Quest Journals

Journal of Research in Business and Management

Volume 12 ~ Issue 1 (2024) pp: 37-43
ISSN(Online):2347-3002
www.questjournals.org
Research Paper

Creating Customer Satisfaction and Loyalty with Price,

Product Quality and Service Quality (Case Study at
Mcdonald's Customer)
Ali Akbar Anggara1, M. Elfan Kaukab2
1
Faculty of Economics and Business Universitas Muhammadiyah Purwokerto
2
Faculty of Economics and Business Universitas Sains Al-Qur’an
Corresponding Author: M. Elfan Kaukab

ABSTRACT: The food industry has been experiencing many changes, specifically in production, packaging,
providing and distribution of food. This change has been bringing the food industry to be more competitive.
Afterward, restaurants in the industry have been competing to improve quality to get the customers attention
and loyalty. Furthermore, this study focuses to examine the effect of price, product quality, and service quality
to loyalty with customer satisfaction as intervening variable. The research method used is quantitative research.
The data used are primary data with the type of survey with distributing questionnaires to 220 respondents. The
sampling method used is non-probability purposive sampling. The statistical analysis method used is Structural
Equation Modelling Partial Least Square (SEM-PLS) using SmartPLS software. The results showed the
positively effect of price, product quality, and service quality on customer satisfaction. Then customer
satisfaction has a positive effect on customer loyalty. Furthermore, the price has positively effects on customer
loyalty, while product quality and service quality do not. Moreover, the customer satisfaction has significant
mediating role on the relationship between price, product quality, and service quality on loyalty.
KEYWORDS: Price, customer satisfaction, service quality, product quality, customer loyalty

Received 28 Dec., 2023; Revised 03 Jan., 2024; Accepted 08 Jan., 2024 © The author(s) 2024.
Published with open access at www.questjournals.org

I. INTRODUCTION
Currently there is one fast food restaurant that is the most popular and has a good reputation in the fast
food market orfast food. This restaurant is able to apply technology to be more practical and faster so that it can
satisfy its customers. McDonald's became the most valuable fast food brand in the world in 2020 with a brand
value of up to 33.8 M USD (Brandirectory, 2020). Overall, McDonald's was ranked 1st in the world in 2020
(Technomic's, 2020). In addition, McDonald's was ranked 1st in America's most liked restaurant in 2019 (QSR,
2020).
McDonald's is Indonesia's top brand in 2021 (TBI, 2021). This proves that many customers in
Indonesia like practical and instant food, making it a lifestyle. Fast food, delivery order and drive thru services
have become people's daily consumption (Herminingrum, 2020). Furthermore, this shows that McDonald's is
able to provide good service so that customers feel comfortable and satisfied with McDonald's performance.
Customers feel that their needs and desires can be met properly.
According to Kotler and Keller (2016) Fulfilling customer needs and desires is the most important
thing in the marketing concept. Customers whose needs and desires have been met will feel satisfied and may
become loyal to the product or brand (Wijaya, 2014). Referring to McDonald's, the company must orient itself
towards customer satisfaction and loyalty if it wants to survive competition in the fast food restaurant industry.
On competitionnon-low price, competition is dominated by service and product quality (Syafraji, 1998;
Mahmud et al, 2013).
However, when viewed from market realities, companies must consider the right price position to form
customer satisfaction and loyalty (Curry and Gao, 2012). According to Hill et al (2015), there are two ways that
companies can use to run a business to gain a competitive advantage, namely low costs and product
diversification. Through low production costs, companies can sell their products at competitive prices. Price is
*Corresponding Author: M. Elfan Kaukab 37 | Page
Faculty of Economics and Business Universitas Sains Al-Qur’an
 Creating Customer Satisfaction and Loyalty with Price, Product Quality and Service Quality ..

an important consideration for customers to meet their expectations in satisfying themselves (Muhmin, 2002).
Previous research proves that price has a positive effect on customer satisfaction and loyalty (Muhmin, 2002;
Wijaya, 2014). However, price has no effect on customer satisfaction in the aviation sector (Mahmud et al,
2013).
Another strategy that companies can use is to diversify their products in order to get quality products
when compared to competitors. Restaurants not only sell products at competitive prices but also have to
consider product quality. Quality products have a big influence on customer satisfaction and customer loyalty
(Irawan, 2008).
Previous research adds that price and product quality cannot stand alone. These two factors require
service quality to deliver this value. These three factors form a unity that has a positive influence on customer
satisfaction (Curry and Gao, 2012). Service quality is the most basic factor and plays an important role in
businesshospitality which can influence customer satisfaction (Rizan, 2010; Zahari et al, 2011). Furthermore,
customer satisfaction will build the company's value and bargaining power which can be the main reason for
forming consumer loyalty (Curry and Gao, 2012).
Therefore, it is important for companies to know the behavior and expectations of their customers. This
research will bring updates to marketing research regarding customer satisfaction and loyalty in the fast food
restaurant industry in Indonesia through restaurantsfranchise representative in Jababeka II Cikarang as the center
of business and industry in the District. Bekasi. Apart from that, the research will confirm whether the factors
described are the main reasons for forming customer satisfaction and loyalty at McDonald's restaurants which
makes it the most valuable brand in the world.

II. LITERATURE REVIEW

Marketing is a total system of business activities designed to plan, determine prices, promote and
distribute goods that can satisfy desires and achieve target markets and company goals (Stanton, 2007). The
definition of price according to Kotler and Keller (2016) is one element of the marketing mix that generates
revenue, other elements generate costs. While pricing is the easiest element in a marketing program to
customize, product features, channels and even communications take a lot of time. According to Kotler (2008)
price indicators are affordability, suitability of price to product quality, price competitiveness and suitability of
price to benefits. Product quality is how the product has value that can satisfy customers both physically and
psychologically which refers to the attributes or properties contained in an item or the results of product quality
indicators are performance, durability, conformity with specifications, features and reliability. (Kotler and
Armstrong, 2012). Service quality is the expected level of excellence and control over this level of excellence to
meet customer expectations (Tjiptono, 2008). Overall service quality is determined by the suitability of desires
resulting from a comparison of customer desires and perceived performance. Based on the definition above, it
can be concluded that service quality is a level of superiority that a person feels about a service which is
expected from the comparison between the desires and performance felt by the customer after purchasing the
service. Customer Loyalty is a repeat purchase made by a customer because of commitment to a brand or
company (Kotler, 2008). Customer Loyalty is a deeply held commitment to purchase or support a preferred
product or service again in the future even though situational influences and marketing efforts have the potential
to cause customers to switch. indicators of Customer Loyalty (Kotler and Keller, 2016) arerepeat, retention and
referral. Customer satisfaction is a person's feeling of happiness or disappointment that arises after comparing
the performance (results) of the product they are thinking about with the expected performance (results). If
performance is below expectations then our customers are not satisfied, but if performance meets expectations
then customers are satisfied. If performance exceeds expectations, then the customer is very satisfied or happy
(Kotler, 2008). Customer satisfaction indicators (Irawan, 2008) are feelings of satisfaction, will buy the product,
will recommend it to others and the fulfillment of customer expectations.

III. RESEARCH METHODOLOGY

The method used in this research is a quantitative method with the objects being price, product quality,
service quality, customer satisfaction and loyalty. The subjects of this research were Mcdonald's Jababeka II
Cikarang customers who have made purchases more than 2 times. The survey or questionnaire was distributed
online using google form and got a total of 220 respondents.
The sampling technique in this research uses the methodnon-probability sampling namely by taking
samplespurposive sampling where sampling is carefully selected by determining samples that are appropriate to
the research. The criteria in the research are Mcdonald's Jababeka II Cikarang customers, who have made
purchases more than twice. Determining the minimum sample uses the 10 times by hair formula (2014).The
analysis technique used in this research isPartial Least Square (PLS) with an equation modelStructural Equation
Modeling (SEM) (Ghozali, 2014).

*Corresponding Author: M. Elfan Kaukab 38 | Page

 Creating Customer Satisfaction and Loyalty with Price, Product Quality and Service Quality ..

IV. FINDINGS
4.1 Respondent Characteristics

As many as 51.8% of respondents were women. The composition of respondents dominated by women will be
interesting because women have a consumerist nature (Rosadi, 2014) and a higher level of emotional sensitivity
to the environment (Hurlock, 2002) compared to men. Therefore, this research will benefit because with these
characteristics, women can provide more detailed assessments which will be useful for this research.
Furthermore, respondents were dominated by customers with an age range of 20 – 30 years. Domination by
young people or millennials can be a representation that McDonald's is an exciting place to eat for young people
or millennials. According to Forbes Magazine (2016), McDonald's focuses on targeting its customers at young
people or millennials. This is of course for the reason that this generation is the dominator or the largest
generation currently compared to other generations born. These results are as illustrated in Table 1.

TABLE 1. Respondent Characteristics

Gender Amount Percentage

Man 106 48.2%
Woman 114 51.8%
Age
< 20 Years 39 17.7 %
20 – 30 Years 155 70.5 %
>30 Years 26 11.8 %
Work
/ Student 106 48.2 %
Self-employed 20 9.1 %
Private Officer 44 20.0 %
State Officer 23 10.5 %
Other 27 12.3 %
Income
< IDR 1,000,000 53 24.1 %
IDR 1,000,000 - IDR 2,500,000 62 28.2 %
IDR 2,500,000 – IDR 5,000,000 59 26.8 %
> IDR 5,000,000 46 20.9 %
Many Visits
1 -2 Times 93 42.3%
2 - 5 Times 100 45.5%
> 5 Times 27 12.3%

Researchers found that the majority of customers who come to McDonald's Jababeka are students with
an income of 1 to 2.5 million rupiah, followed by customers with an income of 2.5 to 5 million rupiah. This can
be an indication that the price of the product McDonald's is very friendly to millennials. Then, if we look at the
number of visits by respondents, the highest number of visits to McDonald's Jababeka was no more than 5 visits.
The most is 2 – 5 times, amounting to 45.5% and only 1 – 2 times, namely 42.3%. These results are sufficient
evidence that the sample can be a representative population for testing the variables used in this research.
According to Valle et al (2006) explain that a person can give a good assessment and show satisfaction and
loyalty which can be seen from repeated visits to the object.

4.2 Result

The test results are said to be significant if the p value < 0.05 or T statistic > T table for n-k-1 = 220-3-1 =
216 is 1.65251. Then, if the effect is significant, to see the magnitude of the effect, you can look at the
coefficient value. Therefore, based on the test results, it is known that H2 (t = 0.216; p value = 0.829) and H3 (t
= 1.546; p value = 0.123) are rejected because they do not comply with the criteria.

*Corresponding Author: M. Elfan Kaukab 39 | Page

 Creating Customer Satisfaction and Loyalty with Price, Product Quality and Service Quality ..

Figure 1: PLS-SEM Output

The results of the analysis are shown in Figure 1 and Table 8 as follows Figure 1. Hypothesis Test Results

TABLE 2. PLS-SEM Output

Coefficient T P
Statistics Value
Price -> Customer Loyalty 0.357 3.788 0.000 H1 accepted
Product quality -> Customer Loyalty 0.022 0.216 0.829 H2 rejected
Service Quality -> Customer Loyalty 0.170 1.546 0.123 H3 rejected
Price -> Customer Satisfaction 0.301 5.339 0.000 H4 accepted
Product quality -> Customer Satisfaction 0.334 4.937 0.000 H5 accepted
Service Quality -> Customer Satisfaction 0.348 5.217 0.000 H6 accepted
Customer Satisfaction -> Customer Loyalty 0.346 3.256 0.001 H7 accepted
Price -> Customer Satisfaction -> Customer Loyalty 0.104 2.655 0.008 H8 accepted
Product quality -> Customer Satisfaction -> Customer Loyalty 0.115 2.774 0.006 H9 accepted
Service Quality -> Customer Satisfaction -> Customer Loyalty 0.120 2.839 0.005 H10 accepted

The findings can be interpreted as follows:

1. Price is an important part of marketing that can generate revenue and is also the most flexible (Kotler and
Keller, 2016). Quality prices, namely affordable prices, discounts and in accordance with the services and
products obtained, will create a good emotional bond in the eyes of customers towards a product or service
(Alagoz, 2011). Respondents who are dominated by millennials indicate that price is a sensitive instrument
for customers (Dovaliene and Virvilaite, 2008). The results of this research are in line with many studies
conducted previously that price has a positive effect on customer loyalty (Vaidyanathan and Aggarwal,
2003; Consuegra et al, 2007; Virvilaite 2008).
2. Product quality has no effect on customer loyalty. This shows that product quality does not play a role in
increasing loyalty. The results of this research are in line with previous research conducted by Halim et al
(2014), Jannah et al (2019), Juwita et al (2019) which said that product quality has no effect on loyalty.

*Corresponding Author: M. Elfan Kaukab 40 | Page

 Creating Customer Satisfaction and Loyalty with Price, Product Quality and Service Quality ..

Customers who are mostly millennials may have other considerations as a basis for them coming back and
being loyal to McDonald's products.
3. Service quality has no effect on customer loyalty. Quality of service is not a consideration for customers to
return to McDonald's restaurants. The lack of influence of service quality on customer loyalty, especially
millennial customers, could be due to the intention of customers who come to enjoy McDonald's food and
drinks at affordable prices, not to enjoy the service. Similar research was conducted by Akroush et al
(2016) who conducted research on the tourism industry in Jordan.
4. Price has a positive effect on customer satisfaction. The value of a price will increase if the price paid is in
accordance with the product or service obtained, there are benefits obtained such as discounts and
affordability (Virvilaite et al, 2009). Prices can influence someone in making decisions. Those who feel
there is value in the price that must be paid can stimulate customer satisfaction (Alfin, 2013; Akpoyomare,
2014).
5. Product quality influences customer satisfaction. The results of this research are supported by research
conducted by Jahanshasi (2011) which proves that product quality has a positive effect on customer
satisfaction.
6. Service quality has a positive effect on customer satisfaction. Service quality is an important discussion
when it is related to marketing strategy. Marketing service development theory explains that good service
will provide satisfaction to customers (Anderson and Olsen, 2008). The results of this research are
supported by previous research conducted by Aydin and Zer (2005), Darmawan et al (2017), Zameer et al
(2015).
7. Customer satisfaction has a positive effect on customer loyalty. Oliver (1980) states that customer
satisfaction and dissatisfaction is strongly related to whether or not customer expectations are met. Chuaet
al., (2007) believes that customer loyalty is greatly influenced by customer satisfaction. When customers
feel satisfaction with a product or service they use, in general customers will repeat their decision to use
that product or service in the future. Loyal customers will not only choose the restaurant again, but will
also be willing to recommend it to other parties and be willing to pay a higher price to get the product or
service. This is often interpreted as loyalty.
8. Price has a significant effect on loyalty with customer satisfaction as the intervention. This research is
relevant to previous research conducted by Mahmud et al (2013) which explained that customer
satisfaction can mediate the effect of price on loyalty. Providing fair prices and having an exchange rate
that is comparable to the products and services obtained will provide satisfaction to customers. The
security and comfort that arises from the psychology that the price is affordable will make customers
satisfied and tend to make repeat purchases or be loyal to the brand.
9. Product quality has a significant effect on loyalty with customer satisfaction as the intervention. The results
of this research are relevant to previous research conducted by Jannah et al (2019) which proved that
customer satisfaction is a mediator of the relationship between product quality and loyalty. This is proof
that customer satisfaction is an important part that can increase customer loyalty if McDonald's improves
the quality of its products. Improving product quality will influence customer satisfaction and then
influence loyalty.
10. Service quality has a significant effect on loyalty with customer satisfaction as the intervention. The results
of this research are in accordance with previous research conducted by Surahman (2020) that customer
satisfaction mediates the relationship between service quality and loyalty. Quality service is service that
can meet customer expectations so that it will increase customer satisfaction (Surahman, 2020). This can
then stimulate customers to return and make repeat purchases, which is a characteristic of loyalty
(Wantara, 2015; Sahid et al, 2018).

V. CONCLUSION
In summary, the findings of this research reveal several key conclusions. Firstly, price has a positive
impact on customer loyalty, indicating that customers are more likely to remain loyal when influenced by
pricing considerations. Interestingly, product quality alone does not appear to directly affect customer loyalty.
Similarly, service quality is not found to have a direct impact on customer loyalty. On the other hand, the study
suggests that price positively influences customer satisfaction, highlighting the role of pricing in shaping
customers' overall satisfaction levels. Moreover, both product quality and service quality independently
contribute to increased customer satisfaction, indicating their importance in shaping customers' contentment.
Additionally, the research underscores the positive connection between customer satisfaction and customer
loyalty. Customers who are satisfied with the overall experience are more likely to exhibit loyalty. Furthermore,
the study introduces the concept of mediation, indicating that the positive impact of price, product quality, and
service quality on customer loyalty is mediated by customer satisfaction. In other words, the influence of these
factors on loyalty is channeled through their impact on customer satisfaction.
*Corresponding Author: M. Elfan Kaukab 41 | Page
 Creating Customer Satisfaction and Loyalty with Price, Product Quality and Service Quality ..

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*Corresponding Author: M. Elfan Kaukab 43 | Page