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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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    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 CompanyKementerian 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 VisionThe vision of KPDNKK is a leader in the development of domestic trade, co-operatives

    and consumerism

    1.1.2 Corporate Mission StatementThe 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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    1.2PROBLEM STATEMENTThe 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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    1.3OBJECTIVE OF STUDYNormally, 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 satisfaction2. To examine the weather speed of feedbackinfluence customer satisfaction

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    1.4RESEARCH QUESTIONAccording 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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    1.5THEORITICAL FRAMEWORKThe 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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    1.6RESEARCH HYPOTHESESHypotheses 1

    Ho : There is apositive relationship between friendly atmospheres with customer satisfaction

    Ha : There is nopositive relationship friendly atmospheres and customer satisfaction

    Hypotheses 2

    Ho : There is apositive relationship between Speeds of feedback with customer satisfaction

    Ha : There is nopositive relationship Speeds of feedback and customer satisfaction

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    1.7SIGNIFICANCE OF STUDY1.7.1 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 organizationThe 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 customerThrough 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 governmentThe 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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    1.8SCOPE AND LIMITATIONScope

    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 feedbackThe 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 BudgetingIn 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 experienceThis 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

    1.10SUMMARY AND CONCLUSIONIn 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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    1.11DEFINITION OF TERMSKPDNKK: 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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    2.2Friendly atmosphereFriendly 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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    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 ScaleThis 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 disediakanI 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 H1: : There is a significant between friendly atmospheres with customer

    satisfaction

    T-Test

    2 H1: 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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