IMPACT OF PRODUCT QUALITY ON CUSTOMER RETENTION IN MANUFACTURING COMPANIES IN NIGERIA

CHAPTER TWO

REVIEW OF LITERATURE

INTRODUCTION

Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in three sub-headings:

• Conceptual Framework
• Theoretical Framework

2.1 CONCEPTUAL FRAMEWORK

Concept Of Product Quality

Product quality can also be defined as an extent to which a product succeeds to meet the needs of the customer (Lemmink & Kasper , 1994). According to product based approach, the quality is the root of economics and the variation in quality of product are the reflection for differentiation in quality (Garvin, 1984). Product quality is one of the important tools to maintain the competitive advantage in market which is designed to undergo the product development process to achieve the consumer satisfaction and upgrade the quality in performance (Benson et al., 1991; Flynn et al., 1994). To be more specific and precise, further study from different researcher shows that along with the competitive advantage the product quality is also a basis for strategic advantage, which implies that an enhanced performance can be determined when a product quality is improved (Daniel and Reitsperger, 1991 and Terziovski et al. 1999). Ultimately, this suggests that a real product quality is/should be visible in an improved quality performance (Dunk, 2002). The study of a product quality and its extrinsic influential characteristic with reference to customer retention, the image of product itself is more essential than the physical quality of product (Shasharudin et al. , 2010). Moreover, they note in their findings that a better and a good customer relationship is stronger when there is a product awareness and these both factors are critically important for shaping the customer perception. According to Zeithaml (1981), search properties include such traits like color, style, price, fit, and smell. Here, search properties those characteristics of product and service attributes which can be easily compared and observed by the customers before they make the purchase of product or services. Moreover, he finds that products (e.g. goods) have more search qualities than services, with more experience and credence qualities. Here, credence properties are those characteristics of product and service attributes that cannot be differentiated even after the product, or service, has been purchased and consumed. Similarly, experience properties are those characteristics of product and service attributes, which can only be evaluated after purchase and use of the product, or the actual consumption of the service is done (Kenyon, Sen, 2012).

Concept Of Retail Product Quality Scale

Dabholkar et al. (1996) state that measures which are developed to study service quality of a purely service environment such SERVQUAL does not work when it comes to service quality for retail stores. Therefore, he came out with his model called the Retail Service Quality Scale (RSQS). This scale is capable of measuring five different dimensions of store service quality which is developed considering 28 items, 11 are taken from SERQUAL and remaining 11 items are discovered by qualitative research. The dimensions are namely as:

1. Physical aspects
2. Reliability
3. Personal interaction
4. Problem solving
5. Policy According to Dabholkar et al. (1996), the above service characteristics of retail store are structured hierarchically, where every element is further divided into more understandable features. These dimensions are explained as following:
6. Physical aspects – Layout, comfort, aesthetics elements and style of the store are part of this dimension.
7. Reliability – fulfilling promises and service performance.
8. Personal interaction – the behavior of service personnel such being courteous, helpful, confidence and trust in customers.
9. Problem solving – helping customers in case of returns, exchanges and complaints.
10. Policy – rules and principles that guide organizations to operate such as convenient operating hours, availability of parking spaces and payment options. For a retail store the physical features among others include equipment of store, materials associated with services of stores, convenience of store’s physical layouts. Physical features have been depicted as “servicescape” which is combination of service and landscape. This includes features like noise, temperature, air quality, furnishing, signs, and symbols (Bitner, 1992). According to Kotler (1994), environment of store is important part of shopping experience which even can influence the customer decision whether to visit again. Reliability of services in retail means keeping promises, provision of right services and availability of merchandise. Personal interaction dimension dictates the knowledge of employees, confidence, and providing prompt service, willing to help customers and handle customers on individual basis (Zeithaml, 1988). Personal interaction is of utmost important for retailer to maintain high quality of services and maintaining the customers satisfied. This will result in sense of personal attachment and personal feeling to the brand. Thus, an important factor for retail loyalty and customer retention is personal interaction and relationship between the retailer and its customers, between the salesperson and the customers (Macintosh, 1997). Problem solving means the handling of complaints, returns and exchanges. Retailer’s willingness to act promptly at any service encounter and resolve customer’s problems sincerely are included under this feature (Mehrabian, 1974). General policy it addresses the policy of retailers regarding the quality of merchandize, convenient operating hours and parking place in addition methods provided by retailers to make easier payment process. This can be done through supporting major credit cards. It also reflects norms and values of retailer, and its code of conduct. (Das et al. 2010). RSQS has been used by researchers in different types of retailing stores. And this model has been validated in a retail store environment. In our study, we investigate and study services in retail store based on dimensions mentioned in RSQS because they are specifically developed for retail settings. As our study focuses both service and product quality so below we shed light on important concepts related to the quality of products and related theories.

Product Quality Dimensions

There are eight different dimensions such as

1. performance
2. Features
3. reliability
4. conformance
5. durability
6. serviceability
7. aesthetics and
8. perceived quality (Garvin, 1984, 1987).

According to Garvin (1987); quality is primarily stated as strategic question which governs or helps to control the development of product design together with its features or options. Every firm is objected towards achieving a world class performance, and for that they adopt a method and set the strategic objectives in order to improve the product, process and service quality (Adam, 1992). In addition, Hill (1994) states that product quality is significant factor for firm’s development and for gaining sustainable competitive advantage. Moreover, Garvin forwards his view that the past experience with a firm and its product plays a vital role in maintaining the customer impressions about its products. He states that “high quality means pleasing consumers, not just protecting them from annoyances” (p. 104). He suggests that with respect to quality management and the related design of products or services, management needs to think strategically about quality, and focus on those dimensions that support their strategic objectives and are interrelated to each other and influencing customers for its product and services. When an individual make a purchase decision, the primary objective begins with the motive of having a satisfaction from the product they purchase. This is also related to the character of “performance” proposed by Garvin from customer perspectives. Supporting to the given dimensions by Garvin, other several researchers have made the empirical investigations on it. For example; StoneRomero et al. (1997) studies provide support to the multi-dimensional nature of product quality; Paulson-Gjerde and Slotnick (1997) also forwarded a multidimensional approach to study manufacturing quality; Ahire and Dreyfus (2000) find that the management of product design is equally important as the management of process quality; Sousa and Voss (2002) point out that future research should focus upon the fundamental nature of an organization’s products and use measures that capture the relevant dimensions for those products. Thus, we can assume that the Garvin’s proposed dimensions are a knowledgeable kit for studying a product quality. Furthermore, in addition to the characteristics of product defined by Garvin (1987) and Han et al. (2000) link two new dimensions “form” and “function” to product usability. Therefore, product form can be defined as the customer’s image and impression of the product. Here, product functions are relevant to the product’s performance. However, these both dimensions are essential in creation of value and maintaining customer satisfaction (Roozenburg and Eckels, 1995).

Concept Of Customer Retention:

Defining in own words, customer retention can be mentioned as the process of buying products and services within certain time span in a repetitive nature (Sirdeshmuk et al., 2002). Along with this, in general, when there is higher cost of customer acquisition in comparison with the lower cost of serving, it tends to make the repetition of customers and consequently lead to increase in profitability. Hence, in this circumstance firms are advised to increase the customer retention level (Edward and Sahadev - 2011). Customer retention has been traditionally associated with perceived service quality, perceived value and customer satisfaction (Bloemer et al., 1999). However, many practitioners have found different conceptualization of customer retention in their research work.According to Bowen and Chen – (2001), there are three approaches in measuring retention 1) behavioral measures, 2) attitudinal measures and 3) Composite measures. On the basis of service quality, the retention is treated as an observed behavior (Liljander and Strandvik, 1994). However, the behavioral measures of retention criticized by different researchers as only on the basis of reoccurring purchasing nature of the customer, it lacks the conceptualization on its measures which does not even differentiate loyal customers or their attachment to a particular product or brand (Day, 1996; Dick and Basu, 1994). Similarly, another measure attitudinal approach focuses on the emotional and psychological aspects of customer attachment co-relating to the retention (Bowen and Chen, 2001). And, the last approach is the combinational form of both approaches named as a composite measure which studies both behavior and the cognitive nature of customer (Bloemer et al., 1998). According to Oliver, 1999, the most important aspects in obtaining an absolute retention are the composition of psychological and attitudinal measures with the nature of repeat purchase. Conclusively, we can visualize in this research that customer retention is the frequency of repeat purchasing nature of customer with the combination of attitudinal and cognitive measures. Customer retention also signifies a long-term commitment between customer and the firm to maintain a certain relationship by developing a form of the mutual commitment and leading to create long term buyer-seller relationships (Wilson, 1995).

Relationship Commitment And Customer Retention

Commitment is one of the important tools for any business house. With the nature of our research objective, discuss about the relationship commitment which is also one of dynamic concept in business world. Commitment is significant variable in business relationships that provides the strength, stability, durability, and even profitability of a relationship (Dwyer et al., 1987; Morgan and Hund, 1994). Actually, most of the findings illustrate the relationship as a perceived value for future perspectives. We can find two different dimensions studied under the relationship commitment: 1) affective commitment and 2) calculative commitment (Kumar et al., 1994; Geyskens et al., 1996). They state that affective commitment is willingness to have a continuation of the relationship for own excluding any instrumental values. Whereas, further they state that calculative commitment is highly defined on the basis of instrumental commitment nature for instance it includes costs, investments, benefits and any other related investment types.

Service Quality, Product Quality And Customer Retention

Service quality is defined as customer’s valuation of product’s distinct quality (Zeithaml, 1988). It is conceptualized view about the customer’s evaluation with respect to their expectation and perceived performance (Parasuraman et al., 1988; Bolton and Drew, 1991). In this research study, we focus on service and product quality from the customer perspectives relating to the consumptions of goods and services in a grocery chain market.

2.2 THEORETICAL FRAMEWORK

Customer satisfaction theory

Four Cs Theory was proposed by U.S. marketing expert Robert F.Lauterborn in 1990. It based on customer demand, re-set the four basic elements of marketing mix: consumer, cost, convenience and communication. It stressed that companies should focus on customer satisfaction first, then try to reduce customer purchase costs, and the convenience of buying process and marketing communication. It has great progress and development compared with 4P theory. It attaches to customer-oriented, the pursuit of customer satisfaction as the goal. It is actually important in current situation that consumers play an initiative role.

Tourism product is a kind of service products, with its own feature. Namely: integrated, invisible, synchronization, non-metastatic, vulnerability and heterogeneity. Customers spend time, money and effort to obtain a travel experience, and feeling, and this feeling and experience is as individual as the person. Therefore, it is an emotional spending. In addition, the tourism product is easy to copy, tour companies difficult to use difference strategies. From the practical application of business and market development trends, 4C theory also has inadequate:

First, 4Cs theory is consumer-oriented, focusing on looking for consumer demand, to meet consumer demand, but there is competition-oriented in market, enterprises can not only see the demand, but also pay an attention to competitors. In order to win in fierce market competition, company should analysis own strengths and weaknesses in the competition and take the appropriate strategy. Secondly, under the guidance of the 4C theory, companies often ignore the long-term profits. So how combine consumer demand and corporate’s long-term profit is a big problem to be solved. In this research, we focus on search customer need, pivotal need in different age, use cost rational and improve customer satisfaction. We will combine customer satisfaction and company’s long-term profits.

Servperf model

Although SERVQUAL model is a good measurement for many industries, researchers reported that this model is not suitable for some areas like retail store environment (Dabholkar,et al, 2000). By years of study on this model and more debates among scientists, some stated that this model is not comprehensive in different applications (Brady et al, 2002). In 1992, Cronin and Taylor suggested the refined model by considering performance as the only factor needs to be measured for service quality. They argued that service quality is a consumers’ attitude and the performance (perceived service) of the service is the only measurement for service quality.

Investigating service quality relationship with consumers’ satisfaction and purchase intention was their study; they believe service quality is an antecedent of consumers’ satisfaction. They suggested a new model for service quality based on SERVQUAL with respect to the conceptualization and measurement of service quality which used performance as the only measurement for service quality model called SERVPERF. In this new model, Cronin and Taylor (1992) proceeded to measuring performance (perceived service) with the same dimensions as reliability, responsiveness, assurance, tangibles, and empathy for service quality measurement instead of “expectation-perception” difference. The research finding showed SERVQUAL factors are inconsistent, and SERVPERF is a more accurate measurement for service quality in comparison with SERVQUAL (Cronin & Taylor, 1992).

Industry-Specific Service Quality Models

Although some of the proposed models have strong validity and are applicable for measuring service quality in many service industries, researchers found that most of them have lack of generalizability for all businesses. Some of those models have support for applying and testing in different businesses like SERVQUAL, but even that famous measurement has some lack of application for some specific businesses such as retail store (Dabholkar et al., 2000). Models evaluated in previous parts were generic, but the hierarchical model suggested by Dabholkar et al., (2000) was based on retail store environment. Some researchers believe that businesses need to use a context-specific service quality measurement for the best understanding of consumers’ perception on service quality.

Therefore, researchers suggested some models based on specific service businesses. For example, in the information technology (IT) based services, Wong,(2011) suggested IT alignment model, Dabholkar (2000) proposed attribute and overall affect model, Oliver (2019) suggested IT-based model, Blose (2005) suggested model of e-service quality, and Mehta and Lalwani(2000) proposed internet banking model. Dagger, Dabholkar, and Shepherd(2000) developed the Hierarchical model in healthcare industry with some special dimensions and sub-dimensions related to health care services. Akter, D’Ambra, and Ray proposed a new model based on the hierarchical model for mobile health services. However, the base of this model was the hierarchical-multilevel model, one of the dimensions (physical environment quality to platform quality) with new sub-dimensions specifically for mobile health services.

Tsaur, Chang, and Yen (2002) evaluated a specific model for the airline industry based on SERVQUAL with several attributes based on airline services by using the fuzzy set theory. Other researchers proposed a new model for the airline industry in 2002 with the specific criteria category and evaluated criteria for this industry by fuzzy set (Chang & Yeh, 2002). Based on previous studies in airline service quality, a new model proposed by Liou and Tzeng (2007) for airline services with factors suggested and specific for this service business. In 2002 Cunningham, Young, and Moonkyu suggested a new model based on previous studies in airline specific models of service quality for measuring service quality in airline businesses. They suggested baggage handling, bumping procedures, operations and safety, in-flight comfort, and connections as the dimensions of this model scaling by several items for each dimension (Cunningham, Young, & Moonkyu, 2002). In addition, they used SERVPERF in this study for service quality. They found strong reliability and validity for both models (SERVPERF and industry-based). Result showed that both generic and specific models are applicable and acceptable for measuring service quality in the airline industry (Cunningham Lawrence F, Young, & Lee, 2004; Cunningham et al., 2002). Industry-specific measurements of service quality vary from one business to another and included the factors related to specific service. Therefore, these models can be more useful and specific for applying in businesses and can be helpful for managers to find the weaknesses and advantages of their firm to improve their service and achieve customers’ satisfaction. However, the generic models are more theoretical but applicable as well as specific.