Impact of Product Quality on Customer Retention in Manufacturing Companies in Nigeria

CHAPTER ONE

INTRODUCTION

Background Of The Study

In this present era, the production of high-quality products, as proponed by Apudo (2010), has been shown to be a primary factor for consumer retention. Consistent provision of outstanding and quality products through many years of frequent use, according to Brown&Eisenhard (1995), contributes to the added value of acquaintance and demonstrated trustworthiness, which is a byproduct of customer satisfaction. Historically, most organizational success is attributed to the effective production of quality products in the past decades, and this has been dependent on their capacity to detect consumer demands and promptly manufacture products that match these needs (Brown et al., 1995). Therefore, product development can be considered the lifeblood of any business (Hassan, Hamid, Muhammad, & Rahman, 2010). As a result, there became a need, as pinpointed by Connor, Galvin, & Evans, (2005), for organizations to understand the value needed by customers rather than the value provided by the product. To this effect, organizations are increasingly attempting to design and manufacture products that meet consumers’ expectations in order to retain them.

In view of the foregoing, business organizations, as asserted by Nilsson, Johnson, & Gustafsson (2001), invest heavily in quality management systems to ensure success in delivering high-quality products and services, which results in customer satisfaction and retention. Also, business organizations, as stated by Jun & Cai (2010), frequently place great emphasis on high technological standards as well as solid customer relationships because they are critical in the course of customer satisfaction. According to Apudo (2010), in order for businesses to survive and thrive in a competitive market, consumers’ requirements and expectations must be addressed. This is due to the fact that what matters most is the value customers place on the experience they receive from consuming or using products (Jaafreh and Al-abedallat, 2013).

Researches have revealed the significance of quality product management as a collection of coordinated actions that steer and regulate an organization’s product performance to achieve effectiveness and efficiency. The importance of this set of operations, on the other hand, is to secure the availability of high-quality products to customers, which serves as the foundation for customer retention. Furthermore, a study on product quality and customer retention in Ghana conducted by Michael and Grend (2019) revealed that product reliability, perceived quality, and brand trust are the primary elements that impact customer retention and brand loyalty. As a result, there is no denying that quality products play an important role in customer satisfaction and retention.

Statement Of  The Problem

According to William and Baldasare, Patrick (2007), satisfying customers’ desires is a product development problem rather than a solely a marketing or design issue, Product development is an interdisciplinary activity that necessitates contributions from practically all organizational functions.

Three functions, however, are essentially fundamental to the product development process. These, as posited by William and Baldasare, Patrick (2007), include marketing, design, and manufacturing, all of which are geared toward delivering high-quality products to customers..

Unfortunately, most organizations’ adoption of quality management methods has been hampered by noncompliance with the procedures and modus oparandi of quality control management implementation. Several studies on quality control management and consumer retention (though focused on small-scale firms in developed nations) have found that the ability of a manufacturing organization to retain its consumers through consistent provision of quality products is critical to its survival. In today’s world, the business environment has become increasingly competitive, as consumers are now exposed to a plethora of alternatives. As a result, organizations are striving to keep their customers and secure customer loyalty in order to keep competitors from snatching them (Chalotra, 2012). The importance of product quality, among other aspects that may influence customer retention, cannot be overstated. The most basic definition of a quality product is one that meets the customer’s expectations. Consumers, according to Jun (2010), are loyal to brands that successfully and consistently meet their demands through the availability of high-quality products. As a result, it is critical for manufacturing enterprises to ratify difficulties affecting the quality of their products if they are to keep customers and gain new ones. In light of the foregoing, the purpose of this study is to investigate the impact of product quality on customer retention in manufacturing firms.

Objective Of The Study

The major and general aim of this study is to examine the impact of product quality on customer retention in manufacturing companies. Specifically, the study will;

1.        Examine the relationship between product reliability and customer retention.

2.        Examine the relationship between product durability and customer retention.

3.        Examine the relationship between product conformance and customer retention.

 Research Hypotheses

The validity of the following statements will be tested in the course of this study;

H01: There is no significant relationship between product reliability and customer retention.

H02: There is no significant relationship between product durability and customer retention.

H03: There is no significant relationship between product conformance and customer retention.

Significance Of The Study

Though the presentation of quality products as a key factor for customer retention is not a new subject in the business world, some companies still treat it with negligence. Therefore, this study will once again remind and educate manufacturing companies on the need to produce quality products and maintain good quality standards in the market so as to constantly satisfy their customers and avoid losing them to competitors.

Additionally, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the impact of product quality on customer retention in manufacturing companies.

Scope Of The Study

The study focuses on the impact of product quality on customer retention in manufacturing companies. It will further delve into examining the relationships between product reliability and customer retention, product durability and customer retention, and product conformance and customer retention. The study will be conducted in Enugu State, where some manufacturing companies will be selected as case studies for this research.

 Limitations Of The Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents.

In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other companies and locations.

Definition Of Terms

Product Quality: A product is known as a quality product only when it satisfies various criteria for its functioning for the consumer.

Customer Retention: This refers to the ability of a company or product to retain its customers over some specified period.

Reference

Apudo, M.O. (2010). Quality management practices and customer retention in micro and small enterprises in Nairobi city-county, Kenya.

Chalotra, V. (2012). Customer satisfaction regarding small scale industries products.

Hassan, S., Hamid, A., Muhammad, N. N., & Rahman, N. (2010). Factors affecting industrial goods buying decision making in a manufacturing company.

Jaafreh, A.B. and Al-abedallat, A.Z. (2013). The Effect of Quality Management Practices on Organisational Performance in Jordan.

Jun, M. & Cai, S. (2010). Examining the relationships between internal service quality and its dimensions, and internal customer satisfaction.

Nilsson, L., Johnson, M. D. & Gustafsson, A. (2001). The impact of quality practices on customer satisfaction.

Nwiepe, Naata Michael & Grend, Miebaka David (2019), Product Quality and Consumer Brand Loyalty.

O’Connor, G., Galvin, K. & Evans, T. (2005). Electronic marketing and marketing communications: The role of technology. Kimmel marketing communications new approach.

William T. and Baldasare, Patrick (2007), The Asymmetric Impact of Negative and Positive Attribute-Level Performance on Overall Satisfaction and Repurchase Intentions.