the views of one of the terms such as the economy when demand and supply will be lower then the product will affect revenues and profits to be gained by tourism industry. Thus, it will have an impact on the growth of the tourism industry.

As one of the supporting market appeal Timor Leste, resource factors is an important factor to be managed effectively in order to support the competitiveness of market appeal. Development of the tourism industry from year to year did not experience significant growth coupled with the inability to provide services to the tourists. Where the physical assets owned Timor Leste tourism industry such as the completeness of product support facilities have been inadequate. In the human qualities of the poor ability of HR both knowledge and skill in fulfilling the market. the ability of the organization to which every industry is different depending on the scale or the size of the industry in which the organization's ability to provide services is still inadequate.

 

LITERATURE REVIEW Market Attractiveness

According to Urbšien?, Monkevi?i?t?, Navikait? (2014), quoted from Best Concept 2005 explains that there are three factors that affect the attractiveness of the market, namely: 1) factor markets: with dimensions consisting of market size, growth rate, the strength of the buyer. 2) the intensity of competition: with dimensions consisting of price competition, substitutes and ease of entry to the market. 2). entry into the market: with dimensions that consists of knowing the customer, login access to market channels and sales capabilities. The following chart shows this line of thought of the concept of Best 2005: 

 

Figure 1. Factors influencing market attractiveness 

Potential attractiveness may be one strategy to encourage the growth of demand for tourism products, which is mentioned by Pallapothu (2013), that there are three issues that need to be noticed in exploiting the potential market appeal are: 1) access and the estimated potential market, 2) how entry into the market and, 3) the establishment of the market.

In the explanation also added that the dimension of market size are: the growth rate, the intensity of the reception, free-market structure, infrastructure, commercial and country risk in the potential market (Cavusgil, Kiyak, and Yeniyurt, 2004). Identify the macro factors at the state level and the industry shows that micro factors at the firm level as a key driver in estimating market appeal (Natarajarathinam & Nepal, 2012). Market appeal becomes one of determining the success of a business and gives an overview of the situation and market conditions as well as the factors that influence the microenvironment and macro environment.

 

Resources

Essence of resources and size becomes an important factor in the support the success of the performance of the organization, which in the opinion of Wilson & Amine (2009) that the performance of a successful company is a function of the ability of the company to develop this valuable resource, steps and not easily imitated. It also said that resources are usually grouped into three categories: 1) human capital (HC), 2) HC include training, experience, judgment, intelligence, relationships, and managerial insight. 2) physical capital (PC) technology includes physical, plant and equipment, geographic location and access to raw materials. 3) organizational capital (OC) covers the structure and history of the company, information systems, and business relationships.

 

Marketing Mix Strategy (7P)

According to Shah (2012) that before the service concept development, marketing mix includes 4P (product, price, promotion and placement) but with the development of the service or the service concept of the marketing mix expanded to 7P (product, price, promotion, placement, people, processes and evidence physical). Here is shown a conceptual model of marketing mix (7P) and an explanation:

 

Figure 2. Marketing Mix

 

1. Product: Products are goods produced by manufacturers to end users. The products can be categorized two types of tangible products and intangible products (services).
2. Price: The price to pay is a tool used to buy products or services. Generally the price of the service involves considerations related to fixed costs (overheads) and variable costs (including labor and materials costs). element consists of the determination of the price discount, the determination of the commission to channel cooperation and credit (term to sell products and services)
3. Promotion: Promotion is a variety of strategies and ideas implemented by marketers to encourage end users to be aware of the brand. Sale service is not easy because of its intangible services. There are two ways of sale used by the service industry in which advertising and marketing activities of mouth.
4. Placement/Place: Placement refers to the location where the products and services available can be sold or bought. Buyers can purchase products or services on the market either physical or virtual market. The placement of elements also consists of the physical channels and channels of cooperation.
5. People/personnel: People are becoming an important factor in the service industry because the people who activating interaction service processes. In marketing services, people can make or break an organization for people is what creates the first impression in the service industry. Elements of the person in question is an employee who works in the service industry.
6. Process: The process of service is the way in which the service is delivered to the end customer. Elements of the process that is current work activities.
7. Physical Evidence: Physical evidence is the last element of the marketing mix has a very important element. Elements of physical evidence include interior design, equipment, staff service, noise and environmental hygiene.

 

Marketing Performance

Marketing performance is becoming the size of the contribution of the marketing function for the achievement of organizational goals. In the opinion of Francis, Okorie, Christopher & Benson (2011), explains that the size of the output performance include the volume of sales, sales growth and profitability. From the same study cited from O'Sullivan and Anabela (2007), suggests that there are three indicators of marketing performance is sales growth, market share and profitability. Here is shown a model of the performance measures:

 

 

 

Figure 3. Marketing Performance Measures

 

Sales growth: where the number of units of product sales increased. Of product units sold in one year compared with previous years. From this explanation it can be deduced about the dimensions of the variable sales growth consisted of a percentage of sales before, now and in the future.

1. Sales volume: Volume of sales which describes the number of product units sold in a set time period, usually one year duration. From this it can be concluded in the explanation for the dimension of variable sales volume consisting of the large number of products offered, the large number of product units sold and the duration of the sale.
2. Profitability Performance: This part describes where the percentage of total benefit costs which measures revenue minus total costs (Ivanovic, 1998). This explanation can be inferred from the dimensions of the profitability variable consists of total expenditures, total revenue and total profit.

 

Research hypothesis

Based on the framework that has been described, it can be formulated hypotheses as follows:

1. 1. The appeal of the tourism industry markets of Timor Leste have an influence on the strategy of marketing mix (7P) in the industry of tourism services in Timor Leste
   2. The resources owned by each of Timor Leste's tourism industry has an influence on the strategy of marketing mix (7P) in the industry of tourism services in Timor Leste.
   3. The attractiveness of markets and resources has an effect on marketing mix strategy (7P) that impact on the performance of marketing in tourism services industry Timor Leste.

 

METHODOLOGY

In this research the method used is descriptive survey method. For data collection questionnaire is used. This questionnaire intend to record the Influence of market appeal and resources on marketing performance through a marketing mix strategy (7p) in Timor leste tourism services industry. Sampling method in this study is  random sampling method. Sample size 230 was selected out of the total population of 300. The approach to modeling and solution techniques will be used as an analysis tool AMOS. Structural equation modeling (SEM) is used in this study as this method is able to measure the construct indirectly, ie through the indicators and analyze the indicator variables, variables latent, following the measurement error where other models are not able to match the relative completeness of measurement when compared with SEM.

 

ANALYSIS AND DISCUSSION OF FINDINGS

Structural equation model of research

The full model in this study can be seen in the image below:

 

Figure 4. Structural Equation Model

Based on the picture above structural equation as follows: Y = 0.256 * 0.354 * X1 + X2, Errorvar = 0.809, R ² = 0.191 Z = 0.854 * Y, Errorvar = 0.271, R ² = 0,729. Descriptively it can be concluded that the dimensions and indicators of each variable indicates the effect of the existing research and the relationship between each other.

 

The influence of market appeal against the marketing mix strategy (7p) Hypothesis  1:

H₀₁: Attractiveness (X1) has no effect on SBP (Y)

H₁₁:           Attractiveness (X1) has an effect on SBP (Y)

 

Table 2. Results of Hypothesis (1) Testing

Effect	t count	Sig	Description	Conclusion
X1 ---> Y	3,939	0,000	Ho Rejected	Significant

 

Based on the table above, the conclusion as follows: Attractiveness value of t count (X1) to SBP (Y) is 3.939 and the Sig. 0,000. Because the value Sig is smaller than α (0.05), the Ho1 rejected, meaning Attractiveness (X1) has a significant effect on SBP (Y). From the results of this study can be explained that descriptive variable market appeal Timor Leste potential in order to encourage the marketing mix strategies/7p with dimensions of market factors, the intensity of competition and access to go to the market. 

Timor Leste tourism industry considers that the appeal of Timor Leste market has good potential for the development of industry in the future although currently do not draw in the growth performance of industry. Tourism industry see the market in the future will be good potential market because the level factor can be reached and in control well by industry in designing marketing strategies what will be applied. Easy to reach and control the existing markets due to vast markets of Timor Leste are not too large as it consists of 13 districts that were located not too far from one district to another. For the market growth rate, any existing players in the market can rapidly adapt to market conditions (predict) that can assist industry in designing new strategies (marketing mix strategy/7p) in order to gain market share. On the other hand the purchasing power of consumers, especially the tourism product demand is quite good although for the moment is relatively low, which may be affected by not maximal cooperation between the government and the tourism industry in revamping the infrastructure of tourist destinations and the tourism industry. Industry Timor Leste see also that for the moment the best dimensions provide the greatest influence in affecting the attractiveness of the market is the dimension of the intensity of competition. Where the intensity level of competition was very high market impact on the high risk-taking work by industry and vice versa lower the intensity of competition will lower the risk of industrial employment.

Based on previous studies of Urbšien?, Monkevi?i?t?, Navikait? (2014), (Best, 2005) that the three factors which give influence on the attractiveness of the market is the market factor, the intensity of competition and the access to the market (Best, 2005). Factor market as an overview of market conditions and climate must be careful to know the company before plunging into the market. On the other hand the intensity of competition as a trigger for marketers in preparing strategies to help organizations working in the face of market competition. As the final stage of entry into the market as a benchmark for marketers to see the easiness anything that can be used as an opportunity and also to accelerate marketing performance.

With the influence of market appeal against the marketing mix/7p, then in setting marketing strategies, the tourism industry Timor Leste needs to examine elements in the attractiveness of the market (factor markets, the intensity of competition and the access to the market) up to the dimensions of the intensity of competition as elements provides most dominant influence on the marketing mix/7p in order to achieve work objectives of government and tourism industry Timor Leste.

 

The influence of the resources of the marketing mix (7p) Hypothesis 2:

H02: Resources (X2) has no effect on SBP (Y).

H12:         Resources (X2) has an effect on SBP (Y).

 

Table 3. Results of Hypothesis (3) Testing

Effect	t count	Sig	Description	Conclusion
X2 ---> Y	5,242	0,000	Ho Rejected	Significant

 

Based on the table above, the conclusion as follows: The value of t count for Resources (X2) on SBP (Y) is 5.242 and the Sig. 0,000. Because the value Sig is smaller than α (0.05), then Ho2 rejected, meaning Resources (X2) has a significant effect on SBP (Y). From the results of this study can be explained that descriptive variable industry becomes a vital resource in helping major industry labor movement in order to encourage the achievement of the performance of the marketing mix/7p.

Tourism industry of Timorese see that the resources owned by every industry has been able to meet the needs of tourists though not yet complete. It can be seen from still goes on industrial activities in offering their products to tourists until recently. The resources considered as an element that contributed to the improved performance of the organization. In Timor Leste tourism industry resource dimension that contribute most is human capital and organizational capital.

Human capital as the main capital in activating the work activities of industry is the key factor in influencing the success of the organization in achieving its goals. In Timor Leste tourism industry top management seeks to recruit and retain experienced employees. This is done by management to maintain the quality of work in order to achieve a competitive advantage industry. Furthermore, any existing employees are given the opportunity to receive job training to increase their skill with the aim of employees will be more introspective in generating performance due to lower employee competence if it will have an impact on achievement than performance. Following measures taken by the management of the tourism industry Timor Leste is to create a harmonious working relationship between every line of work to create a culture of cooperation that is solid so existing work processes can be passed along. The reason why the employment relationship needs to be cultivated because of the presence of a strong culture of cooperation will accelerate the effectiveness and efficiency of the organization. All the efforts made by the management of Timor Leste tourism industry is based on industry managerial insights sourced from internal information work. Insights Managerial an extremely important industry needed to accommodate and inform everything related to the development of the industry so that the implementation can work in accordance with the original purpose desired.

The second dimension which provides a considerable influence on the resources of Timor Leste tourism industry is capital organization. Industry considers that the capital of the organization as a basis for binding elements that exist in the organization of a unified vision and mission in order to achieve industry objectives. As one indicator of the dimensions of the resources, the structure of the company and the company's history is fundamental in regulating the activity of work that reflects the procedures for the organization in achieving its goals. Structural work and history of good corporate culture will foster a good working anyway. One work culture that can be seen is the employment relationship. An organizational culture that emphasizes teamwork in producing a performance requires a harmonious working relationship between all lines of work both internally and externally. Thus creating the power to produce industry job performance. On the other hand to support the working relationship there must be also based on good information system so as to assist industry in the division of labor operational information. System information is seen by the tourism industry Timor Leste as a template for organizing information work effectively in achieving the objectives of industrial employment.

Based on previous studies of Wilson and Amine (2009) that the performance of a successful company is a function of the ability of the company to develop this valuable resource, steps and not easily imitated. The resource in question is human capital, physical capital and organizational capital are considered to have competencies that can be empowered to produce a value that can be useful for industry.

With the influence of the resources of the marketing mix strategy, the tourism industry must begin to reorganize its resources, which as indicators that provide the most dominant influence is the human capital and organizational capital needs to be optimized again and attempt to fix the resources are still low influence on the marketing mix/7p such as physical capital that will be the dominant influence on the marketing mix/7p so balanced.

 

Effect of appeal and the resources of the marketing mix (7p)  that impact on the performance of marketing

To test the significance of indirect influence, testing is done by comparing the value t of ab coefficient counted with the value t table is 1.96. If the value of t is greater than t table it can be concluded occur mediating influence (Ghozali, 2009).

Hypothesis 3:

H₀:       the attractiveness of markets and resources has an effect on          marketing performance (Z) through SBP (Y)

H₁:  the attractiveness of markets and resources has no effect on marketing performance (Z) through SBP (Y)

 

Table 4. Results of Hypothesis (3) Testing

Variable	SBP	Performance	Sobel test (mediation effect of SBP)	Description
Attractiveness	0,256		4,947	Significant
Resource	0,354		5,354	Significant
SBP		0,854

 

From the table above it can be concluded that the effect on the performance of marketing resources to mediation marketing mix/7p more dominant or larger percentage of 5.354, compared with the effect of market appeal against marketing performance with the mediation of marketing mix strategy/7p with a percentage of 4.947.

Descriptively explained that the tourism industry Timor Leste, a resource becomes an important dimension that can facilitate the labor and operationalization inhibiting industry. So that every industry that is trying to improve the quality of the resource with a variety of systems and policies. In Timor Leste tourism industry, human capital and organizational capital is an indicator that gives a major influence on resources. Human capital as a key element in creating the originator of the idea as well as organizational performance is seen by the industry must be packaged properly so that performance can be produced in accordance with the desired goals by industry and organizational capital as the power to regulate the behavior of the organization in achieving its goals.

From the great influence posed by the resources within the framework of the tourism industry directly Timor Leste also affects marketing mix strategy having an impact on the marketing performance. Industry saw that in designing strategies marketing mix/7p must be supported by good organizational resources. As with any industry in designing the marketing mix/7p particular indicator physical evidence as a dimension of the dominant influence on the marketing mix/7p (interior design, the completeness of equipment, service staff, noise and environmental hygiene) needed human capital and organizational capital that is useful for creating an effective working culture system (organizational capital) and the creation of competence (human capital) in order to improve marketing performance.

In Timor Leste’s tourism industry, marketing performance achievement should be supported by the good quality of the marketing mix/7p. As well as in increasing the sales growth of tourism products required precision of the marketing mix/7p such physical evidence strategy (Through interior design to good environmental hygiene) can trigger and encourage interest or desire of tourists to buy.

It is also expressed in a previous study Andreas & Salinas.et.al. (2008) that the relationship and the influence of market attractiveness and resources as part of the marketing mix (7P) in improving marketing performance can be justified because the marketing mix strategy requires a transformation managerial, productive and commercial system which will enable the company not only to reduce the externalities of their activity (the external environment) but also to optimize the productivity of resources in order to achieve market traction, reduce costs and improve product quality in order to achieve marketing performance is optimal and in supporting the process work flexibility.

 

CONCLUSIONS 

1. The results of verification testing shows that there is significant influence resource to SBP (Y). From the results of this study can be explained that descriptive variable resource potential in order to encourage the marketing mix strategies/7p with dimensions of human capital, physical capital and organizational capital. With the test results more dominant or greater than the market appeal is the percentage by 5, 242%.
2. From the results of this study can be explained that descriptive variable market appeal of Timor Leste has the potential to influence in order to encourage the marketing mix strategies/7p with dimensions of market factors, the intensity of competition and access to go to the market. With the test results was less dominant or smaller than the resource that is the percentage of 3, 036%.
3. The influence on the performance of marketing resources to mediation marketing mix/7p more dominant or larger percentage of 5.354, compared with the effect of market appeal against marketing performance with the mediation of marketing mix strategy/7p with a percentage of 4.947.

 

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