AN ATTEMPT TO ESTABLISH THE RELATIONSHIP BETWEEN

CUSTOMER SATISFACTION AND BRAND LOYALTY

(A STUDY OF VISHAL MEGAMART AND BIG BAZAAR)

1
Amit Joshi

Abstract

The study intends to investigate the relationship between Customer Satisfaction and
Brand Loyalty. This research is confined and tested at Vishal Megamart and Big
Bazaar, situated in surrounding areas of Chandigarh (Panchkula and Zirakpur
respectively). This is achieved by utilizing an in-depth interview method to obtain the
questionnaire distributed to 60 respondents (30 each from both the malls).
Regression Analysis is carried out for establishing the relationship between these
two variables i.e. Customer Satisfaction and Brand Loyalty. Furthermore, t-test is
also applied for testing the relationship between the individual variable of one store
with the same variable of another store. Calculated results are also in this favour that
there is relationship between the Customer Satisfaction and Brand Loyalty and
comments that one variable is dependent and another is independent. The results of
the study will be helpful for the marketers and researchers who seeks the reasons
behind the dynamic factor, which is responsible for the major decisions related with
customers, price and products i.e. Customer Satisfaction.

Key words: Customer satisfaction, Brand loyalty, Vishal Megamart and Big Bazaar

INTRODUCTION
Customer satisfaction and brand loyalty is becoming an increasingly important factor

in Modern Retailing (Nair 2006). Mittal and Kamkura (2001) also addressed the link

between satisfaction and repurchase behavior. Over the past decade, retailers used

manufacturer brands to generate consumer interest, patronage, and loyalty in a store.

With the growth of competition, retailers compete with manufacturers for consumer

pull to increase their relative market power and their share of the total channel profit

1
Lecturer, Guru Gobind Singh Institute of Technology and Management Studies, Yamunanagar
pie. In doing so, the rise of the retailer as a brand is one of the most important trends

in retailing. It is in this context the present research on customer satisfaction and

brand loyalty aspects has been conducted with special reference to Vishal Megamart

and Big Bazaar.

Customer Satisfaction is a measure of how products and services supplied by a

company meet or surpass customer expectation. It is seen as a key performance

indicator within business. In a competitive marketplace where business competes for

customers, customer satisfaction is seen as a key differentiator and increasingly has

become a key element of business strategy.

Organisations are increasingly interested in retaining existing customers while

targeting non-customers; measuring customer satisfaction provides an indication of

how successful the organization is at providing products and/or services to the

marketplace. Infact, Customer satisfaction is an ambiguous and abstract concept and

the actual manifestation of the state of satisfaction will vary from person to person

and product/service to product/service. The state of satisfaction depends on a number

of both psychological and physical variables which correlate with satisfaction

behaviors such as return and recommend rate. The level of satisfaction can also vary

depending on other options the customer may have and other products against which

the customer can compare the organization's products.

Kotler (1998) defined customer satisfaction by stating that a customer is the most

important person ever in this office, in person or by mail.

Kotler (1998) noted that customer satisfaction, whether the buyer is satisfied after

purchase, depends on the offer’s performance in relation to the buyer’s expectation.

Customer satisfaction is a result of your product or service meeting a certain set of

customer requirements. Chang (1994) maintained that customer satisfaction was the
watchword for business. And Griffin (1997) claimed everyone was rushing around to

find ways to make customers happy by meeting and even exceeding their

expectations.

On the other hand, brand loyalty plays an important outcome of customer satisfaction.

It is found in a number of studies that if customers are satisfied then it can be resultant

into loyalty towards its brand also. Here it is vital/requirement to know the meaning

of brand.

A traditional definition of a brand was: “the name, associated with one or more items

in the product line, that is used to identify the source of character of the item(s)”

(Kotler 2000, p. 396).

The American Marketing Association (AMA) definition of a brand is “a name, term,

sign, symbol, or design, or a combination of them, intended to identify the goods and

services of one seller or group of sellers and to differentiate them from those of

competitors” (p. 404).

Within this view, as Keller (2003a) says, “technically speaking, the n, whenever a

marketer creates a new name, logo, or symbol for a new product, he or she has created

a brand” (p. 3). He recognizes, however, that brands today are much more than that.

As can be seen, according to these definitions brands had a simple and clear function

as identifiers.

Now it will be easy to understand the meaning of brand loyalty. Brand loyalty

consists of a consumer's commitment to repurchase or otherwise continue using the

brand and can be demonstrated by repeated buying of a product or service.

Brand loyalty is more than simple repurchasing. Customers may repurchase a brand

due to situational constraints (such as vendor lock-in), a lack of viable alternatives, or

out of convenience. Such loyalty is referred to as "spurious loyalty". True brand

loyalty exists when customers have a high relative attitude toward the brand which is

then exhibited through repurchase behavior. This type of loyalty can be a great asset

to the firm: customers are willing to pay higher prices, they may cost less to serve,

and can bring new customers to the firm.

BRIEF INTRODUCTION TO VISHAL MEGAMART AND BIG BAZAAR

Vishal is one of fastest growing retailing groups in India. Its outlets cater to almost all

price ranges. The showrooms have over 70,000 products range which fulfills all needs

of household, and catering under one roof. It is covering about 29, 90, 146 sq. ft. in

24 states across India. Each store gives the customer international quality goods and

prices hard to match. The group’s prime focus is on retailing. The Vishal stores offer

affordable family fashion at prices to suit every pocket.

Big Bazaar is also a brand name which has also earned fame in the field of retailing.

It is not just another hypermarket, whereas it caters to every need of the customers’

family. Where Big Bazaar scores over other stores is its value for money proposition

for the Indian customers. With the ever increasing array of private labels, it has

opened the doors into the world of fashion and general merchandise including home

furnishings, utensils, crockery, cutlery, sports goods and much more at prices that are

affordable too. Big Bazaar plans to add much more to complete the shopping

experience of the customers.

LITERATURE REVIEW

The relevant literature covering customer satisfaction and brand loyalty has been

reviewed as under:
Oksana Mont and Andrius Plepys (2003) studied in their study ‘Customer

satisfaction: Application to the product-service systems’ commissioned by the

National Institute for Advanced Industrial Science and Technology in Japan (AIST)

and supported by the Sustainable Consumption Unit (UNEP) provided an overview of

approaches used in different disciplines for evaluating consumer behaviour. The study

analysed the applicability of existing research concepts, theories, and tools for

evaluating consumer satisfaction with product-service systems (PSS). It included a

discussion of their strengths/weaknesses. They suggested in their research to change

the design of product-service system to reduce the behavioural pitfalls that could be a

potentially easier way towards sustainable development.

Aaker and Joachmisthaler (2000) discussed the traditional branding model as

concerning brand management process related to the function of a brand as an

identifier, where a brand management team was responsible for creating and

coordinating the brand’s management program. In this situation, the brand manager

was not high in the company’s hierarchy; his focus was the short-term financial

results of single brands and single products in single markets. The basic objective was

the coordination with the manufacturing and sales departments in order to solve any

problem concerning sales and market share.

The study ‘Latino Brand Loyalty Study’, conducted by ‘Cultural Access Group, Los

Angles’ reveals that brand loyalty among Latinos within key product categories is

related to the relative position of the Latino respondent on the acculturation spectrum.

The developed tool is based on the responses from nearly 1,000 survey participants

from the market areas of Chicago, Houston, Los Angeles, Miami, New York,

Phoenix, San Antonio, and San Jose/San Francisco, across a broad array of product

categories. The product categories included the following products:

  Headache remedies
 Home electronics
 Laundry detergents
 Processed cheese
 Carbonated soft drinks
 Sour cream
The model factors key indicators of consumer affinity to brands; data points were

correlated to the response sets of ten consumers.

Francisco Guzmán (ESADE) explored and comments on the dramatic shift of central

concern of brand building in his study ‘Brand Building Towards Social Values:

Associating to Public Goods’. He pointed out the branding and its roles in traditional

setup were subject to constant review and redefinition. He state that the shift in focus

towards brands began when it was understood that they were something more than

mere identifiers. He quoted in his study that in the first case firms wishes to buy

production capacity (production orientation) and in the second they want to buy a

place in the mind of the consumer (Brand orientation).

Jung-Chae Suh and Youjae Yi in his study ‘When Brand Attitudes Affect the

Customer Satisfaction-Loyalty Relation: The Moderating Role of Product

Involvement’, investigated the moderating role of product involvement in the

customer satisfaction-loyalty relation, while drawing on the attitude accessibility and

stability theories. He established structural equation modeling which shows that the

customer satisfaction has both direct and indirect effects on loyalty, whereas ad

attitudes and corporate image have only indirect effects through their mediating

influence on brand attitudes. Furthermore, product involvement decreases the direct

effects of satisfaction on brand attitudes and loyalty, but it increases the indirect

effects of ad attitudes and corporate image.

It is possible for a customer to be loyal without being highly satisfied (e.g. when there

are few other choices) and to be highly satisfied but not yet to be loyal. Retailer need

to gain a better understanding of the relationship between satisfaction and loyalty to

allocate their marketing efforts between satisfaction initiatives and loyalty programs.

If for example, the retailer finds that loyalty is associated with increases store branded

product, it could directly focus on enhancing its private label strategy (Chen et al

1996).

Satisfaction advances the relationship to the subsequent stages through repeated

purchases and this serves to enhance the perception of the supplier’s reliability. Such

advances strengthen the positive attitude towards the supplier and allow the

development of the relationship towards loyalty.

Past researchers have consistently viewed customer satisfaction as being central to

loyalty and improved financial performance (Anderson, Fornell, & Lehman 1994)

while Reicheld (1996) suggests that satisfaction is significantly related to loyalty only

at very high level of satisfaction.

On the premise of the gap that the earlier research has not covered VISHAL

MEGAMART and BIG BAZAAR with special reference to customer satisfaction and

loyalty aspects, the present study aims at bridging the gap.

HYPOTHESIS OF THE STUDY:

From the above discussion it is clear that in this study the exact nature of the

relationship between overall satisfaction and loyalty is an empirical issue based on

these argument we hypothesize that:

H1: Customer satisfaction is positively related to brand loyalty.

H2: Customer satisfaction regarding products / services of retail stores do not vary

across VISHAL MEGAMART and BIG BAZAAR.

H3: Brand loyalty regarding products / services of retail stores do not vary across

VISHAL MEGAMART and BIG BAZAAR.

OBJECTIVES OF THE STUDY:

1) To assess and analyses the relationship between customer satisfaction and

brand loyalty in BIG BAZAAR and VISHAL MEGAMART.

2) To assess the similarity in the level of customer satisfaction across VISHAL

MEGAMART and BIG BAZAAR samples.

3) To assess the variation in brand loyalty across VISHAL MEGAMART and

BIG BAZAAR samples.

4) To develop a conceptual background about the concept of Customer

Satisfaction and Brand Loyalty

RESEARCH METHODOLOGY

 DATA COLLECTION:

This study is based on Primary as well as Secondary data.

1. Primary Data Collection Forms and Generation of Scale

Items

Primary Data has been collected from 60 respondents (customers), i.e. 30 each from

VISHAL MEGAMART and BIG BAZAAR. Before the preparation of Final

Questionnaire, Exploratory Survey was conducted using (open-ended questions).

Thereafter, on the basis of the Exploratory Survey, the suggestions were incorporated

by redesigning the questionnaire on 5 point Likert scale questions (5<----->1)

ranging from ‘Very satisfied’ (5) to ‘Very dissatisfied’ (1) in an appropriate and

simplest form followed by addition and deletion of certain terms. The scale values

of negatively worded items were reversed before data processing. Then the

final schedule was administered on 60 respondents (30 each from VISHAL

MEGAMART and BIG BAZAAR). It was ensured that one respondent to be

contacted from one family during their visit to the store.

 POPULATION AND RESPONSE RATE

Response rate was found to be 100% and no questionnaire was dropped.

2. SECONDARY DATA COLLECTION

In this study the relevant sources of data are books, journals, magazines, brochures

and websites and online papers & articles.

 DEPENDENT AND INDEPENDENT VARIABLES:

In this study Brand Loyalty is taken as dependent variable and Customer Satisfaction

is taken as independent variable.

 STATISTICAL TECHNIQUES

First, mean and standard deviation for responses obtained from VISHAL

MEGAMART and BIG BAZAAR customers was obtained in order to carry out

further analysis. Thereafter, in order to establish a relationship between brand

loyalties as dependent variable with independent variable of customer satisfaction,

simple regression was used. Finally t-test was applied in order to analyze the mean

difference across sample means.

 LIMITATIONS OF THE STUDY

All possible efforts were made to maintain objectivity, validity and reliability of the

study, yet certain limitations need to be kept in mind whenever its findings are

considered for implementation. These are as under:

1. Due to vague, biased and similar responses of customers which arrived

because of lack of interest and time constraint, the subjectivity cannot be

ruled out.
2. The study is area specific and thus cannot be generalized for other

parts of the country having dissimilar business environmental conditions.

MAJOR FINDINGS & INTERPRETATIONS

For the sake of convenience analysis and interpretations are divided into two parts

which are stated below:

A) Relationship between customer satisfaction and brand loyalty

B) Mean differences regarding customer satisfaction and brand loyalty across

two retail stores

A) Relationship between customer satisfaction and

brand loyalty:

The purpose of the study is to establish and test the relationship between Customer

Satisfaction and Brand Loyalty. For revealing the relationship between customer

satisfaction and brand loyalty, regression is calculated by using mean values of

variables. Two variables include the dependent and independent variable i.e. Brand

loyalty and Customer Satisfaction respectively. The purpose of calculating regression

is to justify the hypothesis. Further, for knowing the variability among the variables

R² is calculated.

Table 1
Regression Summary (with coefficient) of Customer Satisfaction as Predictors
of Brand Loyalty (Dependent Variable) using simple regression method
R R² Adj R² Observations
Customer satisfaction and Brand
1 0.85 0.663 0.64 30
Loyalty (VISHAL MEGAMART)
Customer satisfaction and Brand
2 0.79 0.601 0.59 30
Loyalty (BIG BAZAAR)
Table 1 reveals the results of simple regression analysis using mean values of 14

items (responses of questions related to customer satisfaction) of customer satisfaction

to predict the dependent variable of brand loyalty using 8 items (responses of

questions related to brand loyalty). The value of R as 0.85 signifies positive

correlation between predictor (customer satisfaction) and the outcome (brand

loyalty). The total variability in customer satisfaction accounted for by independent

variable of brand loyalty is 66.3% (Lewin and Rubin 2004). Therefore, Hypothesis

(H1) is also partially true in respect of VISHAL MEGAMART customers.

Similarly, Table 1 also shows the results of simple regression analysis using mean

values of 14 items of customer satisfaction to predict the dependent variable of brand

loyalty using 8 items. The value of R as 0.79 signifies positive correlation between

predictor (customer satisfaction) and the outcome (brand loyalty). The total variability

in customer satisfaction accounted for by independent variable of brand loyalty is

60.10%. Therefore, Hypothesis (H1) is also partially true in respect of BIG BAZAAR

customers.

B) Mean differences regarding customer satisfaction and brand loyalty across

two retail stores

The overall mean satisfaction regarding customer satisfaction and brand loyalty for

VISHAL MEGAMART found at 3.05 and 2.70 respectively. To assess whether mean

responses of VISHAL MEGAMART customers (meu1) is greater than mean

responses (meu2) of BIG BAZAAR customers, t-test was used. The observed value (-

0.193) (the critical value at 28 df was 1.699) was on left side of right-tailed t-

distribution curve that too on the acceptance side so the null Ho has been accepted.
Thereafter left tailed test was performed assuming (meu1) is less than (meu2) wherein

the value was clearly on the acceptance region thereby accepting the null hypothesis

again. This clearly means that on rejection of both the alternate hypothesis tested on

right-tailed and left tailed t-distribution, the null hypothesis is accepted that customer

satisfaction regarding VISHAL MEGAMART & BIG BAZAAR do not vary.

Similarly, with respect to brand loyalty also the value of t (-0.304) was found to be on

the acceptance region. This provides acceptance to null hypothesis and rejection to

alternative hypothesis.

Table 2: Independent t-test for customer satisfaction and loyalty aspects

Descriptive Pooled estimate Estimated standard
t-value Critical value
variables of sigma square of Mean1-Mean2
Customer
1 0.89 0.723 -0.193 1.699
satisfaction
Brand
2 0.89 0.723 -0.304 1.699
loyalty

CONCLUSION

By establishing the relationship between Customer Satisfaction and Brand Loyalty by

calculating regression analysis of mean values of the both variables it is clear that

there is positive correlation between the predictor and the outcome. It is resultant into

the acceptance of H1 i.e. Customer Satisfaction is positively related to brand loyalty.

After analysis and testing of relationship of both variables an attempt is made to check

the relationship of mean responses of VISHAL MEGAMART customers with mean

responses of BIG BAZAAR customers by using t-test. Results showed that there is

not any difference found between the Customer Satisfaction of VISHAL

MEGAMART and BIG BAZAAR. Similarly the same results found in case of Brand

Loyalty of Both.
Policy Implications

The partial acceptance to first hypothesis regarding relationship between customer

satisfaction and brand loyalty clearly indicated that more strategic efforts by retailers

to enhance customer satisfaction that will lead to brand loyalty.

Further the mean differences across two samples was found to be insignificant thereby

indicating more stringent efforts on the part of VISHAL MEGAMART & BIG

BAZAAR store to enhance customer satisfaction and maintain their own image and

identity in the eyes of the customers.

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