BRAND LOYALTY IN THE CONCEPT OF MARKETING A CASE STUDY OF PEUGEOT AUTOMOBILE NIGERIA PLC.

BRAND LOYALTY IN THE CONCEPT OF MARKETING A CASE STUDY OF PEUGEOT AUTOMOBILE NIGERIA PLC.

ABSTRACT

The impact of consumers’ brand loyalty to the growth and survival of a brand can never be overemphasized as it affect to a large extent, the marketing performance of such brand. As a result, this study examines brand loyalty in the concept of marketing, using Peugeot Automobile Nigeria as a case study. A sample of 250 employees and customers was taken from Kaduna, Abuja and Makurdi where the study was conducted. The questionnaire was used as the major instrument for data collection while analysis was done based on simple percentage. The results obtained from the analysis revealed that the impact of brand loyalty on the marketing performance of Peugeot Automobile Nig. Plc. is significant. The study therefore recommends that organizations should employ the use of persistent advertising in communicating both the features and qualities of their brand to prospective customers so as to build their customer base and ensure loyalty to the brand.

CHAPTER ONE

INTRODUCTION

1.1    Background to the Study

Globalization has pushed the world into a global village and provides fast flow of information to market audience. Consumers are more rational today and they have good knowledge about products and services. Competition is high almost in every industry and each day rivals come into the market with new products and services. Due to this high competition and availability of substitute goods, consumers have been pushed into a situation where their level of loyalty is very much shaky as compared to old times. Consumers today have access to fast flow of information and they have a lot of options that tends to alter their choice about a particular product or service as the level of substitute offerings is high. Based on the foregoing, one major factor that influences consumer purchase decision today is brand loyalty, Erdem et al. (2006).

Representing one of the most important factors believed to explain consumer brand choices, it is no surprise that the concept of brand loyalty has aroused an enormous interest among academics as well as practitioners within the field of marketing and consumer behaviour. Brand loyalty is widely discussed in marketing literature because it plays a more and more important role in marketing. Brand loyalty is a complex construct in itself, which needs to be disaggregated if it is to be clearly understood (Atilgan et al, 2005). Researchers have been challenged to define and measure brand loyalty because this dimension is formed by two different components: attitudinal and behavioural (Dick and Basu, 1994). brand loyalty is defined as “a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same-brand set purchasing despite situational influences and marketing efforts having the potential to cause switching behaviour” (Oliver, 1999). Brand loyalty has several important strategic benefits to the firms, such as gaining high market share and new customers, supporting brand extensions, reducing marketing costs, and strengthening brand to the competitive threats.

One of the brand’s assets at the source of value, brand loyalty implies both a consistent pattern of purchase of a specific brand over time and a favourable attitude toward a brand. Brand loyalty develops when the brand fits the personality or self-image of the consumer or when the brand offers gratifying and unique benefits that the consumer seeks. In both instances, personal attachment develops toward the brand, Aaker (1992).

Firms with large groups of loyal customers have been shown to have large market shares, and market share, in turn, has been shown to be associated with higher rates of return on investment (Buzzell et al., 1975; Raj, 1985; Reichheld et al., 1990). Dick et al. (1994) suggest that brand loyalty favours positive word of mouth and greater resistance among loyal customers to competitive strategies. Obviously such findings encourage marketers to build and maintain brand loyalty among customers. When striving for such goals, information on factors determining the creation of brand loyalty among customers becomes an important matter.

The success of a firm depends largely on its capability to attract consumers towards its brands. In particular, it is critical for the survival of a company to retain its current customers, and to make them loyal to the brand. Former Ford vice president Basil Coughlan estimates that every percentage point of loyalty is worth $100 million in profits to his firm (Wang et al., 2010). Major enterprises like Del Monte, Harley Davidson and General Motors are spending large sums of money to induce brand loyalty, Moisecue (2009). Firms selling brand with a high rate of loyal consumers have a competitive advantage over other firms. Brand loyal consumers reduce the marketing costs of the firm as the costs of attracting a new customer have been found to be about six times higher than the costs of retaining an old one, Rosenberg et al. (1983). Moreover, brand loyal consumers are willing to pay higher prices and are less price sensitive Reichheld et al. (1990). Brand loyalty also provides the firm with trade leverage and valuable time to respond to competitive moves, Aaker (1992). In sum, loyalty to the firm's brands represents a strategic asset which has been identified as a major source of the brands' equity.

Developing brand loyalty is much more difficult to day due to consumers’ increased sophistication and to the legions of habit breaking, demarcating activities of competitive advertisers. Building brand equity requires time and money. Brand value and preference drive market share, but share points and brand loyalty are usually won by the advertisers who spend the most.

The freedom to advertise encourages businesses to create new brands and improve old ones. When one brand reaches market dominance, smaller brands may disappear for a time. But the moment a better product comes along and is advertised skilfully, dominant brand losses out to the newer, better product, Keller (2008).

1.2    Statement of the Problem

Brand loyalty is a fundamental concept in strategic marketing. It is generally recognized as an asset (Aaker 1991, p. 140), the reason being that it increases pricing flexibility (Simpar et al. 1976, pp. 140- 14 1). There may be some debate over the extent of the phenomenon, but the consensus is clearly that brand loyalty is a concept of major importance (Jacoby and Chestnut 1978). It is no doubt that a company’s prosperity depends on its ability to attract and keep customers who are able and willing to pay for the company’s products which can be done simply by making them loyal to the brand. That being said, it is therefore pertinent that companies deploy all means at their disposal, which may include employing the use of the mass media, to effectively communicate the value of their offering to their target market so as to strengthen the brand’s name and keep customers loyal. Given this, it is not surprising that a lot of consumer behaviour literature is concerned with the sources of loyalty and the mechanisms through which it comes about (Kotler et al 2006:13). Similarly, there is a market level literature on how a firm, primarily through advertising, can foster brand loyalty. And yet, at the market level, the cornerstone in our knowledge is missing. Conceptually the simplest and most basic problem is: "how can a firm exploit brand loyalties once it has it? In addition, how can it be sustained once established? These questions are yet to be answered in the literatures. It is on this backdrop that this study seeks to examine brand loyalty in the concept of marketing with a view to ascertaining how it can be sustained once achieved with specific reference to Peugeot Automobile Nigeria.

TABLE OF CONTENTS

Title Page        -           -           -           -           -           -           -           -           -           -           i

Declaration      -           -           -           -           -           -           -           -           -           -           ii

Approval Page-           -           -           -           -           -           -           -           -           -           iii

Dedication       -           -           -           -           -           -           -           -           -           -           iv

Acknowledgements    -           -           -           -           -           -           -           -           v

Table of Contents       -           -           -           -           -           -           -           -           -           vi

Abstract           -           -           -           -           -           -           -           -           -           -           ix

CHAPTER ONE: INTRODUCTION

1.1       Background to the Study        -           -           -           -           -           -           -           1

1.2       Statement of the Problem      -           -           -           -           -           -           4

1.3       Objectives of the Study          -           -           -           -           -           -           -           5

1.4       Research Questions   -           -           -           -           -           -           -           6

1.5       Significance of the Study -     -           -           -           -           -           -           6

1.6       Definition of terms      -           -           -           -           -           -           -           7

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1          Introduction     -           -           -           -           -           -           -           -           9

2.2       Concept of Brand Loyalty       -          -           -           -           -           -           8

2.3       The Concept of and Dimensions of Brand Equity      -           -           12

2.4       Relationships between Advertising with the Dimensions of Brand Equity     -           -           -           -           -            -           -           -           -           18

2.5        Effect of Brand Communication on Brand Equity     -           -           23

2.6       Effect of Brand Communication on Brand Attitude   -           -           24

2.7       Effect of Brand Loyalty on Marketing            -           -           -           -           25

2.8        Determinant of Brand Loyalty            -           -           -           -           -           27

2.9       Theory of Reasoned Action    -           -           -           -           -           -           30

CHAPTER   THREE: RESEARCH METHODOLOGY

3.1       Introduction-    -           -           -           -           -           -           -           -           32

3.1          Research Design        -           -           -           -           -           -           -           -           32

3.3       Population of the Study          -           -           -           -           -           -           -           33

3.4       Sample Size Determination    -           -           -           -           -           -           34

3.5       Sources and Nature of Data -            -           -           -           -           -           -           35

3.6       Instrumentation-          -           -           -           -           -           -           -           -           36

3.7       Validity and Reliability of Research Instrument          -           -           37

3.8       Technique of Data Analysis    -           -           -           -           -           -           38

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF RESULTS

4.1       Introduction     -           -           -           -           -           -           -           -           40

4.2       Data Presentation on the Study Variables-    -           -           -           -           40

4.3       Answering Research Questions-        -           -           -           -           -           54

4.4       Discussion of Findings            -           -           -           -           -           -           -           56

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Findings -           -           -           -           -           -           -           -           59

5.2       Conclusions    -           -           -           -           -           -           -           -           -           61

5.4       Recommendations     -           -           -           -           -           -           -           -           62       

          Appendix          

TOPIC: BRAND LOYALTY IN THE CONCEPT OF MARKETING A CASE STUDY OF PEUGEOT AUTOMOBILE NIGERIA PLC.

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