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AN ANALYSIS OF THE IMPACT OF CUSTOMER SATISFACTION ON BRAND LOYALTY: A CASE STUDY OF TESCO PLC, UK

2. Literature review

2.1 Introduction

This study mainly focuses on the customer satisfaction and its impact on the brand loyalty. However, the first variable of the study is customer satisfaction and it is the independent variable whereas, brand loyalty is the dependent variable in this study. Moreover, customer satisfaction is important for the organisation in increasing the brand loyalty of the organisation. In this section concepts of the two variables with theories and models have been discussed with instances and factors. Empirical evidence has been put in this section to get the idea from the literature about the topic.

 

2.2 Previous research works

Article named,An empirical analysis of home appliances in Pakistan, authors are, Prof. Dr.Abdul Ghafoor Awan, Dean and Asad-ur-Rehman, MS Scholar,in this article, it has given much emphasis on customer satisfaction which is the main concern and the brand loyalty is the main objective. This two marketing concepts can be addressed as the goals of companies. The customer satisfaction, as well as the brand loyalty, is the main issue and sensitive for any business firm. This article discusses the impact of brand loyalty where the customer repurchase the same brand is an indication for long-term revenues, benefits as well as the growth. The efficiency level must be enhanced by the proper investigation of brand efficiency to satisfy the customer’s objective. This will help to improve the performance level of the companies and competitive environment by maintaining sustainable growth.

Article named, Brand awareness and customer loyalty, author: Maciej Kaniewski, in this article is mainly focused on the brand awareness where the brand recall is the special phenomenon. This makes the customer aware of the brand recognition and makes them understand the complex structure of the brand of any product.  This will help them to understand the quality of the brand, the practical attributes of the goods, whether it is properly functioning or not and mostly about its tastes if they buy for the first time. This will have a great impact on the choice of purchasing and one time purchases will satisfy the customer’s expectation.

2.3 Conceptual Framework

 

2.4 Concept of Customers satisfaction

Customers satisfaction is related to the marketing concept which measures the expectation level of the customers that is concerned about the services and the product supplied by the company. It is the concept in the abstract sense that involves the factors like the quality of the product and the services that are provided by the supplier, the availability of the goods, the place where those goods can be bought and the original price of the goods. The main objective of the suppliers of the company is to meet the expectation level of the customer by providing them with the best possible services of better quality and with reasonable prices. As stated by Zhang (2014, p.290), the survey of customer satisfaction is related to some factors where the customers are more concerned about the quality of the product they receive. It also depends upon the time factors that at what place the product will be available, the sales availability, the waiting time and the location as well as parking of the operation, the attentiveness as well as the politeness of the service providers. The most important factor is the cost of the goods and the delivery time of the product that target to satisfy the customers.

2.5 Theories of customer satisfaction

The theory of assimilation:

This theory focuses on the customer’s way of adjusting the perceptions of specific goods by reducing the dissonance, discrepancies between the performance of the product received and the expectation level of the customers and minimising experimental disconfirmation. These adjusting factors will minimise the tensions of the customers and make them bring very close to their level of expectation. This theory focuses to reduce the agreement among the customers and increase their level of expectations as well as the satisfaction level.

The theory of contrast:

This theory focused on magnifying the level of discrepancy between the attitude of a customer and their statements of opinion. This theory describes the time of experiment disconfirmation of the customers. The customers try to avoid the discrepancies level between the level of expectation that they previously had and the actual performances of the product, by changing the evaluation away from the level of expectation (Rahimi 2017, p.44). This theory has the continuous effect of exaggerating the discrepancy level. If any firm increases the expectation level in advertising then the expectation level of the customer will be reduced slightly than the promised level, the goods or the services will be cancelled or rejected that will be totally unsatisfactory.

The theory of assimilation-contrast:

This theory describes the relationships between all those variables related to the model of disconfirmation. As stated in assimilation theory, the customers try to adjust the differences of the perception level of goods performance. They will try to reach their previous level of expectation only when the level of discrepancy will be too small. But in the case of Contrast model, there will be the large discrepancies between the difference in perceived performance and the level of expectation of the customers. This theory illustrates both of the theories that have the tendency of reducing the discrepancies and target to reach to the satisfaction level of the customer (Cha et al. 2016, p.240).

2.6 Models of Customers satisfaction

Servqual Model:

Servqual model is the instrument for multidimensional research which is focused on capturing the expectation level of the customers and their perceptions of the performance of the quality of goods or services (Lam, 2014, p.30). Servqual is the expectancy model for disconfirmation paradigm where the customer confirmed the expectation level for the pre- consumption of the service quality or they may be disconfirmed due to the experience they gathered from the perceptions of the actual services received.

The basic features and dimensions of servqual model are as follows:-

  1. a) Physical dimension – This includes the factors like facilities, equipment and the products for communication that will evaluate the customer’s satisfaction.
  2. b) Reliability – The customer’s expectation level will be fulfilled if the capability of doing the services is reliable in nature. Then the delivery time, as well as the service cost, will be minimised.
  3. c) Responsibility – It means the service quality that is provided by the service provider should be sensitive and must be aware towards the inquiries and the complaints from customer’s side. It means to answer the questions given by the customers.
  4. d) Warranties and guarantees – This indicate the competency level of the workers of organisation and their ability to gain the customer’s trust and the level of confidence towards the organisation.
  5. e) Empathy – This influence the spirit of the customers that how the provided services satisfy them. The organisation has to understand the customers who are really important to it.

Kano Model:

This is the proposed tool for providing the useful technique of including any features in the product and the part of services (Saleem 2014,p.710). These possible features help to maximise the profit and fulfil the customer’s satisfaction level.

Basic attributes of Kano model are as follows:-

  • Threshold attributes – This attribute must be present in every product to meet customers expectation.
  • Performance attributes – This attributes influence the performance level of known product that will help to increase the enjoyment of the customers.
  • Excitement attributes – This attributes indicate the surprising event for the customers that they don’t know what they want but actually getting.

 

2.7 Concept of Brand Loyalty

Brand Loyalty is the concept of the company that helps in the understanding of the behavior of the customer who become loyal to the company and make repeated purchase of the products (Cha et al. 2016, p.239). Loyal customers purchase their choice of products from various brands with a convenient price. Therefore, different companies tries to cultivate their loyal customers in order to increase their sales of the company. Therefore, this factor enables the company to maintain and enhance the quality of the products and services in order to cultivate the loyal customers in the market. As suggested by Pappu and Quester, (2016, p.15), the brand name of the company makes a positive change in the mind of the customers regarding the company. There are many factors that helps the company to increase its brand loyalty in the market. Therefore, brand name of the company helps in maintaining the customer engagement in the company.

2.8 Theories of Brand Loyalty

Three stage theory

The three stage theory consists of three stages that resembles the brand loyalty of the company. These three stages are explained below:

Design

The design describes the outlook of the company in the market. It includes the logos, slogans, colours and catchy-phrases (Liu et al. 2016, p.1064). It is the way to attract the customers towards the company in order to increase the sales of the company. Different company has also its own logo and slogans to attract the customers. It differentiate the company from other companies in the market.

Value Proposition

It is the products and services that the company offered in the market for the customers that helps in attracting the customers to towards the company. This adds up a value to the company by the quality of the products and services provided to the customers (Di Benedetto and Kim, 2016, p. 3723). Different companies have a proper value proposition that helps in increasing the engagement of the customer in the company. The product and services offered by the company helps in the increasing the brand loyalty in the market.

Positioning Statement

This is a statement that the company makes in order to provide the quality products and services to the customers. This helps the customer to select their choice of brand and makes repeated purchase from the company. The brand name of the company has increased a lot that helps in making the positioning statement for the company.

The multidimensional theory

This theory explains the various dimensions of the brand loyalty including the demographic and psychological aspects with multivariate measurements. This theory deals with the implementation of the brand loyalty on the mind of the customers and attract them towards the product and services of the company. There is a drastic changes in the factors that are affecting the brand loyalty of the company. The psychology of the customers have changed from the low pricing to the high pricing. The customers are not bothering with the high prices of the products rather than the quality of the product.

2.9 Factors that drive brand loyalty

There are various factors that helps in driving the brand loyalty in the customer. The loyalty of the customers towards a company helps in driving the brand loyalty of the company.

Product

According to Kitrungpaiboon and Kim, (2017, p.53), the product of the company is the main factor that drives the brand loyalty of the company. The customers are looking for the good quality of the products and choose the brand that provides the product of their choices. Therefore, the quality of the product is a necessary factor in the brand loyalty. The competition in the market has enabled the company to look after the quality of the product they offer in order to compete in the market with the other companies.

Price

In the current scenario, customers are looking for the quality product at a convenient price. The pricing of the product is important to engage the customers with the company. Therefore, the pricing strategy of the company have to be maintained in a proper way to minimise the selling price of the product in the market. The availability of the quality product at a minimal cost helps in attracting the customers towards the company.

Variety in products

The customer looks for the variety in the products of the company. These variations includes the change in colour, size and quality of the products of the same company (Haryanto et al. 2016, p.4029). The varieties in the product helps the customers to choose from the products. Therefore, the customers get attracted to the particular company offering this service.

Marketing

The marketing strategy also affects the brand loyalty of the company. There are many companies that improvises in the market due to its marketing strategy. Companies used to have a brand ambassador of the product who advertises the products in the public. Therefore, the public get attracted to the way they advertise the product and opts for the purchase of the product from the company.

2.10 Factors that satisfy the customers

The satisfaction of the customers is very important in the respect of the company point of view. A satisfied customers provides referral to other customers for the purchase of the products from the company. There are various factors that helps in the customer satisfaction:

Customer needs

The needs and expectations of the customer are important for the company to satisfy it (Drabjerdi et al. 2016, p.265). There are many needs and expectation of the customers that have to be identified by the company and take steps to meet them. These helps in creating a positive impact of the company in the minds of the customers regarding the brand loyalty of the company.

Ease of access

The products and services that are provided by the company to the customer needs to be easy in access. Therefore, the company looks for the ease in the complexity of the product. This helps in attracting the customers towards the company.

Customer relationships

The CRM of the company helps in strengthening the relationships with the customers. This department in the company resolves the queries and issues of the customers that helps in the customer engagement in the company. Therefore, a healthy relationship with the customer helps in engaging the customers in the company.

2.11 Impact of customer satisfaction on brand loyalty

There are various impacts of the customer’s satisfaction on the brand loyalty of the company. A satisfied customer is an important assets of the company (Garcia-Martinez et al. 2016, p.66). Companies used to make different strategies in order to satisfy their customers. A strong brand name influences the customers by its quality products and services. A satisfied customers helps in increasing the sales of the company and provide referrals to other customers for purchasing a particular brand. This helps in increasing the brand loyalty of the company. The customer satisfaction helps in increasing the number of loyal customers for the company (Keller, 2016, p.9). This affects the performance of the company in the market regarding the quality of the products and services offered by the company.

2.12 Gaps in Literature

The theories and models that has been discussed in the above section helps in understanding the fundamental of the given topic. The depth of the study of the topic has not been discussed in the literature including the proper effect of the customer satisfaction on the brand loyalty. The literature does not provide any steps that can be adopted by the companies to enhance the brand loyalty of the company and the engagement if the customers in the company.

2.13 Summary

From the above discussion, it is summarised that the satisfaction of the customer is important for the enhancement of the brand loyalty of the company. The loyalty of the customer is properly explained in the context with the use of the different theories and models related to the variables of the topic. These theories and models have helped to understand the various effects of the customer satisfaction on the brand loyalty.

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