ABSTRACT
This research is used to explore the impact of
perceived service quality on customer satisfaction and brand loyalty. The main
objective of this study was to identify the service quality offerings of
Honeywell Flour Mills Nig. Plc and Lister Flour Mills Ltd to their customers, to
ascertain the level of customer’s satisfaction and to determine the
relationship between customer service and brand loyalty. Questionnaires were
used in collating respondent’s opinion. The findings of the study based on the
outcome using simple descriptive percentage and Pearson moment correlation
method which interpreted the trends in the companies in terms of product
quality, customer’s satisfaction, brand loyalty and perceived service indicate
that positive significant relationship exist between perceived service quality,
customer satisfaction and brand loyalty. Customers are the most important
components that make up a business without satisfying them, there will be no
loyalty. Hence, some recommendations were suggested, one of which is that
management must consider product quality and service quality as the foundation
to build up consumer satisfaction and loyalty.
TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table of Contents vi
CHAPTER ONE: INTRODUCTION
1.1 Background of the
Study 1
1.2 Statement of the
Problem 5
1.3 Research Questions 6
1.4 Objectives
of the Study 6
1.5 Significance of the Study 7
1.6 Scope of the Study 7
1.7 Limitations
of the Study 7
1.8 Study Plan 8
1.9 Definitions
of Key Terms 9
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 10
2.1 Definitions of Customer Satisfaction,
Brand Loyalty
and
Service Quality 10
2.1.1
Customer Satisfaction 10
2.1.2 Brand Loyalty 13
2.1.3
Service Quality 15
2.2
Theories of Consumer Motivation 17
2.2.1.
Sigmund Freud Theory of Human Motivation 18
2.2.2
Maslow's Theory of Hierarchy of Needs 19
2.2.3
Expectancy Theory: By Vroom (1964) 20
2.2.4 Equity
Theory of Motivation by Adams (1965) 21
2.2.5 Opponent -Process Theory of Motivation 23
2.2.6 Incentive Theory 23
2.3 The
Theory of Perception 24
2.4 Product
Quality and Importance 26
2.5 Clarification
of Concepts 28
CHAPTER THREE: RESEARCH
METHODOLOGY
3.0 This examined the authenticity of the
research hypothesis and
the
choice of method used in analyzing the
data collected 34
3.1 Historical
Profile of Honeywell Flour Mills Plc and
Lister Flour Mills Limited 34
3.1.1 Honeywell
Flour Mills Plc. 35
3.1.2 Brief
History of Lister Flour Mills Ltd. 37
3.2. Statement of Hypotheses 39
3.3 Method of Data Collection 39
3.4 Population
of Study and Sample size 40
3.5. Sampling
Technique 40
3.6 Method
of Data Analysis 40
CHAPTER
FOUR: DATA PRESENTATION, ANALYSIS AND
DISCUSSION
OF RESULT
4.0 Introduction 43
4.1. Demographic Data 43
4.2 Perceived
Service Quality and Customer Satisfaction Analysis 45
4.3 Brand
Loyalty Analysis 50
4.4
Hypotheses Testing 51
4.5 Discussion of the result 53
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary 55
5.2
Conclusion 58
5.3
Recommendations 61
References 62
Appendix
65
CHAPTER ONE
INTRODUCTION
1.1 Background
to the Study
The
broad goal of every marketing organization is to achieve effectiveness in its mission
and efficiency in its process. Whereas the mission is its major objective, the
process is its means or method of achieving the objective. To be efficient is
to maximize output from a minimum of input or resource. To be effective is to
achieve the purpose of existence for the organization.
Every
marketing organization has used over the years product, price, place and
promotion for the pursuit of these twin facets of management. However, in more
recent years greater creativity and improved scientific approaches are being
employed to ensure that at every transaction the customer is receiving enhanced
value through perceived service quality. Cowell (1996), defined perceived
service quality as the judgment made by consumers when they compare their
expectations with their perceptions of what they receive (service experience).
Put differently, a service is regarded as an act, which add value to the
recipient. It is also any activity or benefit that a party can offer to
another, that is essentially intangible and does not result in ownership of
anything. Its production may or may not be tied to a physical product. Service
therefore may relate to the process involved e.g. operating systems for
providing products or it may relate to the people involved and the quality of
interaction with the customers.
Perceived
service quality is today not given as a separate activity but is weaved into
every facet of the business whether product, price, place (distribution) or
promotion so that a total quality management in its broadcast sense is
applicable. Kotler (2002) defines service quality "as all parts of the
distribution (delivery) process which add value to the transaction, from the
customer's view point". Service quality is designated with four
characteristics. It is inseparable from the product provider, it is variable by
the provider; it is perishable, meaning that it is lost anytime it is not given
(utilized) and it is intangible, meaning that it is not a storable commodity.
Product
or service is the main thrust for satisfying consumer needs. Today production
systems are faster, able to produce more in shorter time; miniaturizations are
possible and in vogue, designs look elegant, simple and compact although
sophisticated in function. In all these, the consumer is being given more
choice. Smart people keep creating niches for more satisfactions still for the
discerning or sophisticated consumer e.g. designer wears, perfumes etc as
distinct from popular brands.
Perceived service quality as a process or
strategy is combined with other marketing mix to create satisfaction for the
consumer and loyalty to the brand or business. No business survives for a long
time without achieving these twin results. Business profitability and survival
therefore force the marketer or entrepreneur to continuously challenge his/her
structures, values, technology, products and offerings so that as consumers'
profiles, tastes, lifestyles, needs, etc change, so will the marketer change
because any business that remains static is doomed(Brandy &Robertson, 2001).
The
drive to providing excellent service quality to customers has forced
fundamental changes in many organizations. Traditionally, hierarchical
organizations have flattened out. Authority to act has moved from the top of
the ladder to the bottom allowing employees in daily or regular contact with
customers to act speedily and with assurance for the satisfaction of the
customers on the spot. To be able to do this with ease, such employees have
been given very broad-based training in the operations of the organization and
are also supplied with relevant and up to date information with regards to what
the organization intends to achieve at every point in time(Christopher, 1994).
Companies
that want to be in the forefront of success in satisfying consumers engage in
marketing/consumer research to identify genuine needs, the size of the market,
the location of prospective buyers, their age, gender, income levels,
lifestyles, religious conviction etc. The companies that know all these are
usually able to produce goods or services that consumers purchase to satisfy
their needs.
The
centrality of customer satisfaction is found in the popular marketing epithet:
"The customer is king". This is because whereas a political king
rules his empire and expects obedience and respect from his subjects, the customer
king, also expects his/her wishes, need and satisfactions to be paramount in
the schemes of the producer. This is why consumerism developed in modem
marketing to forcefully, through legal or political means, make producers and
suppliers, offer for sale, goods or services that are safe, economical
affordable and dependable. In this way, business will be seen as being
customer-driven (Cowell, 1996).
Brand
loyalty is linked to customer satisfaction. If a producer readily produces
goods or services that are safe, dependable, economical and affordable, the
consumer is most unlikely to waver in purchases or seek to alternatives. This
is why Liswood (2003) said that customer retention is the key to competitiveness
and to driving profits, that the best measure of quality and value is customer
retention.
Brand
loyalty or customer retention is important for very many reasons. Firstly, if a
customer keeps coming back and gives a producer all of his or her business,
then that producer has met the customers' standards and expectations. Secondly,
it is more economical to manage a loyal customer than to build a new one.
Thirdly, a loss of a key customer could be very grievous because a new customer
may not immediately equal the revenue made from the old and lost customer.
Fourthly, loyal/ retained customers are great apostles for your brands.
Fifthly, customer research has found out that loyal customers are often willing
to pay up to 20% more for a brand or service whereas new customers will be
unwilling to pay that.
Loyalty
is so much more robust than satisfaction. It is what people do, not what they
say. What they say i.e. lip service, may be in the region of satisfaction. What
they do i.e. repeat purchase, complaints, suggestions on improvements, advocacy
- are in the sphere of loyalty. Loyalty is similar to royalty. It is
dependable, predictable, respectable and profitable in the long run. That is
why, for winning companies, building loyalty in customers, is not the end of
the service quality chain, but the beginning and core of the total business
operation.
Kotler (2002) posited
that it is the best policy for a company to keep profitable and highly
satisfied customers for life by using various skills and creating various
programs to keep them very satisfied and dissuade them from switching. This is
an important fact of marketing because a loss of a major customer can mean a
loss of huge revenue, which may not be compensated for by a new customer.
Kotler suggested that companies could make their customers pass through the
following: First time customer Repeat customer Client
Advocate
Member Partner Part
owner.
Being
part owner is perhaps the highest position a loyal customer can occupy. A company
can achieve this level of loyalty with its customers, without necessarily
making the customers own shares in the organization. If on the other hand,
opportunity exists for the individual, or the organization that is a customer,
to purchase part or all the company in order to continue to buy or promote its
products or services, so be it. Sportsmen or women, these days buy into their
clubs for these reasons just as famous musicians or popular singers buy into
the recording companies that promote their works (Kotler, 2002).
In
the view of many marketers, usage status, usage rate and loyalty are the most important outcomes of all purchasing
processes. Usage status refers to the
experience of the customer relative to the product or brand. Usage rate is the frequency
with which customers use and purchase a product. Often the Pareto 80/20 rule
applies here, that is, 20 percent of users account for 80 percent of usage. Loyalty determines whether the customer is
committed to the brand. Loyalty
permits criticism or compliant. What is meant here is that a loyal customer
will consider it a duty or obligation to criticize a company or brand he/she
holds very dear if he/she notices something unpleasant occurring. Such criticism may be private or public but the focus
and goal will be a call for improvement.
Similarly, the company should welcome such criticism with openness of heart and see it as an opportunity to
strengthen the faith or confidence of its loyalists.
Loyalty is not a happen chance event. It is a result of
painstaking service quality and visionary leadership from the company. It is
founded on a culture of excellence and a
climate of respect for the individual customer in his/her feelings,
tastes, emotions and all that promote self-esteem.
1.2 Statement of the Problem
The
Flour Milling Industry is vibrant and with a huge production capacity. Olaniyonu,
(1998)gathered that there are about 22 mills around the country. Any mill that
seeks to justify its existence and effectiveness needs to have its marketing
and production skills to its front burner. In
this regard, below are some of the problems identified in the study.
The Nigerian customers had changed over the years. They
are more educated and exposed than in the
past. The fact that virtually all the mills in the country sell to the same customers and outlets makes the
matter worse so what are the problems
consumers face in their choice of brands? How has perceived service quality influenced the decisions of consumers in
their choice of flour? How has quality
packaging been effective in marketing of flour and resulting in brand
loyalty from customers?
Finally customer service quality is a major tool while
customer satisfaction and brand loyalty are
major results to achieve. It is imperative therefore, for the organization to initiate/adopt processes,
skill/technologies that have been found effective
in the area of perceived service quality, customer satisfaction and brand
loyalty to meet up with the current business challenges. Therefore how does a flour mill position its product vis-a-vis
competitors' products because most consumers acquire goods that are tailored
to their individualized need rather than the generalized need of the market?
1.3 Research Questions
In
line with our statement of problem and research objectives, the researcher would try to find answers to the following
questions in the course of the research.
- Are customers pleased and happy with
the service quality offerings of both Honeywell
and Lister brands?
- At
what level can customer perceived quality on choice of products?
- Can
perceived quality service enhanced customers patronage and satisfaction?
- Does
customer satisfaction have a relationship with service quality perception?
1.4. Objectives
of the Study
The primary objective of the study is to examine the
influence of perceived service quality on customer satisfaction and
brand loyalty.
The other specific objective of this study includes:
i.
to examine the
relationship between perceived service quality and customer satisfaction;
ii.
to ascertain the relationship between customer satisfaction and brand loyalty; and
iii.
to determine the
relationship between customer service and customer satisfaction.
1.5 Significance
of the Study
Gathering
of this data has lead to a better understanding of the influencing level of the attributes on customer satisfaction.
The results of this study did not only
contribute to the awareness of the relationship between the variables but it also direct managers in the flour industry for
quality improvement to increase
customer satisfaction. Through the statistical analysis a conclusion on the existence of a relationship between qualities
attributes of flour service provider and customer satisfaction will be
more obvious.
1.6 Scope of the Study
An
attempt is made to limit this research to the flour industry with particular
reference to Honeywell flour mill and Lister flour mill because the study
cannot cover all service companies. The study based on the two mills of flour
in Ilorin and Ibadan in order to achieve effective means of perceived service
quality influence on customer satisfaction and brand loyalty. This study will
cover the time frame of year 2000-2014.
1.7
Limitations of the Study
Gathering
of all needed data in most studies is usually met with a number of obstacles
and constraints. The main constraining factor in this research is finance. This
is because a lot of money was required to
administer the questionnaires and time devoted to conduct the interviews was
based on booked appointments which had to be followed up with repeated phone
calls.
Another constraint is the lack of cooperating attitude on
the part of some of the respondents
particularly the dealers who are always busy attending to customers. Some of the questionnaires were not properly
filled while some were not returned at
all and this restricted the level of results obtained.
Despite all these, it is the researcher's belief that if
the study achieves the desired objectives, the efforts put there
in would be justified. The conclusions reached
so far emanate from the two hundred, (200) customers contacted. One hundred
(100) were allocated to Ibadan district, while the remaining one hundred (100)
were distributed to Ilorin. The probability sample size of Ibadan is targeted
through the population of staffs so as to achieve the purpose of presentation.
Has to Ilorin, the population of staffs are few, so as to limit time
constraints and the cost effective in achieving the desirable results. Ibadan
and Ilorin were chosen due to the familiarization of staffs so as to reduce
cost and time barriers.
1.8 Study
Plan
The
study is made up of five chapters. Chapter one is the introduction, Chapter two contains the review of relevant
literature on theories influencing consumer behavior, product quality
and importance which invariably lead to customer satisfaction and loyalty.
Chapter three comprises of the brief history of
the two companies, list of key flour mills in Nigeria. It also comprises of the
methodology of data collection and
information on how the data will be collected,
processed and analysed. The method of analysis is also stated. Chapter
four is made up of actual analysis of the collected data. Chapter five contains
summary of findings conclusion and recommendations based on the findings of the study.
1.9
Definitions of Key Terms
Brand- A
name, term, sign, symbol or design, or a combination of these that identifies the products or services of one seller or
group of sellers and differentiates them from those of
competitors.
Motivation-
This
is a feeling of enthusiasm or interest that makes someone determined to purchase a product or service
Perception- This
is the process by which people select, organize, and interpret information
to form a meaningful picture of the world
Product
Quality- The characteristics of a product that bear on its
ability to satisfy stated or implied customer needs
Satisfaction-
This is an individual's subjectively derived favourable
evaluation of an outcome and/or experience associated with
consuming a product.
Service
Quality- The characteristics of a service that bear on its
ability to satisfy stated or implied customer needs
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