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The purpose of this research was to investigate the degree of effect product quality has on 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.
INTRODUCTION AND BACKGROUND TO STUDY
The aim of this chapter is to give insight into the purpose of this study and to state clearly the problem that led to this study. The first section is the background to the study which will help create a better understanding of the variables involved in this study. The second part will identify the gaps which exist in literature that has led to this study and clearly discuss theses gaps. The last sections will discuss clearly the objective of this study and the key terms that will be used in this study will be defined.
Background to 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;
2010 – March 2011), the country currently has a total of 83,857,798 GSM subscribers;
From the data above, MTN holds 49.7 percent of the total market share. This study will attempt to investigate reasons why MTN holds the majority as compared to the other GSM operators, if it is as a result of its product being of greater quality and satisfying customers’ expectations or for other reasons not known yet.
1.3 Statement of the Problem
Studies have shown that there are several factors that influence a customer’s decision to repurchase a product or service or to be loyal to be a particular product. . 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. Other scholars and experts have also come up with factors that influence brand loyalty and one thing remains common with them; they believe that product quality or perceived product quality plays a role in customer brand loyalty however, a review of literature on the relationship between product quality and brand loyalty has highlighted the gap in literature that critically analyzes the product quality and brand loyalty construct or the degree of effect that product quality has on brand loyalty.
A review of different product quality models also emphasize the gap in models that are constructed solely to explain the degree to which product quality influences brand loyalty. This is because most of the product quality models available highlight the chain of reaction from customer expectations to brand loyalty without breaking down the quality constructs into the different degrees that may be responsible for brand loyalty. However, these models have been constructed to explain the product quality and brand loyalty process for different countries and their marketing environment. Till date, there is little or no product quality model that has been constructed to suit the Nigerian environment or to explain how product quality and brand loyalty works in the Nigerian context.
These reviews have shown that there is a need to understand how the product quality and brand loyalty construct works especially in the Nigerian market. Since these models have been constructed without bearing the Nigerian market, there is a need to construct one which will suit the Nigerian market and also breakdown the quality construct into degrees and highlight other reasons that may be responsible for brand loyalty.
Objectives of Study
In light of increasing attention among marketers and brand managers focusing on how to sustain existing customers in the highly saturated telecommunications market in Nigeria, the aim of this research is to examine the degree to which product quality influences brand loyalty and also to find out other reasons that may be responsible for brand loyalty especially in the telecommunications sector. It has been discovered that there is little or no literature that critically examines the product quality and brand loyalty construct and how it really works, this research aims at adding to the limited number of literature that looks distinctively at the degree of effect that product quality has on brand loyalty. This would enable a clearer understanding on how product quality influences brand loyalty and the other factors that may be responsible for brand loyalty specifically in the Nigerian market.
After a number of models were reviewed on the relationship between product quality and brand loyalty, it was discovered that most of the models were constructed to adapt to foreign markets and there was little or no literature which examined brand loyalty in the telecommunications sector. To this effect, this research aims at constructing a model that is adaptive for the Nigerian telecommunications market which clearly illustrates the degree of effect of product quality on brand loyalty and other factors that may be attributed to brand loyalty in the telecommunications sector.
Organization of Dissertation
This research works aims at examining the degree of effect product quality has on brand loyalty. In order to achieve this, the study has been broken down into different sections and chapters to distinctively explain the constructs involved.
Figure 1: Dissertation Organization Organogram
Chapter one serves as the background to study in which the researcher will attempt to create a clearer understanding of the variables involved in the study and reasons why the researcher is embarking on this study. Chapter two which is broken down into two parts is the literature review for this study. Part A of the literature review will serve as the theoretical foundation of this study while Part B will serve as the conceptual and theoretical framework.
The theoretical foundation which is the part B of the literature review presents a review of variety of existing models and literature that are related to the variables of this study. The review of existing models ends with an analysis of the strengths and weaknesses of these models. However, the weaknesses highlighted in these models suggest the absence or limitation of existing body of literature in this field of study which leads to the identification of an overall research question.
Part B of the literature review which serves as the conceptual and theoretical framework attempts to answer the overall research question that was posed in the previous part of the literature review. In attempt to do this, the researcher puts forward a conceptual model whose components will be grounded on the arguments of a social science theory which is the theoretical framework. The thorough discussion of the conceptual model and the theoretical framework will lead to the conceptual answer of the research question posed in the previous part.
Research methodology which is the chapter three is an attempt to investigate the conceptual model and find answers to the research question by field study. It presents the research methods to be used by defining a few research methods and selecting that which is most suitable for the field study. This chapter is an embodiment of the research design.
Chapter four which is the presentation/analysis and discussion of data is broken down into two parts; part A and B. Part A presents the presentation and discussion of the first instrument used to collect data while part B is devoted to the presentation/analysis and discussion of the second instrument that was used to collect data.
The final chapter which is chapter five presents the conclusion and recommendations. Here, the researcher summarizes findings from the field study and the literature review, concludes the research by basically summarizing the whole study and then presents recommendations from findings.
Definition of Key Terms
Brand Loyalty: Brand loyalty is defined as a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, despite situational influences and marketing efforts having the potential to cause switching behaviour (Oliver, 1997). Brand loyalty refers to brand preferences; that consumers will not consider other brands when they buy a product (Baldinger & Rubinson, 1996; Cavero & Cebollada, 1997).
Customer Satisfaction: Anton (1996) defined customer satisfaction as a state of mind in which the customer’s needs, wants, and expectations throughout the product or service life haven been met or exceeded, resulting in future repurchase and loyalty.
Market Inertia: When consumers tend to do what they have been doing unless acted upon by an overwhelming external force (B. Robinson 2005).
Product Quality: The concept of product quality can be critically defined from two different perspectives; objective quality and the perceived quality (Brunsø et al., 2005). However, this study focuses on perceived quality. Perceived quality is a result of consumers’ subjective judgment on a product (Zeithaml, 1988; Dodds et al., 1991; Aaker, 1991).
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