EFFECTS OF PRODUCT QUALITY ON BRAND LOYALTY (A STUDY OF NOKIA MOBILE PHONE)


Content

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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