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A study of marketing strategy of shopping centre for customer
retention in Hong Kong

Chu, Ka-wai; 朱嘉慧
Chu, K. [朱嘉慧]. (2009). A study of marketing strategy of
shopping centre for customer retention in Hong Kong. (Thesis).
University of Hong Kong, Pokfulam, Hong Kong SAR. Retrieved
from />2009

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The author retains all proprietary rights, (such as patent rights)
and the right to use in future works.


A STUDY OF MARKETING STRATEGY OF SHOPPING
CENTRE FOR CUSTOMER RETENTION IN HONG KONG

by

CHU KA WAI

DISSERTATION

Submitted in partial fulfillment of the requirements for
the degree of Master of Housing Management
The University of Hong Kong
December 2009


DECLARATION

I declare that this dissertation, entitled A study of marketing strategy of shopping centre for
customer retention in Hong Kong, represents my own work, except where due
acknowledgement is made, and that is has not been previously included in a thesis,
dissertation or report submitted to this University or other institution for a degree, diploma
or other qualification.

CHU KA WAI

ii


ACKNOWLEDGEMENT

I wish to express my sincere gratitude to my supervisor, Dr. Eddie Hui, for his professional
guidance and support.

He has provided many valuable advices and opinions during my


preparation of this research paper.

Moreover, I would like to thank my interviewees for their valuable time to fill in the
questionnaire.

They made a lot of contributions in my data collection.

I also want to

take this opportunity to thank my friends, family and colleagues for their unfaltering
support and assistance.

iii


Abstract
1 Chapter One - Introduction
1.1 Background
1.2 Research Questions
1.3 Significance
1.4 Goals and Objectives

2 Chapter Two - Literature Review/ Background
2.1 Definition and Concept of Shopping and Shopping Centre
2.1.1 Shopping
2.1.2 Shopping Centre

2.2 Background of Shopping Centre Development
2.3 Classifications of Shopping Centre
2.3.1 Territorial Shopping Centre

2.3.2 District Shopping Centre

2.3.3 Neighbourhood Shopping Centre
2.4 Definition and Concept of Marketing and Marketing Strategy
2.4.1 Marketing
2.4.2 Marketing Strategy
2.4.3 Marketing Mix

2.5 Definition and Concept of Customer Retention
2.6 Shopping Centre Marketing Mix Framework
2.6.1
2.6.2
2.6.3
2.6.4

Place – Location/ Accessibility
Physical Evidence - Exterior Design
Product - Interior Design, Tenant Mix and Leisure Attractions
Promotion - Communications Mix
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2.6.5 Price - Cost of Access
2.6.6 Process - Customer Service
2.6.7 People - Customer Participants

3 Chapter Three - Methodology
3.1
3.1.1
3.1.2

3.1.3

3.2
3.2.1
3.2.2
3.2.3

Research Methods
Documentation
Customer Survey
Site Investigations

Shopping Centres
ifc mall
apm
New Town Plaza

4 Chapter Four - Data Analysis and Results
4.1

Overall Results

4.2

Analysis For Different Categories

4.2.1
4.2.2
4.2.3
4.2.4


Gendor
Age Group
Education Level
Income Level

4.3

Analysis For Customer Satisfaction of Shopping Centre

4.4

Analysis For Customer Spending Behavior of Shopping Centre

4.5

Analysis of the Relationship between Marketing Strategy, Customer
Satisfaction and Customer Retention of Shopping Centre

4.6

Discussions, Implications and Recommendations
v


Chapter Five – Conclusions and Recommendations
5.1

Summary/Conclusion


5.2

Management Implications

5.3

Limitations and Scope for Further Study

Appendix
Bibliography

vi


ABSTRACT

This paper examines the relationship between the marketing strategy and the customer
retention of shopping centre industry in Hong Kong and identifies the major components of
marketing strategy for enhancing and sustaining the customer retention to the shopping
centre.

The economic development had grown rapidly in the past decades.

The

shopping behaviour of the customers has also changed a lot from purchasing in a general
store to the enclosed shopping mall with comfortable environment and air-conditioning
facility, which created a good condition and atmosphere to the fast growth of shopping
centre industry.


Following to the violent competitions among the shopping centres and

the awareness of the importance of customer retention in the shopping centre industry, the
shopping centre manager put more focus to assess how the marketing strategy can help to
retain the existing customers so as to increase the patronage and rental income of the
shopping centre.

The literatures have been reviewed to identify the major components of the marketing
strategy of the shopping centre industry.

In order to further investigate the customers’

opinions on various marketing components which will affect their decision making to
re-visit the shopping mall, the customer survey of large scale shopping centres in different

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districts i.e. ifc mall, apm and New Town Plaza has been carried out.

The results of the

survey indicate there are a close relationship between the marketing strategy and the
customer retention of Hong Kong shopping centre industry.

Good marketing strategy

can retain the repeated customers in the shopping centres.

The data of survey also


indicates

that

the

components

of

“Tenant

Mix

&

Leisure

Attractions”,

“Location/Accessibility” and “Customer Service Provided” play the essential roles for
sustaining the customer retention in the shopping centre industry.

Besides, the survey

shows the relationship between customer satisfaction and customer retention that the
customers who visit the shopping centre more times per week felt more satisfactory to the
services of shopping centre, which points out that the satisfactory feeling of customers can
assist to retain them in the shopping centre.


Since the results of survey reflect the

repeated customers are willing to spend more money for shopping, the success to retain the
existing customers can improve the performance and return of the shopping centres.

Through this paper, the shopping centre managers, the private developers and business
owners can have further insight and knowledge to the importance of marketing strategy and
customer retention in their shopping centre development.

They understand that the

effective marketing strategy can achieve and sustain the customers’ needs and their
satisfactory feeling, which enhance customer retention and the competitiveness to the

2


shopping centre as a result.

Further studies are required to explore a more comprehensive spectrum of shopping malls
so as to fully understand the extent of variation in marketing orientation across various
types of shopping centres when the sample size is not big enough to examine the topic.

3


CHAPTER ONE

1.1


INTRODUCTION

Background

The “shopping centre” concept was begun in the United States and was grown rapidly in
the 1950s.

This concept was then expanded to other countries in the world afterwards.

Many different types and sizes of shopping centre were thus appeared to fulfill different
needs.

In recent years, there are many new shopping arcades opening in Hong Kong.

The competitions among the shopping centres become violent.
the major factor to determine the success of shopping center.

Traditionally, location is

However, due to the change

of customer behavior and demand, the shopping centre is now not only a place for
shopping, but also for a form of family entertainment and satisfying a social need.

The

effective marketing strategy implementing by the shopping centre manager becomes a
critical element to achieve and sustain the customer needs, which can retain the customer
and enhance the competitiveness to the shopping centre.


Recently, the developers and investors are conscious of the benefits of retaining current
customers, which are essential leading to the success of shopping center development.
The effective marketing plan can draw more people and repeated customers to visit the

4


shopping arcade again and as a consequence enhance the sales revenue to the tenants and
achieve stable and high rental income to the investors.

Therefore, the developers are

willing to put more financial and manpower resources to implement marketing strategy so
as to enhance the attractiveness of the arcade and build up a good relationship with
customers.

1.2

Research Questions

In this research paper, it is going to explore the relationship between the marketing strategy
of shopping centre industry and the customer retention in Hong Kong.

What are the

major components of the marketing strategy for shopping centre development?
important are these components in sustaining the customer retention?

How


There are the

questions that this paper attempts to answer.

1.3

Significance

Most marketing theory and practice center focus on the analysis of attracting new

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customers, but less examines on retaining existing customers (Kotler, 2001).

However, in

today’s turbulent and fiercely competitive retailing environment, the shopping centre
manager faces the tasks not only to attract shoppers patronizing the mall but also to
maximize retention of current patrons (Yavas, 2003).

This is a worthy topic to be

discussed because this research has put more focus on assessing the relationship between
marketing strategy and customer retention.

Besides, the results of this study offer further insight for private developers and business
owners to understand the importance of marketing strategy and customer retention in their
shopping centres investments, so that they can establish or re-structure their existing and

future development strategies and planning.

The analysis of the study is also valuable to the shopping centre manager to get more idea
on improving the marketing and management of the shopping centre in order to build up a
good customer relationship and enhance the customer retention rate.

1.4

Goals and Objectives

The aims of this research paper are to examine and explore the major components of the
6


marketing strategy of shopping centre affecting customer retention in Hong Kong.

The essential components of marketing strategy for shopping centre development are
identified followed by a review of relevant literatures.

In addition, this paper analyzes the

relationship between each marketing component of shopping centre and customer retention,
and explores which marketing components have more impacts on customer retention.

It

attempts to find out how these marketing components enhance and sustain the customer
retention to the shopping center.

Besides, the dissertation further investigates and proves the scholars’ points of views on the

above matters by analyzing the customers’ opinions through the questionnaires.

The

survey focuses to search the customers’ opinions on various marketing components
affecting their decision making to visit the mall repeatedly, which provides useful
information in assessing different components of marketing strategy affecting the customer
retention and assist to analyze which marketing components are the significant elements for
the customer retention of shopping centre industry.

The shopping centre manager can

further improve the performance of shopping centre by strengthen these marketing
components so as to attract the repeated customers visiting the shopping centre again.

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CHAPTER TWO LITERATURE REVIEW/ BACKGROUND

In the past forty years, the shopping centre industry has experienced unprecedented growth.
There are many changes of shopping centre development in the aspects of size, amenities
and tenant mix over the years and the industry has had to overcome recessions,
overbuilding and major shifts in anchor tenants’ economic situations and space
requirements as well as changes in the characteristics of shoppers (Alexander and
Muhlebach, 1992) .

The role of the marketing strategy is also increasingly important to entertain the shoppers’
needs and establish well-planned services to the shoppers in order to attract and retain them
to visit the shopping centre.


This is essential to maintain the stable income from the

shopping centre and achieve a good rate of returns on investments for private developers
and business owners.

2.1

Definition and Concept of Shopping and Shopping

Centre

8


2.1.1 Shopping

“Shopping is a primary human activity in which almost every individual in civilized society
takes part…” as described by Beddington (1982).

Hui (2007) mentions that “Shopping

perhaps is one of the most exciting activities in life.

As the taste and the preference of

shoppers change constantly, retail facilities have evolved in response.”

Nowadays, the


environments of many shopping centres are changed constantly and they are included
comprehensive services, facilities and entertainment so as to fulfill different needs from the
customers.

2.1.2 Shopping Centre

There are a wide range of definitions developed for “shopping centre” in the past decades.
According to Yuen (2005), the formal one was developed by Urban Land Institute in 1977
which defines the shopping centre “as a group of architecturally unified commercial
establishments built on a site that is planned, developed, owned and managed as a unit,
with on-site parking provided on the property, and related in location, size, and type of
shops to the trade area that the unit serves.”

9


Guy (1994), quoted by Warnaby et al. (2005), describes the shopping centre “as planned
retail developments comprising various retail outlets which are under one freehold
ownership and managed and marketed as unit.”

He indicates the fundamental differences

compared to traditional high street retail locations i.e. planned developments that are
managed and marketed as a unified whole.

He also implies the shopping centres are

coherently and proactively marketed and so they have a strong marketing profile (Kirkup
and Rafiq, 1999).


As mentioned by Wee & Tong (2005), shopping centre is defined as “a group of retail and
other commercial establishments that is planned, developed, owned, and managed as a
single property” in accordance with the International Council of Shopping Centres (ICSC),
one of the largest and most authoritative organization on shopping centers in the world.

2.2

Background of Shopping Centre Development

Over the past century, retail shopping behaviour has changed dramatically.

Before the

industrial revolution, retail purchases were often made close to the residence in a general
store due to high transportation costs.

In the mid-1920s, the development of shopping

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centre was grown very fast as a result of the invention and popularization of the automobile
causing a lower price of traveling costs (Eppli and Benjamin, 1994).

People became easy

to travel and more mobile and they are willing to travel further to shop.

It caused the rise


of the suburbs in the United States and provided the developers an opportunity to create “a
revolutionary retail experience” - the shopping center.

It caused the out-of-town shopping

centres built since 1920s (Alexander and Muhlebach, 1992).

The creation of a national

highway system also gave the shopping centre industry a huge jump start (White and Gray,
1996).

The trend of shopping mall with enclosure during the 1950s till 1970s also push the
development of this concept further when the enclosed mall can provide a pleasant and
comfortable atmosphere to the shoppers (Alexander and Muhlebach, 1992).

Moreover,

shopping centres now include many of the services and entertainment, which become a part
of American life.

In addition to purchasing retail and necessity goods, they go shopping

centres for community activities, fashion shows or educational displays.

Besides,

shopping centres have thousands of repeated customers who tend to have an emotional
attachment.


Thus, the shopping centre management is now more important that it can live

up to its end of the bargain and provide a clean, safe, exciting place to shop and fill with the
range of merchandise appropriate for that particular market (White and Gray, 1996).

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2.3

Classifications of Shopping Centre

Different countries have different classifications of shopping centres.
States, the suburban shopping centre is the dominant form of retail space.

In the United
It divided to

five major types i.e. the regional centre (including super regional centre), the community
centre, the neighborhood centre, the specialty centre (including outlet and off-price centre)
and the convenience centre. The types are defined by their dominant or anchor tenants,
their gross leasable area and the population or trade area that they serve.

The new types

of shopping centre had also been developed e.g. the megamall which is three or four times
larger than an ordinary regional centre and the power centre designed for a higher ratio of
anchor tenants (Institute of Real Estate Management, 1990).

This concept is also extended to Hong Kong and affects the development of shopping

centre industry. There are different types of shopping centre including regional and smaller
size shopping mall nowadays to accommodate various needs of people for shopping in
Hong Kong.

According to the Hong Kong Planning Standards and Guidelines, the

Planning Department had completed a study in November 2005 called the “Review on
Shopping Habits” and based on the shopping preferences of consumers to classify the types

12


of shopping centre into a three-tier retail hierarchy i.e. Territorial Shopping Centres,
District Shopping Centres and Neighbourhood Shopping Centres (Planning Department,
website).

2.3.1 Territorial Shopping Centre

Territorial Shopping Centres are located within well-developed urban areas and are
supported by good transportation networks with other districts in Hong Kong.

They serve

the territory as a whole and provide the greatest variety of high order comparison goods
and dining, leisure and entertainment services.

The districts of Mongkok, Causeway Bay

and Tsim Sha Tsui are classified as the shopping areas with territorial significance which
can attract consumers from other districts and provide a high concentration of shopping

malls of various sizes with supporting commercial facilities such as offices and hotels.
Examples of Territorial Shopping Centres include Langham Place at Mongkok, Times
Square at Causeway Bay and Harbour City at Tsim Sha Tsui.

2.3.2 District Shopping Centre

District Shopping Centres are located at the locations with district-wide significance.

13


They mainly serve the population within the district providing variety of household durable
goods, personal consumer goods, personal durable goods, leisure and entertainment
facilities as well as dining services.

District Shopping Centres are located next to the

public transport nodes in the districts to make convenience to the consumers when they
interchange between public transport modes at these nodes.

Examples include at Telford

Plaza at Kowloon Bay, Tuen Mun Town Plaza at Tuen Mun, and Citygate Shopping Center
at Tung Chung.

2.3.3 Neighbourhood Shopping Centre

Neighbourhood Shopping Centres are located within walking distance from nearby
residential areas including private and public housing estates.


They mainly serve the local

populations living nearby and provide convenience goods, household retail services,
personal retail services and dining services to the customers.

Example of Neighbourhood

Shopping Centre includes Chi Fu Landmark in Pokfulam.

2.4

Definition and Concept of Marketing and Marketing

Strategy
14


2.4.1 Marketing

At the initial stage, the concept of Marketing is only applied to consumer products in the
field of automobiles, health care and soft drinks in the United States.

Due to the

effectiveness in achieving success of these companies through the marketing tools, other
fields of companies such as services providers, professional firms, public institutions and
even non-profit institutions also adopted this concept to promote their brands (Tam, 2007).

There are numerous definitions of marketing, but their meanings are similar.


Kolter (1994)

defines the term of marketing is “a social and managerial process by which individuals and
groups obtain what they want through creating and exchanging products and value with
others”.

Another definition from The Chartered Institute of Marketing is that marketing is “the
management process responsible for identifying, anticipating and satisfying customer
requirements profitably”.

The American Marketing Association, as quoted by Kolter (1994), defines “Marketing is

15


the process of planning and executing the conception, pricing, promotion, and distribution
of ideas, goods, and services to create exchanges that satisfy individual and organizational
goals.”

Kolter (1994) mentions that the aim of marketing is to know and understand the need of
customer so as to make the product or service fits him and sells itself.
should result in a customer who is ready to buy.”

“Ideally, marketing

It holds the key to achieving the

company’s goal in creating, delivering, and communicating customer value to its chosen
target markets, which is more effective than its competitors.


2.4.2 Marketing Strategy

Marketing strategy is increasingly important in the shopping centre development when the
competition become keen in the industry as illustrated by Alexander and Muhlebach (1992).
Kolter (1988) states that “Marketing strategy defines the broad principles by which the
business unit expects to achieve its marketing objectives in a target market.

It consists of

basic decisions on total marketing expenditure, marketing mix, and marketing allocation”.
It is an overall marketing plan aiming to achieve the customers’ needs by influencing the
marketing mix in relation to expected environment and competitive condition (Kotler and

16


Armstrong, 1994).

The definitions indicate that there is a close linkage between

marketing works and customers’ needs.

Walker et al. (2006) explains that the marketing strategy is “to effectively allocate and
coordinate marketing resources and activities to accomplish the firm’s objectives within a
specific product market”.

The Middle East Council of Shopping Centres (MECSC), which is a voluntary non-profit
association based in Dubai and established in 1994 representing shopping mall owners,
developers, marketing managers, leasing managers, retailers, property managers and
government officials, highlighted in the seminar for the importance of re-visiting marketing

strategies to the shopping centres under the current intensely competitive environment.

It

explains that the shopping centre managements have recognized the need for the re-visit
marketing strategies to keep pace with consumer behaviour that is constantly evolving.
The re-visiting marketing strategies can increase sales, productivity and efficiency, and
develop insights into marketing trends that will define the future (Feimster, 2007).

As illustrated by White and Gray (1996), “Effective marketing strategy requires that every
element of the marketing mix fits together to deliver a coordinated and integrated appeal to

17


the target customers group.”

I agree this point of view that the elements of marketing mix

are essential to develop a successful marketing strategy to meet customers’ needs or wants
and for the company to achieve its goal.

2.4.3 Marketing Mix

McCarthy (1964) defines marketing mix “as a combination of a set variables related to
fulfilling customers’ needs”.

McCarthy and Perreault (1990) further define marketing mix

“as the controllable variables that an organization can co-ordinate to satisfy its target

market”.

Marketing mix is also described as the core concept of marketing theory and as

the tools and techniques to implement the marketing concepts (McDonald and Tideman,
1993).

The traditional concept of marketing mix is 4Ps (i.e. Product, Price, Place and Promotion),
which is proposed by McCarthy’s in 1964 and focused for product marketing.

Booms and

Bitner (1981) extend the 4Ps concept to specific adaptations for service marketing i.e. 7Ps
service marketing mix model by including the additional 3Ps (i.e. People, Physical
Evidence and Process).

Then, Kirkup and Rafiq (1999) and Warnaby et al. (2005) further

developed the Booms and Bitner’s 7Ps service mix to re-label and sub-divide some

18