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THE IMPACT OF PRODUCT QUALITY ON CONSUMER BRAND LOYALTY

ABSTRACT

The purpose of this research was to investigate the degree of effect of product quality on consumer brand loyalty and to determine other factors that are responsible for brand loyalty especially in the Nigerian telecommunications industry. Previous research had shown that product quality has an effect on brand loyalty but there is still little or no literature discussing the extent to which product quality influences brand loyalty and none of the product quality models adopted for the Nigerian market. The qualitative and quantitative research methods were used; interviews were conducted on five MTN personnel and questionnaire was distributed to 150 respondents who use MTN in the Victoria Island metropolis, Lagos State. The research results showed that product quality was not the strongest factor that led to brand loyalty but market inertia and that product quality was more likely to lead to brand loyalty when customers judged the product as having very high or high quality in the Nigerian telecommunications environment. A critical study of market inertia as a factor that leads to brand loyalty is recommended.

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY

The marketing environment has become a very competitive one as it is has continued to evolve. Thus, it has become important for businesses to look for ways of gaining and sustaining brand loyalty by building consumer trust. In essence, brand loyalty has become the target of all organizations. Organizations have realized that when customers are loyal to their brand, it provides the organization with steady form of income which in turn increases profits. According to Investopedia, companies that successfully develop loyal customers also develop brand ambassadors – consumers that will market 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 toward 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 the serve and bring in new customers to the firm (Reichheld and Sasser, 1990). A consumer purchases a product to fulfill his needs and has certain amount of expectations from the brand he buys. When he is able to meet those perceived value from the brand or expectations, he develops a trust and satisfaction towards the brand which is called “Customer Satisfaction”. 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 behavioral objective for the defensive strategy is customer loyalty or what is known as “Brand Loyalty” (Fornell 1992).

Prus and Randall in 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 involves 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 behaviors (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 have 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 perceives that brand’s quality, situational constraints, a lack of alternatives or simply because the customer finds it convenient. Lau et al. (2006) in his article mentioned that there were several factors that influenced consumers’ 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 those characteristics of a product that satisfy 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 (Brunsø et al., 2005).  Objective quality refers to the technical, measurable, and verifiable nature of products/services, processes, and quality controls. This includes product features, product performance, durability amongst others. While subjective or perceived quality refers to the consumers' value judgments 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.

Since the inception of GSM mobile operations in Nigeria in 2001, the telecommunications sector has witnessed enormous growth as compared to the pre- GSM era. The telecommunications sector has become highly saturated thus, making its marketing environment highly competitive with operators looking for ways to get new customers and sustain already existing customer base. Currently, there are five GSM mobile operators in Nigeria; MTN, GLOBACOM; CELTEL (now AIRTEL), M-TEL and ETISALAT. According to the Nigerian Communications Commission Quarterly Summary of Telecoms subscribers (June 2010 – March 2011), the country currently has a total of 83,857,798 GSM subscribers;

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