Research Project on Customer Loyalty

  Customer Loyalty

      Table of contents     

Executive Summary

1.1. INTRODUCTION

1.2Importance

1.3 Background history

1.4 Problem definition

2. LITERATURE REVIEW

2.1 Identifying the gaps

2.2 Dependent variable

2.3 Independent variables

2.4 Relationship of variables

3 THEORATICAL FRAMEWORKS

3.1 Variables

3.2 basic model

3.3 hypothesis development

4. METHODOLOGY AND DATA ANALYSIS

4.1 Data Collection

4.2 INTERPRETATIONS

4.3 Results and Discussion

4.4 Durability of Relationships

5. CONCLUSIONS
6. REFERENCES

        The influence of service quality, trust and customer satisfaction

                                                On customer loyalty

 Students of the FUUAST  Islamabad.

1. Adnan Maqbool
2. Umair Malik
3. Muhammad Majid
4. Bilal Umar

Executive summary:

The customer loyalty report provides a key performance indicator by measuring the customer performance of the business. The report will tell you how loyal the customer base is, how many new customers you have gained, how many customers you have lost, and how many have become inactive. This paper represents the customer loyalty of Telenor Company and the factor that are associated with it. We analyze a sample of 100 customers the data are collected through the questionnaire. Convenience sampling is used which a type of non probability is sampling. We found that there is a positive relationship of loyalty with service quality, trust and customer satisfaction. This shows that there is a positive correlation between the variables. It also represents that by increasing all services of company the loyalty and satisfaction of customer will be high. Consumers perception about service quality, trust and customer satisfaction are equally important to build up customer loyalty.

 Key words: customer loyalty, service quality, trust, customer satisfaction

Introduction

The customer loyalty has been of much concern to all. The positive relation of service quality, trust and customer satisfaction show that how well customer loyalty is build up for the Telenor Company. The research also shows that all the key factor have positive effect on loyalty. In past decades, Taiwan’s researchers have observed the measurement and management of service quality but few studies focused on the determinants of customer satisfaction other than the quality of other issues. In addition until now, the simultaneous investigation of the interrelationships between service quality, trust, habit, customer satisfaction, price fairness, has not been yet done. The tangible dimension of service quality was defined as the appearance of physical facilities, equipment and communication materials, but not the physical product bought by consumers. It was commonly suggested that service quality is an antecedent of customers satisfaction, and that consumer satisfaction leads to customer loyalty (Cronin, Brady, and Hult 2000).However, in past studies Lee(1998) found that service quality and product quality help to increase customer loyalty and influence customer satisfaction. So our objective is to find the effect of quality, price, trust and satisfaction on loyalty of the customers. The definition and measurements of loyalty depends on the purchasing behavior of the consumers. Jacboy and chestnut(1978) concluded that consistent purchasing as an indicator of loyalty could not be valid because of preference for convenience and that inconsistent purchasing could mask loyalty if consumer had brand loyalty to several brands in one product category. However the behavioral measurement could not distinguish consumer loyalty from repeatedly habitual behavior. therefore rsearchers define loyalty on the basis of attitude and behavior of the customers(Oliver 1997). Later on it was find out that there are some more variable that are influencing the academic loyalty like price fairness, habits etc.

LETRATURE REVIEW:

Customer loyalty

Repeat purchase of product consistently in future is called loyalty.

The marketing literature suggests that customer loyalty can be defined in two distinct ways (Jacoby and Kyner, 1973). The first defines loyalty as an attitude. Different feelings create an individual’s overall attachment to a product, service, or organization (see Fornier, 1994). These feelings define the individual’s (purely cognitive) degree of loyalty.

The second definition of loyalty is behavioral. Examples of loyalty behavior include continuing to purchase services from the same supplier, increasing the scale and or scope of a relationship, or the act of recommendation (Yi, 1990). The behavioral view of loyalty is similar to loyalty as defined in the service management literature. This study examines behavioral, rather than attitudinal, loyalty (such as intent to repurchase). This approach is intended,

first, to include behavioral loyalty in the conceptualization of customer loyalty that has been linked to customer satisfaction, and second, to make the demonstrated satisfaction/loyalty relationship immediately accessible to managers interested in customer behaviors linked to firm performance. Both the service management and the marketing literatures suggest that there is a strong theoretical underpinning for an empirical exploration of the linkages among customer satisfaction, customer loyalty, and profitability. The relatively small quantity of empirical research performed on these relationships to date (Storbacka et al., 1994) is probably the result of the paucity of organizations’ measuring “soft” issues, such as customer satisfaction and customer loyalty, in meaningful ways.

Service quality

If price is increase according to the service quality and product quality customer are ready to purchase product which leads to customer and consumer loyalty, there is positive relationship between fair price and loyalty

Trust

Customer’s loyalty is also effect by trust. There is positive relation, if trust increase loyalty should be increases. Brand trust positively related with both purchase loyalty and attitudinal loyalty

Customer satisfaction

Product quality and price are foundation to build up consumer satisfaction and loyalty.

The  literature is found in the marketing domain. It discusses the impact of customer satisfaction on   customer loyalty. Yi’s “Critical review of customer satisfaction” (1990) concludes, “Many studies found that customer satisfaction influences purchase intentions as well as post-purchase attitude”

THEORATICAL FRAMEWORK:

1. In the current research we want to check the relationship of different variables on customer loyalty hence our dependent variable is customer loyalty
2. We took service quality, trust and customer satisfaction as an independent variables.
3. At the end we have checked the relationships among these variables whether this is positive or negative

SCHMATIC DIAGRAM:

DEPENDENT VARIABLE

1. Customer loyalty

INDEPENDENT VARIABLES

1. Quality Service
2. Trust
3. Customer Satisfaction

Methodologye

DATA COLLECTION, ANALYSIS AND INTERPRETATION

To check the customer loyalty the results and interpretations of information collected are presented the data analysis is divided into two sections which are:-

UNIT OF ANALYSIS is individual and SAMPLING design is NON PROBABILTY and the sample size is 100

SECTION 1:- Analysis on the basis of THE DEMOGRAPHICS i.e. AGE, GENDER and NETWORK

SECTION 2:- Analysis on relationship of CUSTOMER LOYALTY with SERVICE QUALITY, TRUST, CUSTOMER SATISFACTION.

The questionnaires were distributed among 100 customers that were using the Telenor network. Different ratios of customers respond on the basis of Age, gender, and the network they were using.

AGE: – 18-21,22-25,26-30,30 and above.

GENDER: -females, males.

Networks:-Mobilink, U-fone, Telenor, Warid

HYPOTHESIS TESTING:-

There are three hypotheses that are being tested:

H1: There is a positive relationship between customer loyalty and service quality

H2: There is a positive relationship between student trust and customer loyalty

H3: There is a positive relationship between customer satisfaction and customer loyalty

From the above table it is shown that all the independent variable is positively correlated with dependent variable.

As significant value should be less than 0.05 and our value is .000 which shows that our analysis is hundred percent correct

Sample size was 100

As all the value of dependent and independent variables have double stars that means variables are highly correlated.

REGRESSION ANALYSIS:-

Following tables shows the relationship of Independent variables with dependent variables on the basis of regression analysis:

In this regression analysis we conclude that the value of adjusted R square is .613 which shows that all the independent variables highly affected to dependent variable i.e. there is 61% change in dependent variable due to independent variables and remaining 39% is due to the other factors .The correlation(R) between dependent and independent variable is 0.791 shows the relationship.

               INTERPRETATION OF REGRESSION EQUATION

AS WE KNOW THAT

Y = a + BX

Y= DEPENDENT VARIABL i.e customer loyalty

A= intercept(constant) means that there is no effect on that constant whether the value of independent variables are changing or not

B=SLOP (STANDARDIZE VALUE OF BETA)

NOW FROM ABOVE TABLE

FOR SERVICE QUALITY(SQ)

Y=a+BX

2.2 =.28+.16(.12) Means that by changing 1 unit of service quality  22 % of our dependent variable(CL) is increased

FOR TRUST

.28=.28+.07(.05)  Means that by changing 1 unit of service quality  28 % of our dependent variable(CL) is increased

FOR CUSTOMER SATISFACTION

.34=.28+.62(.09)  Means that by changing 1 unit of service quality  34 % of our dependent variable(CL) is increased

CONCLUSION:

In order to conclude I have tested the relationship of all the independent variables i-e SERVICE QUALITY, TRUST AND CUSTOMER SATISFACTION, and found the positive relationship between our dependent and independent variables.

REFFERENCES

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Fornier, S. (1994), A Consumer-based Relationship Framework for Strategic Brand Management,

published PhD dissertation, University of Florida.

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London.

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Management, Vol. 2 No. 3, pp. 17-25.

Gummesson, E. (1993), Quality Management in Service Organizations: An Interpretation of the

Service Quality Phenomenon and a Synthesis of International Research, International Service

Quality Association, Karlstad, Sweden.

Heskett, J.L., Sasser, W.E. and Hart, C.W.L. (1990), Breakthrough Service, The Free Press, New

York, NY.