EFFECTS OF PRODUCT QUALITY ON BRAND LOYALTY

(A STUDY OF NOKIA MOBILE PHONE)

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND TO THE STUDY

The marketing environment has become a very competitive one as it has continued to evolve. Thus, it has become important for businesses to look for ways of gaining and sustaining brand loyalty by building customer trust. In essence, brand loyalty has become the target of all organization because they have realized that when customers are loyal to their organizations brand it provide the organization with steady form of income which in turn increases profit. Companies that successfully develop loyal customers also develop brand ambassadors: Consumers that will purchase a certain brand and talk positively about it amongst their friends. This is free word-of-mouth marketing for the company which goes a long way in saving the company some cost of promotion.

True brand loyalty exists when consumers have a high relative attitude towards a particular brand which can be exhibited through repurchase behaviour. This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices, may cost less to be serve and bring in new customers to the firm (Reichhed & Sasser, 1990). Gounares and Stathakopoulos (2004) suggested that the challenge of marketers is how to influence loyalty. A consumer purchases a product to fulfill his needs and has certain expectation from the brand he buys, when he is able to meet those perceived value from the brand, he develops a trust and satisfaction towards the brand which is called “customer satisfaction” (Farris, Neil, Philip, & David 2010).  Customer satisfaction is a measure of how products and services supplied by a company meet or surpass customer expectation (Farris et al 2010). Companies have begun to realize that it is easier and more cost efficient to find ways to improve customer satisfaction and retain current customers instead of paying more attention to winning new customers. Creating customer satisfaction is a defensive strategy and the behavioural objective for the defensive strategy is customer loyalty or what is known as “Brand Loyalty” (Fornell, 1992).

Prus and Randall (1995) described brand loyalty as follows: “Customer loyalty is a composite of a number of qualities”. It is driven by customer satisfaction, yet it also involve a commitment on the part of the customer to make a sustained investment in an ongoing relationship with a brand or company. They also stated that brand loyalty is reflected by a combination of attitudes (intention to buy again and/or buy additional products or services from the same company, willingness to recommend the company to others, commitment to the company demonstrated by a resistance to switching to a competitor) and bahaviours “(repeat purchasing, purchasing more and different products or services from the same company, recommending the company to others)”. It is widely considered that loyalty is one of the ways with which the consumer expresses his/her satisfaction with the performance of the product or service received (Bloemer & Kasper, 1995).

There has been a lot of reasons associated with why customers remain loyal to a product. Customers may be drawn to a particular brand due to the way it perceive that brands quality, situation constraints, a lack of alternatives or simply because the customer finds it convenient. Lau, Chang, Moon, and Liu, (2006) in his article mentioned that there were several factors that influenced customers’ brand loyalty towards certain brands, the factors were brand name, product quality, price, promotion and service quality. This study will critically look at product quality as a factor that influences brand loyalty and the extent to which the quality of a product make customers loyal to that product. Product quality is comprised of the features and the characteristics that make up that product and its ability to satisfy customers’ needs. Product quality can be defined as the group of features and characteristics of a saleable good which determine its desirability and which can be controlled by a manufacturer to meet certain basic requirements (Business Dictionary). According to Gaurav Akrani (2013) Product quality means to incorporate features that have a capacity to meet consumer needs (wants) and gives customer satisfaction by improving products (goods) and making them free from any deficiencies or defects, it can also be those characteristics of a product that customer’s wants and needs in exchange for monetary considerations. If the consumer is satisfied with the product, then the quality is deemed acceptable.

A perception of high quality or that which is above expectations can help to create high brand loyalty (The economic glossary). The concept of product quality can be analyzed under two main different perspectives: The objective quality and the perceived quality (Brunso, Bredahl, Grunert, & Scholderer, 2005). Objective quality refers to the technical, measurable, and verifiable nature of products/services, processes and quality controls. This includes product features, product performance, and durability amongst others. While subjective or perceived quality refers to the consumers’ value judgements or perceptions of quality. This could include aesthetics and the perceived quality of the brand image. When a customer perceives a quality to be of high quality, this could be if his expectations towards the product were met considerably, it could lead to loyalty to that product. It has been suggested that the way a customer perceives the quality of a brand plays a strong role in determining the customer’s commitment to that brand.

1.2       STATEMENT OF THE PROBLEMS

However, review of literatures on the relationship between product quality and brand loyalty have highlighted the gap in literatures that critically analyzes the product quality and brand loyalty construct or the degree of effect that product quality has on brand loyalty.

These reviews have shown that there is a need to understand how product quality and brand loyalty constructs work especially in the Nigeria market. Lau et al (2006) in his article mentioned that there were several factors that influence consumers brand loyalty toward certain brands. The factors were brand name, product quality, price among others. Other scholars and experts have also come up with factors that influence brand loyalty and one thing remains common among them is “PRODUCT QUALITY”.

This study will attempt to determine how product quality and brand loyalty works in Nigeria and to what extent product quality affects brand loyalty of a particular brand which leads to its preference over competitors’ brand. The study focuses on Nokia Mobile Phone.

1.3       OBJECTIVES OF THE STUDY

The broad purpose of this research work is to identify the effect of product quality on brand loyalty in an organisation. Pertinently, the objective of this research work are to:

1.      To determine the perception of Nokia Mobile Phone users regarding the quality of the product;

2.      To ascertain the relationship between product quality (i.e. Nokia Mobile Phone’s quality) and the brand loyalty of its users;

3.      To determine how the phone’s ‘User friendliness’ affects customers’ retention/loyalty level;

4.      To assess the extent of impact to which the phone’s affordability affects customers’ retention/loyalty;

1.4       RESEARCH QUESTIONS

In order to achieve the objective of this study, the following research questions will be answered:

1.      What is the perception of Nokia Mobile Phone users regarding its quality?

2.      What is the relationship between Nokia Mobile Phone’s quality and the brand loyalty of its users?

3.      Does the phone’s ‘User friendliness’ affect customers’ retention/loyalty level?

4.      To what extent of impact does the phone’s affordability affect customers’ retention/loyalty?

1.5       RESEARCH HYPOTHESES

Hypotheses are tentative statement or arguable assertions formulated about the characteristics of a defined population which may be accepted or rejected after critical investigation and test. (Adaramola, 2001).

The testable hypotheses for this research work include;

1.      Nokia Mobile Phone users do not have different perception regarding the phone’s quality.

2.      There is no relationship between Nokia Mobile Phone’s quality and the brand loyalty of its users.

3.      Nokia Phone’s ‘User friendliness’ does not affect customers’ retention/loyalty level.

4.      Nokia Phone’s affordability level does not determine customers’ retention/loyalty level.

1.6       HOW RESEARCH OBJECTIVES RUN THROUGH RESEARCH QUESTIONS AND HYPOTHESES

S/N

RESEARCH OBJECTIVES

RESEARCH QUESTIONS

RESEARCH HYPOTHESES

1.

To determine the perception of Nokia Mobile Phone users regarding the quality of the product;

What is the perception of Nokia Mobile Phone users regarding its quality?

Nokia Mobile Phone users do not have different perception regarding the phone’s quality.

2.

To ascertain the relationship between product quality (i.e. Nokia Mobile Phone’s quality) and the brand loyalty of its users;

What is the relationship between Nokia Mobile Phone’s quality and the brand loyalty of its users?

There is no relationship between Nokia Mobile Phone’s quality and the brand loyalty of its users.

3.

To determine how the phone’s ‘User friendliness’ affects customers’ retention/loyalty level;

Does the phone’s ‘User friendliness’ affect customers’ retention/loyalty level?

Nokia Phone’s ‘User friendliness’ does not affect customers’ retention/loyalty level.

4.

To assess the extent of impact to which the phone’s affordability affects customers’ retention/loyalty;

To what extent of impact does the phone’s affordability affect customers’ retention/loyalty?

Nokia Phone’s affordability level does not determine customers’ retention/loyalty level.

1.7       SCOPE AND DELIMITATION OF THE STUDY

Generally, the purpose of the research is to conduct a descriptive study on the effect of product quality on brand loyalty. Specifically this study will investigate how product quality helps in the competitive environment of Mobile Phone Industry. This study is limited to Nokia Mobile Phone.

The researcher will conduct a survey interview. Moreover, the study furnishes discussions made by other authors regarding product quality, brand loyalty and customer satisfaction.

1.8       SIGNIFICANCE OF THE STUDY

The study will provide clear understanding of how effective products quality is on the attainment of brand loyalty. A study of this nature is expected to contribute to the performance of different organisations and other mobile phone industries. It provides a basis for the understanding of the importance of product quality in attaining loyal customers.

The study will equally be of immense use to students researching on this area of study. It also hopes to be an eye-opener towards the effect product quality has on ensuring consumers loyalty to a particular brand which in turn leads to the success of the organisation.

Through product quality organization will have loyal customers because of the satisfaction they derive from the product. Finally, the study is expected to stimulate further research interest on other factors that makes consumers’ loyal to a particular brand. Nokia has a competitive advantage over its competitors because of its product quality.

1.9       DEFINITION OF KEY TERMS

PRODUCT: This is anything offer to the market to attract attention, acquisition, use, consumption and disposal to satisfy a need or want (Kotler, 2006).

PRODUCT QUALITY: It is define from two different perspectives, objective quality and the perceived quality (Brunso & et al 2005). However, this study focuses on perceive quality which is a result of consumer subjective judgement on a product. (Zeithaml, 1988; Dodds et al 1991;   Aakers, 1991).

BRAND: According to American Marketing Association, Brand is a name, term, design, symbol or a combination of them intended to identify one seller goods as distinct from those of competitors.

BRAND LOYALTY: Is defined as a deeply held commitment to re-buy or re-patronize a preferred product constantly in the future despite situational influence and marketing efforts having the potential to cause switching behaviour (Oliver 1997).

CUSTOMER SATISFACTION: Anton (1996) defines customer satisfaction as a state of mind in which the customer’s needs, wants and expectations throughout the product or service life have been met or exceeded resulting in future purchase and loyalty.

MARKET INERTIA: This is when consumers tend to do what they have been doing unless acted upon by an overwhelming external force (B. Robinson 2005)

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