Relationship Between Products Price And Customer Loyalty Marketing Essay
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 4784 words||✅ Published: 1st Jan 2015|
For this research, a survey was conducted using a set of questionnaire. A total number of 225 questionnaires has been distributed to respondents in Melaka and Negeri Sembilan. Respondents were demanded to fill in their age, gender, marital status, cultural background, education level, monthly income level, store that preferable, and frequency of visitation to retail firms and also to evaluate the product's attributes (Product's Price, Store Location, Product's Quality and Brand Image) that affect customer loyalty toward retail firms.
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In order to survive in this competitive era, it is important to make out the perceived product attributes from the customer perspective should the company intend to stand still or it diminishes. However, the published research study on this particular area is limited. Therefore, this research is conducted to discover and to examine the relationship between product's attributes (Product's Price, Store Location, Product's Quality and Brand Image) and customer loyalty toward retail firms in Malaysia. Furthermore, this study is developed based on the model proposed by Rajaguru and Matanda (2006).
The results for the overall, all of the hypotheses "H1: There is a significant relationship between product's price and customer loyalty", "H2: There is a significant relationship between store location and customer loyalty" and "H3: There is a significant relationship between product's quality and customer loyalty" are found to be supported, except for hypothesis "H4: There is a significant relationship between brand image and customer loyalty" which is found to be not supported. In short, product's attributes such as product's price, store location and product's quality are found to be significant but yet only brand image is found to be not significant. Additionally, there is a difference of customer loyalty between all the demographic variables. All the results obtained from this research are fully supported by previous study as below.
5.2.1 To identify the relationship between product's price and customer loyalty.
According to the data analysis in Chapter 4, this objective has been achieved and supported. There is a relationship between product's price and customer loyalty toward retail firms (p<0.05). Thus, this objective is supported by other researches (Romaniuk and Dawes, 2005), which have shown that one of the vital product attribute that affect customer loyalty and repurchase behavior is product's price. Customers are sensitive to product's price and often make buying decision based on product's price.
Besides, Biswas et al. (2002) have proved that price of a product directly affect the customer's buying intention and customer's value awareness. Price can be considered as the important factor that influences buying behavior among the various offerings in the different category of products (Romaniuk and Dawes, 2005). A study done by Lichtenstein et al. (1993) also indicated that product's price plays a vital role that may influence consumer buying in all purchasing situations. Additionally, Yavas (2003) declared that product's price as an imperative indicator that affects store choice and customer buying behavior. Generally, customers will be only continuous to purchase or stay loyal if the product's price offers by the retail firms meets the expectations of the customers. Therefore, retail firms should provide affordable or reasonable product's price in order to increase and to retain loyal customers.
5.2.2 To determine the relationship between store location and customer loyalty.
The multiple linear regression analysis results in Chapter 4 show that there is a relationship between store location and customer loyalty toward retail firms (p<0.05). Hence, this objective has been achieved and supported. The support for this objective is consistent with Yee and Sidek (2008), which mentioned that store environments include store location, store design, and in-store stimuli, will affect customer loyalty toward a particular store. Rowley (2005) concluded that there are four types of customer loyalty which are contented, convenience-seeker, captive and committed. Convenience-seeker refers to a customer has no special commitment toward the store or company but yet, just because the store location is nearby and convenience then the customer makes repetitive purchase (Rowley, 2005).
According to other researchers (Kim & Jin, 2001; Craig et al., 1984; Bruner & Masson, 1968; Nevin & Houston, 1980) also found that location of a store is the most imperative factor that affects customer to make purchase in a particular store and stay loyal toward the particular store. Moreover, if consumers find the store to be easily reached and convenient, then the consumers may become loyal to the particular store and make repetitive purchases (Evan, Moutinho and Raaij, 1996). In other words, customers in Malaysia prefer to visit the retail firms which are nearby with their home. Therefore, a retail company should build their store close to the residential in order to increase and to keep hold of their customers.
5.2.3 To investigate the relationship between product's quality and customer loyalty.
According to the data analysis in Chapter 4, this objective has been achieved and supported. There is a relationship between product's quality and customer loyalty toward retail firms (p<0.05). This result is expected since the past literature (Ruyter and Wetzels, 1997; Fandos and Flavian, 2006) has time after time shown that the perceived product's quality is often viewed as a primary concern for customer loyalty and that perceived product's quality contributes positively to increase loyalty. Thus, they also stated that the influence of quality on preference loyalty varies in different industry.
Furthermore, Boulding et al. (1993) has reported that there is a positive relationship between product's qualities and customers repurchase intentions and willingness to recommend to others. This is because perceptions toward product quality influence value, efforts of marketers have focused on improving product quality in order to enhance perceptions of value, and so purchase intentions leading to loyalty (Grewal and Munger, 2001). Customer's repurchase decision depends greatly on the quality performance of a product or a service (Chaudhuri and Holbrook, 2001). In brief, customers in Malaysia do put product's quality in consideration before they make any purchase. Consequently, a company needs to keep it mind on the quality of product so that the customers will stay loyal and make repetitive purchase its products compare to other alternative brand of similar products.
5.2.4 To discover the relationship between brand image and customer loyalty.
The multiple linear regression analysis results in Chapter 4 demonstrate that there is no significant relationship between brand image and customer loyalty toward retail firms (p>0.05). For this reason, this objective has not been achieved and not supported. It is inconsistent with previous findings (Motameni and Shahrokhi, 1998), which concluded that brand image today is an important marketing tool for manufacturers to increase their loyal customer or preserving the existence customers. On the contrary, this finding is consistent with Aydin and Ozer (2004), which found that there is no relationship between brand image and customer loyalty due to the purchasing power of customers is lesser if compare to other developed countries and thus customers tend to prefer cost as an important factor that need to put into consideration before making any purchase decision compared to brand image.
This finding does not support previous researchers (Barich and Kotler, 1991; Zeithaml, 1981; Dick and Basu, 1994; Porter, 1985; Raj, 1985; Reynolds et al., 1974-1975) that brand image and corporate reputation plays an important role in customer repurchase buying behavior in addition to these two factors are crucial to retain and to preserve existing customer or develop loyalty on customers. One possible reason could be most of the foreign retail firms are newly established or still new in the market, hence there is no strong brand image among Malaysia consumers. Consequently, from the four product's attributes (Product's Price, Store Location, Product's Quality and Brand Image) identified, brand image was not considered as an important factor for Malaysians to be loyal to particular retail firm.
In fact, Ruyter (1998) has reported that brand image has no direct impact on customer loyalty, but an indirect impact on customer loyalty through satisfaction. Brand image may not give customers the enough reasons for them to make repetitive or stay loyal with a particular brand of retail firm. Malaysia customers prefer to make purchase at any retail firms regardless of brand image but yet only consider the Product's Price, Store Location, and Product's Quality.
5.2.5 To find out the most significant and contributing factor of product attributes that will influence customer loyalty.
According to the data analysis in Chapter 4, this objective has been achieved. From the outcomes generated from multiple regression analysis, this indicate that product's quality is the most influential variable to customer loyalty toward retail firms if compare to other variables since it recorded the highest beta value (Beta = 0.505) and it's followed by product's price (Beta = 0.311) and lastly store location (Beta = 0.118). It is similar to previous findings (Gale and Klavans, 1985; Yee and Sidek, 2008), which have revealed that quality of product can be defined as the most important factor that influence customer's buying decision and customer loyalty. It can determine determinant a company success and gain competitive advantage among other competitors that offer the similar product.
According to Bowen and Chen (2001), the customer loyalty is greatly influence by the product's quality and it's important for manager to improve their product's quality in order to increase loyal customers. Customers may repurchase at the same retail firm due to the tangible quality of the product sold (Yee and Sidek, 2008). In general, consumers in Malaysia will only stay loyal or make repetitive purchase if the product's attributes provided by retail firms are satisfiable consumer's needs and consumer's demand. Therefore, retail firms should provide products with better quality to consumers and lower product's price and greater convenience in order to increase loyal customers.
5.3 Implication of Study
In today's internationally competitive market, retail firms have to find ways by which they can increase loyal customers or retain current customers through improvement on product's attributes. This research clearly provides researcher, manufacturer and customer the body of knowledge that will help them to have a better understanding on which product's attributes do influence more on customer loyalty toward retail firms.
To increase the application and accuracy of results, the target respondents of this research are from different age, different gender, different marital status, different cultural background, different education level, and different income level. There are a lot of similar research been conducted by previous researcher in different country such as India, Turkey, and Korea etc. Although the previous researchers in foreign country had come out with many valid opinions and many applicable conclusions, but yet the results and findings may not be applicable in Malaysia due to different culture, different education level, different context and geographical factor. Consequently, this research is conducted in order to solve the inconsistency and differences.
The findings of previous researchers are not conclusive. Different researcher has different outcomes and findings. Some said the most significant product's attributes and factors that affect customer loyalty is product's price (Engel et al., 1990; Bronnenberg, 1996; Wickliffe and Pysarchik, 2001; Romaniuk and Dawes, 2005); some said product's quality (Gale and Klavans, 1985; Espejel et al., 2007; Yee and Sidek, 2008); some said store's location (Wood and Browne, 2007; Carpenter and Moore, 2006) and some said brand image (Bloemer and de Ruyter, 1998; Nguyen and Leblanc, 2001; Pan and Zinkhan, 2006). From the data analysis, it had stated that the most significant product's attributes that affect customer loyalty toward retail firms is product's quality (Beta = 0.505). Consequently, the findings of this research gives future researchers a better insight or better understanding whereby the Malaysia consumers do perceive product's quality first before making any purchase decision. Moreover, this research study is developed based on the model proposed by Rajaguru and Matanda (2006). Nevertheless, Rajaguru and Matanda (2006) only examine three product's attributes (Product's Price, Store Location and Product's Quality) as factors that might affect customer loyalty toward retail firms but yet this research study do add in one additional product's attribute (Brand Image). Consequently, additional brand image will give good references to future researcher as a model to research customer loyalty in retail industry.
Additionally, this research paper also stated that the product's price (Beta = 0.311) is the second most influential product's attributes on customer loyalty toward retail firms and it's followed by store location (Beta = 0.118). Furthermore, even though brand image used in this research study proved to be no relationship with customer loyalty, however it might applicable in different industry. Future researcher may investigate more on these product's attributes in order to obtain a more ideal theoretical framework on buying behavior in the context of Malaysian consumers. In general, this research paper will give other researchers the related information that they can't find in past researches.
From the findings of the research paper, it concluded that nowadays Malaysia customers consider product quality (Beta = 0.505) first before buying or make purchase. Product's attributes can influence the customer buying behavior and determining the success of a company (Johnson and Gustafsson, 2000). According to Stevenson (2009), product's quality can divide into three major groups which are basic quality, performance quality and excitement quality. Basic quality means that customer needs have inadequate effect on customer satisfaction if present, but yet lead to dissatisfaction if deficient. However, performance quality refers to customer's satisfaction and dissatisfaction is greatly affected by the functionality of the products. Conversely, excitement quality implies that features that are out of customers expected and cause stimulation. In order to compete with other competitors, manufacturer needs to produce better quality of products and to improve the quality of products to meet the customer's expectations
The findings show that the Malaysia customers perceive product's price (Beta = 0.311) as the second most influential product's attributes that affect customer loyalty toward retail firms. Therefore, manufacturer should not only focus on product's quality but also product's price. The better the product's quality doesn't mean that the higher the product's price should be. If the product's price exceeds customer's expectation, for sure that particular product is less purchase and can't be in good sales or maybe customers will purchase other alternatives brand of similar product.
Last but not least, the data analysis of this research concluded that store location (Beta = 0.118) is the third most influential product's attributes that affect customer loyalty toward retail firms. Manufacturers or retail firms may put store location into consideration before they build their stores or branches (Hernandez and Bennison, 2000). Strategic store location may increase the number of customer's visitation. Hence, the results of this research do help manufacturer to improve their current strategies and directions in sequence to gain competitive advantage or greater market share if compare to other competitors. In brief, manufacturer must be always aware of the changing customer's preferences and needs in order to survive in nowadays competitive market.
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In the present day, there is a lot alternatives brand of product provided by different companies in the market. Some are value pricing; some with good quality, and some with both. In order to be a smart consumer, customer nowadays tends to consider more and should not only base on one product's attribute before making purchase decision. It allows customers to choose the best or the most appropriate products based on all the product's attributes such as product's quality, store location, product's quality and brand image. From the data analysis, customers in Malaysia perceive product's quality (Beta = 0.505) as the most important factor that take into consideration before making purchase at retail firms. Through this study, customers can become conscious where they can have the knowledge about how to evaluate or how to assess the intended products before buying it.
The findings of this research allow manufacturer to understand nowadays customers in Malaysia desire a better quality of products with lower price since the product's quality and product's price ranked as the first and second important factor that affect customer loyalty the most. Consequently, if the manufacturer understands the current preferences of nowadays customers, manufacturer can customize the product according to customer's wants. Incidentally, both parties can get benefit from that whereby customers can get a better quality of products at lower price and manufacturer can increase its profit by selling more of its products.
Furthermore, Malaysia is a multi-racial country. Most people are from different races, different culture, different background and different education level. The differential in the culture, living habits, and lifestyle make the study a must in the Malaysian context. From the research's findings, it proved that customers with difference background have different perceptions on product's attributes that affect their purchase decision. Through this research study, a better conclusion can be drawn out. Undeniably, there are a lot of similar studies had been conducted in other countries such as India and Korea but limited of similar researches in Malaysia. Therefore, the results obtained from this paper educate the Malaysia's customers to be a smart consumer and they can consider product's price and store location besides product's quality before their purchase a product.
In conclusion, the results of this research can be use by local retail firms to survive or foreign retail firm who plan to open outlet. In order to take advantage of such a huge market potential, the Malaysian retail firms need produce products with good quality and cheaper price. In short, if local firms can catch what the local customers want, they can gain competitive advantage.
5.3.4 Retail Firm
This research study revealed that product's quality (Beta = 0.505), product's price (Beta = 0.311) and store location (0.118) are important factors that affect customer loyalty toward retail firms in Malaysia. As a result, retail firms regardless of local or foreign should improve product's quality and lower product's price to increase loyal customer. Besides, retail firms should have good planning on place to build its store to increase customer's visitation and to enhance customer loyalty. Tepeci (1999) stated that loyal customers can bring a lot of profits to a company if they stay loyal. Therefore, it is important for local retail firms such as Giant and MYDIN to understand the Malaysian consumer's preferences in order to compete with foreign retail firms such as Tesco and Carrefour which are growing well-liked.
Furthermore, majority of retail firms nowadays do produce their own products. For instances, Tesco, Tesco do produce its Tesco brand products such as Tesco toothpaste, Tesco soft drink Cola and Tesco wardrobe etc. To enhance the sales of their own brand products, retail firms should look into this issues and rebranding their products because customers today are concern and have higher expectation toward the products produce and retail firms. Therefore, retail firms should not neglect the importance of product's quality if they want to succeed and to gain market share in future.
5.4 Limitations of Research
There is no perfection in one study. Hence, there are some limitations faced when carrying out this research and there is still room for further investigation and improvement into the product's attributes that affect customer loyalty toward retail firms. Firstly, the sample size of this research paper is not big enough to represent the general public's perception on the topic of product's attributes that affect customer loyalty toward retail firms. In this research, a total number of 200 respondents were selected to determine the product's attributes influencing customer loyalty toward retail firms. A minimum of sample size was adopted considering reasonable. But, if this survey could be done in a large of sample size, the results will be closer to actual, significant and accurate.
Secondly, in this research study, data was collected only in Melaka and Negeri Sembilan. It might be limited to only two regions in Malaysia. As a result, the findings and results from the analysis may not fully signify or cannot be generalized the attitude or buying behavior of all the Malaysia consumers. This is because people in different region might have different buying behavior or perceptions toward the issues studied in this research study. Ideally, in order to portray a more accurate result on product's attributes that affect customer loyalty, data should be collected from all over Malaysia. Data is collected only in Melaka and Negeri Sembilan due to time constraints.
Thirdly, there is limited of similar research has been conducted in Malaysia. It is difficult to refer or to use as literature in this research study. Although there is similar researches has been conducted in Malaysia and share the same theoretical framework, but yet it was refer to different industry such as sport wears, food, and mobiles etc. Therefore, the related information might be not truthful or correct to be applied in this research study since mostly of the literature are from researches in different country such as India, Turkey, Korea and Russia. Thus, there might be some biases when selecting responses. This is because some of the respondents are older people and less educated, thus they might not truly understand the questions. Besides, there are some respondents seem to be not serious in answering the questionnaire because of laziness or time constraint, hence this has led to high diversify inconsistency in the means and standard deviations of certain statements in the questionnaire.
Last but not least, this research study didn't cover customer satisfaction as mentioned in other previous studies. This is because the theoretical framework of this research study mainly refers a study done by Rajaguru and Matanda (2006) in India. Rajaguru and Matanda (2006) are using Means-end chain theory (MEC) as theoretical groundwork in their study and this same goes to this research study. Means-end chain theory (MEC) refers to customer's motivation toward product's attributes and customer loyalty towards a particular store or product is an outcome of customer's perception (Mort and Rose, 2004). In order to generate more specific or detailed results, more factors such as customer satisfaction should be analyzed on whether or not it affects customer loyalty toward retail firms.
The review of literature and the results of this research study point out that the relationship between product's attributes (Product's Price, Store Location, Product's Quality and Brand Image) and customer loyalty toward retail firms require additional research. Based on the limitation mentions in 5.4 Limitation of Study, future researchers are recommended to use a larger sample size for future research if there is no time and budget constraints. The reason for using larger sample size is larger sample size will give more accurate data, make the result specific and be generalized to "Malaysian Context". Thus, it may generate different outcomes if the sample period increases. This is because the customer's preferences and needs might change. Additionally, future researcher may extend their data collected place to whole Malaysia and not only subject to few regions in order to generate more precise results.
On the other hand, future researcher may include more information to support brand image which has been proved in this research study to has no relationship with customer loyalty toward retail firms. Different research has different outcomes. Future research might come out with the results of brand image has relationship with customer loyalty toward retail firms. Moreover, extension of theoretical framework should be done by future researchers. So, it is suggested that future researchers or researches can focus on some other attributes such as customer satisfaction and identify other different factors that might affect customer loyalty toward retail firms in the future study. Future researchers can insert and investigate the customer satisfaction as below.
Independent Variable Extraneous Variable Dependent Variable
Figure 5.1: Suggested Theoretical Framework for Future Research
Due to increasing competitive industries such as retail industry, the key of success is to increasing and preserving market share (Tepeci, 1999). This is not the matter of winning customers but retains or maintains current customers. Loyal customers refuse to accept competitors' lower price offer but yet continue to purchase from the particular brand of retail firm. Therefore, the purpose of the research study is to investigate how the customers in Malaysia perceive or determine that which of the product's attributes (Product's Price, Store Location, Product's Quality and Brand Image) affect customer loyalty toward retail firms.
Loyal customers are important for an organization because of loyal customers can bring a lot benefit such as repetitive purchase or recommend to others (Rajaguru and Matanda, 2006). The research demonstrated that it was not easy to increase or preserve loyal customer due to there are many brand of retail firms offer products with similar product's attributes. From the data analysis of this research study, it was revealed that there are three out of four products' attributes affecting the customer loyalty toward retail firms in Malaysia which are product's price, store location and product's quality.
The results of this research illustrated that product's quality is the most significant product's attributes that influence customers to be loyalty. Coincidentally, the results same with previous researches in Hong Kong's sport wear industry whereby product's quality play an important role in determining the customer loyalty. Thus, the findings of this research study also show that other than product's quality, consumers in Malaysia prefer product's price and store location as appropriate product's attributes that influence customer loyalty toward retail firms or put into consideration before making any purchase.
Finally, the retail industry is increasing competitive with the present of foreign retail firms. Therefore, it is important to hold or to access to the customer's preferences and needs in order to gain competitive advantage. More positive or precise researches are needed to educate future researchers, consumers, manufacturers and retail firms.
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