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FACTORS THAT INFLUENCE CUSTOMER SATISFACTION OF SERVICES CASE OF KEMENTERIAN PERDAGANGAN DALAM

NEGERI, KOPERASI DAN KEPENGGUNAAN (KPDNKK) KOTA BHARU




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CHAPTER 1:
INTRODUCTION
1.1 STUDY BACKGROUND
The concept of satisfying customers is rooted deep in the philosophy of marketing and is
a key element in most marketing definitions. The researcher will explain why customer
satisfaction is important to this Kementerian Perdagangan Dalam Negeri, Koperasi dan
Kepenggunnaan (KPDNKK) then discuss customer satisfaction of services case of
KPDNKK. Measuring and understanding customer satisfaction are important elements in the
organization. Customer satisfaction has a significant influence on friendly atmosphere and
speed of feedback.
Then, expectations are important comparison standards that help consumers to evaluate
the perceived performance of the services that offer throughout and at the end of the service
counter. Customers are satisfied if the experience matches or exceeds their expectations, and
dissatisfied if the service performance fails to match their expectations.
Customer satisfaction is important to KPDNKK because to measure the level of
satisfaction weather is bad or good. Then, it also important for KPDNKK because the
organization can make improvement or make any adjustment towards their services provided.
If the customer satisfied, so it can give impact positive word of mouth and can also create
loyalty for the organization.
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To managing and measuring customer satisfaction it takes continuous effort to maintain
high customer satisfaction levels. Kevin Cacioppo (2000), measuring customer satisfaction is
a relatively new concept to many companies that have been focused exclusively on income
statements and balance sheets. Companies now recognize that the new global economy has
changed things forever. Increased competition, crowded markets with little product
differentiation and years of continual sales growth followed by two decades of flattened sales
curves have indicated to today's sharp competitors that their focus must change.















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1.1.1 Background of Company
Kementerian Perdagangan dalam Negeri, Koperasi dan Kepenggunaan (KPDNKK) was
established on 27 October 1990, with the aim towards encouraging ethical trade practices
and to protect consumer interest. The role and functions of the Ministry have been
expanded in 2009 to include the franchise and cooperative sectors.
1.1.1 Vision
The vision of KPDNKK is a leader in the development of domestic trade, co-operatives
and consumerism
1.1.2 Corporate Mission Statement
The missions are to provide a conducive business environment for the development of
domestic trade and to steer the nation towards a more consumer conscious and
empowered society. Other missions like to develop competitive, progressive and resilient
co-operatives and also to foster creativity and innovation through an effective IPR engine
1.1.4 Objective
The main objective of the establishment of the Ministry is to promote and encourage the
development of domestic trade that is competitive and ethical while protecting the
interests of consumers at large. Other objectives of KPDNKK are to enforce and protect
intellectual property rights and to enforce and eradicate exploitation in subsidized goods.
Then, the objective to enforce trade laws for consumer protection and also to enforce and
monitor the supply and price of essential goods.

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1.2 PROBLEM STATEMENT
The agencies do not have enough knowledge on the level of customer satisfaction regarding
the service that provided by their staff when the customer come to make their complaint.
Therefore the study will attend to examine whether friendly atmosphere and speed of
feedback have any impact on customer satisfaction. There are several factors that contribute
customer satisfaction like friendly atmosphere, personal attention, and speed of feedback and
also complete form. So, the organization can know what the factor that can influence
customer satisfaction and how to improve customer satisfaction. However, this study will
only consider friendly atmosphere and speed of feedback.
Friendly atmosphere is a feeling or mood that has in a particular place or situation, and a
feeling between two people or in a group of people .It also defines the air in a room or in a
confined space whether is comfortable or not. If the organization did not have the friendly
atmosphere for customer, so the customer not satisfy or not comfortable for make any
complaint regarding the situation
The speed of feedback means how the employee handles the problem or any situation like
the customer want to renew their business license or they want make a redress regarding they
purchase any product. If the procedure is a quick, so the customer will happy and satisfy in
the organization. The speed of feedback also like the time for waiting for serves, whether
their speed of feedback from employees are slow, or quickly.

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1.3 OBJECTIVE OF STUDY
Normally, the research study should have objective first. It seems like an important compass
for researcher in guiding to achieve the purpose of doing the research. The objective should
be specific, measurable and realistic. Here are several objectives that uses by the researcher
to measure the factors that influence customer satisfaction of services case of Kementerian
Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan (KPDNKK) in Kota Bharu area.

1. To examine the weather friendly atmosphere influence customer satisfaction
2. To examine the weather speed of feedback influence customer satisfaction









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1.4 RESEARCH QUESTION
According to Malhotra (1999), research question are refining statements of the specific
components of the problem. In this study, the researcher has come out with two research
question to answer the objective of study. The research questions are following:

1.4.1 Research Question 1
To what extent friendly atmosphere influence the customer satisfaction?

1.4.2 Research Question 2
To what extent speed of feedback influence the customer satisfaction?











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1.5 THEORITICAL FRAMEWORK
The research was conducted to study the relationship between the independent and
dependent variables. The focus is on the dependent variable that is customer satisfaction as
the factor that influences customer satisfaction of services provided by KPDNKK. The
factors that cause customer satisfaction are friendly environment and speed of feedback.
Each of the components is selected based on the literature review and the research of other
models. This variable is interrelated to each other and is elaborated below.

1.6.1 Dependent variable
This variable changes depending on the related factor for certain things. It will be affected
by any changes on other factors, which are independent variable. In this study, customer
satisfaction is the dependent variable and other factors that influence customer satisfaction
of services provided by KPDNKK are friendly atmosphere and speed of feedback.

1.6.2 Independent variable
According to Uma Sekaran (2003), independent variable is one that influences the
dependent variables in either a positive or a negative way. That is, when the independent
variable is present, the dependent variable is also present, and with each unit of increase in
the independent variable, there is an increase or decrease in the dependent variable also. In
another word, the variance in the dependent variable is accounted for by the independent
variable. The independent variables in this study included friendly atmosphere and speed of
feedback.
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Theoretical Framework






Figure 1: Relationship between dependent variable and independent variable.

Customer Satisfaction is a degree of satisfaction that provided by goods and services of a
firm as measured by the number of repeat customer. Satisfaction itself also can refer the
number of different facts of the relationship by customer like satisfaction about quality of a
particular product or services and satisfaction with ongoing business relationship itself.

Friendly atmosphere is showing kindly interest and goodwill or serving a beneficial that
helpful purpose
Speed of feedback is a response to an inquiry or experiment and also the process in which
part of the output of a system is returned to its input in order to regulate its further output
The dependent variable using a Kano Model while independent variable using a Peters-
Moore-Holmberg theory that will be discussed on chapter two.
Friendly Atmosphere
Speed of feedback
Customer satisfaction
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1.6 RESEARCH HYPOTHESES
Hypotheses 1
Ho : There is a positive relationship between friendly atmospheres with customer satisfaction
Ha : There is no positive relationship friendly atmospheres and customer satisfaction

Hypotheses 2
Ho : There is a positive relationship between Speeds of feedback with customer satisfaction
Ha : There is no positive relationship Speeds of feedback and customer satisfaction












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1.7 SIGNIFICANCE OF STUDY
1.7.1 To the researcher
This researcher is mostly significant to the researcher. The researcher can apply the
theory that is learned at classroom into practical manner. The researcher will also
exposed with firsthand experience in carrying out research to meet both academic and
industry requirements that contribution the academician.

1.7.2 To the organization
The study also important to the organization like KPDNKK, Kelantan because the
findings of research will play a vital role in making this service management and the
organization also can also get the opportunity for improvement in making successful
management. Other than that, the organization can know the extent the level of customer
satisfaction of services provided by them.

1.7.3 To the customer
Through the questionnaire contributed, the customers can express their feelings, ideas
and comments on the subject matter. These in whole would benefit KPDNKK, Kelantan
in the long term understanding and the need and expectation of their customer



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1.7.4 To policy maker or government
The government can make the new policy in order to guide the organization that can
develop or establish their policy for increase the services provided by KPDNKK.
















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1.8 SCOPE AND LIMITATION
Scope
This section describes the overall context of the research areas. The aim of this study is
to know the factors that influence factors that influence customer satisfaction of services
case of KPDNKK. The factors included friendly atmosphere and speed of feedback. The
unit of analysis is individual and the respondents covered are the customer area Kota
Bharu.

Limitation
1.8.1 Time constraints
Four month to do this research is not really enough, but the data has been obtained and
the results are sufficient. In addition, the researcher had to go for practical training while
doing the research. To overcome this problem the researcher had managed and used time
precisely to gain as much information as possible.

1.8.2 Poor feedback
The respondent not totally gives the good feedback because they not give the cooperation
during to distribute the questionnaire. So, it difficult to researcher for collects the actual
data. Some respondent did not answer the question sincerely. Some were rush, thus the
simply answered the question without revealing the true information. Other than that, the
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sample is small because the customer did not really know about services that provided by
KPDNKK.

1.9.2 Budgeting
In term of budgeting, the researcher also has the lack of budgeting because the researcher
cannot get the allowance to back up all the expenses.

1.9.3 Lack of experience
This is the first time the researcher conducted a research. The researcher faced some
difficulties in analyzing the data and using SPSS to come up with result findings

1.10 SUMMARY AND CONCLUSION
In this chapter, the researcher discusses about the background of the study, problem
statement, objectives, hypotheses, scope of study, significance of study and the limitations
faced by the researcher while conducting this research.






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1.11 DEFINITION OF TERMS
KPDNKK: Kementerian Perdagangan Dalam Negeri, Koperasi dan Kepenggunaan that
provided service like supervision of domestic trade, supervising the price items of
necessities, licensing and controlling the manufacturing and sales such time and
manage the consumer protection.
Customer Satisfaction: Degree of satisfaction that provided by goods and services of a firm as
measured by the number of repeat customer. Satisfaction itself also can refer the
number of different facts of the relationship by customer like satisfaction about
quality of a particular product or services and satisfaction with ongoing business
relationship itself
Friendly atmosphere: Showing kindly interest and goodwill or serving a beneficial that helpful
purpose

Speed of feedback: A response to an inquiry or experiment and also the process in which part of
the output of a system is returned to its input in order to regulate its further output




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CHAPTER 2:
LITERATURE REVIEW
2.1 Customer Satisfaction
Customer satisfaction is defined as an "evaluation of the perceived discrepancy between
prior expectations and the actual performance of the product" (Tse and Wilton, 1988, Oliver
1999). Satisfaction of customers with products and services of a company is considered as most
important factor leading toward competitiveness and success (Hennig-Thurau and Klee, 1997).
Customer satisfaction is actually how customer evaluates the ongoing performance (Gustafsson,
Johnson and Roos, 2005). According to Kim, Park and Jeong (2004) customer satisfaction is
customers reaction to the state of satisfaction, and customers judgment of satisfaction level.
Customer satisfaction is very important in todays business world as according to Deng et al.,
(2009) the ability of a service provider to create high degree of satisfaction is crucial for product
differentiation and developing strong relationship with customers.
The Kano et al. (1996) model of customer satisfaction classifies product attributes based
on how they are perceived by customers and their effect on customer satisfaction (Kano, Seraku
et al. 1996). According to the model, there are three types of product attributes that fulfil
customer satisfaction to a different degree: 1) basic or expected attributes, 2) performance or
spoken attributes, and 3) surprise and delight attributes.
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A competitive product meets basic expected attributes, maximizes performances attributes, and
includes as many excitement attributes as financially feasible. In the model, the customer
strives to move away from having unfulfilled requirements and being dissatisfied.



Figure 2: Kanos Model


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The performance or spoken attributes (the central line of the model) are those expressed by
customers when asked what they want from the product or services. Depending on the level of
their fulfillment by a product or a service these requirements can satisfy or dissatisfy consumers.
The basic or expected attributes (lower curve in the model) are basic attributes, which customers
take for granted and they are so obvious that they are not worth mentioning. While the presence
of these attributes is not taken into account, their absence is very dissatisfying .The surprise and
delight attributes (upper curve in the model) lay beyond customers expectations. If they are
present they excite the customer, but their absence does not dissatisfy, as customers do not
expect them. A successful combination of expected and exciting attributes provides a company
with an opportunity to achieve competitive advantage. A successful company will correctly
identify the requirements and attributes and use them to document raw data, user characteristics,
and important service or product attributes.
Customer satisfaction makes the customers loyal to one service provider. Previous
researchers have found that satisfaction of the customers can help the brands to build long and
profitable relationships with their customers (Eshghi, Haughton and Topi, 2007). Though it is
costly to generate satisfied and loyal customers but that would prove profitable in a long run for
a firm (Anderson, Fornell and Mazvancheryl, 2004). Therefore a firm should concentrate on the
improvement of service quality and charge appropriate friendly atmosphere in order to satisfy
their customers which would ultimately help the firm to retain its customers (Gustafsson,
Johnson and Roos, 2005).It is a common phenomenon that the services a brand offers and the
price it charges actually determine the level of satisfaction among its customers, than any other
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measure (Turel et al. 2006). Customers involvement is also important as when buyer consider
the product important and invests time to seek information then it ultimately enhances the
satisfaction level (Russell-Bennett, McCollKennedy and Coote, 2007). This satisfaction may
influence the concerned company by repurchase, purchase of more products, positive word of
mouth and willingness of customer to pay more for the particular brand. Any business is likely to
lose market share, customers and investors if it fails to satisfy customers as effectively and
efficiently as its competitors is doing (Anderson, Fornell, and Mazvancheryl, 2004).




.






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2.2 Friendly atmosphere
Friendly atmosphere meant the styles and appearance of physical environment for service
giving and the part experienced by customers on the occasion of service transferring (Bitner,
1992). The atmosphere, smell and music expressed by the physical environment would affect
customers' perception and behaviours. The overall atmosphere filled with inspiring delight
affected customers to stay longer organization. It could enhance the willingness for customers' to
interact and to communicate with service providers and business performance of stores could be
improved (Donavan and Rossiter, 1982; Donavan, Rossiter, Marcoolynn and Nesdale, 1994).
Thus, when customers implemented touch with service providers, the service providers' service
quality to customers included manual attitude and behaviors. Also, the atmosphere of service
environment would affect customers' perception of service performance.
. The friendly atmosphere based on the Peters-Moore-Holmberg theory because the
atmosphere and style of helpful face-to-face style. It is generally accepted that friendly
atmosphere, helpful suggestions and encouragement support study motivation and facilitate
success. The medium used to bring about empathy is normally friendly conversation. The
friendly atmosphere is essential also in the interaction between organization and customer. The
organization helping the customer is the main purpose of this interaction.
Customers reaction towards service counter communication practices that were incompetent,
not smooth lacking in terms of friendliness and also with difficulties in terms of courteous and
professional interaction are often presented in the newspapers and the internet.
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The service environment includes numerous dimensions that can be classified into two main
themes and they are internal environment and external environment. Literature on the internal
environment primarily focuses on organizational culture and the overriding philosophy brought
to service provision by management. The external theme focuses primarily in the physical
ambience of service setting. Fisk, Brown and Bitner (2000) stated that, correct workplace
conditions are important factors for health and performance and are profitable and beneficial in
every way. Meanwhile, Rust and Oliver (1994) stated that, improving workplace conditions and
health standards would assure employees performance. To create a physical infrastructure to
satisfy internal and external customers and to obtain higher workplace performance and profit
will have a direct impact on an organizations success and on the wealth of the community.








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2.3 Speed of feedback
Time spent in communications between the service worker and the customer in the
service encounter (measured in seconds) is the first element. Time of the encounter was
conceptualized in the original customer contact model (Chase & Tansik, 1983) as a key
ingredient. Time is an absolute measure and represents some active behavior of the service
employee. Communications time alone captured 71% of the variability that the service experts
felt differentiated one episode from another on a magnitude dimension (Kellogg & Chase, 1995).
The second element is information richness (Daft & Lengel, 1984); a concept that
addresses the value of the service exchange that is not correlated with time (Kellogg & Chase,
1995). Information richness is a complex measure including feedback (the speed at which
feedback between service worker and customer is received: 1. very slow (days), 2. slow (hours),
3. fast (minutes), 4. immediate), the communication channel (1. limited visual, 2. audio, 3. visual
and audio), the source of communication (was the major theme of the interaction 1. personal or
2. impersonal) and the language used (1. numeric, 2. natural, 3. body, natural). Kellogg (1991)
suggests that the information richness concept parallels an early customer contact example of
face-to-face, telephone, and mail communication. Face-to-face is high in feedback; uses visual
and audio communications channels, is personal and has the advantage of including the full
natural range of body language. In contrast, mail communication has very slow feedback, only
limited visual usage, is impersonal and uses only written (numeric) language. Telephone
communication falls in the middle with immediate feedback, only audio, may be either personal
or impersonal, and generally natural in language.
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This leads to the third element of the measurement model which is intimacy. Intimacy
provides a qualitative assessment of the service encounter and is something that is beyond mere
humanistic behavior (Kellogg, 1991). Intimacy in the study was defined as mutual confiding and
trust as measured by a 5 point Likert scale with anchors no intimacy and the highest degree of
intimacy.
The amount of feedback provided sends messages about the importance of the customer
survey to everybody in the organization. Rather than providing superficial feedback through
newsletters, notice boards or e-mail, the results should be personally presented via feedback
workshops, preferably to all employees but at least to those who have a role in delivering
satisfaction. For large organizations, feedback workshops may be costly, but will be less
expensive than the cost of failing to improve customer satisfaction (Nigel Hill,1999)








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CHAPTER 3:
RESEARCH METHODOLOGY AND DESIGN
3.0 Research Methodology
This chapter is important for the researcher as to make a decision on how to collect data and
where to obtain it. Besides that, it helps the researcher to select and determine the appropriate
research design in providing the framework to conduct the study. This section discusses about
the procedures, style and steps taken to fulfill the research objective requirement. The objective
of this chapter is to describe about the process and techniques involved in the study. For this
study, the researcher used qualitative and quantitative research. Through qualitative research,
the researcher obtained information from face to face interview with KPDNKK staff. Besides the
direct interview, the researcher used a survey method by distributing questionnaires to the
respondents.
3.1 Research Design
In conducting the research, the researcher used descriptive and correlation study to clarify and
define the nature of factors that influence customer satisfaction services provided by KPDNKK
include friendly atmosphere and speed of feedback.



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3.2 Administration Questionnaire
The structured question is used in gathering data for the completion of this study. The
questionnaire is designed properly in order to ensure compatibility of the data, increase speed
and accuracy of recording and facilitate data processing.
In the questionnaire, it is divided into four (4) sections which consist of Section A that represents
Demographic, Section B for Customer Satisfaction, Section C for Friendly atmosphere, and
Section D for Speed of feedback.
This type of questions constructed with questionnaire which is:
Likert Scale
This type of question allows the researcher to indicate how strongly agree or disagree the
respondents are with the asked questions.










Sangat tidak setuju Sangat setuju

1
Saya berpuas hati terhadap
perkhidmatan yang disediakan
I am satisfied with the services
provided
1 2 3 4 5 6 7 8 9 10
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3.3 Data Collection
All the data needed for this research collected from primary and secondary data. Data is gathered
for the purpose of analysis, testing hypothesis, interpret the relationship that exists between
variables and answer the research objectives and questionnaires. For the primary data, the data is
gathered and assembled specifically for the research project at hand. The researcher created and
distributed the questionnaire to the respondents. Other than that, the researcher in getting the
information from companies conducted several interviews. For the secondary data, the resource
of information are journals from internet, magazine, newspaper, journals, reference book, the
documentations of the company and other related articles.
The researcher focused on customer in Kota Bharu. There were 120 sets of questionnaire
distributed to the respondents to get the information and the researcher distributed the
questionnaire in two languages, Malay and English language.
3.4 Sampling
Sampling is useful in determining and representing the whole large of population. The researcher
used non-probability method that is convenience sampling. This is because the researcher cannot
get the specific list of the samples.
Only 120 respondents were taken to the sample for the study, which is adequate and good
enough for the research. According to Roscoe (1957), sample size should be larger than 30 and
less than 500 for most research.

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3.5 Procedures of Data Analysis
The procedures of data analysis were done after the data collection. The data collected was keyed
in and analyzed through the Statistical Package for Social Science (SPSS) program after coding.
All the questionnaires are coded to ensure all results will be recorded and analyzed by the
researcher in other to get accurate result. Some of the statistical techniques that are used in the
hypothesis testing and data analysis are as follows:
3.5.1 Frequency Distribution Analysis
After the data was collected, the researcher used descriptive statistical tool from SPSS program
to analyze the data in which the data is tabulated. Tabulation consists simply of counting the
number of cases that fall in various categories.
From the tabulation of the data, the researcher aimed to determine the frequency distribution of
the variable in the question and calculated the descriptive statistic. Frequency distribution is a
mathematical distribution where the researcher tries to obtain and count the number of responses
associate with difference values of variable and expresses them in percentage term.
A frequency distribution also indicates the shape of empirical distribution of the variable. The
frequency data may be use to construct pie charts, or a bar graph in which the values are stated in
the graph.

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HYPOTHESIS STATISTICAL
ANALYSIS
1 H
1
: : There is a significant between friendly atmospheres with customer
satisfaction
T-Test
2 H
1
: There is a significant between Speeds of feedback with customer
satisfaction
T-Test



3.5.2 Cross-Tabulation
In determining the objective, the researcher used cross-tabulation technique in knowing the
relationship between variables. It allows the researcher in determining the association between
dependent and independent variables; marketability of the product and the factors that influence
it. Cross tabulation is a statistical technique that describes two or more variables simultaneously
and results in table that reflects the joint distribution of two or more variables that have limited
number of categories or distinct values. It is the simplest techniques for describing the size of
relationships.


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3.5.3 Correlation Coefficient
In order to indicate the relationships that formed between variables and to test the hypothesis, the
researcher used correlation coefficient .Correlation is used to support the result of the hypothesis
that has been tested. The researcher used a Bivarate Pearson Product Moment Correlation to
examine the correlation between the dependent and independent variables. The correlation
coefficient, r, ranges from +1.0 to -1.0.
A correlation coefficient indicates both magnitude of the linear relationship and the direction of
the relationship. Thus, by using this method, the researcher is able to clarify factors that
contribute to the marketability of life insurance products and to identify whether the relationship
is strong, weak, positive or negative.

3.5.4 Hypotheses Testing
The research questions create the hypotheses, as the hypotheses are the probability answers.
Hence, this research wants to identify which hypothesis is accepted. According to Zikmund
(1993), hypotheses are stated into two: a null hypothesis and alternative hypothesis. A null
hypothesis is a statement about the status qou. Alternative hypothesis is a statement indicates the
opposite of the null hypothesis. The purpose of hypothesis testing is to determine which of the
two is accepted. The cross-tab (eta statistic), correlation and regression are used to test the
hypotheses

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3.6 The research schedule for the study
Item
No
ACTIVITIES INVOLVED MONTH
January
MONTH
February
MONTH
Mac
MONTH
April
1 Refining :
Statement of problem
Objective of the study
Research question
Research hypothesis

2 Design validate, and testing for
reliability of measuring instruments

3 Fieldwork and data collection
4 Data management, editing, coding,
and input data

5 Data analysis and writing final report





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