Consumer decision making process in shopping ... - thaihalalfoods.com

Sep. 2009, Volume 8, No.9 (Serial No.75)

China-USA Business Review, ISSN 1537-1514, USA

Consumer decision making process in shopping for halal food in Malaysia∗ Mohani Abdul, Hashanah Ismail, Haslina Hashim, Juliana Johari (Faculty of Economics and Management, Universiti Putra Malaysia, Serdang 43400 UPM, Malaysia)

Abstract: This paper reports on the results obtained from quantitative and qualitative data on consumer decision making process in shopping for halal food. A total of 213 questionnaires were returned by respondents, confirming that our respondents who are concerning about the “halal” logo are also concerning about the ingredients used. The study also confirms that there is a significant relationship between respondents’religion and their perceptions towards halal logo and ingredients. While the qualitative data from a focus group interview on how Muslim consumers shop for halal food shows that there is a need for assurance that food to be purchased is halal, implying the presence of risk and uncertainty when making purchase considerations. Using the audit risk framework in conventional assurance services, the study finds that assurance is sought in relation to the halalness of business premise, halalness of product, and assurance from environmental elements such as the halal logo displayed. Key words: assurance; halal food; Muslim consumers

1. Introduction Consumers in many parts of the world today are blessed with an array of choice when buying food products. Society has evolved to a stage where what we consume as ordinary consumers are no longer produced directly by us but are instead produced by many intermediaries in the food supply chain. In the process many consumers will not know and may not need to know who the intermediaries are and how the food processing was carried out. Nevertheless, in many societies religion plays one of the most influential roles in food choice (Musaiger, 1993; Dindyal, 2003). According to Hermann et al (1997), the first stage of a purchase takes place when the consumer inspects the food, as well as requesting for additional information. This means that an effective label might be a cue for quality, which can lead to a purchase. Quality management practices such as adopting halal certification can boost customers’ confidence and hence can lead to their satisfaction. Customer satisfaction is an oft-mentioned construct in the quality management literature. Anderson et al (1994) found that there are positive relationships between quality and customer satisfaction, and customer satisfaction and profitability. The impact of religion on food consumption depends on the religion itself and on the extent to which individuals follow the teachings of their religion. To the Muslims, there is an additional need for food quality ∗

The authors are grateful to Universiti Putra Malaysia for funding this research project under grant “Research University Grant Scheme, Initiative 4, SMEs Perceptions Towards Halal Policy in Increasing Their Market Share and Market Competitiveness”. Mohani Abdul, D.B.A., senior lecturer, Faculty of Economics and Management, Universiti Putra Malaysia; research field: entrepreneurship. Hashanah Ismail, MSc, associate professor, Faculty of Economics and Management, Universiti Putra Malaysia; research fields: auditing and financial reporting. Haslina Hashim, MSc, lecturer, Faculty of Economics and Management, Universiti Putra Malaysia; research fields: management information system and management. Juliana Johari, MSc, lecturer, Faculty of Economics and Management, Universiti Putra Malaysia; research fields: marketing information system and management. 40

Consumer decision making process in shopping for halal food in Malaysia

assurance in that only food deemed as halal is fit to be consumed. Hence food certified as halal possesses a credence quality attribute, i.e. a product characteristic that cannot be evaluated or ascertained by the individual consumer, even upon or after consuming the goods (Darby & Karni, 1973). As a product attribute, “halal” refers to the nature, origin, and the processing method of the foods and foods produced taking animal welfare or sustainability issues into account, as such the presence of the credence quality has to be clearly communicated through its labeling. Hence the communication source and message conveyed with respect to the credence quality have to be trustworthy and credible (Verbeke, 2005). Halal certification is important as it is the sole identifying mark that the product meets the halal requirements. Given the need for assurance that what a Muslim consumer is about to purchase meets halal requirements, what are the elements of halalness sought by Malaysian Muslim consumers? It is therefore the objective of this paper to examine how Muslim consumers make purchase decisions and try to identify elements of assurance sought to enhance confidence that products to be purchased are indeed halal, the role that halal certification plays in Malaysian Muslim consumers’ decision making when they buy their food and the other factors that Malaysian Muslim consumers take into consideration when they buy their food. The rest of the paper is organized as follows: The next section reviews the literature. This is followed by a description of the research method used in the study. The paper then reports the findings of the study together with a discussion of the findings and the paper then concludes.

2. Literature review Halal food market exists wherever there are Muslim consumers whose tastes and preferences are governed by halal rules on food specification. Halal food may apparently be the same as other food, but its nature, technique of its processing involving the ingredients, handling, use of various methods from the beginning to the end, is always the one approved and recommended by Islamic law. The correct labeling on halal food is essential for consumers, because certain labels can often be misleading (HFA, 2002-2003). Riaz (1996) argues that there are very few labels on food items in grocery stores that indicate whether the food product is halal for Muslim consumption or not. Many different models have been proposed to explain consumer behavior towards food in general for example the work of buying behavior of food products by Acebron, Mangin & Dopico (2000), the behavioral perspective model (Leek, Maddock & Foxall, 2000), and classical attitude behavioral model (Trondsen, Braaten, Lund & Eggen, 2004). In general, all of these models show that choice and motivation toward food consumption are driven by attitude towards the product. Attitudes toward a product are not only determined by the consumers’ motives and their consumption experience, but also by their perceptions of the product (Alvensleben, 1997). Perception is most likely to be distorted, hence the perceived world and the real world do not correspond with each other and attitudes regarding the perceived properties of the product are linked to selected variables (Kotler & Armstrong, 1993). The more positive or negative a consumer’s attitude is towards a product, the more drawn the consumer is to the positive (or negative) properties of the brand-leading to a stabilization of the attitude towards the product (Kotler & Armstrong, 1993). According to Aitelmaalem, Breland and Reynold (2005), the main factor that influenced Canadian Muslim’s meat purchasing decisions is having confidence and trust that the product they are about to purchase is halal. With the modern technology in placed, particularly the internet, news regarding some practices especially bad practices by the firms spread very fast. Hence consumers’ skepticism grows and may force companies to

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compete for credibility in the marketplace. The customer confidence needed for long-term loyalty can be earned only by companies that establish public trust especially whose product is intangible and difficult to evaluate (Seiders & Berry, 1998). Trust is central to exchange and is believed to influence interpersonal behavior more than any other single variable (Golembiewski & McConkie, 1975). When consumers lose their trust, violation of justice principles can trigger perceptions of unaccountability. Such perceptions could produce intense reactions from them, who are often driven to get even with such firms.

3. Trust and fairness Studies by Nooteboom, et al (1997), Garbarino & Johnson (1999), Morgan & Hunt (1994), Tax, Brown, & Chandrashekaran (1998), have pointed to trust as a fundamental ingredient for the development of strong and long-term relationships between consumers and organizations. Similarly, Rousseau, Sitkin, Burt and Camerer (1998) agree that trust becomes relevant when there is an existence of risk or lack of assurance about a product. Trust would help in reducing uncertainty and risk in transactions. The building of consumer trust is sensitive to perceptions of justice regarding the way complaints were handled by the company (Santos & Fernandes, 2008). More specifically, the perception of interactional fairness strongly impacted consumer trust in the employees which, in turn, revealed a high impact on trust in the company. Thus it is perceived that the particular characteristics of service provision, such as intangibility contributes to the creation of a favorable environment for the relevance of constructs such as trust and loyalty and, consequently, for the establishment of more solid relationships between consumers and companies. Reports abound of companies misleading consumers by falsely labeling their products as halal in order to take advantage of the growing global market. Majority of these companies were not fully complying with halal guidelines. For example, a majority of UK Muslims do not trust big supermarkets when buying halal meat (Allam Ahmed, 2008). They will only be assured that the meat is halal if the seller is a Muslim selling halal products in their local shops, and in fact not many of the respondents know the existence of supermarkets in their local area that sold halal meat. Furthermore The Muslim Council of Britain (MCB) has warned that up to 90 per cent of the meat and poultry sold as halal in the UK may have been sold illegally and not slaughtered according to the requirements of the Muslim faith. The need for assurance in our everyday lives is not confined to selection of food alone. In the auditing profession auditors provide assurance about the quality of financial information disseminated by corporations to those outside the corporations. The assurance given reduces uncertainty and therefore risk in decisions to be made by users of the audited financial information. Auditors are guided by the audit risk model in performing their assurance responsibilities. The audit risk model prescribes that one must identify the sources of risk or uncertainty first before assurance can be given. The risk could come from within the organization or external to the organization. Using the audit risk model a potential customer is also looking for assurance: that a product has met the halal requirements as prescribed by Islam. The assurance relate to several sources: the production process, the product itself and the supply chain. Hence the audit risk model is conceptually appropriate to describe the assurance seeking behavior of Muslim consumers.

4. Issues and challenges in Malaysia Some of the issues identified in the study by Shahidan Shafie and Md. Nor Othman (2008) on the impact of 42


halal phenomenon to the Malaysian consumers and companies in Malaysia include (1) the inconsistency of the definition of halal on the aspect of slaughtering of animal; (2) proliferation of halal logos by individual firms; (3) the use of Arabic-sounding or Islamic-signaled brand names; (4) the rampant display of Quranic verses (or the use of Arabic characters) by food operators to indirectly signal that the premise is operated by Muslim and that it offers halal foods; and (5) the lack of enforcement by the authorities with regards to the misuse of halal logos. They also conclude that the main challenge to the usage of “certified halal” issue is the lack of enforcement by the Jabatan Kemajuan Islam Malaysia (JAKIM)1 personnel; hence leading the public to question the validity of some of the products or services claiming to be halal. This could be due to lacking in assistance given by government ministries like the Ministry of Domestic Trade and Consumer Affairs, which tends to focus on their own problems that could be not related to halal products. In addition, the lack of collaboration amongst the world’s halal-certification authorities has created “doubts” amongst the Muslim consumers on the authenticity of the halal certification process. The speed of issuing halal logo is another challenge facing JAKIM. This could be due to JAKIM not having a fully fledged research and development (or technical) unit, which is able to process each halal application promptly. Also in Malaysia each state has its own Department of Religious Affairs empowered to issue the halal certificate. The state might need to get assistance from a third party to commission lab testing and analysis as well as to do an on-site inspection. This third party normally involves food technologists, chemists or experts from local universities.

5. Methodology Data for this study was obtained in two stages. In the first stage, we tried to identify more general criteria of buying food amongst consumers. Hence a survey was carried out amongst consumers using simple random sampling during the Malaysian Agriculture, Horticulture and Agro-tourism Show (MAHA) 2008 (11-23 August, 2008). Respondents were asked to fill in a questionnaire indicating their level of agreement or disagreement with 20 statements, eliciting their perceptions towards halal logo and ingredients in food and beverages using a five-point Likert Scale where 1 indicates strongly disagree and on three open-ended questions on “Consumers’ perception towards halal certification among food factories and industries in Malaysia” the other end 5 indicates strongly agree. The data were analyzed using Statistical Package for Social Sciences (SPSS). ANOVA was used to test the significance of the statements in relation to ethnic background and religion. While in the second stage, a more scrutinized method whereby three major questions were posed to six Muslim lecturers in a public university in Malaysia. The questions were as follows: (1) What criteria are you looking for when you buy your food? (2) Can you explain the meaning of “Halal Food”? (3) What do you think about halal certification especially among the food factories and industries in Malaysia?

6. Results In the first part of the study, a total of 213 consumers responded and agreed to fill up our questionnaires. Table 1 depicts the demographic variables of our respondents. Most of our respondents were females (56.8%) and 1

A government agency entrusted with issuing halal certification 43


more than 80% are Muslims and 79.8% are Malays. Table 1 No. 1

2

3

Demographic variables of our respondents

Demographic variable Gender Male Female Total Religion (ethnic background) Muslim (Malay) Muslim (others) Non-Muslim (Indian & Chinese) Non Muslim (Others) Total Ethnic background Malay Chinese Indian Others Total

Frequency

Percent

92 121 213

43.2 56.8 100.0

170 7 35 1 213

79.8 3.3 16.4 0.5 100.0

170 25 10 8 213

79.8 11.7 4.7 3.8 100.0

7. Some relationships between consumers’ perceptions and product attributes (1) Relationship between respondents’ ethnic background and their perceptions towards halal logo and ingredients in foods and beverages. Table 2

Ethnic background versus mean score on perceptions towards halal logo and ingredients

No.

Ethnic background

1 2 3 4

Malay Chinese Indian Others

Mean score Halal logo 3.84 2.82 3.39 3.15

Ingredients 3.75 3.11 3.58 2.75

There is a relationship between respondents’ ethnic background and their perceptions towards halal logo and ingredients. The Malays recorded the highest mean score (3.84 for perceptions towards halal logo and 3.75 for the ingredients), followed by the Indians (mean score of 3.39 for perceptions towards halal logo and 3.58 for the ingredients), and finally the Chinese (with mean score of 2.82 for perceptions towards halal logo and 3.11 for the ingredients) (see Table 2). When tested for the significance, both of them are significant at 95% confidence level which could explain that all of the Malays are Muslims (as depicted in Table 1) and are very concerned about the halal logo and ingredients. Table 3

Religion versus mean score on perceptions towards halal logo and ingredients

No.

Religion

1 2 3 4

Muslim Buddha Hindu Christian

Mean score Halal logo 3.83 2.75 3.20 2.55

Ingredients 3.73 3.10 3.48 3.05

(2) Relationship between respondents’ religion and their perceptions towards halal logo and ingredients.

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There is a significant relationship between respondents’ religion and their perceptions towards halal logo and ingredients. The Muslim respondents have a greater mean score on their perceptions towards halal logo and ingredients (with a mean score of 3.83 on their perceptions towards halal logo and 3.73 on the ingredients) compared to the non-Muslims with a mean score of 2.93 on their perceptions on halal logo and 3.23 on the ingredients (see Table 3). Interestingly the Hindus score the second highest that could explain that most hindus are vegetarians and are concerned of the ingredients of their foods. When tested for the significance between the Muslims and Non-Muslims versus their perceptions towards halal logo and ingredients, both of them are significant at 95% confidence level. As discussed earlier, religion plays an important role in determining the choice of food especially among the Muslims. (3) There is a correlation between consumers’ perceptions towards halal logo and the ingredients. When tested for the significance, it was found that the mean consumers’ perceptions towards halal logo and ingredients were significant at 99 percent confidence level. This could confirm that our respondents who are concerning about the halal logo are also concerningh about the ingredients used. Similarly, the role of halal certification is to ensure that the halal requirements of the goods are in place. A product that has a halal designation with the halal logo means that the product contains halal ingredients that comply with the Islamic principles of hygiene and humane treatment of animals, and other rules involving the production processes. While in the second stage of our method, more detailed criteria of selecting foods and beverages were sought through a qualitative study. Based on the focus group session the responses indicate areas of assurance sought that halal comes in several dimensions as indicated in Fig. 1 below: Halal logo Brand Selection of business premise 1. Cleanliness 2. Owner’s religion

Product

Cleanliness

1. Packed food

Cost

2. Fresh food

Packaging - ingredients Convenience Trust

Fig. 1

Model of how a Muslim woman shop for halal food: Assurance sought

The Fig. 1 shows that halal do not just relate to food product alone but encompasses the business premise where the products are sold as well as the labeling of food as halal as embodied in the halal logo attached to the products. Like the audit risk model. Total halal assurance can be broken into its components and when consumers seek halal products they use criteria not only relating to food but also relating to the business premise and food labels.

8. Some comments made by our respondents Our respondents expressed doubts towards JAKIM halal logo due to current controversies as highlighted in the media thus confirming claims made by Shahidan and Md. Nor (2008) and Sharif (2000). Besides the halal logo, respondents were also very concerning about the ingredients of food. Respondents commented that non-Muslim producers especially the Chinese have very little understanding of the halal issue. Thus government agencies like

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JAKIM should not just focus on just issuing halal certificate only but need also to extend more effort towards disseminating and educating non-Muslim producers on what halal food and halal certification entails. Respondents even suggested that JAKIM should create a certificate that portrays a logo of Muslim product in order to inform consumers that the product is a truly Muslim certified product that can avoid confusion among Muslim consumers.

9. Conclusion This study examines consumers’ perceptions towards the halal logo as an assurance label for food quality as well as their perception towards halal ingredients. The study confirms that there is a significant relationship between respondents’ religion and their perceptions towards halal logo and ingredients. It was also found that the mean consumers’ perceptions towards halal logo and ingredients were significant at 99 percent confidence level which could explain that our respondents who are concerned about the halal logo are also concerned about the ingredients used. This study also reports on how Muslim consumers make purchase decisions with respect to halal food. Based on responses given by a focus group as well as responses to a questionnaire distributed to visitors to an exhibition, the study finds that the key feature in selecting halal food is trust and confidence. Using the audit risk model the study identifies the areas of assurance that customers seek which are: that customers seek assurance that business premises are halal, food is halal and that the halal logo conveys and convinces the customer that the food thus labeled is fit for consumption by a Muslim The findings also suggest that consumers would like to see more proactive monitoring of genuine halal certification and greater enforcement against false labeling of non-halal foods as “halal”. This study also implies that it is important for managers in food and beverages to have halal certification besides have a proper labeling of the contents of their food and beverages in order to attract their customers particularly the Muslim customers. References: Acebron, L B., Mangin, J. L. & Dopico, D. C.. (2000). A proposal of the buying model for fresh food products. Journal of International Food & Agribusiness Marketing, 11(3), 75-96. Aitelmaalem, H., Breland, P. & Reynold, L.. (2005). Canadian halal meat market study. An alternative market for Alberta’s meat industry. Retrieved from http://www.1.agric.gov.ab.Ca web assessed on 14/4/2009. Allam Ahmed. (2008), Marketing of halal meat in the United Kingdom supermarkets versus local shops. British Food Journal, 110(7), 655-670. Alvensleben, R. v. (1997). Consumer attitudes and behaviour on the meat market in Germany. In: Alvensleben, R.v., S.v. Cramon-Taubadel & A. Rôhr, K. Schleyerbach, Problems of meat marketing, seven essays. Arbeitsbericht Nr. 2. Lehrstuhl für Agrarmarketing, Universităt Kiel. Anderson, E.W., Fornell, C. & D. R. Lehmann. (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. Journal of Marketing, 58(3), 53-66. Darby, M. & E. Karni. (1973). Free competition and the optimal amount of fraud. Journal of Law and Economics, 16, 67-88. Dindyal, S.. (2003). How personal factors, including culture and ethnicity, affect the choices and selection of food we make. Internet Journal of World Medicine, 1(2), 27-33. Garbarino, E., & Johnson, M.. (1999). The different roles of satisfaction, trust and commitment for relational and transactional consumers. Journal of Marketing, 63(2), 70-87. Golembiewski, R. T. & McConkie, M.. (1975). The centrality of interpersonal trust in group processes. In: C. L. Cooper (Ed.), Theories of group process. New York: John Wiley & Sons. Morgan, R.M.. & Hunt, S.D.. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58, 20-38. Hermann, R. O, Warland, R. H. & Sterngold, A. (1997). Who reacts to food safety scares? Examining the AAR crisis. Agribusiness, 13(5), 511-520. Halal Food Authority (HFA). (2002-2003). Safety launch halal meat. Retrieved from http://www.halalfoodauthority.co.uk/front.html. Kotler, P. & Armstrong, G.. (1993). Marketing: An introduction (3rd. ed). N.Y.: Prentice Hall. Leek, S., Maddock, S. & Foxall, G..(2000). Situational determinants of fish consumption. British Food Journal, 102(1), 18-39. Morgan, R.M., & Hunt, S.D. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58(3), 20-38. Musaiger, A. O.. (1993). Socio-cultural and economic factors affecting food consumption patterns in the Arab countries. Journal of

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