How the role of Brand Loyalty affects consumer behaviour towards Supermarket chains around the Portsmouth student area.
This research is going to be about how the level of people’s loyalty to a brand or certain supermarket can affect their actual behaviour to carry out a purchase. I am looking to see if certain loyalty schemes being used affect people’s decisions and also if the customer interaction within the store can influence their loyalty too. Rationale
The loyalty between customers in the UK and the supermarket they choose to shop in has been fiercely competed over in recent years. This has not only sparked huge price wars between companies such as Tesco, ASDA, Sainsbury’s etc but forced them also to launch loyalty schemes and many other strategies to keep the customers of the UK in there stores. The use of promotions in retailing has increased rapidly in recent years (“Promotions spur growth in UK grocery sales”, 2010), branding correctly and efficiently is important for any company in the grocery retailing sector and promotions is a vital key to the success of this. However the question as to how these supermarkets gain loyalty successfully is inconclusive, recent research has looked at whether the corporate image is the influencing factor of brand loyalty (Martenson, 2007, p.544). Whereas other theories have suggested that the factor of price orientation can influence store loyalty (González-Benito et al., 2011, p.1). This suggests that there is more evidence needed in order to discover which factors influence consumer-brand loyalty within supermarkets in Portsmouth. Research Questions
1. Do loyalty schemes within Supermarkets have a direct affect on brand loyalty? 2. Does the perceived customer service within these supermarkets affect the consumers brand loyalty? Literature review
Before looking at what Brand loyalty is, the term brand alone should be defined. A brand can be defined as a distinguishing name and/or symbol, intended to identify a product or producer (Aaker, 1991). Although, Kotler (2000 p.396), said that a brand is the name, associated with one or more items in the product line that is used to identify the source of character of the item. In the Current day Branding has become one of the worlds most influential and useful marketing tools in order to identify and diversify companies from one to another. Customers will judge a product on their first impressions and therefore the branding is essential for the success of them. So Brand Loyalty in terms of consumer behaviour according to the American Marketing Association can be defined as the degree to which a consumer consistently purchases the same brand within a product class (Bennett, 1995).
It is also clear to see that brand loyalty is not built up overnight and takes time to develop, as according to Jacoby (1978 p.1) the long- term success of a brand is based not on the number of consumers who purchase it only once, but the number who become repeat purchasers. Repeat purchase behaviour is an axiomatic term which simply refers to the extent to which consumers repurchase the same brand after experiencing the brand (Knox et al., 2001, p.113). So it could be said that brand loyalty is built through this type of repeated behaviour by consumers. Although Schultz and Bailey (2000, p.46) suggests that Customers expect to pay for value, but brand or customer loyalty only occurs when the two parties perceive that the relationship between them is equal. Thus, they stated that a customer-brand relationship and customer or brand loyalty is potentially strong only when two conditions are met: 1. The customer represents relatively high current or potential value to the brand. 2. The brand is compatible with the customer’s needs.
Likes the brand – Considers it a friend
With Switching Costs
No Reason to Change
Indifferent- No Brand Loyalty
According to Aaker (1991 P.40) there are five levels of brand loyalty relating to the consumer, where each level represents a different marketing challenge and a different type of asset to manage and exploit.
This is a much clearer way to categorize consumers and can help to identify the amount of brand loyalty shown from one customer to another, although it is important to note that not all customers will fall under one level and they may be a combination of them. Many UK Supermarkets will use similar theories to understand the loyalty levels of their customers, in turn developing strategies to reach the ones who are not as loyal and hopefully maintain the loyal relationships they have with committed buyers. So there is no doubt that the consumer is key in any retail companies bid to gain greater brand loyalty and stand out amongst the highly competitive crowd. According to the Kantar Worldpanel, Grocery competition is as intense as ever recent data showing an increase within the grocery market at 4.8% per year (“Grocery price competition remains ‘intense’, says Kantar Worldpanel”, 2011). With this in mind, companies over the last few decades have begun to introduce their own loyalty card systems, with the aims of increasing sales revenues by raising purchase/usage levels and also building closer bonds between the customer and brand (Uncles, M. D. et al, 2003, p.294).
These types of loyalty schemes are often conveyed with the use of loyalty cards, which can be acquired and used all throughout the UK with Tesco’s using the well-known ‘Clubcard’, Sainsbury’s the ‘Nectar’ card and many of the other supermarket retailers with similar schemes in place. Many of these schemes have seen great success and become ‘household’ names within the UK, although it is unclear as to where the loyalty within them lies. O’Malley (1998, p.52) suggests that it could be people showing loyalty to the scheme and not necessarily the brand, as they are devoted to what the scheme is offering and may have no real devotion to the particular company or brand. Other theories (O’Brien, 1995, p.79) say that from a customer’s perspective there are five elements that determine a loyalty schemes value. They are cash value, choice of redemption options, aspirational value, relevance, and convenience. If these are met in accordance to the industry then brand loyalty can be increased or gained in return.
In financial terms many organisations may not see loyalty programs as necessarily a way of increasing immediate sales but a long term effort to gain them. As Loyalty gives something of a guarantee of future earnings; even if current earnings are high, a low level of loyalty means that future earnings may be at risk (Pearson, 1994). So Loyalty schemes are clearly an effort for supermarkets to stay competitive in a tough market and keep what market share they do have. But are also at the same time are key in the long-term success to build and sustain a strong customer base. So when looking at customer service related to the level of brand loyalty shown it is important we look at customer satisfaction. As defined by the American Marketing Association, customer satisfaction is: the degree to which there is match between the customer’s expectations of the product and the actual performance of the product.
Expectations are formed based on information consumers receive from salespersons, friends, family, opinion leaders, etc., as well as past experience with the product. When entering a supermarket people will remember their experience not only through what they bought or for what price, but also what level of customer service they received. Satisfaction is positively associated with repurchase intentions, likelihood of recommending a product or service, loyalty, and profitability. For example Rust and Williams (1994) found that greater customer satisfaction resulted in a greater intent to repurchase, therefore a greater loyalty being created towards the brand. However, Bloemer and Kasper (1995) argue that mere repurchase may be indicative of inertia and not loyalty from the consumer. This indicates that there may not be enough information as to whether customer service really can increase a supermarkets brand loyalty, therefore there may be reason to research this further. Methodology
The epistemological stance that I will adopt in this research proposal is the phenomological approach, as I will be looking at peoples own opinions and views into how loyal they consider themselves to be to their local supermarket. I favoured this particular approach over a positivist one, as I would lose any room for subjective opinions and not be able to get a real insight as to where students loyalty in supermarkets lie. Saunders (2007, p106) says, “those researchers critical of positivism argue that rich insights in to this complex world are lost if such complexity is reduced entirely to a series of law-like generalisations” Considering the exploratory nature of this study, I will be seeking to find the true feelings and attitudes of students as to where their loyalty lies within the grocery retail market. I will do this through use of qualitative data and not just the raw quantitative data as to where they most frequently shop.
Therefore, I will adopt an inductive approach which is used when “new facts are being studied, new truths revealed and new general propositions or theories are put forward” (Bennett, 1983, p.88) In my research I will be conducting semi-structured interviews in order to obtain the information I require from students in Portsmouth. Where Saunders states “In semi-structured interviews the researcher will have a list of themes and questions to be covered, although these may vary from interview to interview.” (2007, p320). This way I will be able to use a list of questions to interview the student, but still be able to differ from them when necessary in order to expand on any responses or keep the interview in relation to my research questions. I discounted such methods as questionnaires and focus groups as they were too impersonal and did not allow me to gain the most honest and reliable opinions. Interviews allow the researcher to build a rapport with the interviewee that can provide more honest answers and allow the interviewer to probe for explanation and explore new avenues opened by the interviewee responses (Bryman & Bell, 2003).
The sampling method I use must be able to represent the Portsmouth student population, making sure it is still practical and also not be too time consuming. I decided to use non-probability sampling as the sample size would be small at around 20 students, which of whom would be representative of the 20,000+ local student population. This is a valid technique, especially if there are time constraints or it is impractical to survey the entire population (Saunders et al, 2007, p.226). To ensure that my sample would be best representative of the whole student area and take into account the geographical aspect of where the local supermarkets were located in relation to the sample. I will select my sample in accordance to locality of students to the major supermarkets and make sure I interview students who shop in different stores to one another. Technical Issues
My sample size will be a low amount of around 20 students, due to the length of time to conduct interviews and the nature of them. Therefore I may experience an insufficient amount of data to analyse or not even be able to conclude anything with my findings. To try to avoid this issue I will make sure the questions asked are well planned and thought through, still keeping a semi-structured approach in order to probe the interviewee for the answers I seek. Ethical issues
When conducting my research as it is consumer-based and not within an organisation, I will make sure to adhere to the Social Research Association Ethical Guidelines. The SRA Ethical Guidelines states, “In general, researchers have an obligation to conform to the ethical standards of the society in which they conduct their work.” Therefore I will adhere to the guidelines and make sure my questions asked within interviews are socially acceptable and not too personal for interviewees. Word Count: 1995
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