An analysis of the impact of customer satisfaction on brand loyalty

an analysis of the impact of customer satisfaction on brand loyalty: a case study of sainsbury’s plc.

Executive Summary

This study reflects the analysis report of business environment of a specific company named Sainsbury Plc. In this assignment, the business environment of the company Sainsbury PLC is analyzed with the respect customers satisfaction and brand loyalty of the Sainsbury PLC etc. This study is helpful to analyze impact of brand loyalty in order to develop relationship with customers.

  1. Introduction

Introduction

In the era of digitization and global competitive business environment, business organisations need to emphasis on customer loyalty and customer satisfaction in order to achieve organisational goal. This research project sheds light on significance of customer satisfaction and brand loyalty with reference to Sainsbury’s plc in United Kingdom. It has nearly 23% of market share that is almost double of ASDA. Hence this study is helpful to identify the factors associated with consumer’s perception towards Sainsbury brand.

Background of the study

In order to ensure organisational sustainability in global competitive marketplace, business organisation needs to focus on effective management system. Sainsbury’s plc offers a wide range of products by understanding consumer’s perceptions. This study has highlighted impact of customer satisfaction and brand loyalty over business operation with reference to Sainsbury’s plc.

Background of company

Sainsbury’s plc had started its operation in London in 1869. It has more than 1200 outlets all over the world with employee strength of 180000 (SAINSBURY, 2018). It is one of the largest retail organisations that operate not only in UK but also in US and Asian subcontinent. The main reason behind huge customer base is its ability to analyse market trends and develop products as per customer requirements. Sainsbury’s plc has focused on creation of the loyal customers since many years, by offering customers right product on right time.

Rationale

Sainsbury’s plc has faced significant challenge from its competitors Tesco in terms of retail operations. In last financial year Tesco has witnessed significant growth in its business operation and it has achieved 30.1% of market share in retail marketplace.

The main factor by which Sainsbury’s plc has faced challenge in its retail operation is its marketing strategy that is not up to the expectations of customers.

It is evident that in recent time, a huge number of customers have made complaint that product and service offered by Sainsbury’s plc is not meet the basic standard of customers requirements and it is the main issue for which customers are inclined to other brand such as ASDA or Tesco.

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Research aim

This research will be helpful to identify and critically analyse the relationship between customer satisfaction and customer loyalty with reference to Sainsbury’s plc.

Research objectives

  • To critically review relation between customer satisfaction and customer loyalty over brand management in the context of Sainsbury’s plc
  • To measure the level of customer satisfaction with the help of SERVQUAL and SERVPERF Model
  • To analyse the responses of respondents by using primary data collection method
  • To provide valid recommendations in order to enhance level of service standards with reference to Sainsbury’s plc

Research questions

What are the factors that hamper customer satisfaction over buying products from Sainsbury’s plc?

What are the unique activities compare to other retailers to increase customer loyalty?

What are the future business strategies and plans to increase customer satisfaction and customer loyalty at Sainsbury’s plc?

Significance of study

This study is useful in order to establish relationship between customer satisfaction and brand loyalty in order to enhance business operation. Customer satisfaction is directly related to quality of the product and standard of services. Hence, this research proposal is helpful to provide disseminated information to improve existing business standards of Sainsbury’s plc.

  1. Literature Review

Introduction

Critical literature review is an important part for research proposal as it shows viewpoints of other researchers about the research topic. It is important to identify the specific articles that provide disseminated information regarding customer satisfaction and brand loyalty and its impact over organisational culture. In addition to this, it is also an important task for researcher to take relevant articles while commencing research project.

Customer satisfaction

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Globalisation and competitive market have changed existing pattern of marketing and customers can choose their desired organisation from a range of options in global supermarket. As opined by Aluko and Knight (2017, p.430), customer satisfaction has significant impact organisational culture and profitability. In order to sustain in global competitive marketplace, retail organisation needs to focus of customer satisfaction by understanding their demands and deliver products and service as per their requirements. In this respect, receiving feedback from customers is a useful approach by that business organisation can able to identify the requirements of consumers and hence develop business strategy regarding the requirements. On the other hand, Madhani (2015, p.212) argued that customer evaluation perceive discrepancy between actual products and delivered products. It is also evident that customer satisfaction is important factor that encourages them to repeat purchase products from the same brands and it helpful to build up brand loyalty. In this respect SERVQUAL model is helpful to measure the customer satisfaction level. This model is associated to identifying the perception gap between expected service standard and received service standard.

Reliability

Responsiveness Assurance

SERVQUAL

Model

Empathy Tangibles

Figure 1: SERVQUAL Model

(Source: Seshanna, 2015, p.12)

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Customer loyalty

Market

Research

Appraoch

Result

Assesement

Strategic

Development

Customer

Loyalty

Deployment

Priority

Setting

 

Action

Planning

Figure 2: Customer Loyalty

(Source: Veloutsou, 2015, p.412)

According to Eccles et al.(2015, p.112), in order to expand business operation, organisations needs to focus on customer loyalty by which it can strengthen its customer base and ensure organizational growth in global competitive marketplace. Building customer loyalty is a complex task and it is also a cost effective method in order to ensure growth of business. Customer loyalty is a key matter of concern from the perspective of business operations and organizations must identify the factors that hamper consumer loyalty towards the brand. Good marketing and promotional strategy might be beneficial to draw attention of consumers towards a particular brand. As stated by Fernie et al. (2015, p.45), customer loyalty is affected due to trust, communication technique, commitment and conflict handling tactics. Hence, it is important to identify the influencing factors that hampers organisational performance and inclined customers towards other brands.

Relationship between customer satisfaction and brand royalty

As stated by Wood and McCarthy (2014, p.144), customer satisfaction is part of structural framework that business organisation has developed to influence purchasing behaviour of the customers. Customer satisfaction is directly related to customer loyalty and organisational

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profitability. Hence it can be said that success of business organization is highly depended upon identifying customer needs and satisfying customer demands. On the other hand, Jenkins and Williamson (2015, p.29) stated that organisation should be focused on building relationship with customers and increase brand loyalty of that particular brand. In this respect, introduction of customer loyalty program might be beneficial to enhance business activity and ensure organisational profit.

Conceptual Framework

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Technical Quality

External Influence

Influencing Factors

Corporate Image

Service Quality

Customers

Satisfaction

Functional Quality

Perceived Price

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Gap of literature

The above mentioned articles are useful to identify the factors that hamper performance of business organisation but it does not provide any strategic framework to overcome those issues. Apart from this, literature review section shows relationship between customer loyalty and customer satisfaction but it has unable to provide effective strategy to develop customer attenuation.

Summary

Literature review section is helpful to provide disseminated information regarding customer satisfaction and brand loyalty. In addition to this, the articles that researcher has adopted here are relevant with reference to development of customer attention in retail industry. It is also evident that loyal customers are switched over different brand due to promotional campaign and loyalty program; hence it is significant to adopt innovative approach to retain its existing customers.

  1. Research Methodology

Introduction

Research methodology is an important part of research project by which researcher can able to carry out the research task. Research methodology is consists of research philosophy, research approach, data collection methods and sampling methods. Hence, it can be noted that research methodology plays significant role to provide relevant data and information regarding customer satisfaction and brand loyalty with reference to Sainsbury’s plc.

Research Philosophy

According to Akwensivie (2014, p.90), research philosophy provides disseminated information regarding research project. Researcher will conduct the research project based on positivism approach as it provides views of others in objective manner.

Research Approach

Research approach is an integral part of research project as it established models and framework regarding research subject (Varley, 2014, p.12). Researcher will adopt deductive research approach to get disseminated information regarding customer satisfaction and its impact over brand loyalty.

Data collection methods

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Data collection method is another important part that is associated with research project and it provides relevant information regarding research topic. Researcher will adopt quantitative data collection methods with primary data analysis. Primary data analysis will be beneficial to carry out research program on real time response of respondents.

Ethical Issues

There are several issues that a researcher will have to follow for conducting research program. In this respect, confidentiality and anonymity are the key element that must be considered by researcher to identify factors regarding customer satisfaction and brand loyalty.

Limitations

Due to lack of financial assistance, researcher cannot able to carry out research program in broader aspects. In addition to this, time is another important factor that creates negative impact over research project. Apart from this, confidentiality during primary data collection method will be considered as a limitation to carry out research work.

  1. Anticipated Outcomes

Researcher with the help of this research project can able to identify the factors that have significant impact over organisational working culture with respect to Sainsbury’s plc. Meanwhile, this project wills benficial to analyse the impact of customer satisfaction over brand loyalty. In addition to this, the research project will be helpful to analyse the factors regarding increasing customer loyalty and customer satisfaction.

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References

Akwensivie, D.M., (2014). Switching behaviour and customer relationship management-the iceland experience. British Journal of Marketing Studies, 2(1), pp.88-100.

Almaaitah, M.F., Harada, Y., Sakdan, M.F. and Almaaitah, A.M., (2017). Integrating Herzberg and Social Exchange Theories to Underpinned Human Resource Practices, Leadership Style and Employee Retention in Health Sector. World Journal of Business and Management, 3(1), pp.16-20.

Aluko, O. and Knight, H., (2017). From corner store to superstore: a historical analysis of Sainsbury’s co-evolution. Journal of Management History, 23(4), pp.423-435.

Eccles, R.G., Krzus, M.P. and Ribot, S., (2015). Models of best practice in integrated reporting 2015. Journal of Applied Corporate Finance, 27(2), pp.103-115.

Fernie, J., Fernie, S. and Moore, C., (2015). Principles of retailing. Eds. 2nd Abingdon:

Routledge.

Jenkins, W. and Williamson, D., (2015). Strategic management and business analysis. Eds. 2nd Abingdon: Routledge.

Madhani, P.M., (2015). Enhancing customer lifetime value in fast fashion retailing with RFID initiatives. International Journal of Business and Globalisation, 15(2), pp.205-237.

Mollah, M.D.A.S., (2014). The impact of relationship marketing on customer loyalty at Tesco Plc, UK. European Journal of Business and Management, 6(3), pp.21-55.

SAINSBURY (2018), Sainsbury’s, Viewed 12 April, 2018, by <https://www.about.sainsburys.co.uk/>

Seshanna, S., (2015). Retail Management. Ed. 3rd UK: McGraw-Hill Education.

Varley, R., (2014). Retail product management: buying and merchandising. Ed. 3rd Abingdon:

Routledge.

Veloutsou, C., (2015). Brand evaluation, satisfaction and trust as predictors of brand loyalty: the mediator-moderator effect of brand relationships. Journal of Consumer Marketing, 32(6), pp.405-421.

Wood, S. and McCarthy, D., (2014). The UK food retail ‘race for space’and market saturation: A contemporary review. The international review of retail, distribution and consumerresearch, 24(2), pp.121-144.