declaration of originality
TRANSCRIPT
Name: Kaosy Philemon Ezeani
Student ID number: 4734369
Dissertation title: Do leading brands need top products to compete?
DECLARATION OF ORIGINALITY
This dissertation is all my own work and has not been copied in part or in whole from
any other source except where duly acknowledged. As such, all use of previously
published work (from books, journals, magazines, internet sites etc.) has been cited
within the main report and fully referenced as an item in the Bibliography/ Reference
Section.
Copyright Acknowledgement
I acknowledge that the copyright of this dissertation belongs to Coventry University.
ETHICS APPROVALI confirm that the dissertation has proceeded with good ethical practice
Signed …Kaosy…………………………… (Turnitin submission identifier number
will be taken as the student’s confirmation of the above statement)
Date: 5th May 2015
TABLE OF CONTENTS
DECLARATION OF ORIGINALITY.........................................................................................1
TABLE OF CONTENTS..................................................................................................................... 2
LIST OF FIGURES.............................................................................................................................. 4
CHAPTER ONE : INTRODUCTION AND BACKGROUND TO STUDY....................................5
1.1 INTRODUCTION......................................................................................................................... 5
1.2 BACKGROUND TO STUDY.......................................................................................................5
1.3 AIMS OF RESEARCH..................................................................................................................6
1.4 RESEARCH QUESTION............................................................................................................. 6
1.5 OBJECTIVES OF RESEARCH....................................................................................................6
1.6 GAPS IN LITERATURE..............................................................................................................7
1.7 STRUCTURE OF DISSERTATION...........................................................................................8
CHAPTER TWO: LITERATURE REVIEW..................................................................................10
2.1 INTRODUCTION...................................................................................................................... 10
2.2 BRANDING................................................................................................................................ 112.2.1 MEANING OF BRANDS...................................................................................................................112.2.2 HISTORY OF BRANDING...............................................................................................................112.2.3 SOURCE OF BUSINESS VALUE....................................................................................................122.2.4 BRAND MEASUREMENT...............................................................................................................13
2.2.4.1 KELLER’S EQUITY MODEL...................................................................................................... 142.2.4.2 YOUNG AND RUBICAM BRAND ASSET VALUATOR......................................................162.2.4.3 HARRIS INTERACTIVE EQUITREND...................................................................................17
2.3 PRODUCT QUALITY............................................................................................................... 182.3.1 MEANING OF PRODUCT QUALITY...........................................................................................182.3.2 DIMENSIONS OF QUALITY...........................................................................................................202.3.3 PRODUCT QUALITY MODELS.....................................................................................................21
2.3.3.1 SWEDISH CUSTOMER SATISFACTION BAROMETER...................................................212.3.3.2 KANO TWO DIMENSIONAL QUALITY MODEL................................................................212.3.3.3 AMERICAN CUSTOMER SATISFACTION INDEX MODEL............................................232.3.3.4 EUROPEAN CUSTOMER SATISFACTION MODEL...........................................................24
2.4 PROBLEM OF STUDY............................................................................................................. 25
2.5 SUMMARY................................................................................................................................. 25
CHAPTER THREE: METHODOLOGY.........................................................................................26
3.1 INTRODUCTION...................................................................................................................... 26
3.2 RESEARCH ONION.................................................................................................................. 27
3.3 HOW THE RESEARCH WAS CARRRIED............................................................................31
3.4 RESEARCH ETHICS................................................................................................................. 31
3.5 SUMMARY................................................................................................................................. 32
CHAPTER FOUR: ANALYSIS AND DISCUSSION OF DATA...................................................33
4.1 INTRODUCTION...................................................................................................................... 33
4.2 BRIEF HISTORY....................................................................................................................... 34
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4.2.1 APPLE....................................................................................................................................................344.2.2 SAMSUNG............................................................................................................................................ 35
4.3 ANALYSIS.................................................................................................................................. 364.3.1 MARKET DEMAND OF APPLE INC...........................................................................................384.3.2 PRICING STRATEGY OF APPLE..................................................................................................394.3.3 MARKET DEMAND OF SAMSUNG.............................................................................................404.3.4 PRICING STRATEGY OF SAMSUNG..........................................................................................41
4.5 SUMMARY................................................................................................................................. 41
CHAPTER FIVE: DISCUSSION......................................................................................................42
5.1 INTRODUCTION...................................................................................................................... 42
5.2 DISCUSSION OF FINDINGS...................................................................................................42
5.3 RESEARCH QUESTION...........................................................................................................43
5.4 RECOMMENDATIONS............................................................................................................44
CHAPTER SIX: CONCLUSION.......................................................................................................45
6.1 INTRODUCTION...................................................................................................................... 45
6.2 BRIEF SUMMARY OF KEY FINDINGS.................................................................................45
6.3 WHY THIS RESEARCH IS IMPORTANT.............................................................................46
6.4 LIMITATIONS........................................................................................................................... 46
6.5 FINAL SUMMARY.................................................................................................................... 46
REFERENCES................................................................................................................................... 47
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LIST OF FIGURES
Figure 1: DISSERTATION STRUCTURE................................................................................9Figure 2: Keller’s Brand Equity Model.....................................................................................14Figure 3: Brand Asset Valuator...................................................................................................16Figure 4: AMCSI Model....................................................................................................................23Figure 5: ECSI Model........................................................................................................................24Figure 6: Research Onion...............................................................................................................27Figure 7: Japan Smartphone Sales Graph...............................................................................36Figure 8: South Korea Smartphone Sales Graph.................................................................36Figure 9: Smartphone Forecast Shipments............................................................................37Figure 10: Smartphone Sales To End Vendors.....................................................................37
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CHAPTER ONE : INTRODUCTION AND BACKGROUND TO STUDY
1.1 INTRODUCTION
The aim of this chapter is to examine the purpose of this study and the problem that
led to the study. The first section of this part talks about the background to the study,
this would help to understand the descriptions in this study. The second section talks
about the research aims, objectives and questions. The third part talks about the gaps
that exist in this literature that led to this study. The fourth section describes the
structure of this dissertation.
1.2 BACKGROUND TO STUDY
As years go by, the marketing industry change and become more competitive. It has
become the priority of various businesses to look for ways to build consumer trust due
to the competition from their rivals and their aim to make more profits; this makes
brand loyalty essential for all companies due to the fact that most businesses know
that once a consumer is loyal to their brand, they keep repurchasing their product
which leads to more profit for the business. Also loyal customers can also recommend
the brand to their family and friends; this improves the popularity and image of the
brand. When consumers buy a product, they have certain expectations that are
required to be met. If the product meets these expectations, the consumer develops a
satisfaction towards the brand.
There are also other reasons involved when talking about why customers are loyal to a
particular brand. The reasons are brand name (an example of this is the case of Apple
Inc., the brand has a strong image that some customers purchase their products due to
the brand’s name and the powerful image it has), promotions, post purchase service
quality and also the price. This research will look at if product quality is an important
factor when customers want to buy a specific product. Product quality is made up of
the features of a product that fulfills the customer’s wants. If the customer is happy
with the product, then the quality of the product is acceptable to the customer. I am
motivated to do this research to find out to what extent is product quality important to
a consumer especially in recent time where customers just buy products due to the
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brand’s image instead of the quality of the product produced or due to the offers a
brand is offering.
1.3 AIMS OF RESEARCH
The aim of this research is to look at if leading brands need the best products to
compete. It focuses on product quality and branding in the sense that to what degree
does product quality and branding have on consumer choices and decisions when
buying a product. A comparative analysis would be done between Apple and
Samsung.
1.4 RESEARCH QUESTION
The following research questions will be used as a guideline while conducting this
research. They are:
1) What is the relative importance of product quality?
2) What is the relative importance of branding?
3) Why consumers prefer certain brands to others?
4) What are the different models that explain the concept of product quality?
1.5 OBJECTIVES OF RESEARCH
The aims of this project can be achieved with the following objectives:
- Find out the degree to which product quality influences brand loyalty
- Find out other factors responsible for brand loyalty
- Comparative analysis of product quality between two brands
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1.6 GAPS IN LITERATURE
There are several reasons that influence a consumer’s decision to be loyal to a product
or brand that would make them buy the same product again. Jober (1947) described
the choice criteria in consumer buyer behavior into 3; economic, social and personal.
“Social criteria include Status and the need for social belonging”. Other factors that
influences consumers brand loyalty towards brand products are the product quality of
the item they are purchasing, the price of the item, the post purchase services and the
promotions available. Various experts have different factors that influences a
consumer’s decision when buying a product but the review of the literature on the
relationship between product quality and brand loyalty has highlighted a gap in
literature that analyzes the effect product quality has on brand loyalty.
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1.7 STRUCTURE OF DISSERTATION
Chapter one talks about the background of the research, the research aims, objectives,
questions and the gaps in the literature. Chapter two, which is the literature review, is
the theoretical foundation of this research. It talks about the relevant literature of this
research, the different models involved, the diagrams and also the problems of this
study. Chapter three is the research methodology, this is where the research design is
justified and the steps involved in taking this research is also explained there. It also
talks about the research methods used, the benefits and limitations of the research
method. Chapter four, which is analysis, talks about the comparative analysis of the
data or results gotten from a case study and articles between Apple Inc. and Samsung
Group in terms of their pricing strategies and market demand. Chapter five discusses
the finding more in depth and recommendations from your point of view. The final
chapter is the conclusion. It shows how the research questions have been addressed
and summarizes the results from the whole research.
CHAPTER ONEBACKGROUND TO
STUDY
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Figure 1: DISSERTATION STRUCTURE
CHAPTER TWO: LITERATURE REVIEW
CHAPTER TWOLITERATURE REVIEW
CHAPTER THREERESEARCH
METHODOLOGY
CHAPTER FOURANALYSIS
CHAPTER FIVEDISCUSSION
CHAPTER SIXCONCLUSION
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2.1 INTRODUCTION
This dissertation examines the relative importance of product quality and if leading
companies need the best products to compete. The aim of this chapter is to make a
review of different theories and models that analyze the concept of branding and
product quality while discussing the lack of a theoretical framework that relates
product quality to brand loyalty. This research was carried out through the reading of
different books and online articles and picking out the relevant theories and
definitions needed. This chapter is going to be divided into 3. The first chapter
includes various theories and models that discuss branding and product quality, the
second chapter analyzes the strengths and weakness of the theories and models
explained in chapter one and the third chapter talks about the lack of theoretical
framework relating product quality to brand loyalty.
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2.2 BRANDING
This section talks about brands and examines the concept. This would be done by
looking at the meaning of branding and relative theories and models.
2.2.1 MEANING OF BRANDSBrands are the primary capital of many businesses. Years back the value of a business
or company was determined in terms of their tangible assets, plants, equipment’s and
real estate. It was recently discovered that the real value of a company is not only
measured by that but also by the minds and decisions of potential buyers and
consumers.
Branding is very important in the consumer’s decision-making process. Different
theorists have come up with different meaning of brands and why it is important in a
consumer’s decision. To understand the meaning of branding, it is important to know
what a brand is. According to (Sadhna, 2009) “a brand is a product’s total
presentation beyond merely its functional characteristics”. The American Marketing
Association also defined a brand as “a customer experience represented by a
collection of images and ideas; often, it refers to a symbol such as a name, logo,
slogan, and design scheme.”
The roles of brands according (Kotler, 2009) are:
- Brands signal a certain level of quality
- Brands facilitate purchase
- Brands reduce risks
- Brands offers legal protection
- Brands can be a powerful means to secure a competitive advantage
- Brands can attract higher quality employees
2.2.2 HISTORY OF BRANDINGThe concept of branding has been around for a number of years, the word branding
has broadened since it was founded. “The modern word Brand is derived from the
word ‘BRANDR’, a word from an ancient Norse meaning to burn” (Shadel, 2014).
During the early years, the word was used primarily to a torch before the meaning
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changed to a mark on a cattle that showed ownership. Individual cattle owners and
ranch owners would have their own unique marks on their cattle’s in case it was lost
or stolen to identify their cattle. A traditional definition of brand according to (Kotler,
2009) is the “name associated with one or more items in the product line, which is
used to identify the source of character of the items”. In the early 90’s companies
began to see brands as an asset and thus made them to start managing corporate
brands in their organizations at senior levels. “Companies such as Kraft Foods,
Unilever and Nestle developed and refined the brand management discipline and job
function.”(Van Auken, 2013). This led to the concept of brands migrate from product
and companies to services and experiences etc. Now Universities, banks, government
agencies now have different brands to differentiate them from other related
companies. Today,” the most powerful brands create communities with their
customers based on shared values, culture and sense of identity.” (Van Auken 2013).
2.2.3 SOURCE OF BUSINESS VALUEBrands create value for businesses in different ways ranging from growing and
retaining market share to attracting different professional employees. According to
(Miller, 2005) “Brands with high market share are often more popular precisely
because they are more popular. Big brands signal low – risk and high acceptance:
consumers feel a sense of safety in numbers”. Leading brands can control particular
markets due to the trust consumers have in them. (Kapferer, 2012) stated, “It is often
held to be a paradox that the number one brands are not the best products”. The
leading brands might not even have the best product compared to their competitors
but due to the trust and brand loyalty from different customers, they will still buy the
products or use their service. “Strong brands have become an important part of the
asset value of a company” (Elliott et al., 2011).
There are other several sources of business value that strong brands provide. They are:
Strong brands command market share: research done on this shows that brand
strength is linked with market strength and market strength is linked with
profitability.
Strong brands can expand into new areas: brands provide businesses with
options to extend and grow through brand extensions. These help businesses to
respond to changes in the market.
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Strong brands have lower price elasticity: Strong brands may increase or
decrease their prices without losing their customers. “With a strong market
share usually comes relatively higher price points, coupled with a lower price
elasticity relative to competitors, this leads to better margins and a higher
return on investment” (Elliott et al., 2011)
Strong brands can attract and retain talent: Strong brands have the necessary
attributes to attract top talented employees and keep them compared to the
brands that have no market presence. This also saves them the cost of trying to
recruit new employees.
Strong brands improve innovations: Strong brands can help create new
products and services using their market orientated research due to the
company’s presence in the market.
(Miller, 2005)
2.2.4 BRAND MEASUREMENT
There are different models which show how brands can be measured. The
measurement of a brand’s strength is known as equity. The models from the literature
that measures a brand are: Keller’s equity model, Young and Rubicam’s brand asset
valuator and Harris interactive Equitrend. Well-known Branding expert, David Aaker
defined brand equity in the early 90’s as “a set of assets and liabilities linked to a
brand, its name and symbol that adds to or subtracts from the value provided by a
product or service to a firm and/or to that firm’s customers”. Also the American
Marketing Association also defined brand equity as “The value of a brand. From a
consumer perspective, brand equity is based on consumer attitudes about positive
brand attributes and favorable consequences of brand use.”
Brand equity measures the potential of a brand to add value to the business. The
benefits of measuring brand equity are
1) During the process of measuring brand equity, weakness in any area can be
found and addressed.
2) Sources of strength can be found which is very useful in developing new
products and services.
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3) Measuring brand equity contributes to the financial valuation of the brand thus
the brand can be treated as a valuable asset.
The interest in measuring brand equity was given particular emphasis by a spate of
high-profile brand acquisitions throughout the 1990s (Miller, 2005).
2.2.4.1 KELLER’S EQUITY MODELAlso known as (customer-based brand equity) model. Was created by Kevin Keller
and published in his book “Strategic Brand Management”. The model shows four
levels that you work through to create a successful brand. The levels are
1) Brand identity
2) Brand meaning
3) Brand response
4) Brand relationships
There are also additional six levels within it that help with brand development. The
levels are: salience, judgments, feelings, resonance, performance and imagery.
(Keller, 2003)Figure 2: Keller’s Brand Equity Model
The first step of this model is to ensure brand identity. Organizations are able to
achieve the right brand identity by creating a brand salience (Keller, 2003). Which
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means to make your brand stand out and customers are aware of it and can recognize
it. The second step is to create brand meaning and what your organization stands for,
which can be achieved by functional (brand performance) or abstract (image related)
brand associations. (Keller, 2003). Performance means how well your product is
suitable to your customer’s needs. It consists of five categories: primary
characteristics and features; product reliability, durability, and serviceability; service
effectiveness, efficiency, and empathy; style and design; and price. (Chegini, 2013),
while Imagery means how well your product is suitable for customers on a social and
psychological level. The third step focuses on customers’ responses to the brands
(what they feel/think about it), their products and marketing activities. Keller (2003)
identified the various types of positive brand feelings. They are: warmth, fun,
excitement, security, social approval, and self-respect. The fourth and the last step is
brand relationship. It is the most difficult step and focuses on a positive relationship
between the customer and the brand. It is divided into four categories: behavioral
loyalty (regular/repeat purchases), attitudinal attachment, sense of community and
active engagement (following your brand on social networks, marketing events and
surveys). The goal in the last step of the pyramid is to strengthen each resonance
category (Manktelow, 2012).
(StepsAhead, n.d.)
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Figure 3: Brand Asset Valuator
2.2.4.2 YOUNG AND RUBICAM BRAND ASSET VALUATORThe Brand Asset Valuator was one of the first models of brand equity developed off
the back of Aaker’s groundbreaking work (Miller, 2005). It was launched in 1993 by
advertising agency “Young & Rubicam”; it covers 19800 brands in over 40 countries.
It is mainly based on consumers’ perceptions using a 32-item consumer questionnaire
(Shaw & Mazur, 1997). It measures four main areas:
Differentiation: Gives a measure of how distinctive a brand is in the market
place. It is the starting point of all strong brands (Miller, 2005)
Relevance: measures how relevant a brand is to the customers personally. (It
fulfills their needs and also fits in with their lifestyle) (Miller, 2005)
Relevance and differentiation come together to form brand strength.
Esteem: Measures how highly the brand is perceived by a customer. This
becomes the aim of managers after differentiation and relevance has been
achieved
Knowledge: Measures the extent to which customers understand what the
brand stands for. It is the end of all marketing communications and
experiences the consumer has with a brand. The knowledge of a brand comes
through the process of brand building. “Young & Rubicam posit that
knowledge—the true understanding of the brand—is the culmination of the
brand building effort (Aaker, 1991).
Esteem and knowledge come together to form brand stature.
An advantage of this model is that it is relatively easy to understand and use, it can
also be used by any brand on any product. It can also be used to measure the ROI
(Rate of interest) of marketing programs with specific accounting and financial
methods. A disadvantage of this model is that it focuses on consumer-based brand
equity while ignoring firm-level brand equity.
2.2.4.3 HARRIS INTERACTIVE EQUITRENDTotal Research Corporation developed this model originally before it was bought by
Harris Interactive (a research firm). “Equitrend is a study that has relied on a simple
measure of brand equity to track a total of over 1000 brands since 1989” (Cees et al.,
2007). This measure is mainly used in North America and is conducted twice in a
year. The Equitrend is a 5 survey-based measure that evaluates customers’
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engagement and gives an idea of a brand’s position in their industry, both internally
and externally. The attributes of the survey are: familiarity (measures how aware
customers are of the brand), quality (provides a score of the opinion of the brand from
the public), purchase intent (measures the relationship between customers and a
brand), brand expectation (calculates whether customers are happy with the brand and
the brand delivered what they expected) and distinctiveness (how products differ from
each other according to customers and how a product is unique compared to that of
their competitors).
An advantage of this method is that it compares different brands in an interesting way
while the disadvantages are it has no measure of brand loyalty which is very
significant in brand strengthen, fails to capture changes in a brands position and also
lacks the diagnostic to depth of the BAV (Miller, 2005).
2.3 PRODUCT QUALITY
This section talks about Product quality and examines the concept. This would be
done by looking at the meaning of Product quality, relative theories, models and also
the strength and weaknesses of the models.
2.3.1 MEANING OF PRODUCT QUALITYThere have been many studies on Quality and why Quality is important to not only
the producers of the good or service but consumers too. Quality can be interpreted by
different meanings; therefore there is no specific meaning of quality.
According to (Dale, 2007) “Quality is the degree to which a set of inherent
characteristics fulfills requirements”. (Mitra, 2012) also defined quality as, “the
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quality of a product or service is the fitness of that product or service for meeting or
exceeding its intended use as required by the customer.”
David Garvin, a Harvard professor summarized five principle categories to defining
quality. They are: transcendent, product-based view, user based view, manufacturing-
based view, and value-based view.
Transcendent Approach: “The transcendent approach views quality as synonymous to
inmate excellence” (Pycraft, 2000). People that support this approach claim that
quality cannot be defined but rather it is a simple process we learn through personal
experience.
Product based view: Quality is viewed here as a precise and measureable variable. It
is measured objectively because quality shows the attributes of a product and lends a
vertical dimension to quality; products can be ranked according to the attributes they
possess. Higher quality products can only be available at a higher cost due to the fact
that quality shows the amount of attributes a product has and because higher attributes
are expensive to produce, the products would be more expensive.
User based view: This view is based on the idea that quality is an individual matter;
which means that a product that satisfies us users are ones with the highest quality.
There are two problems of this approach; consumers have different needs that vary
widely and it is difficult to put all the different needs into a single product. This leads
to the niche strategy or market aggregation approach, which tries to find out which
product attribute most consumers want. This is usually solved by assuming that most
consumers want high quality products. And the second one asks the question about
“how to distinguish products that have quality and those that satisfy the consumer’s
needs”.
Manufacturing based view: This view focuses on the supply side of quality and it is
primarily associated with manufacturing and engineering practice. All manufacturing-
based definitions identify quality as “conformance to requirements” (Garvin, 1984).
Excellence in quality is not in the eyes of the consumer but rather in the standards set
by the company. This also applies to services. This approach recognizes the
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consumer's interest in quality. a product that does not follow specifications given is
most likely going to be poorly made and unreliable, providing less satisfaction than
one that is properly made following specification. Its primary focus is internal
(Garvin, 1984). According to (Ross & Perry, 1989), this approach fails to comply
with Crosby’s concept that states, “Quality is free”.
Value based view: Value based view takes the definition of quality a step further than
the rest of the views. It defines quality in the terms of costs and prices as well as other
attributes hence consumers purchase decision is based on quality at a price that is
acceptable to all (Ross & Perry, 1989). The problem with this approach is that it
combines quality (a measure of excellence) and value (a measure of worth together).
It lacks well-defined limits and difficult to apply it in real situations (Garvin, 1984).
2.3.2 DIMENSIONS OF QUALITYAccording to the business dictionary, dimension is defined as “one of the aspects,
attributes, elements or factors that make up an entity, item, phenomenon, or situation.
According to (Garvin, 1984) there are eight dimensions of quality. They are:
Performance: Is the primary important characteristic of a product.
Performance is what most consumers want in a product they purchase.
Features: These are the secondary characteristics that add to the products basic
qualities. The difference between the primary characteristics (performance)
and features are hard to differentiate.
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Reliability: Is the capability of a product to perform over a specified period of
time. There are two ways to measure reliability: Mean time to first failure
(MTFF) and failure rate per unit time (MTBF).
Conformance: this refers to meeting the requirements and specifications of the
product. This is defined by numerical values (Basu, 2012). Conformance is
measured by the number of repairs under warranty and the amount of incident
calls regarding a product.
Durability: Is the degree to which a product is able to withstand pressure or
damage. A durable product is very important to consumers because customers
want a product that they can use for a while without getting a replacement.
Serviceability: this deals with the response time before a broken product or
service is fixed. Customers are not only worried about the product or service
breaking down but how quick the product or service would be fixed.
Consumers see companies that respond quick to a broken service or product as
a higher quality company.
Aesthetics: This is based mainly on the user-based approach and is a reflection
of individual performance. Aesthetics is about the product looks, taste, smell
etc.
Perceived quality: It is related to the user-based view. This is based upon the
opinions of the customers.
2.3.3 PRODUCT QUALITY MODELSThere are a number of models that explain the concept of product quality and also the
relationship between product quality and brand loyalty. The main models from the
literature are: the Swedish Customer Satisfaction Barometer (SCSB), the American
customer satisfaction index model (ACSI), the European satisfaction index model
(ESCI) and the Kano Two- Dimensional Quality model. The discussion and figures of
each model are explained below:
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2.3.3.1 SWEDISH CUSTOMER SATISFACTION BAROMETERThe Swedish Customer satisfaction barometer (SCMB) was created in 1989. It was
the first national customer satisfaction index used domestically for purchased and
consumed product and services (Fornell, 1992). It includes 130 companies from
Sweden’s largest industries (Johnson et al. 2001). The Swedish customer satisfaction
model anticipates that customer expectations lead to perceived performance. The
expectations customers have of a product or service they purchase leads to the way
they perceive the product. If the product satisfies the customers’ expectations then the
product has done well or has performed well. A customer expectations lead to
customer satisfaction and that leads to either customer loyalty or complains depending
on the outcome of how they see the product. If customer’s expectations of a product
or service are not fulfilled then the product or service is seen as poor to the customer,
this leads to the customer not being satisfied then the customer complains about the
product to the company.
2.3.3.2 KANO TWO DIMENSIONAL QUALITY MODEL
The Kano two dimensional quality models was developed in the 1980’s by professor
Noriaki Kano, a professor at the Tokyo University of science. The model is accepted
widely in research and is beneficial in improving quality management. The model
displays a theory of product development and customer satisfaction. The model was
initially made to develop manufactured product survey according to a survey
conducted with decorative clocks. The results from the product survey displayed that
the customers idea of quality were two dimensional instead of one-dimensional. The
first dimensional was the degree to which the customer are satisfied with the product
or service (Kano et al 1984). The model divides the features of quality into five. They
are:
Attractive quality: These are attributes that satisfy the customers when
achieved but does not cause dissatisfaction if not fulfilled.
One-dimensional: These are attributes that cause dissatisfaction to the
customers if not fulfilled because they were advertised by the company as part
of the product or service.
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Must-be quality: These are attributes customers see as basic attributes.
Customers take them for granted when fulfilled because they expected it as
part of the product or service but are dissatisfied if not achieved.
Indifferent quality: Customers are indifferent about these attributes. They are
neither good nor bad and it doesn’t satisfy nor dissatisfy the customers.
Reverse quality: These attributes refer to the fact that all customers are not
alike. Some customers would prefer high technological products while some
would prefer a basic model of the product.
2.3.3.3 AMERICAN CUSTOMER SATISFACTION INDEX MODEL
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(ACSI, n.d)Figure 4: AMCSI Model
The American customer satisfaction model was created in 1994 by researchers at a
research unit in the University of Michigan. The model was originally based for the
Swedish economy (SCMB). It is an economic indicator that measures the satisfaction
of customers with products and services in the United States. The satisfaction model
monitors developments and changes in customer’s satisfaction which businesses use
to evaluate. The model has three antecedents, which are: perceived quality, perceived
value and customer expectations. According to the model, as perceived quality and
perceived value increases, customer satisfaction increases which leads to brand
loyalty. The model shows that customers have certain expectations they expect from
the product they buy. This is followed by perceived quality, perceived value and
customer satisfaction. Customers view the quality of a product whether high or low
on their opinions and expectations. If a product meets the requirements of a customer
then the customers view the products as high quality. If a product does not meet the
requirements of the customer then it is viewed as a poor quality product, which leads
to the customer being unhappy with the product and complaining about it. This shows
that when customers are happy with a product or service, they become satisfied with it
and leads to brand loyalty. Brand loyalty and customer satisfaction go hand in hand.
2.3.3.4 EUROPEAN CUSTOMER SATISFACTION MODEL
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(Van Haaften, n.d)Figure 5: ECSI Model
The European customer satisfaction index model is similar to the American customer
satisfaction model in a sense that customer expectations, perceived quality, perceived
value, customer satisfaction and customer loyalty are modeled in the same way (Van
Haaften, n.d). It measures the satisfaction of customers in Europe. It can be applied to
multiple companies in several industries and public organizations. The difference
between the two models is that corporate image and perceived service quality are
included while the customer complaints are excluded and also the measurements of
customer loyalty between the two models are different. Loyalty measures in the
European customer satisfaction include the chance of retention, recommending the
brand and how likely the number of customers willing to purchase will increase. The
European customer satisfaction model states that Customers rate the quality of the
product according to the expectations they had before purchasing the product or
service. Perceived product quality, value and customer satisfaction leads to brand
loyalty.
2.4 PROBLEM OF STUDY
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In this chapter, Branding and the product quality models were looked at to explain the
similarities between product quality and brand loyalty. The review of branding and
product quality model led to a research question and problem which is the absence of
a product quality model that shows how product quality can influence brand loyalty
and consumer purchase decision. The research question to this is: To what extent does
product quality influence brand loyalty.
2.5 SUMMARY
In this chapter branding, the meaning and history of branding were explained, the
different models used in measuring brands, which are Keller’s equity model, Young
and Rubicam’s brand asset valuator and Harris interactive Equitrend were reviewed.
These models measure the strength of a brand. The strength and weaknesses of the
models were also looked at. Customers have specific requirements when they want to
purchase a product, they expect this to be met by the company selling the product or
providing the service. The extent to which the requirements are met influences the
customers’ decision making and judges the product. Product quality, the meaning,
dimensions and the different models used which are the Swedish Customer
Satisfaction Barometer (SCSB), the American customer satisfaction index model
(ACSI), the European satisfaction index model (ESCI) and the Kano Two-
Dimensional Quality model were explained and discussed in this chapter. The model
showed the relationship between product quality and brand loyalty.
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CHAPTER THREE: METHODOLOGY
3.1 INTRODUCTION
The purpose of this research is to find out if leading brands need to have the best
product to compete. It was also aimed at finding out the relative importance of
product quality, branding and why consumers prefer certain brands to other. Three
models about branding were reviewed and explained in the literature review while
four models were also reviewed and explained regarding product quality to explain
the concepts of product quality and how it affects consumer’s choices. This chapter
highlights the different research methods and ways of gathering research information,
explains them, talks about the research onion and the different steps and how it
applied to my own research, the data collection method used and the steps, the ethics
approval steps I went through to get the research approved and lastly summarizes the
whole chapter briefly.
26
3.2 RESEARCH ONION
(Saunders et al, 2007)Figure 6: Research Onion
The research onion is a diagram that illustrates the stages that need to be covered in a
research design. Each layer of the research onion shows a stage of the research
process and the different steps to follow. The layers in the research onion diagram are
discussed below:
Research philosophy: “Relates to the development of knowledge and nature of that
knowledge” (Saunders et al, 2007). There are three major ways of thinking about
research philosophy. They are:
- Epistemology:
- Ontology
- Axiology
Research approach: There are two types of this approach, they are:
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1) Deductive approach: This is the process of developing a theory and designing a
research strategy to test the hypothesis.
2) Inductive approach: this is a process where you collect data and develop a theory
from the data you collected.
Research strategies: The method the researcher uses to carry out the research work.
There are different ways of carrying this method. Examples are: experiments, survey,
case study, action research, grounded theory, ethnography and archival research
Choices: This means “the way you choose to combine Quantitative and qualitative
techniques and Procedures”(Saunders e al, 2007). There are three types of
methods, which are:
Mono method: Involves using a single data collection method.
Multiple methods: Involves using more than one data collection method.
Mixed method: Is the use of qualitative and quantitative methods together. The two
methods cannot be combined with each other but can be used after the other.
Time Horizon: Is the time frame the project or research is intended for completion.
There are two types according to the research onion. They are: cross-sectional and
longitudinal.
Cross-sectional: Also called the “snapshot” time collection. Means when research
data is collected at a certain time
Longitudinal: This means the collection of research data repeatedly over a period of
time.
Data collection and data analysis: How the research data was collected and analyzed.
Types of research methods and meanings
28
The following research methodology can be applied to any research study, depending
on the objective of the person doing the research:
Qualitative research: The Cambridge dictionary defines Qualitative research as, a type
of market research that aims to find out the value, opinions and feeling of people
rather than information shown in numbers. The data collection for this research
includes
1) Interaction with individuals directly on a one to one basis
2) Interaction with individuals as a group
The main methods of collecting the data are:
- Interviews
- Observations
- Action research
- Focus groups
Quantitative research: This is a formal, objective research process in which data is
obtained through numerical data. The results from the research are then compared and
generalized.
The main methods of collecting the data are:
- Questionnaires
- Experiments
- Surveys
- Sales figures
- Financial trends
There are two different ways of gathering information. They are:
Primary research: Primary research is the process of gathering your own data instead
of using the data from already published sources. Examples of this research include:
- Survey’s
- Interviews
- Questionnaires
- Direct observations
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Secondary research: This is the use of data that has already been produced. It is either
a qualitative or quantitative research.
Methods of collecting secondary research data are:
- Journals
- Books
- Magazines
- Internet sources
- Information from existing market results
The research taken in this project is secondary research. I chose secondary research
over primary research because of the fact that secondary research is more convenient
and openly accessible than primary research, it costs little to carry out a secondary
research compared to primary research e.g. producing the questionnaire papers for a
primary research or the equipment for a research can be quite costly compared to
getting data through secondary research, the data gotten from secondary research is a
high quality one due to the fact that enough time have been put into the research and
lastly conducting a primary research takes a lot of time compared to secondary
research.
There are also various limitations to this research approach. They are:
-Absence of key information: Due to the fact that it is a secondary research, there are
some information that you may need that the researcher did not carry out so it is a
drawback to the person using the research method
- Another limitation of this approach is that the information or data might be
unfamiliar with the person carrying out the research compared to if you carried out
your own research you will understand it better.
- Difficult to access: the data needed might not be available in your library, while
some online resources require you to pay a fee for their material.
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3.3 HOW THE RESEARCH WAS CARRRIED
I undertook the research by searching the research question on Google scholar,
finding different journals and books relating to the topic, then I searched for product
quality and branding which are the main topics behind the research questions on
locate Coventry (a site used to find different book, journals and articles for Coventry
university students). Went through the lists under each topic then I picked out the
books needed and wrote them down, went to the library to search and pick out the
books and started reading them and was able to narrow down and focus on the
important books and articles needed then highlighted the relevant paragraphs and
phrases needed in my literature review. My next step was to make sure that the
literature review linked and made sense so I narrowed down the review again and
removed the unnecessary literature.
3.4 RESEARCH ETHICS
There are a number of steps I went through to get the research ethical approval from
both my supervisor and the referrer. I started off by registering on the ethics site, and
then proceeded to filling each required part and answering the questions asked i.e.
what my project summary was all about, the purpose of the project and the desired
outcomes. The referrer rejected my first application due to the fact that my project
title and the department had to be changed, the internet resources I was going to be
use had to be accessible to the public so I had to confirm it was. I went through the
application, made the necessary changes then submitted the research ethics
application again and both the referrer and my supervisor approved it.
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3.5 SUMMARY
In this chapter, the research onion and the layers of the onion, which are research
philosophies, approaches, strategies, choices, time horizon and techniques were
discussed and explained. The two different ways of researching, which are
quantitative (use of numerical data) and qualitative (collection of data through
opinions, values and feelings of people), two ways of collecting data, which are:
primary (gathering your own research data) and secondary research (using research
data that has already been published) were explained, the reason why I chose
secondary research for my research project and the benefits and limitations of the
research method I used was explained. The steps used to get my research ethics
approved were also stated.
CHAPTER FOUR: ANALYSIS AND DISCUSSION OF DATA
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4.1 INTRODUCTION
There are many smartphone brands in this modern era of technology that compete
with each other to become the leading smartphone brand. This chapter talks about the
comparison and analysis between Apple and Samsung, the two main leaders in the
smartphone industry, in terms of their phone sales, market demands, pricing strategy
and quality between the two smartphone giants. A brief history would be given on the
two products followed by the market demand, pricing strategies and the quality of
their latest smartphones. The data gotten about their phone quality would be presented
in tabular format for easier understanding. The discussion of the data would attempt to
answer and interpret the main research questions of the study, which are
- If leading brands need top products to compete
- The relative importance of product quality
This chapter is divided into three parts. The first part talks about a brief history of the
two brands, the second part presents the study gotten from the research for easier
understanding while the last part, which is summary, summarizes the whole chapter
briefly.
4.2 BRIEF HISTORY
33
4.2.1 APPLEApple Inc. is an American based multinational company that is involved in the
developing, designing and selling of consumer electronics, computer software’s and
personal computers. The company was established on the 1st of April 1976 and was
registered officially as Apple Inc. on the 3rd of January 1977. The company was
founded by Steve Jobs, Steve Wozniak and Ronald Wayne. The headquarters of
Apple Inc. is based in Cupertino, California, America. Their most popular products
are the IPhone smartphone, IPad tablet, IPod music players, Macintosh computers,
Apple TV and also a new range of smart watches called the Apple IWatch, which was
recently released in 2015. According to an article from Forbes, “apple is the most
valuable brand in the world for a third time in a row at a profit of $104.3 billion, a 20
percent increase from last year.” Apple defeated the Coca Cola Company to become
the most valuable company with the company worth over US$410 billion. Their most
popular product, which is the Apple IPhone, sold for a record 33.8 million in the latest
quarter. There are over 400 retail stores in more than 14 countries worldwide. Apple
also has Apple store and ITunes store. The apple store consists of downloadable apps
and software’s available on the IPhone, IPod, IPad, Macintosh computers and also a
few on the new Apple IWatch. The ITunes store which is one of the largest online
retailer in the world and the Top music retailer in the United States consists of a
database of this music genres and movies. According to a press info released on the
official Apple website, the ITunes store surpassed Wal-Mart to become the number
one music retailer in the United States with over 50 million customers. ITunes has the
world largest music database of over six million songs and has sold over four billion
songs worldwide.
4.2.2 SAMSUNGSamsung is a South Korean based multinational company founded in 1938 by Byung-
Chull Lee. The company’s headquarter is located in Samsung town, Seoul, South
Korea. The company started initially as a food exporter that ships food to china but
34
later entered the electronics market in 1969. As years went by, Samsung Company
expanded into different areas including textiles, insurance and security. Following the
death of Byung-Chull Lee in 1987, Samsung Group separated into four sub divisions
which are; Shinseagae Group, CJ Group and Hansol Group, leaving Samsung group
in charge of electronics, construction and engineering. The other groups are involved
in retail, food, entertainment, telecom, chemicals etc. The Samsung Group now sells
different ranges of electronics for example: personal computers, Televisions, mobile
phones, tablets, microwave etc. Their most popular products are the Samsung galaxy
phones (which have different ranges), Samsung televisions, Samsung computers,
Samsung galaxy tab and also Samsung galaxy watch which is a new development for
the company. Samsung are ranked 9th on the most valuable brand lists, they had the
strongest one year brand compared to other brands in the list, their value rose by 136
percent over the last three years. Their main focus is on the smartphone market and
they are always looking for ways to innovate and expand their products, they were the
largest smartphone manufacturers in 2012. The galaxy smartphone shipments rose 40
percent to 81.2 million according to Forbes. Samsung is amongst the most powerful
influence groups in South Korea and also the fifth contributor of South Korea’s total
exports. Samsung also dominates the Chinese smartphone industry with accounts over
18.5 percent, selling 12.5 million phones in the first three months of release. (Olson,
2012).
4.3 ANALYSISFigure 7: Japan Smartphone Sales Graph
35
(Shah, 2014)
Figure 8: South Korea Smartphone Sales Graph
(Shah, 2014)
Figure 9: Smartphone Forecast Shipments
36
Worldwide Smart Connected Device Forecast Shipments, Market Share, Growth, and 5-Year CAGR (units in millions)
Category
2014* Shipmen
t Volumes
2014* Market Share
2014* YoY
Growth
2018* Shipmen
t Volumes
2018* Market Share
2018* YoY
Growth
5-Year CAGR
Regular Smartphone 1,077.4 60.2% 12.8% 1,246.2 51.2% 3.2% 5.5%
Phablet 174.9 9.8% 209.6% 592.9 24.4% 16.6% 60.0%Tablet + 2-in-1 233.1 13.0% 6.5% 303.5 12.5% 4.7% 6.8%Portable PC 170.0 9.5% -4.7% 170.0 7.0% 0.8% -1.0%Desktop PC 133.5 7.5% -2.3% 121.1 5.0% -1.6% -2.4%Total 1,789.0 100.0% 15.8% 2,433.7 100.0% 5.9% 9.5%(IDC, 2014)
Figure 10: Smartphone Sales To End Vendors
(Gartner 2014)
4.3.1 MARKET DEMAND OF APPLE INCApple recently released smartphone, the IPhone 6, raised the company’s share of the
British smartphone market to a record of 39.5 percent. The other smartphone also
released by Apple, the IPhone 6 plus, was outsold by the IPhone 6. The IPhone 6 cost
539 GBP for a 16 GB model, 619 GBP for the 64 GB model and 699 GBP for the 128
37
GB model while the IPhone 6 plus costs 619 GB for the 16 GB model, 699 GBP for
the 64 GB model and 789 GBP for the 128 GB model. The IPhone 6 accounted for 68
percent of the IPhone sales while the IPhone 6 plus accounted between 23 and 24
percent (Butcher, 2014). This happened due to the fact that customers found the
IPhone 6 plus too big and inconvenient to be carried about as a mobile phone. Data
compiled by IDC shows the year on year growth of bigger smartphones, will increase
by 209.6 percent in 2014 compared to a growth of 12.8 percent for normal sized
smartphones. The data also projects that in the year 2018, the growth of bigger
smartphones will be at 16.6 percent compared to 3.2 percent for normal smartphones.
Apple’s main aim is growth; the number of new devices released in the past few years
has proved this hence the production of the bigger smartphones to match the growth
in demand for it. Another reason why the IPhone 6 plus was produced was to match
the demand in the Asian smartphone markets for bigger phones due to the fact that the
Asian smartphone market is the largest compared to the rest. Apple’s rivals in the
smartphone industry Samsung dominated the Asian smartphone market due to the
customers’ preference for phones with bigger screens. But with the introduction of the
IPhone 6 plus, Apple’s IPhone market share increased significantly towards the end of
last year from 15 percent to 33 percent in South Korea, the home of Samsung where
they dominate the smartphone industry. No foreign brand has had more than 20
percent of the market share in history of South Korea according to an article from
Wall street journal but the introduction of the IPhone 6 plus made a remarkable
difference. Apple could have even sold more phones and made more profit in the
Asian smartphone market but they were not enough devices available to meet the
demand of the customers. The profit of the IPhone in the Asian market increased
Apple’s global IPhones sales to 26 percent annually, passing the 20 million unit
monthly sales for the first time ever (Shah, 2014). The increase in the demand for the
newly released IPhones especially in the Chinese market affected Samsung
Electronics, which led to the company’s first annual earnings decline in three years of
27 percent from 30.5 trillion to 23.4 trillion according to an article from BBC. The
company stated during its last official statement that demand for its smartphones will
continue to fall in the first quarter of the year compared to last year due to seasonal
factors.
38
4.3.2 PRICING STRATEGY OF APPLEMany people believe that Apple products especially their smartphones are overpriced
compared to the prices of other brands, while some believe that the prices of the
products are worth it. In an interview with Bloomsberg business week, Apple’s CEO
Tim Cook spoke about Apple’s strategy. He said, “We never had an objective to sell a
low-cost phone (Nielson, 2014). Our primary objective is to sell a great phone and
provide a great experience and we figured out a way to do it at a lower cost. Apple
strategy of luring customers to buy their products is through product differentiation.
Product differentiation is a marketing process that shows the difference between two
or more products. Apple produces its smartphones in a unique and attractive way,
which makes customers see the smartphone as a quality product. Other strategies used
by apple are innovative advertising and Product launch gathering. Innovative
advertising gives apple an edge over other brands due to the quality of the
advertisement and the way it demonstrates the features of the phone. Also the product
launch, which usually takes place at the beginning of September, demonstrates the
product being released and talks about the features. These shows have lots of people
watching from all over the world eager to see the new products from apple. All these
strategies lead to the demand for the products. Apple focuses on customers that are
loyal to their brand and those that are willing to pay more for a quality product. This
leads to them creating an artificial entry barrier to competitors.
4.3.3 MARKET DEMAND OF SAMSUNGSamsung’s main market for their smartphone is the Asian market especially the
country they are based in which is South Korea. The company over took Nokia as the
39
world’s biggest phone maker in 2012 due to the release of the Galaxy note and also
the sales of the Samsung galaxy model. The galaxy note is a tablet that can also be
used to make calls and receive calls too. Many customers saw that as a convenient
way, instead of having two separate devices for different functions, the Samsung
galaxy note could achieve both functions. Samsung also had a significant growth in
the United States smartphone market due to the increase in the demand for pre-paid
mobile phones and also because of the fact that their mobile phones ran on the
software, which was the most popular operating system at that moment. Recently the
increase in competition in the smartphone market in china affected the sales and
profits of Samsung. Xiaomi, a Chinese based mobile phone brand entered the Asian
smartphone market with a phone called Redmi, which cost $130. The emergence of
the mobile phone led to a decrease in sales for both apple and Samsung because
customers saw the Redmi phone as a bargain cause it has similar features to Apple
and Samsung mobile phones. The demand for Samsung smartphones in Western
Europe also declined due to the emergence of the IPhone 6 and 6 plus which led to
Apple overtaking Samsung to become number one in the global smartphone market
holding 20.4 percent of the smartphone market. Samsung unveiled two new
smartphones, Samsung galaxy S6 and Samsung galaxy S6 edge to compete with
Apple’s IPhone 6 and 6 plus. According to reports, the demand for the new Samsung
smartphones are higher than expected, leading to Samsung opening a new plant to
produce more phones to meet the demand. Samsung predicts record sales of up to
more than 70 million for the new smartphones which will led to the company rising in
the global smartphone market due to the poor sales from the Samsung galaxy s5. The
company also had to speed up the production process of the new smartphones on time
for release. Customers are interested in the new Samsung phones because of the new
features, which is seen as an upgrade from their last phone. The features include a
much better camera, wireless and faster charging, a better build and display.
4.3.4 PRICING STRATEGY OF SAMSUNGSamsung’s strategy is to strengthen the weak areas of the company. The plan includes
reducing the price of their smartphones and also capturing markets with both low cost
phones and phones that are expensive. Over the years, Samsung have been releasing a
cheaper model of their smartphones for those who cannot afford the expensive models
40
especially in developing countries like India. Samsung released the galaxy A3, A5 in
China and the galaxy E5 recently in India. Both phones have a price in the range $300
to $400. The galaxy A3 and A5 were produced to compete with Xiaomi’s cheap
smartphone and Apple’s IPhone 5c in China to match the demand of smartphones that
are not expensive. With this strategy, Samsung expects to overtake Apple as the
global leading smartphone producer. Samsung’s sales in Europe have not been good,
they had a decline by 10.8 percent and also 28.6 in China, one of their biggest
markets. This is because customers think that they are not worth the price compared
to Apple’s smartphones. Samsung released the galaxy s6 and s6 edge to tackle the
problem with the new features and compete with Apple’s IPhone 6 and 6 plus.
4.5 SUMMARY
In this chapter a brief history were given on the two companies, Apple and Samsung
and also their marketing and pricing strategies were explained. Apple is a
multinational company based in Cupertino, California, United States. It was founded
by Steve Jobs, Steve Wozniak and Ronald Wayne in 1977. The company sells
consumer electronics, which includes IPhone, IWatch, IPad, IPod, Macintosh
computer etc. it is one of the most popular brands in the world. Samsung is a south
Korean multinational company founded by Byung Chull lee in 1938. The company
first started as a food exporter but later diverted into consumer electronics. They are
9tho on the most valuable brand list and sell electronics like Samsung galaxy phone,
tablet, personal computers etc. Samsung and Apple are both leading companies in the
smartphone industry competing fiercely with each other to become the top
manufactures. Apple recently released two smartphones, one a bigger version than the
other to compete with the demand of large screen devices. This proved a success for
them as they were able to sell a lot of units and had an increase in their global market
share. This affected Samsung especially and led them to improving the quality of their
phones
CHAPTER FIVE: DISCUSSION
41
5.1 INTRODUCTION
The purpose of this research is to see how product quality influences brand loyalty. In
this section, the main research question is going to be answered, the results from the
analysis are going to be discussed and explained further. The problems with this
research and also suggestions are going to be discussed in this chapter.
5.2 DISCUSSION OF FINDINGS
Apple has been dominant in the global smartphone market recently due to the release
of the IPhone 6 and IPhone 6 plus overtaking Samsung especially in their biggest
market, which is the Asian smartphone market. Countries included in this market are
China, South Korea and Japan but Samsung is expected to fight Apple with their new
smartphones Samsung galaxy s6 and Samsung galaxy s6 edge. Samsung’s worldwide
smartphone sales declined in the 3rd quarter of 2014 from 80,356.8 units sold in 2013
to 73,212.4 in 2014 and a decrease in the market share from 32.1 percent in 2013 to
24.4 percent in 2014. This decrease in sales for Samsung in the last quarter happened
due to the decrease in demand for the Samsung s5. The smartphone sold 40 percent
fewer than expected compared to the sales of the Samsung s4. The s5 sold 12 million
units in the first 3 months of release while the s4 sold 16 million units in the first 3
months. The decrease in sales happened due to customers not interested in the
innovation and wanted more from Samsung.
5.3 RESEARCH QUESTION
42
The research question for this project states, “Do leading brands need top products to
compete?” according to the findings, Apple’s market share in Asia was low due to the
fact that most customers in the Asian smartphone market prefer devices that are in-
between a tablet and a smartphone but with the introduction of the IPhone 6 plus,
Apple has been able to challenge Samsung in the Asian market. Apple’s market share
in the South Korean market increased to 33 percent while Samsung’s share reduced
from 60 percent to 46 percent in November. In Japan, Apple’s market share increased
to 51 percent while Samsung’s share reduced by 6 percent and also in China, Apple’s
iPhone sales grew by 45 percent. This shows the importance of product quality.
Customers in the Asian market had a different preference when it comes to the size of
their smartphones so Apple brought out a new and larger device to match the demand.
This proves that leading brands need top products to compete because if Apple had
not released the new smartphone, they would have had a decrease in the Asian
smartphone market and a decrease overall in their global market share. Samsung on
the other hand, released two smartphones to match customers demand as they try and
recover their loss from the unpredicted lack of demand in the Samsung s5. Customers
around the world are excited about the smartphones leading to the company opening a
new plant to match the demand. This result shows how product quality is very
important not only to the customers but also to the Companies manufacturing those
products. If a product is quality, customers remain loyal and keep buying the product
while if the quality of a product is low or not up to the standard the customers expects,
they switch to other brands.
Branding is important to a company for many reasons. In the case of Apple and
Samsung, branding separates the two companies in terms of recognition; it makes the
two companies stand out from each other and also to other companies. Building a
strong brand is crucial in the business world. A strong brand that has quality products
can get recommended by family, friends to other people. An example is
recommending an Apple laptop to a friend who is interested in buying a new one.
This helps in building the company’s business value because in some situations
customers pay for image. Customers are willing to pay more for a brand that is well
known for quality products. An example is Louis Vuitton, the company is well known
for its quality luxurious products that customers are even willing to pay more as long
as the product satisfies their personal needs. Branding separates Louis Vuitton from
other fashion brands. Also when a brand is well known, the people working for the
43
company are motivated when doing their job because they know the brand has a
reputation to live to so they work extra hard to achieve the company’s objectives.
Branding also helps to create premium pricing in the sense that once a brand has
strong reputation, they can make their prices higher and maximize profit because
customers are willing to pay more for their product. An example is the Apple
MacBook pro. It costs 1000GBP for the laptop compared to the other prices of
different brands it is relatively expensive. But people pay more because it represents
exceptional quality.
5.4 RECOMMENDATIONS
This research project was able to find out what effect product quality has on brand
loyalty. During the research process, market inertia was found out to be important for
brand loyalty in the global smartphone market. For future research projects, it is
recommended that further studies should be done on the relationship between product
quality and brand loyalty to know the extent product quality has on brand loyalty and
how market inertia influences brand loyalty to understand it better. Also the other
factors that influence brand loyalty should be researched on due to the fact that the
marketing environment changes. Results from the study also show how important
product quality is, it is important for business and organizations to monitor the
marketing environment and the quality of their product. A good quality product will
increase the company reputation and influence customers to recommend it to other
people. It is also important for companies to carry out surveys and questionnaires to
find out the opinion of customers on their product or service to look for ways to
improve their product and try to maintain customers that are loyal to them.
CHAPTER SIX: CONCLUSION
6.1 INTRODUCTION
44
In this chapter, a brief summary of the key findings would be given, conclusions from
the research, reasons why this research is important, academic/managerial
implications and limitations and a final summary of the research work.
6.2 BRIEF SUMMARY OF KEY FINDINGS
This research work is about the comparative analysis of two leading companies in the
smartphone industry: Apple and Samsung, in terms of their market demand and
pricing strategies. The purpose was to investigate the effect of product quality on
brand loyalty and also other factors that influence customer brand loyalty. Not much
literature exists on the degree of the effect of product quality on brand loyalty. Apple
and Samsung are both competing to become the world leading smartphone
manufacturer and also control a significant part of the global smartphone market.
Apple is the most valuable company defeating Coca-Cola to claim this honor. They
aim to attract customers with their new and innovative products and also maintain
customer loyalty. They failed to command a large market share in Asian countries due
to the fact that their products did not match the demand and taste of the customers.
This led to them bring out a new model IPhone with a bigger screen display to match
the demand of large screen smartphones in Asia. This led to an increase in market
share in the third quarter of 2014. Samsung on the other hand were affected by
Apple’s blooming sales leading to a decline in of 27 percent in their overall annual
earnings from 30.5 trillion to 23.4 trillion. Samsung planned to address this issue by
releasing two new smartphones to match the sales of the IPhone 6 and 6 plus. The
study was carried out using data from different online journal articles and comparing
the data gotten to get the results. After analyzing the data, it was discovered that
product quality is important to customer’s decisions and it is also likely to influence
brand loyalty. If a product is of high quality to a customer that it satisfies their
personal needs, they become loyal to the brand because they trust their product to
satisfy their needs but if the product does not satisfy the customers needs, they
become disloyal and move on to try a different product. In the case of Apple and
Samsung, the demand for Apple IPhone in Asian smartphone market was not much
and the company addressed the situation by responding to the demand for larger
screen phones, which shows that product quality influences brand loyalty.
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6.3 WHY THIS RESEARCH IS IMPORTANT
This research is important in finding out the relative importance of product quality in
the marketing world. People argue that quality is not the only factor that influences
customer’s loyalty to a brand but from the research taken it shows that product quality
has a significant importance in consumer decisions and loyalty.
6.4 LIMITATIONS
The limitations when carrying out this research was the access to articles used for the
comparative analysis. The data gotten was not easy to access and took a lot of
research and evaluation to get the relevant data needed to carry out this research work.
6.5 FINAL SUMMARY
Customer’s opinions are very important to a business success. If customers see a
product as not up to standard, it affects the perception they give to the product. It is
very important for companies and organizations to carry out effective steps to find out
what customers think about their product and also ways to successfully improve the
product. Brand loyalty is good for businesses as they are sure about the customer base
they have. So it is very important that the company focuses on making sure their
product is of the highest quality to improve sales and profits.
REFERENCES
Aaker, D. A. (1991). Managing brand equity: Capitalizing on the value of a brand
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