The Condition of Traditional Market and the Impact to Consumer

Satisfaction

Rahmanto Kusendi Pratomo

, Moondore Madalina Ali

, Wing Ispurwanto

, Baydhowi

Psychology Department, Faculty of Humanities, Bina Nusantara University, Jakarta 11480 Indonesia

Keyword: Traditional market, physical condition, consumer saticfaction

Abstract: The aim of this research is to understand the overall condition and facilities of traditional market in DKI

Jakarta Province and link it with the level of Consumer Satisfaction. This research also employs a method of

descriptive statistics analysis through exploration and clarification of its data collection in the vicinity of

traditional market located in five areas of DKI Jakarta Provinces. The total of research station amounted to

28 traditional markets with total participant of 259 respondents. This research also showed the physical

condition of the traditional market. The result of the research indicated that work environment had a direct

impact to the engagement level of employee with significance level of p=0.004, with an influence level

between variables R²= 0.394.

1 INTRODUCTION

A market, according to the Peraturan Presiden

Nomor 112 pasal 1 Tahun 2007, is an area of buying

and selling goods comprising more than one seller

that is often called shopping center, traditional

market, shopping complex, shopping mall, plaza,

trade center or other designated names. Traditional

market is a type of activity of distributing goods

from producer to consumer. This activity was

created due to public demands for the need of goods.

Zeithaml et al. (Zeithaml, Parasuraman and Berry,

1990) explained a concept of providing a detailed

information about the customer perception of

services that called s servqual.

Trade Minister of Indonesia (Ekonomi Kompas,

2018) in the beginning of April 2018 revealed three

components that rendered the traditional market lost

its edge with the modern retail market. The first

component was the physical condition of the market,

i.e., the modern retail market has a cleaner

environment compared to the traditional one,

resulting in a better shopping experience (Setyawan,

Samudro and Pratama, 2015). The second

component was access to goods traded by merchants

in traditional market was harder to acquire compared

to merchants in modern market. The third

component was limited capital managed by the

administrator of traditional markets. Considering the

conditions, the government, through the ministry of

trade, would conduct development program or

revitalization of traditional market in that same year.

This program was urgently needed in order to

maintain the existence of traditional market amid

changes in patterns of buying-selling transaction that

is happening currently (Ekonomi Kompas, 2018).

On the other hand, the rapid growth of modern

retail market in Jakarta has become profound in

numbers. In 2014, the gap between the growth of

traditional market and modern market was quite

apparent, i.e., the growth of traditional market

declined to -8.1% while modern market increased to

31.4% (Nasional Kompas, 2010). This condition

showed that traditional market had a decline in its

consumer base. This, of course, would lead to the

downward trend of transaction which in turn,

resulting in the decline of revenue for the merchants

in traditional market, while in contrast, the

consumers and the number of modern retail market

would continue to rise (Ma’ruf, 2005). The trend

happened due to the many advantages of modern

market offer such as a good level of hygiene, better

safety when shopping, haggling-free goods, small

price difference in comparison between the

traditional market and modern market, as well as the

optimum service when serving the costumer. The

emergence of various type of modern market that

offer more facilities than the traditional market

resulted in many people switching from shopping in

Pratomo, R., Ali, M., Ispurwanto, W. and Baydhowi, .

The Condition of Traditional Market and the Impact to Consumer Satisfaction.

DOI: 10.5220/0010000700002917

In Proceedings of the 3rd International Conference on Social Sciences, Laws, Arts and Humanities (BINUS-JIC 2018), pages 81-85

ISBN: 978-989-758-515-9

traditional market to shopping in modern market

(Andriani and Ali, 2013).

Based on observation and interview in the 28

research stations in five provinces of DKI Jakarta,

the research found a similar phenomenon of market

typology concerning the physical environment

condition of traditional market. Consumers in

traditional market tend to care less of the physical

facilities of the market stalls and environmental

hygiene, the unorganized order of block layout in

traditional market, the many occurrences where

sellers don’t occupy in the designated place, and

from both the seller and buyer sides, they are not

really concerned with the market hygiene condition

of prevailing garbage, especially the waste

byproducts from the selling and buying transaction

activities. This situation naturally made traditional

marketplace becomes slum-like and disorderly.

The stall location of merchants that is situated

tightly-adjacent to each other radiates an

uncomfortable atmosphere hindering prospective

buyers to do a series of buying and selling activities,

the rackety noise from the activities of sellers, as

well as unpleasant odors also added the

inconvenience of consumers when making

transactions (Andriani and Ali, 2013). The indoor air

conditioner facilities that only partly functioning add

to the inconvenience of consumers inside the

traditional market site. The governance of OHS

(Occupational Health and Safety/K3) that has not

complied with the standard also became a natural

phenomenon in the existing traditional markets, for

example, the SNI 03-1735-2000 containing the Fire

Hazard Prevention in a Building and SNI-04-0255-

2000containing the General Requirement of

Electrical Installation and other safety standard and

amenities.

The satisfaction of customers and the users of

traditional market facilities evidently play an

important role in making profits and that became a

determinant in creating customer loyalty (Shergill

and Chen, 2007; Parasuraman, Zeithaml and Berry,

1985).The satisfaction of consumer and the user of

traditional market facilities, in the event of making

decision to buy something, can be influenced by

cultural, social, individual and psychological factor

of buyers, (Kotler, 1997; Kotler and Amstrong,

1997) .The image of the site and facilities provided

are the attributes that can become the reason why

consumers choose the place for shopping (Widjoyo,

Rumambi and Kunto, 2013), i.e.: the availability of

commodities, the availability of all the colors, sizes

and types of the merchandise, the easy accessibility

to the shop location, the safety of the site, and the

vicinity of the site must be inside a shopping center

or adjacent to other outlets inside a shopping center.

In addition, the reasons include prioritizing

customer service into a specific segment such as:

teenagers, families, housewives; service choices,

including: various options to payment methods, food

corner availability, delivery service, hospitability in

servicing the consumer, image of interesting and

sincere shop personality, supporting facilities for

food court such as toilet availability, parking lot,

atmosphere of exterior and interior decoration

(Zeithaml, 1988), promotion such as goods prize,

discount, special event, coupon program, and lucky

draw prize program (Shergill and Chen, 2007).One

approach to create a positive image to the existing

image of traditional market is by attracting the

attention of market users, both buyers and sellers. In

this case, the administrator of the traditional market

which is managed by PD Pasar Jaya in DKI Jakarta

province, must be able to improve the physical

facilities both the infrastructure and the supporting

facilities as an effort to bring satisfaction to the users

of traditional market.

2 RESEARCH OBJECTIVES

The objective of this research is to examine the

impact of the facilities condition of traditional

market in relation to the level of consumer

satisfaction, by mapping the typology of traditional

markets in DKI Jakarta Provinces and to describe

the factors that influence the consumer satisfaction

of the traditional market user.

3 RESEARCH VARIABLES

3.1 Market Typology

Regarding to reorganizing and fostering the

traditional market, shopping center and modern

shop, the definition of traditional market is a

physical market that is built and managed by

government, local government, private companies,

state-owned enterprise, and local-owned enterprise

in cooperation with private companies that take form

as plotted working places such as outlets, shops,

kiosks, stalls or tents owned or managed by small

trader, medium trader, self-supported community, or

cooperative along with small-scale business, small

capital and the process of buying and selling

BINUS-JIC 2018 - BINUS Joint International Conference

commodities through bargaining process (Peraturan

Presiden Nomor 112 pasal 1 Tahun 2007).

3.2 Consumer Satisfaction

A standard of expectation established by the

customers is determined by level of performance as

perceived by the customers, comments and

suggestion from consumers, and impression from

employees in relation with customer expectation and

satisfaction. There are five most dominant factors

for service quality determinants from servqual

concept (Zeithaml, Bitner and Gremler, 2009), i.e.:

 Reliability is an ability to perform the

promised service dependably and

accurately. This dimension means company

give its promises about providing and

finishing the work responsibility.

 Responsiveness is consciousness and

willingness to help customer and provide

the service promptly. This dimension puts

an emphasis on the attention and precision

when dealing with the demand, questions,

and complaints from customers.

 Assurance is the knowledge, courtesy, and

ability of employee to generate confidence

and trust. This dimension probably will be

very crucial in services that require a

sufficiently high level of confidence in

which customers will feel safe and secure.

 Empathy is an individualized care and

attention which are given to the customers.

The essence of this empathy dimension is

to show customers through provided

service that they are special, and their needs

can be fulfilled.

 Tangible is represented in a form of

physical facilities, equipment, staff

appearance, and installed materials. This

dimension describes the physical

appearance and services that will be given

to consumer. This includes physical

environment such as exterior and interior of

buildings, the neat and attractive

appearance of staffs when providing the

service.

4 RESEARCH FRAMEWORK

The purpose of the research is to prove that the

analysis of early phenomenon about the condition of

traditional market on Jakarta provinces has an

impact on the customer satisfaction (Figure 1). The

result was the facilities of traditional market will

have a standard anticipation in addressing the impact

that will be generated from the phenomenon.

Figure 1: Research framework.

5 HYPOTHESIS

The hypotheses of this research are:

Ho: The perception of traditional market does not

predict customer satisfaction in DKI Jakarta

Ha: The perception of traditional market predicts

customer satisfaction in DKI Jakarta

6 THE CHARACTERISTICS OF

RESEARCH PARTICIPANTS

The participants in the study were regular customers

of the traditional market around DKI Jakarta. There

were259 participants with the age ranged from 18 to

68 years olds. There were 135 (52,1%) females and

124 (47.9%) males in this study. Participants were

asked to share the link and information to their

network, with the following criteria:Customer of

traditional market, living in greater Jakarta area and

frequent user of traditional market.

7 METHODS

7.1 The Sampling Technique

The sampling technique used in this researchis a

non-probability sampling where not all member of

participants have the same opportunity to be

included in the research. The approach used in the

research is convenience sampling (Gravetter and

Forzano, 2012; Gravetter and Wallnau, 2013).

7.2 Research Design

This study is a quantitative research. The design of

this research is a predictive correlation. Predictive

correlation design does not show cause-effect

Traditional

market facilities

condition

Consumer

satisfaction

The Condition of Traditional Market and the Impact to Consumer Satisfaction

relationship. The predictive variables predict the

criteria variable analyzed using regression model

(Gravetter and Forzano, 2012; Gravetter and

Wallnau, 2013)

7.3 Measuring Instrument

The perception of traditional market questionnaires

were adapted from the (Peraturan Presiden Nomor

112 pasal 1 Tahun 2007). There were 14 question

items. The second questionnaire was about customer

satisfaction

which was adapted from (Zeithaml,

Parasuraman and Berry, 1990). There were 11 items

in the questionnaire. Both questionnaire are using

Likert Scale

8 RESULT

Based on the result oflinear regression analysis, the

R value shows a simple correlation and equals

to0.873, indicating a high degree of correlation. The

value indicates how much of the total variation in

the dependent variable that can be explained by the

independent variable. In this case, the figure 0.394

(39,4%) can be explained as very large. Next result

is the Anova, which reports how well the regression

equation fits the data (i.e., predicts the dependent

variable). F

observed

167.270 with p < 0.0005, which is

less than 0.05, indicates that the regression model

predicts the dependent variable significantly well.

Overall, this indicates thatthe regression model

statistically and significantly predicts the outcome

variable (i.e., it is a good fit for the data).The last

isthe Coefficients regression that provides the

necessary information to predict dependent variable

from independent variable, as well as to determine

whether independent variable

contributes

statistically and significantly to the model and

the

regression equation with total dependent variable

6.653+0.888 (independent variable).

Table 1: Variables in the equation.

Model R R Square

Adjusted R

Square

Std. Error of the

Estimate

0.628

(a)

0.394 0.392 4.34727

a.Predictors: (Constant), Traditional Market Facilities Conditions

Model

Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1 (Constant)

6.653 2.293 2.901 0.004

Work Environment

0.888 0.069 0.628 12.933 0.000

Conditions

Dependent Variable: Consumer Satisfaction

9 CONCLUSION AND

DISCUSSION

In this study we examined the perception of

traditional market and the impact to the consumer

behavior. Data from 28 traditional markets and with

259 participants in DKI Jakarta, we found the reason

of stunted growth of traditional market currently is

due to its physical condition, for example: it was

foul-smelling, stifling, disorganized, muddy and

filthy. Such physical condition made the customer of

traditional market shift by choosing modern market

that offers more complete and convenient shopping

experience (Shergill and Chen, 2007; Sadino and

Syahbana, 2014). The traditional market, which is

often viewed only as a provider of cheap and

complete products /provider of cheap price, was not

popular. Traditional market, often identified as (a

place to conduct) bargaining and haggling prices was

viewed irrelevant to market players in Jakarta, this is

due to the modern retail markets presently are

growing more aggressively in offering complete

products with lower prices even giving discount

(Widjoyo, Rumambi and Kunto, 2013). The future

research should consider comparing consumer’s

satisfaction between traditional and modern markets.

Based on the conducted analysis, the reason of

stunted growth of traditional market currently is due

to its physical condition, for example: it was foul-

smelling, stifling, disorganized, muddy and filthy.

BINUS-JIC 2018 - BINUS Joint International Conference

Such physical condition made the customer of

traditional market shift by choosing modern market

that offers more complete and convenient shopping

experience (Widjoyo, Rumambi and Kunto, 2013;

Sadino and Syahbana, 2014). The traditional market,

which is often viewed only as a provider of cheap

and complete products/provider of cheap price, was

not popular. Traditional market, often identified as (a

place to conduct) bargaining and haggling prices was

viewed irrelevant to market players in Jakarta, this is

due to the modern retail markets presently are

growing more aggressively in offering complete

products with lower prices even giving discount.

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The Condition of Traditional Market and the Impact to Consumer Satisfaction