Higher Education In Malaysia Management Essay

Universities are now recognizing that education is a service industry and are now placing greater emphasis on meeting the expectation and need of the customers who are their students. Today there is intensive competition in the educational market, to adopt strategies to differentiate their offers from those of their competitors by delivering better services.

The concepts loyalty has been perceived and defined by so many researches in different ways. It’s assumed that loyalty is positively related to universities to attract and retain exiting one (see, e.g. Dick & Basu, 1994; Henning-Thurau, 2001).

Loyalty of student is now a major goal of universities. A loyal student is a population source of competitive advantages. There has been increase in competition by universities offering education and this means that retaining old students is as important as attracting and enrolling new students (Kolter & Fox, 1996; Elliott & Healy, 2001).

Loyalty of student is considered important because its has positive effect on long-term profitability on the university (Ribbick et al., 2004). Loyalty of student has been well establish a key to profitability and long-term sustainability (Keating et al, 2003) and previous studies suggest that loyalty of student is a key driver of financial performance in the educational industry (Arnold and Reijnolds, 2000, pp.24).

Loyalty of students is an indicator of university past, present and future performance and there has been ample evidence of its positive effects on universities, thus students constitute an important source of financing to universities in Malaysia ( Osborn et al., 2012).

Loyalty in students is influence by increased student mobility, there giving the process of attracting student a new dimension. Even after graduation from the university, students can still maintain and continue their relationship with the university, by participating in conferences and other arrangements or by acting as an advocate of the university. Marzo_Navarro (2005) said that there is a growing numbers of formal students who are returning to the universities to continue their education.

Under this study, it will discuss the Building loyalty of students in Malaysia Universities through Relationship Marketing. This study will enable management of universities to identify their strength and their weakness, so that they will be able to make necessary improvement in increase the loyalty of their students.

The chapter will contain;

Background of the study, which will describe about the background and theories which relate to the research.

Problem statements, which will discuss the subject related to the topic.

Research question, which discuss the questions which is needed to answered the research.

Objective of the study, which discuss the purpose of the study

Significant of the research work.

Scope and Limitation of the Research


Malaysia educational sectors have undergone substantial growth as a result of efforts taken by the Ministry of Education to expand the educational industry. The Malaysia government has made it a long-term goal to make Malaysia a regional center for excellence in education provision. The growth of education in Malaysia can be seen in several areas which include; increase in student’s enrollment, increase in numbers of higher institutions (His), increase in government spending in education, promoting education and the country’s continuous need for human resources.

Before now, educational institutions has operated traditionally in a relatively stable environment for decades, however the industry is now facing an aggressive competition in a new dimension and environment. MAPCU (Malaysia Association of Private College and University) estimated that the industry has generated a total of RM1.5 billion in 2008 (Oh et al., 2009), and now a sizable business to attract intensive competition.

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The ministry of education in Malaysia has clearly stated it vision and which is to make Malaysia a center of learning and educational excellence by the year 2020. Hence, the management of quality in education had gain momentum very rapidly in the last few years and universities are now playing an important role in the competitive marketplace. Palmer (1997, p. 321) suggest that universities possess all the characteristics of service industry, which are intangible, heterogeneous, inseparable from the person delivery it, variable and the students (Customers) participating in the process of production of the service.

Having a good relationship with the students can help enhance competitive edge and profits for the university (Berry et al., 1996. pp18). The key objective of relationship marketing is to maintain the loyalty of students to their university (Hart & Johnson, 2000).

A student that is loyal stays in a relationship, say positive word-of-mouth and generate more financial profits to the university (Buttle, 1997; Hart & Johnson, 1999). Education is people based and students are customer of the university (Finney & Finney, 2010, p.27).

Few research on educational field have used Morgan & Hunt’s (1994) model to discuss the relationship between students and their educational institution (Adidam et al, 2004, pp.34). Building relationship with students is important to enhancing loyalty of students to their universities. A loyal student provides predictable financial resources for universities, especially self-finance universities.

Loyalty has been assumed to be positive because of the ability to attract both new students and retain existing ones. Loyalty is a primary goal of relationship marketing and it’s most times equated with relationship marketing concept itself (Gwinner & Gremler, 2001 and Johnson & Hunts, 2004). Loyalty is been defined as a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, thereby causing repetitive same-brand-set purchasing (Kolter, P. (2000, pp23. Vol.7 No. 2.)

On universities and institutions, loyalty as both short-term and long-term effects, quality of teaching positively active participation and committed behavior influence the loyalty of students (Oliver, R.L., 1999, Vol.63, pp.33 – 44). A loyal student is a probably a good advocates of his/her university and recommending the university to others and beside a growing number of former students returning to their universities in order to update their knowledge (Marzo_Navarro et al., 2005).

Even after graduation, a student that is loyal to his/her university, will recommend his/her university to friends and may also continue to support the university through donations, financial supports or offering placements to existing students in his/her company (Hennig-Thurau et al., 2001, vol. 23, pp.18 -25).

Therefore, there are great advantages of loyalty in students because even after their graduation, they are still committed to their universities and the importance of loyalty is far reach. Loyalty in student is one of the major objectives of universities; therefore loyal student population is a source of competitive advantage, with outcomes as positive words of mouth (WOM), communication, retention and repeat.

1.1.0 Background of the Higher Education in Malaysia

With globalization and the liberalization of higher education in Malaysia, local universities and colleges are facing new challenges in the educational arena. Overseas universities such as Nottingham University, Monash University and Curtin University of Technology, are transforming themselves into global universities by establishing new branch campuses and exporting educational programmes to Malaysia. Given this head on competition, local universities and colleges have no choice but to improve the quality of their programmes and graduates so that they can compete with the best globally.

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The Malaysian higher education has undergone substantial growth as a result of efforts made by the Ministry of Education to expand the education industry. This is actually Malaysia’s long term objective to make the country a regional centre of excellence in education. The growth of higher education in Malaysia can be seen in several areas such as increased governmental policies in promoting education, increase in student population and enrolment, increase in the number of higher education institutes including private and public universities and colleges. Since the inception of its first university in 1961, Malaysia now has 20 public universities, 32 private universities and university colleges, four branch campuses of international universities, 21 polytechnics, 37 public community colleges and 485 private colleges as compared to year 2000 where Malaysia only had 11 public universities, five private universities and university colleges, three branch campuses of international universities, 11 polytechnics and 632 private colleges (http://www.mohe.gov.my).

The role of higher institution is to produce a competent workforce equipped with knowledge, skills, attitude and behavior to meet the demands of the high technology era. As John F. Kennedy, 35th President of the United States of America aptly puts it: “Our progress as a nation can be no swifter than our progress in education. The human mind is our fundamental resource.” Malaysia too believes in investing in education, particularly higher education as a means of achieving greater socio-economic progress and human capital development by consistently setting aside a high proportion of development budget, averaging 20%, for education. Presently, only about 12% of the general populations are pursuing their tertiary education locally whilst a significant number of them are studying abroad. By the year 2020, the government hopes that 40% of the Malaysian population will attend tertiary education (http://www.mohe.gov.my). In this respect, the prerequisite of a successful institution of higher learning is to have skilled workforce to provide quality services to their students be it academic or non-academic services. Hence, human resource development in the university is vital and remains significant.


Loyalty of students is an indicator of higher institution past, current and future performance. Loyalty of students can be attained by delivering superior quality educational services (Gilly, 2001). Only few educational institutions in Malaysia have been able to gain loyalty of their students and little of them known about mechanism of generating loyalty in students (Ribbick et al., 2004). Several factors such as service quality, student satisfaction, relationship commitment and trust have been attributed to bring about loyalty in students to their institutions.

It is often argued that a student that is please with his/her university is more like to return and eventually form an emotional ties with his/her university. However, it will be difficult for universities to eventually please and bond their students, who are always demanding for better educational services. Loyalty of students is always considered important because it’s of positive effects in both short-run and long-run impact in universities (.Ribbick et al, 2004).

Therefore, the problem statement for this research paper; is to determine if service quality, student satisfaction, relationship commitment and trust, equally contributes to loyalty of student to their universities and for universities to have a base on relationship marketing.


The following the research questions for this research which are;

Will Service Quality influence Loyalty of Students towards their universities?

Will Students Satisfaction influence Loyalty of Students towards their universities?

Will Relationship Commitment influence Loyalty of Students towards their universities?

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And lastly, Will Trust influence Loyalty of Students towards their universities?


Berry and Westfall (2006) p.25 defined Relationship marketing as “attracting, maintaining and enhancing students’ relationship. Therefore, Relationship marketing is a concept used to establish and maintain short-run and long-run successful relationship with students, making them a loyal student of their universities.

However, the main objective of this research paper is if Service quality, student satisfaction, relationship commitment and trust, are one of the main concept of relationship marketing that brings about loyalty in students.

Other objective of this study;

To examine whether Service Quality influence loyalty of students toward their universities.

To identify whether Student Satisfaction influence loyalty of students towards their universities

To determine whether Relationship Commitment influence loyalty of students towards their universities.

To determine whether Trust influence loyalty of students towards their universities


Relationship marketing is a driving force in universities this days and this is to develop, maintain and enhancing loyalty of students to their universities. A loyal student that has a relationship with his/her university is less expensive to maintain and this will contributes to the university, whereby the student engages in behaviors that will benefit the university, like Advocating for the university (Reynolds’ and Arnold, 2001).

Loyalty of students is very important to universities because it enhances profits. Universities need to observe and study student’s behaviors, thereby they can develop a strategy that can bring loyalty of student and the end product is profit. If universities want to sustain competition, they should provide excellent services towards their entire students and failure to maintain and enhance their services will make it impossible to achieve their target and loyalty of students.

It’s now important that universities provide great service to students in order to gain their loyalty. Therefore, this research will be of great contribution to universities, in order for them to gain loyalty of their students and implement strategies of meeting student’s needs.


Loyalty: Loyalty is defined as a student’s favorable attitude toward the higher educational institution through positive word-of-mouth by recommending the institution to others (Dick & Basu, 1994; Hagel & Amstrong, 1997).

Relationship Marketing as defined by Berry and Westfall, (2006) as “attracting, maintaining and enhancing student’s relationship, It’s a concepts that focus on building ties with existing students and new students, with the intention to retain them.

Service Quality: Service quality can be defined as the students’ attitude or judgment about the superiority of a service (Robinson, 1999). Zeithmal & Berry (1999) say that service quality is the evaluation of service provider performance, based on their exercise and impression.

Student Satisfaction: This is a short-run attitude which result from the evaluation of the students experience with the university service received (Elliot and Healy, 2001). Yi (1998) and Oliver, (1980) said that student satisfaction does with emotions and feelings the student perceived and the expectation on the performance of the university.

Relationship Commitment: This is a concept that brings an enduring desire and maintains a values relationship and it examines relationship benefits (Moorman et al., 1999, pp.25). Relationship commitment brings about a long-term direction towards a business relationship and that is grounded by emotional bonds.

Trust: Egan et al., (2004) defined trust as an acceptance of openness to another’s possible but not expected or lack of good will, as defined by Blois et al., (1997, pp.58). the students believes that the services provided by the university are reliable and of high integrity (Morgan and hunt, 1996).

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