EFFECT OF CRITICAL INCIDENT ON BRAND SWITCHING: BANKING SECTOR REVIEW

ABSTRACT.

This study investigated the effect of critical incident on brand switching. Customer satisfaction which is based on incident that surrounds a particular brand. This study also ascertains other intervening factors that also could lead to brand switching. 120 respondents were sampled, data was collected through self administered questionnaire, and data was analyzed through descriptive statistic and correlation model. It was found out that among many factors including convenient location, service failure and high charges, critical incident becomes more significant in determining the rate of brand switching. It was found out that critical incidents have a positive relationship. The value of this research will help bank management to consciously create a positive incidents that may reduce customer dissatisfaction and at the same time increase brand loyalty.

TABLE OF CONTENTS

Approval page … … … … … … … … … … i

Declaration … … … … … … … … … … ii

Certification … … … … … … … … … … iii

Dedication … … … … … … … … … … iv

Acknowledgement … … … … … … … … … v

Table of contents … … … … … … … … … vi

List of tables … … … … … … … … … … ix

List of figure … … … … … … … … … … x

Abstracts … … … … … … … … … … xi

CHAPTER ONE

1.1 Introduction … … … … … … … … … 1

1.2 Statement of Problem … … … … … … … … 2

1.3 Research Objectives. … … … … … … … … 3

1.4 Research Questions … … … … … … … … 3

1.5 Research Hypothesis … … … … … … … … 3

1.6 Significance of the Study. … … … … … … … 4

1.7 Scope of the Study. … … … … … … … … 4

1.8 Limitations of the Study … … … … … … … 4

1.9 Definition of Terms … … … … … … … … 5

CHAPTER TWO     

2.1   The Concept of C.I … … … … … … … … 6

2.2   Empirical framework of critical incidence … … … … … 7

2.3   Overview of customer behavior … … … … … … … 8

2.4   Brand switching behavior … … … … … … … 9

2.5   Determinant of switching motives/ factors influencing brand

       switching behavior … … … … … … … … 10

2.5.1 Poor service quality … … … … … … … … 10

2.5.2 Price/ cost … … … … … … … … … 11

2.5.3 Ethical problems … … … … … … … … 11

2.5.4 Attraction by competitors … … … … … … … 11

2.5.5 Inconveniences … … … … … … … … … 11

2.5.6 Advertising … … … … … … … … … 12

2.6   Critical incident and customer satisfaction … … … … … 12

2.7   The effect of critical incident on brand switching … … … … 13

2.8 Critical incidents as determinant of overall customer satisfaction. … … 13

2.8.1 Aggregate performance perceptions as determinant of overall

          customer satisfaction. … … … … … … … … 14

CHAPTER THREE

METHODOLOGY

3.1 Area of study  … … … … … … … … … 15

3.2 Population Of the study  … … … … … … … 15

3.3 Sample technique  … … … … … … … … 15

3.4  Determining the Sample Size … … … … … … 16

3.5 Data Collection … … … … … … … … 16

3.6 Data Analysis Methods  … … … … … … … 16

CHAPTER FOUR

4.1 Presentation, analysis and interpretation of data … … … … … 18

4.2 Administration and collection of questionnaire. … … … … … 18

CHAPTER FIVE

5.1 Summary … … … … … … … … … … 29

5.2 Conclusion … … … … … … … … … 29

5.3 Recommendation … … … … … … … … … 30

REFERENCES

LIST OF TABLES

Table 1: Overview of socio-economic characteristics of the respondents (N=120) … 19

Table 2: Overview of selected factors that could lead to brand switching … … 21

Table 3: showing customer dissatisfaction … … … … … … 24

Table 4: showing customer switching behavior … … … … … 25

LIST OF FIGURES

Figure 1. Showing factors that could lead to brand switching … … … … 23

Figure 2. Showing customer dissatisfaction behavior … … … … … 26

Figure  3: showing customers switching behaviour … … … … … 27

CHAPTER ONE

1.0 Introduction

In the present competitive Global market, consumers or the customers are regarded as a valuable assets for any vision – oriented organization. Research has shown that organizations are increasingly focusing on the retention of their existing customers. Thus gaining knowledge about customers’ switching behaviors is substantively important for the sustainability for any organization. Since consumers are the ultimate end users of any product or services, the success of any organization depends upon the satisfaction of the customer. If not they are liable to switch to other brands.

Interestingly, it has been shown that although customers may express their satisfaction, they nevertheless frequently seem to switch brand. Liyander et al (1998). Service providers today are largely concerned with attracting and retaining customers. Therefore, there is an increasing need to understand the customers switching path and why they switch to other brands. According to Van and Verhoef (2008), switching path consist of a sequence of various combination of critical encounters or events leading to a switching decision; thus, the switching process starts with the customers awareness of some negative aspect in the decision, although a complete absence of such negative incidence is impossible, the possible impact of these negative perceptions has led to some service or product failures.

Critical incidence however addresses in empirical terms (from observations and practical experience) how incidences are related to the customers’ overall satisfaction or dissatisfaction. However it is assumed that a negative incidence has a negative impact on consumer behaviors and that a positive incidence has a positive impact on both consumer behavior and their overall satisfaction. Gremler, (2004).

1.2 Statement of Problem

The fundamental problem in predicting the customer choices exist in the fact that brand switching decision of the customers are solely made on the bases of several different criteria simultaneously, which includes factors like brand image, features, services quality and price e.t.c. thus, the frequent switching behaviors of customers has compelled to review such factors that affect the service industry, besides the problem has been more compounded in the service industry where  customers get attracted towards the competitors offering especially when their expectation do not meet with their perception.

Also, the unprecedented rough interface between services providers and consumers/ customers creates both communication as well as a relational gap, while most time it is critical enough to make a switch. As already indicated, the main concern in this paper was how critical incident can contribute to the overall satisfaction or dissatisfaction of customers to a given product.

The marketer faces different type of new Trier which includes loyal users of another brand and users who frequently switch brands. However, managing customers especially those who frequently switch brands must be understood in other to avoid incidents that could dissatisfy their switching behavior. A critical incident is (by definition) one particular historic event which from the customers’ point of view was particularly satisfying or dissatisfying in the customer’s relationship with the service provider.

Therefore this research has analyzed the power of critical incident on switching behavior of customer among other factors.

1.3 Research Objectives.

The main objective of this study was to determine the effect of critical incidence on brand switching; while the specific objective of this study was to:

1. Measure the socio – Economic characteristic of respondent.

2. Determine factors that could lead to consumer brand switching.

3. Measure the relationship between negative incidents and brand switching.

4. Measures the criticality of critical incidents among other factors that causes brand switching.

5. Make recommendation based on research finding.

1.4 Research Questions

This research work enabled the research to come up with answers to the following research question:

1. What were the factors that lead to consumer brand switching?

2. Does negative critical incident affects brand switching?

3. Were there any positive relationship between critical incident and brand switching?

4. Is critical incidents more significant among other factors that could cause brand switching.

5. What were the effects of critical incidents on consumer behavior?

1.5 Research Hypothesis

The following hypothesis was tested in the course of this study.

Ho1 There is no positive relationship between critical incidents and consumer brand switching behaviors.

Ho2                  Critical incident does not have affect consumer brand switching behavior.

1.6 Significance of the Study.

This research work has been of great benefit to the service providers in their bid to mange and retains their customers. Also, the sales persons have not be left out in making use of this study. It has helped service providers especially bankers gain better knowledge about their interactions with customer and other staff. It has also been a good resource in identifying the experience of service sector, client responses to service failure and interactions.

The managers from all cadres has benefited from this work which has helped them to acquire and use information in environmental scanning.

1.7 Scope of the Study.

This research covered an in depth investigation on what happens in the interface between the service providers and their clients which is known as critical incident and how it has affected consumer behavior.

1.8 Limitations of the Study

The major limitation faced with this study includes:

Poor response from respondent in answering the questions in the questionnaire.  Poor access to research materials, un– corporative attitude of case organization, inadequate finance needed for the study was high and could not be afforded by the researcher, and illiteracy is also a limitation to this study.

1.9 Definition of Terms

Critical incidence: is (by definition) one particular historic event which from the customers point of view was particularly satisfy or dissatisfying in the customers’ relationship with the service provider. (Gremler 2004)

Brand: this is defined as a name, term, sign, symbol or design or combination of them which is intended to identify the goods of one seller or group of sellers and to differentiate them from those of its competitors.

Consumers: are the ultimate end users of any product or services, the success of any organization depends upon the satisfaction of the customer.

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