The Effect Of Product Quality On Brand Loyalty

Abstract

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.

Chapter One

Introduction And Background To Study

1.1 Introduction

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.

1.2 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).