ABSTRACT
This research work focused on effect of
product quality on brand loyalty, Nokia mobile phone as the study. The research
critically and vividly looked into the meaning of brand, product, brand
loyalty, customer satisfaction, product quality, market inertia.
The method used is survey research design
which gives room for primary data Questionnaire. Questionnaire is the instrument used which
was administered on 120 mobile phone users. One- way analysis of variance (ANOVA)
was used to test hypothesis one, pearson’s product moment correlation was used
to test hypothesis two while multiple linear regression analysis was used in
testing hypotheses three and four to examine the effect of product quality on
brand loyalty. During the course of findings, it was revealed that product
quality is one crucial driver of customer loyalty and there is a significant
relationship between the quality of Nokia mobile phones in terms of durability,
reparability and other features and loyalty of its users. Conclusively it was deduced that product
quality is a strong factor that lead to brand loyalty when customers judged the
product has having very high or high quality in the Nigerian mobile phone
industry.
TABLE
OF CONTENTS
TITLE PAGE I
CERTIFICATION II
DEDICATION III
ACKNOWLEDGEMENT IV
ABSTRACT V
TABLE OF CONTENT VI
CHAPTER ONE: INTRODUCTION
1.1
BACKGROUND OF THE STUDY 1
1.2
STATEMENT OF THE PROBLEMS 4
1.3
OBJECTIVES OF THE STUDY 4
1.4
RESEARCH QUESTIONS 5
1.5 RESEARCH HYPOTHESES 5
1.6 HOW RESEARCH OBJECTIVES RUN THROUGH
RESEARCH
QUESTIONS AND HYPOTHESES 6
1.7 SCOPE AND DELIMITATION OF THE STUDY 6
1.8 SIGNIFICANCE OF THE STUDY 7
1.9 DEFINITION OF KEY TERMS 7
CHAPTER TWO: LITERATURE REVIEW
2.1 INTRODUCTION 9
2.2 BRAND AND BRANDING 9
2.2.1 BENEFITS
AND PITFALLS OF BRANDING 10
2.2.2 PRESENCE
AND RELEVANCE 17
2.2.3 ADVANTAGE
OF BRANDING 18
2.3 BRAND
LOYALTY 18
2.3.1 POSITIVE
EFFECTS OF HIGH DEGREE OF BRAND LOYALTY 19
2.3.2 LOYALTY
DRIVEN CONSUMER TYPOLOGY 20
2.4 PRODUCT
QUALITY 22
2.4 .1 MEANING
OF PRODUCT QUALITY 22
2.5 MODELS
ON PRODUCT QUALITY 24
2.5.1 SWEDISH
CUSTOMER SATISFACTION BAROMETER 24
2.5.2 AMERICAN
CUSTOMER SATISFACTION INDEX 26
2.5.3 EUROPEAN
CUSTOMER SATISFACTION INDEX 28
2.5.4 THE
INTEGRATED MODEL OF PRODUCT QUALITY 30
2.6 STRENGTHS
AND WEAKNESSES 31
2.7 PROBLEM
OF STUDY AND EMERGING OVERALL RESEARCH QUESTION
2.8 THEORETICAL
FRAMEWORK 32
2.9 THE
GNDUKWE PRODUCT QUALITY MODEL 33
2.10 BRIEF
HISTORY OF NOKIA 38
2.11 SUMMARY
OF THE CHAPTER 38
CHAPTER THREE:
RESEARCH METHODS
3.1
INTRODUCTION 40
3.2
RESEARCH DESIGN 40
3.3 THE
STUDY OF THE POPULATION 41
3.4 SAMPLE
SIZE DETERMINATION AND SAMPLING PROCEDURE
41
3.5 PILOT
STUDY 42
3.5.1 VALIDITY
OF DATA COLLECTION INSTRUMENT 42
3.5.2 RELIABILITY
OF THE DATA COLLECTION INSTRUMENT 42
3.6 DATA
ANALYSIS TOOLS 43
3.7 LIMITATIONS
OF THE STUDY 45
CHAPTER FOUR:DATA
PRESENTATION, ANALYSIS AND DISCUSSION
4.0
INTRODUCTION 46
4.1 ANALYSIS
OF QUESTIONAIRE 46
4.2 ANALYSIS
OF THE RESPONDENTS DEMOGRAPHIC DATA 50
4.2.1 RESPONDENTS
PERCEPTION OF NOKIA PHONES 50
4.2.2 RESPONDENTS
LOYALTY TO NOKIA MOBILE PHONES
CONSUMPTION 63
4.3 TEST OF
HYPOTHESES 70
4.3.1 HYPOTHESIS
ONE 70
4.3.2 HYPOTHESIS
TWO 71
4.3.3 HYPOTHESIS
THREE AND FOUR 72
4.4 DISCUSSION
OF FINDINGS 75
CHAPTER FIVE :
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.0
INTRODUCTION 77
5.1
SUMMARY OF FINDINGS 77
5.2
CONCLUSIONS 77
5.3
RECOMMENDATIONS 78
REFERENCES 79
QUESTIONNAIRE 82
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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