Class Name IMBA2301

Course Name Data, Model, and Decision-Making

Date 22.12.2023
Lecture Number -
Student ID SL22204016
Student Name Kerim Jumakulyyev
Assignment Individual Report

Examine the effect of service quality on customers loyalty in furniture hardware

industries(case study BLUM company, Austria.)

Table of the Contents;

1.ABSTRACT……………………………………………………..…………………………………..…..1
2.Introduction………………………………………………………..…………………………………….1
3. Company Overview …….. … ……………………………………………………………..………….2
4. Literature overview ………… …………………………………………………………...…………..2
5. Descriptive Statistics ……………………………………………….…………………………………3
6.Developing Hypothesis……… ……………………………………………...………………………..4
7.Research Methodology……… ………………………………………………………………………….4
8.Descriptive Summary of Study Variable………………… ………………….………………………5
9.The Relationship between Study Variables…… ………………………… …………………………..5
10.Result of the Research and Recommendations…………………………………………………….6-7
12.References …………………………… ………………………………………….……………………8

Abstract Organization Overview

This study aims to understand the relationship of service quality dimensions,
customer satisfaction, and loyalty in the Furniture hardware industry. The study surveyed
101 respondents using a standard SERVQUAL questionnaire to examine the relationship
between service quality dimensions, customer satisfaction, and loyalty in the Furniture
hardware industry. The Structural Equation Modeling approached was used to analyze data.
The findings suggest that assurance, empathy have a positive influence on customer
satisfaction.

Introduction
Furniture is the stuff we use for sitting, resting, and keeping things safe. It's usually
made from wood and other materials that don't change how it works. The cool things about
furniture, like how useful, pretty, and safe it is, come from how it's designed and the
special parts it has.
Now, these special parts, also known as hardware, make furniture even better. They
add value and make people like the furniture more. But, sometimes, people don't like
certain hardware parts. They might complain that doors and drawers don't open smoothly,
or the furniture is too heavy to move easily. Some folks might not like noisy doors or
handles that wear out quickly.
So, it's super important that the hardware not only looks good but also makes the
furniture safe, useful, and comfy. We want furniture that's not just pretty but also works
really well!
Did you know that the countries that are good at making hardware are also really good at
making furniture? It's like a big competition, and we need to know how well different parts
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of the world are doing in making furniture and its special hardware. That way, everyone
can have the best furniture with the coolest hardware!

Company verview
BLUM is a special company that creates amazing things for furniture. They're like
the superheroes of furniture hardware, making sure that furniture looks cool and works
perfectly.
What BLUM Does: BLUM is all about creating special parts for furniture, like
hinges, drawer systems, and lift systems. These parts make furniture strong, easy to use,
and look super awesome.
Magic of Innovation: BLUM loves to use magic tricks, but it's not real magic – it's
innovation! They come up with new and cool ideas to make furniture even better. It's like
making furniture that can do special tricks to make people happy.
Quality Kings and Queens: BLUM is really, really good at making sure everything
they create is super strong. They check and test everything to make sure it won't break
easily. It's like they're the kings and queens of making quality furniture parts.

Literature review
Product quality
As per Kotler and Armstrong (2016), a product refers to anything presented to the
market to attract attention, facilitate purchase, usage, and ultimately meet consumer wants
or needs. Product quality, according to Kotler and Armstrong (2016), is the product's
capability to fulfill its functions. This includes overall durability, reliability, accuracy,
ease of operation, repairability, and other product attributes. Tjiptono (2015) adds that the
quality of a product, be it goods or services, is evaluated through various dimensions.
These dimensions include performance, durability, conformance to specifications (ensuring
the product meets stated criteria), features, reliability, aesthetics, perceived quality, and
serviceability.
Price
According to Kotler and Armstrong (2016), price is the amount of money you need
to pay for a product or service. In simpler terms, it's the total value that customers believe
they receive when they own or use a product or service. Kotler and Keller (2016) also
mention that price is one part of the marketing mix that brings in revenue; the other parts
involve costs. The price of a product also tells the market what value the company wants its
product or brand to have. Joshi (2012) defines price as the exchange of goods or services
for money. In the world of selling things, the price is a big factor.
Costumer Loyalty
Making customers happy has many benefits for a company. It helps build a good
relationship between the company and its customers. This good relationship leads to
customers buying from the company again and again, and it creates loyalty. Loyalty means
that customers are committed to buying their favorite product or service again, even if
there are other options or marketing efforts trying to make them switch to something else
(Kotler & Keller, 2013). So, when customers feel happy using a product or service and
keep buying it, they become loyal customers. And not just that, loyal customers also
influence people around them to use the same product or service.

Descriptive Statistics:

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Descriptive statistics include measures of central tendency and measures of variability.

Developing Hypothesis
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 Customers assess the perceived value they receive for the price paid. If they believe
the product or service offers excellent value, it can enhance satisfaction and contribute to
loyalty.
H1. Price is positively related to the customer loyalty of BLUM
The relationship between product quality and customer loyalty is a fundamental
aspect of marketing and business strategy. The insights provided by Kotler and Armstrong
(2016) and Tjiptono (2015) help to elucidate the dynamics between product quality and
customer loyalty. So with this I propose:
H2: Quality is positively related to the customer loyalty of BLUM
Innovation often leads to the development of new products, services, or features that
can enhance the overall customer experience. When customers perceive that a company is
continuously improving and offering novel solutions, it can foster loyalty.
H3:Innovation is positively related with the customer loyalty of BLUM.
Oliver (1999) explores the drivers of consumer loyalty, emphasizing the role of
satisfaction, trust, and commitment. The study provides insights into the emotional and
psychological aspects of customer loyalty and how a positive brand experience contributes
to loyalty over time, in shed this I propose:
H4: Brand is positively related to the customer loyalty of BLUM .

Research Methodology
Explanatory type of research design was used to address the objectives of the study
because explanatory research design helped the researcher to examine the effect of the
independent variables (Price, Quality, Innovation and brand) on the dependent variable
(customer loyalty). The population of this study was the number Unknown. Since the
number of population of the study is unknown, the formula developed by Cochran (1977)
was found to be appropriate for determining the sample size. Therefore, 101 customers
were determined as the total sample size of the study.

Descriptive Summary of Study Variable

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 The main variables of the study were prepared and collected using a Likert scale
questions. To make the analysis of likert scale questions easy, the researcher used the rule
that was proposed by Al-Sayaad, Rabea and Samrah (2006) based on the mean score range.
Accordingly, the ranges of values were presented as disagreeing if the mean score is
between 1.00 and 2.60, neutral if the mean score is between 2.60 and 3.40 and agree if the
mean score is above 3.4. Based on these classifications the interpretations of all Likert
scale items such price, quality, innovation, brand and loyalty were presented as follows:

The Relationship between Study Variables;

The possible values of correlation coefficients range from –1 (a perfect negative
relationship) to +1 (a perfect positive relationship) or a direct relationship between two
variables. A value of 0 indicates no linear relationship between two variables (Kothari,
2012). Likewise, Bhattacheriee (2012) further classified the strength of correlation between
±.81 and ±1.00 as very strong, between ±.61 and ± .80 as strong, between ±.41 and ±.60 as
moderate, between ±.21 and ±.40 as weak, and between ±.00 and ±.20 as none. In this
section, the independent variables were analyzed one by one using correlation analysis to
identify their relationship with the dependent variable. For this purpose, independent
variables such as tangibility, reliability, responsiveness, assurance, and empathy were
tested their degree of relationship with customer loyalty before conducting the regression
analysis. Therefore, Table 4.1 shows the correlation between customer loyalty and
independent variables (price, quality, innovation and brand) of the study.

Result of the Research and Recommendations

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H1. Price is positively related to the customer loyalty of BLUM = Price: β=0.467,
p=0.001<0.05. Accept H1.
H2. Quality is positively related to the customer loyalty of BLUM = Quality: β=0.475,
p=0.001<0.05. Accept H2.
H3:Innovation is positively related with the customer loyalty of BLUM. = Innovation: β=-
0.60, p=0.177<0.05. Reject H3.
H4: Brand is positively related to the customer loyalty of BLUM. = Brand: β=0.477,
p=0.001<0.05. Accept H4.

Result of the Research and Recommendations:

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 Price and Customer Loyalty (H1):
The positive relationship between price and customer loyalty (H1) is accepted. This
suggests that customers of BLUM are influenced positively by the pricing strategy, and it
plays a role in fostering loyalty. This could be due to perceived value, competitive pricing,
or other factors that contribute to a positive customer experience.
Quality and Customer Loyalty (H2):
The positive relationship between quality and customer loyalty (H2) is accepted.
This indicates that the perceived quality of BLUM's products or services contributes
positively to customer loyalty. Consistent delivery of high-quality offerings appears to be a
key factor in retaining customer loyalty.
Innovation and Customer Loyalty (H3):
The rejected relationship between innovation and customer loyalty (H3) suggests
that, based on the data or analysis, there is no statistically significant positive relationship
between innovation and customer loyalty for BLUM. It could be that customers may not
currently perceive innovations as strong drivers of loyalty or that there may be other
factors influencing loyalty more prominently.
Brand and Customer Loyalty (H4):
The positive relationship between brand and customer loyalty (H4) is accepted. This
implies that the brand image and perception contribute positively to customer loyalty. A
strong brand identity appears to be associated with higher levels of customer loyalty for
BLUM.

Quality Assurance:
BLUM should make sure their products or services are really good. They should
check and promise that what they offer is high quality. They can even get certificates or
use special measures to show customers that they care about quality. This helps customers
feel confident and happy with what they buy, making them more likely to stick around.
Innovation Strategies:
Even if the analysis says that new and cool ideas (innovation) don't seem to make
customers stay, BLUM should still think about it. They can try to understand what
customers like and want. Maybe they can come up with new features or services. Even if
they already have cool stuff, they need to talk about it more so that customers know about
it and appreciate it, which can make them want to stay.
Brand Building:
BLUM needs to make people really like and trust their brand. They should always
tell a good story about their brand in their ads and messages. When customers have a good
experience with BLUM, they are more likely to stick with them. This could mean doing
nice things for customers or teaming up with other brands that people already like. It's like
making friends with the customers and showing them that BLUM is a good choice.

Refferences:
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1. Kotler, Philip & Adam, Stewart & Brown, Linden & Armstrong, Gracie. (2003).
Principles of marketing.
2. Tjiptono, Fandy. (2015). Strategi Pemasaran.
3. Joshi, Bal & Ghimire, Krishna & Yadav, Nawal. (2013). Agricultural Plant Genetic
Resources Management and Agriculture in Nepal.
4. Kevin Lane Keller Source: Conceptualizing, Measuring, and Managing Customer-
Based Brand Equity, Journal of Marketing, Vol. 57, No. 1 (Jan., 1993), pp. 1-22

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