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.