Impact of Brand Loyalty and Consumer Satisfaction on Consumer Purchase Decision in Retail Industry

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Impact of Brand Loyalty and Consumer Satisfaction on Consumer Purchase
Decision in Retail Industry
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Acknowledgement
Conducting this research has been one of the most enriching experiences of my life. The
contribution of this research to enhance my knowledge base and analytical skill has been
paramount. It gave me the opportunity to face challenges in the process and overcome
them. This would not have been possible without the valuable guidance of my professors,
peers and all the people who have contributed to this enriching experience. I would like
to take this opportunity to thank my supervisor Prof. Cormac Austin for the constant
guidance and support provided to me during the process of this research. It would not be
justified if I did not thank my academic guides for their important and valuable assistance
and encouragement throughout the research process. I would also like to thank my friends
who had provided me with help and encouragement for collecting primary data and
valuable resources. Finally, I would like to thank the consumers from the retail industry
who have participated in the research survey and provided with valuable inputs into the
subject. The support of all these people has been inspiring and enlightening throughout
the process of research in the subject.
Heartfelt thanks and warmest wishes,
Yours Sincerely,
PLEASE FILL
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Abstract
Brand loyalty is defined as the preference of a buyer for a particular brand of product
irrespective of various other factors like product, quality, quantity and others.
Establishing brand loyalty is one of the main objectives of any business organization as it
significantly helps the company to overcome market competition. Customer satisfaction
is defined as the state of the customer when his requirements are met by the products
provided by the seller in terms of quality, price and quantity. However, on a larger scale,
customer satisfaction can be defined as the fulfilling of the requirements of the customer
base within a target region even during high competition in the market. Purchase decision
of a consumer is defined as the process by which the customer decides whether to buy or
not to buy a product from a brand. The focus of this research is the retail industry in the
country of Saudi Arabia and throughout the research the performance of the retail
industry in Saudi Arabia and the related factors like brand loyalty and customer
satisfaction has been analyzed and discussed.
Based on results of the study, it has been gathered that both brand loyalty and customer
satisfaction play major role in determining the consumer purchasing decision in Saudi
Arabia retail industry. However, the study has been conducted on a very small sample
size and does not reflect the true situation in the field of research. The results deduced
from the data can only be used to set a trend of consumer purchasing behaviour in the
country with the limitation that it may not be true for all consumers in the country.
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Table of Contents
Chapter 1: Introduction, Research Aim, Objectives and Research Questions................................5
1.1 Background............................................................................................................................5
1.2 Research Focus......................................................................................................................7
1.3 Research Aim and Research Questions.................................................................................8
1.4 Research Objectives...............................................................................................................8
1.5 Outline of Structure...............................................................................................................8
Chapter 2: Literature Review.........................................................................................................10
2.1 Introduction..........................................................................................................................10
2.2 Brand Loyalty......................................................................................................................10
2.3 Customer Satisfaction..........................................................................................................13
2.4 Purchase Decision................................................................................................................14
2.5 Retail Industry Analysis in Saudi Arabia Context...............................................................15
2.6 Conceptual Framework........................................................................................................18
2.7 Discussion of Findings from Literature on Saudi Arabia Context......................................19
2.8 Conclusion...........................................................................................................................26
Chapter 3: Research Design and Methodology.............................................................................27
3.1 Introduction..........................................................................................................................27
3.2 Method Outline....................................................................................................................27
3.3 Research Outline..................................................................................................................28
3.4 Research Philosophy............................................................................................................28
3.5 Research Approach..............................................................................................................29
3.6 Data Collection and Analysis..............................................................................................29
3.7 Sampling..............................................................................................................................30
3.8 Ethical Considerations.........................................................................................................30
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Chapter 4: Findings / Results.........................................................................................................31
4.1 Quantitative Data Analysis..................................................................................................31
4.2 Qualitative Data Analysis....................................................................................................32
Chapter 5: Analysis and Discussion of Findings...........................................................................33
5.1 Analysis of Quantitative Data..............................................................................................33
5.2 Analysis of Qualitative Data................................................................................................42
5.3 Detailed Discussion Based on the Findings.........................................................................44
Chapter 6: Conclusion and Recommendations..............................................................................50
6.1 Conclusion...........................................................................................................................50
6.2 Recommendations................................................................................................................60
6.3 Research Limitations...........................................................................................................61
6.4 Linking with Objectives......................................................................................................61
6.5 Future Scope of Research....................................................................................................62
References......................................................................................................................................64
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Chapter 1: Introduction, Research Aim, Objectives and Research
Questions
1.1 Background
Brand loyalty and customer satisfaction are considered to be two major factors
behind the commercial success of a business organization especially in the retail industry.
Brand loyalty is defined as the affinity of a customer towards a particular brand of
product such that the customer buys products of that brand only although there are other
similar brands present in the market. Thus, once the company is able to launch its brand
successfully, it expects to gain brand loyalty from the customers so that it is able to build
up a strong customer base (Aaker 2011). In order to develop brand loyalty, the company
needs to provide the customers with the best quality of products in the market within a
limited price range. While some of the customers prefer best qualities of products
irrespective of price, some other customers consider the price range of the products
before purchase decision. Thus, the company that wants to gain brand loyalty for the
customers need to consider both these factors before releasing their products in the
market.
On the other hand, customer satisfaction is defined as the situation when the
customer is happy after buying a product of his choice from a retail store such that he
purchases the same product of the same brand again and again. Thus, in order to gain
popularity, a business organization should also consider gaining customer satisfaction as
it plays a vital role in the overall business of the company (Berry 2007). With high value
of customer satisfaction, the sales of the company / retail store will continue to increase
and the company will be in a much better place in the competitive environment in the
market.
Purchase decision is defined as the consideration made by the customer regarding
whether he will buy a particular product of a particular brand from a particular retail store
or not. There are several factors that play major roles in the determination of the purchase
decision of a customer.

Brand efficiency of a product is directly related to brand loyalty and customer
satisfaction and can be defined as the ratio of brand output and brand input. In other
words, brand efficiency is the amount of brand output that is generated against the inputs
made towards the development of the brand. Brand loyalty of a customer can only be
developed when the company is able to generate high brand efficiency. In order to
increase brand efficiency, it is important for the company to control spending and also
generate sufficient amount of revenue through sales. Now, for achieving high sales and
earn significant profit margin, the company must ensure the customer base is loyal
towards the brand and satisfied regarding the products they receive. Majority of
customers look to ensure they receive high value for money in terms of product quality,
quantity and service (Apéria and Georgson 2011). Some researchers have introduced the
concept of brand management that helps a company to grow brand efficiency and brand
loyalty of the customer. Some of common brand management techniques deployed by the
companies include advertising campaigns, distribution of free samples, quality
management of the products before dispatch and others. Generally, the aim is to ensure
the customers feel the qualities and prices of the products are reasonable as well as value
for money. With time, as brand efficiency increases, brand loyalty among the customers
also increases that in turn influences the purchase decision of the customers (Dick and
Basu 2007). Some researchers pointed out the example of some brands like Apple and
have stated that once the company has earned very high brand value and strong brand
loyalty among the customers, they are free to increase products costs and change other
factors and still not risk losing customers. This is because their brand values are so strong
that the customers will always have top preference towards purchasing products only
from that brand irrespective of the presence of alternative cheap products from other
brands.
Some authors have expressed their opinion that in order to gain brand success in
terms of finances, it is important for the company to develop a good brand image and
brand awareness. Brand image refers to the perception of a particular brand on the eyes of
customers. Some of the key success factors behind developing a brand image is an
attractive brand symbol design, a suitable name that reflects the ambition and nature of
the company, attractive products and others. On the other hand, brand awareness refers to
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the idea of the people regarding what products can be purchased from a particular brand
(Corstjens and Lal, 2008). For instance, a customer with low brand awareness will not
expect smartphones from “Apple” brand. The researchers have emphasized that the most
popular and successful brands will always look to ensure fulfilling the requirements of
the customer and make their business customer centric. The advantage of this approach is
that it enables the companies to gain brand loyalty and satisfaction of the customers.
It is known that customers are massively important to determine the success of
any business in the global context and studies state that the roles of customers in business
have always been overemphasized. As per various studies, the purchasing behaviour of
the customers help the company in gaining high profit margins, competitive advantage in
the market as well as considerable economic growth in the business. Previous studies
have left a gap on the influence of customer satisfaction on both trust, and loyalty as
mediator variables with the end result of causing a repurchase by customers (Han and
Hyun 2015). There is a growing recognition that customers of any business organization
have a life cycle; thus should be acquired, retained, and climb a value ladder from first
time customers to partner status. According to the studies, the customers are key
predecessors for sales, business’ growth and profitability and hence, the businesses
depend considerably on their purchasing behaviour but at the same time, these companies
need to take initiatives that ensure the customers become loyal to the organization and
purchase products from the company on a continuous basis. In cases where studies have
concentrated on the impact of customer trust on customer loyalty, contradicting results
have been found. Researchers noted trust to have no significant impact on customer
loyalty using community services data. Contrary to this, it has been found that trust has
an impact on customer loyalty using data from restaurant customers.
1.2 Research Focus
The focus of this research is the retail industry in the country of Saudi Arabia and
throughout the research the performance of the retail industry in Saudi Arabia and the
related factors like brand loyalty and customer satisfaction will be analyzed and
discussed.
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