Product Satisfaction and Its Effect on Customer Loyalty

Marketing Management 344 This research report has been prepared for evaluation by Dr. C. Schlechter as well as KFC Western Cape. The purpose of this report is to assess the impact of product satisfaction on customer loyalty for KFC Western Cape.

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Executive summary
KFC Western Cape has identified a number of low selling products, including the breakfast offering the a.m. Mini Twister. The reason for this lack of sales is unknown and must be determined by means of market research. It is believed that customer loyalty, which is possibly influenced by product satisfaction, of the brand as well as the product plays a significant role in the existence of this problem. The variables brand awareness, product category usage and brand association are believed to impact on product satisfaction, and therefore on brand loyalty. The decision statement Assess the impact of product satisfaction on customer loyalty for KFC WesternCape forms the basis of the research report. The required results were obtained by the use of a non-probability sample being interviewed by means of a self-administered questionnaire. A sample of a 100 respondents participated in the study. After collection and analysis of the data the following observations were made: KFC ranks third amongst preferred breakfast fast food restaurants, there was a positive, but weak relationship between loyalty and usage, there was a very weak positive relationship between associations for an a.m. mini twister for moderate to strong loyalty and through a Chi-square test it was identified that respondents are aware that KFC has a breakfast menu. Ultimately the units of the sample are aware that KFC has a breakfast menu, but do not see KFC as a first choice when buying breakfast and is therefore not loyal to KFC. It can be concluded that understanding what drives satisfaction among customers is a huge opportunity for fast-food retailers. Knowing how to maximize the positive effects of those components that satisfaction consists of can lead to considerable returns in terms of increased satisfaction. It was recommended that KFC focus on increasing awareness of its breakfast offering as well as creating greater associations between KFC and breakfast.

Contents
Executive summary .................................................................................................... 1 1. Introduction ......................................................................................................... 1 1.a. Theoretical Discussion ..................................................................................... 1 1.a.i. Brand Loyalty ............................................................................................. 2 1.a.ii. Product Satisfaction ................................................................................... 2 1.a.iii. Brand and Product Awareness ................................................................. 3 1.a.iv. Product Category Usage .......................................................................... 3 1.a.v. Brand/Product Association ........................................................................ 4 1.b. Discussion of Problem Definition ..................................................................... 4 1.c Discussion of Research Objectives ................................................................... 5 2. Research Method ................................................................................................ 6 2.a. Research Objectives Formulated into Hypotheses: ......................................... 6 2.b. Research design .............................................................................................. 7 2.b.i. Brief discussion of secondary research conducted: ................................... 7 2.b.ii. Detailed discussion of primary research conducted .................................. 8 2.c Measurement instrument .................................................................................. 9 2.d. Sampling plan .................................................................................................. 9 2.d.i. Target population ....................................................................................... 9 2.d.ii. Research Frame ...................................................................................... 10 2.d.iii. Probable or non-probable ....................................................................... 10 2.e. The design of a sample ................................................................................. 11 2.e.i. Sample size .............................................................................................. 12 2.e.ii. Selecting the sampling units .................................................................... 13 2.f. Data collection and Fieldwork ......................................................................... 14 2.g. Analysis ......................................................................................................... 15 3. Results: ............................................................................................................. 16

3.a. Realised sample: ........................................................................................... 16 3.b. Descriptive data: ............................................................................................ 19 3.c. Inferential Data............................................................................................... 24 4. 5. 6. 7. Limitations of the Study ..................................................................................... 27 Conclusion and Recommendations................................................................... 28 Reference List ................................................................................................... 30 Annexures ......................................................................................................... 32 Declaration of Group Member Contribution .......................................................... 32 Plagiarism Declaration: ......................................................................................... 33 Research Project Assessment Sheet ................................................................... 34 Questionnaire Copy .............................................................................................. 35 Calculations Table ................................................................................................ 37

Table of figures Figure 1.c 3.a.i 3.a.ii 3.a.iii 3.a.iv 3.b. 3.b.i 3.b.ii 3.b.iii 3.b.iv 3.b.v 3.b.vi 3.b.vii 3.c.i 3.c.ii 3.c.iii 6 17 18 18 19 20 20 21 22 22 23 23 24 24 25 26

1. Introduction
1.a. Theoretical Discussion
KFC is a fast-food restaurant that is present throughout the world. The restaurant focuses on chicken products, offering fast-food chicken products during breakfast, lunch and dinner times. The company has expanded exponentially; there are now over 15,000 KFC outlets in 105 countries and territories around the world.(About Us, 2012) KFC Western Cape approached the University of Stellenbosch Marketing Management 344 class of 2012 to investigate, using relevant theory, why certain products within the companys product offering are underperforming. Based on sales performance KFC has highlighted the products that are performing worse than they had initially anticipated. These products stand out significantly as proving to be problematic for KFC. Why are these products so-called slow-movers? Why is the demand for them so low? This report aims to answer these questions by focusing on the a.m. Mini Twister that is offered during breakfast hours at KFC. In this report the term slow-mover is defined as a product identified by the client as an underperformer in the sales category due to some influence-able marketing related variable(s). This report analyses primary research that was conducted to determine the reasons behind the poor performance of this product. This primary research was conducted using a survey research method by means of a questionnaire that was completed by means of a non-probability, mall-intercept sampling method. One hundred respondents were asked to complete the questionnaire, and this was done at the Cape Town International Airport. The results of this research was analysed using the Pearson Correlation and Chi-Squared analysis methods, and relevant conclusions and recommendations drawn from this analysis. The purpose of this study was therefore to determine the reasons for the low sales of this product, determining if there were any relationships between constructs and variables that were identified. These relationships were identified and analysed to determine the roles they played in contributing to the existence of this problem. To

determine these relationships a number of constructs and their related variables were used. These constructs were: 1.a.i. Brand Loyalty This is a construct that has been thoroughly used and investigated by researchers for over three decades. Jacoby and Kyner (1973:2) describes brand loyalty as consisting of six conditions: (1)the biased (non-random), (2) behavioural response (purchase), (3) expressed over time, (4) by some decision-making unit, (5) with respect to one or more alternative brands out of a set of such brands, and (6) is a function of psychological (decision-making, evaluative) processes. This construct gave the researchers an indication of whether or not consumers are loyal (or not) to KFC and whether the existence of this loyalty is influenced by product satisfaction. The measurement of loyalty is a problematic exercise but being able to accurately show correlation with other constructs allows the researchers to draw definite and relevant results. 1.a.ii. Product Satisfaction Swan and Jones Combs (1976:25) describe product satisfaction as follows: When purchasing a product the consumer makes predictions (forms expectations) concerning the future performance of the item. As the item is used, the consumer compares the quality of performance to his expectations. If the product performs as well as, or better than, expected he will be satisfied. If, however, performance is below expectations, dissatisfaction will result. Research has established that judgments of the quality ofproduct performance are related to expectations. The general finding is that products that meet or exceed expectations receive favourable ratings on product performance, while those that perform below expectations receive less favourable ratings. Therefore, it is logical to assume that favourable judgments of performance would yield satisfaction and unfavourable judgments would lead to dissatisfaction. (Swan & Jones Combs, 1976: 25-26) This construct allowed the researchers to determine the level of satisfaction that respondents have experienced when frequenting a KFC outlet and purchasing a product, a breakfast offering and/or an a.m. Mini Twister.

From the product satisfaction construct, the following variables were derived: 1.a.iii. Brand and Product Awareness Hoyer and Brown (1990:141) describe brand awareness as: a rudimentary level of brand knowledge involving, at the least, recognition of the brand name. Awareness represents the lowest end of a continuum of brand knowledge that ranges from simple recognition of the brand name to a highly developed cognitive structure based on detailed information. Brand awareness has also been proven to increase with the help of advertising (Clarke et. al, 2009: 30-33). Brand and product awareness is positively influenced by advertising. Brand and product awareness can fall under this definition, as both can be subject to recognition and recall. The researchers felt that this is an apt variable as the possibility is there that product satisfaction can be determined by the degree of brand and product awareness that is present. The determining of this would lead to the ability to make useful recommendation with regards to awareness, therefore brand and product awareness was an applicable variable to be used. 1.a.iv. Product Category Usage Product usage (usage) refers to the purchasing and use (consumption) of a product. This consists of two types of usage, trial usage and repeat usage. Kempf and Smith (1998:325) define trial usage (or product trial) as: a consumer's first usage experience with a brand, it is a critical factor in determining brand beliefs, attitudes, and purchase intentions. This variable indicated to the researches how willing consumers were to trial a new product, as well as specifically trial a product on the KFC breakfast menu. This indicated to the researchers whether the sample population would even attempt the focus product and was thus an applicable subvariable to be used. Repeat usage refers to the willingness on consumers to continuously purchase the same product. A number of factors can influence this purchase behaviour, Hoyer (1984:822) discusses these: many decisions are made repeatedly or frequently over time in these instances, consumers may rely not only on previously acquired product information stored in memory, but also on judgments of brand satisfaction or dissatisfaction, which occur in the post-purchase evaluation (or usage) stage of the decision process. As is discussed above, repeat usage is influenced by factors

including brand satisfaction, making in an increasingly applicable variable to the product satisfaction construct. This sub-variable indicated to the researchers whether respondents indicated any evidence of brand loyalty and whether product and brand satisfaction was influenced by repeated usage. As a whole, the product usage variable contributed significantly to the conclusions drawn about product satisfaction as well as an overall understanding of the respondent results. 1.a.v. Brand/Product Association Brand associations provide value to the brand, firm, consumer and product. Chen (2001:440) elaborates: There are a variety of ways brand associations can provide value. Among the ways in which associations create value to the firm and its customers are: helping to process/retrieve information, differentiating the brand, generating a reason to buy, creating positive attitudes/feelings, and providing a basis for extension. Product association can be described as a type of brand association (Chen, 2001:443) and can further be divided into functional attribute associations and non-functional attribute associations. Functional attribute associations consist of product attributes, perceived quality and functional benefits, while non-functional attribute associations consist of symbolic association, emotional association, price/value and user/usage situation. (Chen, 2001:443). The association variable allowed the researchers to determine how KFC and its breakfast offerings were perceived, while taking a number of the above-mentioned factors into consideration. The association variable contributed to the product satisfaction construct by highlighting to what degree customers were satisfied with previous visits to the restaurant and past purchases.

1.b. Discussion of Problem Definition

A situational analysis of the problems surrounding the slow-moving KFC products within the Western Cape lead to the situation being defined as: KFC offers products that do not sell as well as expected, costing the company resources such as money and time. The symptoms of this situation are the low selling products as indicated to the researchers by KFC. No interview process with KFC was conducted, but the list provided to the researchers by the companies indicates the low-selling products. This report focuses on the low selling breakfast offering of KFC and in particular the a.m. Mini Twister.

A problem occurs when there is a difference between the current conditions and a more preferable set of conditions (Zikmund&Babin, 2012:110). Clearly this is the case with the low-selling products and this problem needs to be solved. As discussed above, probable causes of this problem were identified as brand and product awareness, product category usage and brand and product association. These variables made up the construct product satisfaction and this, along with the construct customer loyalty formed the basis of the research into the problem. The aim of this study was therefore to investigate the problem of the low selling KFC product a.m. Mini Twister by focusing on awareness, product usage and association. The results of the research as well as the analysis of these results would be used to determine the cause of this problem. To determine whether customer loyalty was impacting the cause of the problem, and if this was influenced by customer satisfaction was to be the main reason for the study. A problem/decision statement is a clear and unambiguous statement of the object of study and the research objectives (Mouton, 2001:48). With the relevant constructs and applicable variables in mind such a statement for this report was formulated: Assess the impact of product satisfaction on customer loyalty for KFC Western Cape.

1.c Discussion of Research Objectives

From the decision statement it is clear that the relationship between the constructs as well as those with the variables needed to be tested. Thus, the following research objectives were formulated: Determine if there is a relationship between usage and loyalty. Determine if loyalty is influenced by associations. Determine if loyalty is affected by awareness.

These objectives formed the basis for the research study going forward. The primary research focused on these objectives, as did the analysis of these results and the recommendations that were made. A conceptual diagram is used below to visually depict the link between the variables and constructs.

Figure 1.c.

Awareness

Usage

Product Satisfaction

Loyalty

Associations

2. Research Method
2.a. Research Objectives Formulated into Hypotheses:
The above research objectives were further formulated into testable hypotheses that would allow for further investigation into each objective. For the first set of hypotheses the researches attempted to determine whether there existed a correlation between product category usage and brand loyalty. HA0: There is no relationship between product category usage and loyalty. HA1: There is a relationship between product category usage and loyalty. For the second set of hypotheses the researched attempted to determine whether there existed a correlation between brand association and brand loyalty. HB0: Association has no impact on loyalty. HB1: Association has an impact on loyalty.

For the third set of hypotheses the researchers attempted to determine whether there existed a correlation between brand loyalty and brand awareness. HC0: Loyalty is not affected by awareness. HC1: Loyalty is affected by awareness.

2.b. Research design

According to Zikmund and Babin (2010:64), a research design encompasses the overarching blueprint for a research report. It depicts the relevant methods and procedures used in order to effectively conduct the required data collection and analysis. Both primary and secondary research was conducted to develop a comprehensive understanding of the current situation faced by KFC Western Cape. This report is a survey research study of the aforementioned constructs interrelationship based heavily on primary-empirical data. Non-empirical secondary research was also conducted. A detailed discussion of the primary and secondary research methodologies and procedures utilised in compiling this report follows below. 2.b.i. Brief discussion of secondary research conducted: The study includes a conceptual analysis of secondary data that reviews existing findings on the theoretical and empirical relationships between product satisfaction as a function of awareness, product category usage and associations and product satisfaction and customer loyalty. A conceptual analysis aims to clarify existing, theoretical, non-empirical data in order to assist researchers in categorising and comparing primary research findings. The use of credible existing theory significantly improves the relevance, accuracy and reliability of survey research as it provides a sense of depth and clarity to the research methodology. The preceding secondary research was conducted in order to clarify definitions and discussions on the constructs and variables used. The discussion on brand awareness was assisted by information gathered from Brown and Hoyer (1990) as well as Clarke et. al. (2009). The discussion on product category usage and in particular was aided by information gathered from Brown and Hoyer (1990), Hoyer

(1984) and Jacoby &Kyner (1973). The discussion of the trial usage section of this variable incorporated the views of Kempf and Smith (1998) into it. To examine further information regarding brand associations, Chen (2001) was consulted. For further investigation into brand loyalty, information from Jacoby and Kyner (1973) was consulted. For discussion on the construct customer satisfaction, Jones Combs and Swan (1976) was the primary source used. For further information on the effect of advertising on all previously mentioned constructs and variables, Clarke et. al. (2009) as well as Kempf and Smith (1998) was consulted. All secondary research conducted preceding this section has been discussed here, as is referenced previously. Most secondary research that was conducted was in the form of external research, some internal research was conducted in the form of the information received from KFC regarding the list of slow-moving products. 2.b.ii. Detailed discussion of primary research conducted To conduct the primary research, the researchers made use of survey research is the form of questionnaires. There are a number of advantages and disadvantages to using a survey research method. The advantages include: it provides a quick, inexpensive, efficient and often accurate means of assessing information about a population. Also, fairly straightforward statistical tools can be used by researchers to analyse the data gathered. (Zikmund&Babin, 2012:191). These advantages were particularly appealing to the researchers in this case. The disadvantages of survey research include: when researchers do not follow basic research principles results can be ineffective or misleading. Also, respondent errors could be a real problem, as well as researcher errors - such as measuring the wrong relationships (Zikmund&Babin, 2012:191). The surveys conducted were, to a certain extent, that of an interactive approach. Respondents had the ability to interact with the researcher, although the questionnaire was completed by respondents on their own. Therefore, to a certain extent, the questionnaires could be considered to be self-administered.

2.c Measurement instrument

A number of different measurement scales were used to conduct and measure the primary research. Nominal, ordinal, interval and ratio scales were used throughout the research. These scales allowed for the accurate and appropriate measurement of the results. Also, by using different scales the researchers improved their chances of obtaining accurate, comprehensive data. Examples of these included in the questionnaire (which can be found as an annexure) are: Nominal: question 1, Ordinal: question 7, Interval: question 17, Ratio: question 21. Discrete measures as well as continuous measures were used throughout the research. Discrete measures are taken of the nominal and ordinal scales while continuous measures are taken of the interval and ratio scales. As this research aims to show correlation, composite measures were also taken. When primary research is conducted the three criteria for good measurement, namely reliability, validity and sensitivity (Zikmund&Babin, 2012:334-337) need to be adhered to. The primary research of this report has strived to meet these criteria, although it is limited by its validity and reliability.

2.d. Sampling plan

The aim of this section is to draw an accurate sample that is representative of the target population and is relevant to this study. It is important that the sample reflect the characteristics of the population, therefore a sampling process that guides the researcher from a general perspective to a more specific one, was used (Zikmund&Babin, 2012:412). Firstly the target population needs to be defined appropriately, for a sampling frame to be chosen. The third step in the sampling process is to choose between a probable and non-probable sampling method, after which the sampling design was chosen. The sample size was defined and the sample units selected, which left only the fieldwork to be co-ordinated. 2.d.i. Target population The target population refers to the total market in which the research's target market is located. Due to the size of a population, there are very high financial- and time costs associated with the research and therefore made use of a sample. The target population is the group that the research would suggest using a sample. The sample is the pool from which respondents were selected (Zikmund&Babin, 2010:412).

The target population for KFC's "Breakfast Twister" included South Africans of all races (White, Black, Coloured and Indian) and genders (Men and Women) who visit restaurants (fast food or sit in) for breakfast and are literate. The fieldworkers ensured that no foreigners were included in this study and the target population's characteristics were specifically identified for the purposes of the study. The study was conducted in the Western Cape province of South Africa and the properties will be analysed for supporting arguments. Thedecision statement includes all persons dining in the population as a whole and not just specifically KFC consumers. The reason for this is because the one focal point is awareness."All KFC consumers includeboth current and potential consumers. The population is limited to those who are actively functioning in the restaurant consumer market and by making this estimate, we ensure that the necessary interest in the product itself, if not the brand itself is present. 2.d.ii. Research Frame A sampling frame is the actual units from which a sample is drawn (Glossary of statistical terms, 2012). It could be in the form of a phone book, a city's address book, a list of businesses or database. However,no framework is perfect and will always exclude someone, such as phone books with unlisted numbers. The sampling frame consists of the people of all races who live in the Western Cape, whose names the researchers did not have (Primary tables Western Cape, 2012). Because a non-probability sampling method was used, it was not necessary to draw a sample framework. Alternatively, if there was a list of all the consumers names, a probability sampling method would have been used. 2.d.iii. Probable or non-probable Several ways exist for a sample to be taken. The main alternative sampling plans can be divided into two categories,using either probable techniques or non-probable techniques (Zikmund&Babin, 2010:423). Non-probability techniques are oftenused for sampling in marketingresearch. Non-probability samples are selected on the basis of the researcher's personal judgment, geographical convenience, quota or some non-random process (Nonprobability Sampling, 2006). The disadvantage of this technique is that an unknown part of the whole population is not part of the sample. This means that the sample may not be representative of the total

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population. Thus, the results of the research cannot be used in generalizations with respect to the entire population (Castillo, 2009). A probability sampling technique is any method of sampling that makes use of some form of random selection. This accompanies the drafting of a process to ensure that the various elements in the population have an equal chance to be selected. This research study made use of a non-probability sample technique, due to the fact that there is no complete, up to date list available that is applicable to the study (that is, South Africans of all races and genders that visit restaurants, fastfood or sit in, for breakfast). To develop such a list is very cost-intensive and will be deemed unnecessary. Thus secondary research was conducted to supplement the nonprobability sampling technique.

2.e. The design of a sample

The design of a sample involves any procedure that formulates conclusions based on measurements on a proportion of a population. A sample is the subject of a study, thus the chosen subgroup of a population. The sampling design are the techniques used by researchers during a study and forms the plan from which the sample will be drawn and respondents chosen (Zikmund&Babin, 2010:432). Judgement sampling is a technique used by researchers when they use their own prejudice to select units for the sample. Through the use of snowball sampling, researchers identify respondents and ask them to refer the researchers to other potential respondents (Zikmund&Babin, 2010:432). Snowball sampling was not an effective method for this study, as respondents were only temporarily on the airport and would not necessarily know anyone else in the area. The quota sampling method uses parameters to select the sample to ensure that the population is represented equally. According to Zikmund and Babin (2010:425) the purpose of this method is that various sub groups of the population is represented to the extent that the researchers desire. Hence, the quota may have one or more characteristics for subgroups to which the fieldworker must adhere to (Castillo, 2009). Quota sampling is the most effective sampling method to use during this study, for every fieldworker must comply with the requirements of the quota. This involves many characteristics such as race, age or income (Zikmund&Babin, 2010:432). For this study the researchers decided that the respondents must have

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been present in the Western Cape and make use of fast food restaurants, as well as adhere to racial groups. The mall-intercept method was used as it was the most effective manner in which the fieldworkers could select the sample. This method entails that fieldworkers enter a mall and ask anyone who is present at the mall for a response. In this study, the Cape Town International airport was selected and the same method was applied, as if it were a mall. 2.e.i. Sample size The sample size is the number of units in a population to be studied. The sample size must be large enough to indicate a clear difference between the two groups. There were several trade-offs considered, mainly between size, cost and accuracy and validity. The larger the sample, the lower the chance that mistakes occurs, thus increasing the accuracy but also the cost of the study. The opposite is also true, thus it is important that the level of tolerance for errors be determined beforehand (Thomson, 2011). This study possesses a high degree of tolerance when it comes to mistakes. Since it is a relatively simple research design the sample will be kept to a minimum. These two factors enable the study to be effectively performed with a relatively small sample of 100 respondents. This size was realistic and achievable by the field workers. The province of the Western Cape has an estimated population of 5287863 people, of which a calculated average of 336 400 are aged 15 and above. Demographically the Western Cape population is classified as follows:

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Table 2.d.i

Western Cape Demographics Percentage Total Gender Male Female Age 15-24 25-34 35-49 50+ Race Coloured Black White Indian Total WC population
(SAARF, 2012). The sample size allowed for efficient quantification of the conducted research and made it possible to accurately capture the demographic composition of the overall population. Thus the fieldworkers were instructed to interview respondents based on race in order to realise a sample demographic consistent with that of the Western Cape. The choice of 100 participants allowed the researchers to allocate 50 questionnaires to coloured individuals, 30 to black individuals, 19 to white individuals and 1 to indian individual. 2.e.ii. Selecting the sampling units A representative sample was selected from the target population. Because of the resources available for this study, the primary sampling unit is respondents who live in the Western Cape Province. The Western Cape has the highest education level of

48.03% 51.97%

1748801 1892258

26.58% 967685.9 22.56% 821380.1 26.45% 963053 24.41% 888940.1 50.2% 1827221 30.1% 1095604 18.4% 669738.3 1.3% 47318.47 3639882

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10.6% of persons over the age of 20. The latter increases the available population for the study (Mid-yearpopulationestimates, 2011). The geographical extent of the area is the secondary sampling unit, namely the area of Cape Town. The tertiary sampling unit was Cape Town International Airport and the target market between 15 and is 49 years. The field workers were instructed to identify potential respondents at the airport. These requirements for participation in the study were, firstly, that they fall between the ages of 15 and 49. Field workers will therefore start with a screening question where they ask the age of the individual and whether they live in the Western Cape, determine whether the person qualified in respect of the proposed quota. One hundred questionnaires were completed.

2.f. Data collection and Fieldwork

The intercept survey used a quota sampling method to ensure that the mix of survey respondents is more likely to represent the important subgroups in the population. These quotas were identified using external data,derived from SAARF AMPS December 2011 LSM demographic data, that indicate what the actual distribution of the total population looks like (SAARF, 2012).When quotas are used, interviewers approach respondents who generally appear to fit the appropriate quota cell requirements and may ask additional screening questions to determine whether the respondent does in fact fit the criteria. The fieldworkers aimed to attain 13 coloured, 7 black, 4 white and 1 indian respondents each whilst verbally screening the prospective participants based on age and nationality. In an intercept study, it is essential to use well-trained interviewers. The representativeness of the survey respondents can be increased if interviewers are trained to approach a variety of potential respondents, not simply those who look friendly or most approachable. Additionally, interviewers must be carefully trained to approach all respondents in a consistent fashion so that the interviews are of a uniform nature (Butler, 2012). Four fieldworkers were used to collect the data of a hundred questionnaires. The researchers themselves acted as the operating fieldworkers and each received 25 questionnaires to complete. The data was collected at the Cape Town International

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Airport because a broad selection of respondents could be found at this one central location. The researchers also assumed that people who would be found at the airport would have the means to be able to patronize a fast food restaurant and thus form part of the target population. All the fieldworkers were dressed uniformly and appeared neatly groomed. Fieldworkers were instructed to approach a potential respondent and ask if they were willing to complete a short questionnaire about product satisfaction. Within the ambit of the Marketing Management 344 course, the fieldworkers received sufficient theoretical training with regards to conducting coherent primary research by means of questionnaire based data collection. The fieldworkers were trained in the aspects that are of most importance in fieldwork. Firstly, the initial contact with the respondent was discussed, then recording the responses correctly. Thirdly they were educated on how to probe in cases where respondents were reluctant to answer and lastly they were educated in terminating the interview. Thanking the respondent for their time and closing the discussion is important and should end on a positive note (Zikmund&Babin, 2010:473).

2.g. Analysis
Analysis is the detail examination of elements or structures of a phenomenon (Analysis, 2012). The three types of statistical analyses are univariate, bivariate and multivariate, that test the hypotheses of a study. Bivariate statistical analysis involves drawing inferences about two variables (Zikmund&Babin, 2010:538). Many tests can be done to analyse data, such as a Chi-square test, t-Test or Pearson correlation. Independent samples t-Tests are used to test the difference between means for intervalor ratio-scaled variables, taken from two independent samples

(Zikmund&Babin, 2010:565). A Chi-square, also known as Cross-Tabulation, is done on categorical variables in a data set by comparing the observed frequencies with the expected frequencies in each cell of the table (Zikmund&Babin, 2010:561). The general alpha level (p) is 0.05 and determines if the H0 is rejected, or not. If p < alpha, reject H0, whilst if p > alpha, the researcher does not reject the H1. The decision to reject, or not reject a hypothesis is done at a confidence level of 95 percent.

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Pearson correlation (r) is a technique for investigating the relationship between two quantitative, continues variables such as age and measures the strength of the association between the two variables (Pearson's Correlation Coefficient, r, 2007).Probability (p) is the long-run relative frequency with which an event will occur (Zikmund&Babin, 2010:442). P-values are the probability values that are compared at significance levels to test hypotheses. The lower the P-value, the more variables are related to one another, and that means are different (Zikmund&Babin, 2010:541). Analysis of variance (ANOVA) is used when means of more than two groups or populations are to be compared. Only one independent variable is involved and examines the effect of a less-than interval independent variable on an at-least interval dependent variable. An independent samples t-test is seen as a special case of ANOVA, because the independent variable has two levels (Zikmund&Babin, 2010:573).

3. Results:
3.a. Realised sample:
The primary data collected on the sample population is consistent with the demographic composition of the Western Cape. The graphs and tables below clearly show how, given relative congruency due to the size of the sample in relation to the total population, the researchers successfully acquired a representative sample of the Western Cape population in terms of gender, race and age as seen in Table 2.d.i. Please note that all relevant demographic comparisons will be drawn from this table and it has been reproduced below for convenience purposes.

Table 2.d.i
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Western Cape Demographics Percentage Total Gender Male 48.03% 1748801 Female 51.97% 1892258 Age 15-24 26.58% 967685.9 25-34 22.56% 821380.1 35-49 26.45% 963053 50+ 24.41% 888940.1 Race Coloured 50.2% 1827221 Black 30.1% 1095604 White 18.4% 669738.3 Indian 1.3% 47318.47 Total WC population 3639882
Figure 3.a.i below indicates that 55% of the respondents were female and that 45% were male. The December 2011 AMPS data shows that 51.97% of the Western Cape population is female and that 48.03 are female.

Figure 3.a.i Gender

Male Female
Question 24

45% 55%

In Figure 3.a.ii below one can find the frequency of participants segmented according to each applicable race group. Noting that the Western Cape consists of 50.2% coloured, 30.1% black, 18.4% white and 1.3% indian individuals aged 15 and

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above, the study successfully recorded a representative sample that does not deviate more than 3% from the empirical evidence.

Figure 3.a.ii Race groups

Question 27

40 31 22

4 White Coloured Black Indian

3 Other

Figure 3.a.iii graphically represents the proportion of the sample population relative to their age groups. As the sample size consists of 100 participants it is clear that 95% of the population lies between 15 and 49 years of age. This is less consistent with the provincial demographic situation for which the same bracket only consists of 75.59% of the population. The data is still applicable as this study is based on KFCs slow moving products and their target market is made up of 15-45 year old LSM 4-10 category (Serving the world, 2011).

Figure 3.a.iii Frequency of sample population relative to different age groups

40 35 Age in years 30 25 20 15 10 5 0 Series1 0-14 1 15-24 37 25-34 28 35-49 29 50+ 4

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The reason for the inclusion of participant income in this study is to assist the researchers in classifying the participants according to their relevant LSM.73% of KFC South Africas customers lie within the LSM 2-8 categories and the pie chart below, figure 3.a.iv, shows that 94% of the participants are situated in the LSM 2-8 category (Serving the world, 2011). Note that according to SAARF (2012), there are no recorded LSM 1 individuals.

Figure 3.a.iv Participant Income

LSM 1-4 LSM 5-6 LSM 7-8 LSM 9-10
Question 28

6% 20% 42%

32%

3.b. Descriptive data:

Research was conducted in order to determine the frequency levels of fast food consumption within the representative sample population. This was done as a screening function in order to evaluate the suitability of said population with respect to the stated research objectives. To measure the construct brand loyalty, the researchers used indexes of the responses on questions 17 and 18, to create a ratio rating of the respondents loyalty to KFC.

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Figure 3.b. Loyalty to KFC breakfast

NOT LOYAL SOMEWHAT LOYAL VERY LOYAL

14%

23% 63%

Question 17 tested if consumers will still be willing to buy if product prices increased by 10% and correlated it with (question 18) the respondents choice of fast-food restaurant if all offered the same breakfast. A rating of 1 was counted as not loyal, a rating of 2-3 was counted as somewhat loyal, and a rating of 5 was counted as very loyal to KFC breakfast offerings. Figure 4.b.i indicates the number of respondents who consume foods at fast food restaurants.

Figure 3.b.i Do respondents eat fast foods?

100

0 Yes Question 2 No

Given that 100% of the sample population do in fact consume fast food, it is thus apparent that the selected sample is well suited to the relevant industry analysed in this research report. Respondents were asked what time of the day they normally visit a fast-food restaurant to determine when fast-food restaurants sell the most of their products.

20

Figure 3.b.ii shows that the majority of the participants visit fast-food restaurants between the hours of 12:00 and 14:00 in the afternoon. This suggests that most people see only the products available between those times and mostly purchase only the products that they are made aware of, at that time. KFC only offers their breakfast products from 06:00 to 10:30 and also advertises them at those times alone. The breakfast menu is then replaced by the products that are sold all day and no point-of-purchase material is kept available to create awareness of the breakfast menus existence.

Figure 3.b.ii Times restaurants visited

06:00-10:30 12:00-14:00 18:00-20:00 Do not visit Other 2% 5% 24% 43%
Question 4

26%

As can be seen in the following figure 3.b.iii five participants are not aware that KFC offers a breakfast option at all and nineteen respondents are not sure about the breakfast offering. Although seventy three respondents were aware that KFC offers a breakfast menu, more can be done to inform customers of the breakfast option. When the researchers determined the mean value (coding number 5) for question 20, they discovered that most respondents have not bought any item of the KFC a.m. breakfast. This is not a positive finding for it states that the current marketing strategy of KFC is not effective.

21

Figure 3.b.iii Aware of KFC breakfast menu

74
Question 9

19 5 Yes No Don't know

Research was also done to identify how customers form associations about KFC. Multiple options were provided to respondents in the questionnaire. The options given to respondents consisted of forming an association through a) purchase interaction with KFC b) advertisements c) friends, family and other people d) not sure. Figure 3.b.iv indicates that the majority of respondents form the association they have with KFC through purchase interaction with KFC. This indication also supports the above statement that more can be done to create awareness for KFC. If most of the respondents form their associations through purchase interactions (Figure 3.b.iv) and the majority of the respondents visit KFC at times other than when breakfast is served (Figure 3.b.ii) the chance that respondents may learn to associate KFC with a breakfast option is very low. If the respondents do not associate KFC as a potential provider of breakfast, respondents will not be likely to consider KFC as place where breakfast can be bought.

Figure 3.b.iv How associations are formed about KFC

65 42 26 8 Purchase interaction Advertisements Friends,family Not sure
Question 10

22

Further, advertisements ranked second on how association, concerning KFC, are formed. As previously mentioned KFC removes most of their in-store breakfast advertisements after 10:30am and replaces it with other product offerings.

Figure 3.b.v Breakfast is important

Question 6 A

38 31

15 7 6

Strongly Disagree

Disagree

Neutral

Agree

Strongly Agree

Research was conducted in order to determine if breakfast is important to respondents. Through the use of a Likert scale it was indicated that 31 respondents agree and 38 respondents strongly agree that breakfast is important to them (Figure 3.b.v.). The majority thus stated that eating breakfast is important. Concurrently, Figure 3.b.vi below, shows that 42 respondents agree and 24 respondents strongly agree that they prefer to eat breakfast at home. This could in turn indicate that most of the respondents prefer to eat breakfast at home rather than at a fast food restaurant.

Figure 3.b.vi Preferrence to eat breakfast at home

Question 6 B

42 24

21 3 Strongly Disagree 5 Disagree Neutral Agree

Strongly Agree

When evaluating the a.m. mini twister, the researchers found a negative relationship between the associations of customers with regards to the product

23

and its suitability for a breakfast meal. Exactly 50% of the respondents were found to hold a negative association between wraps and breakfast.

Figure 3.b.vii Association of wrap with breakfast

Question 7 C

30 24 20

8 2 Low Below average Neutral Agree Strongly Agree

The remainder of the data correlates with the abovementioned results in terms of associations, usage, and awareness.

3.c. Inferential Data

Determine if there is a relationship between usage and loyalty.

Figure 3.c.i Likelyhood to buy a.m. KFC Twister

25 20 20 16 15 10 6 5 0 Highly unlikely Unlikely Neutral Likely Most likely 14
Question 21 B Question 21 B

20

24

Figure 3.c.ii Preferred fast-food restaurant for eating breakfast

None Other 8% 7%

Mc Donald's Steers Question 18 37% 25% Question 21 B KFC 23%

When the construct, loyalty and the variable, usage were correlated, the researchers identified that there was a positive, but weak relationship between the two. The HA1 will not be rejected as there is a relationship between usage and loyalty (r=0.290, p=0.003). The HA0 was rejected. Through the use of Pearson Correlation, this can be said at a level of 95% certainty. This means that there is a relationship between usage and loyalty to the extent that if usage increases, loyalty increases as well. Thus, implying that respondents, who buy a product and are satisfied, will buy again in future and ultimately become loyal to the service provider, as in this study, KFC. Determine if loyalty is impacted by associations. Refer to Figure 3.b: According to the results of Question 21B and through the use of Pearson Correlation, at a certainty level of 95%, the researchers found there was a very weak positive relationship between association for an a.m. mini twister for moderate to strong loyalty (r=0.196, p=0.316). This is not very significant. The total association for Question 21 determines there is no relationship between associations and loyalty. Thus, the HB0was not rejected whilst the HB1 was rejected.

25

Determine if loyalty is affected by awareness.

Figure 3.c.iii Chi-Square test: Awareness of KFC breakfast menu

80 70 60 50 40 30 20 10 0 Yes
Question 19

Marketing Management 344 This research

report has been prepared for

evaluation by Dr. C. Schlechter as No well as KFC

(blank)

The researchers applied a Western Chi-square test to Question 19 to determine whether Cape. respondents are aware that KFCpurpose breakfast menu. The respondents who has a of The answered I dont know were counted is to No answer, because it ultimately this report as a means that they are not aware that they have the breakfast menu. assess the impact of product Through this test, the researchers identified that respondents are aware that KFC satisfaction on has a breakfast menu. Through Pearson Correlation, at a certainty level of 95% the customer loyalty researchers determined that the HC0 has not been rejected, as the HC1 was rejected for KFC Western (r=0.348, p=0.069). This means that there is no relationship between the variable Cape. awareness and the construct loyalty. The units of the sample are aware that KFC has a breakfast menu, but do not see KFC as a first choice when buying breakfast and is therefore not loyal to KFC.

26

4. Limitations of the Study

Although this research was carefully prepared, the researcher is still aware of its limitations and shortcomings. First of all, because of the time limit the sample of the surveyed group is small only a hundred respondents were included and might not represent the majority of the target population. The researchers assumed that the variables under investigation are measurable and the instrument being used is a valid and reliable instrument to measure those variables. The measure instrument used in this study was a self-administered questionnaire. It was limited by its reliability and validity. An instrument is reliable if it will give the same measurement every time when measuring the same construct and is valid if the actual construct at hand is indeed being measured. The measure instrument has a low reliability because of answer variation that may occur if a respondent had to fill in the same questionnaire again (Zikmund&Babin, 2010:337). In order for a study to be valid, the participants must be representative of the population and must be willing to participate in the study. The participants must respond to questions honestly or participate without biasing the study results. The participants should not behave differently than they would were they not part of this research study. Respondents were also confused by some of our questions (question 9) and in turn marked the wrong tick box leaving the researchers with inaccurate data which could not be used. The respondent in the study were chosen through a non-probable sampling method and suggests that the participants likely do not represent the population. In addition, the results of the study are limited by the honesty of the participants, or their nonbiased participation. Respondent bias occurs when respondents change their behaviour because they know they are participating in a study (Zikmund&Babin, 2010:194). There are limitations on the analyses used in the study. The results of the study are limited by the ability of the statistical procedure selected to find statistical

27

significance. The analysis must be appropriate to address the research question, and the test must have sufficient power to detect a significance relationship if they exist in the population.The researchers lack of knowledge of SPSS software

5. Conclusion and Recommendations

Understanding what drives satisfaction among customers is a huge opportunity for fast-food retailers. Knowing how to maximize the positive effects of those components that satisfaction consists of can lead to considerable returns in terms of increased satisfaction. The components used for this study comprised of product usage, association and awareness and were measured to find their impact on loyalty. The results found that there is a relationship between usage and loyalty. If usage were to increases, loyalty would increases as well,thus suggesting that respondents, who buy products and are satisfied, will buy again in future. This satisfaction arises from the customer comparing their expected experience with their actual experience and would lead to repeat purchasing and usage of the product. Association was also tested to

determine the influence on loyalty. There was found that association does not have a significant effect on customer loyalty. Thus the degree, to which the brand is associated with the product category of breakfast, does not have a positive nor negative affect on how loyal customers are. Product awareness was also investigated to find the impact it has on loyalty of consumers. When introducing a new product to the market, one of the hurdles that must be overcome is lack of consumer awareness. Initially, no one knows about the new product offering. Once you increase the amount of awareness about the product, sales may start to increase as a result. Regardless of how good a product is, it will not help if customers are unaware of it. Through the use of correlation (r) researchers found that awareness does have a positive yet weak relationship with loyalty yet the relationship is too small to indicate any significant effect on loyalty. By measuring customer satisfaction with regards to these components of the shopping experience, retailers can gain an in-depth understanding of their customers likes and dislikes in order to better focus on meeting their needs and exceeding their expectations

28

Taking the above results and conclusions into account, it would greatly benefit KFC if it kept the breakfast advertisements displayed throughout the day and did not remove it, as more people could be made aware of the breakfast option. This greater awareness could then in turn lead to a higher level of associating KFC with a potential breakfast provider. It is also recommended that KFC improve how customers associate it with breakfast. KFC is not positively associated with breakfast, as is shown by 50% of respondents indicating that they do not associate the a.m. Mini Twister (one of KFCs flagship breakfast offerings) with breakfast. This could be changed by amending the breakfast offering. By offering more traditional breakfast items (such as bacon and eggs) it could build up an association and ultimately move further into this market. As KFC has already created the image of offering home-styled sides such as coleslaw and mash and gravy, focusing on this established association with regards to breakfast to greatly benefit KFC. An overwhelming majority of respondents indicated that breakfast is important to them; this shows KFC that there is clearly a market to be exploited.

29

6. References
About Us. 2012. [Online]. Available:http://www.kfc.com/about/.[2012, September 26]. Analysis. 2012. [Online]. Available: http://oxforddictionaries.com/definition/english/analysis [2012, September 26]. Brown, S.P. & Hoyer, W.D. 1990.Effects of Brand Awareness on Choice for a Common, Repeat-Purchase Product.Journal of Consumer Research.17(2): 141-148 Butler, S. 2012. Mall Intercept Survey.[Online]. Available: http://srmo.sagepub.com/view/ encyclopedia-of-survey-research-methods/n284.xml [2012, September 26]. Castillo, J.J. 2009.Research Population.[Online]. Available: http://www.experimentresources.com/research-population.html [2012, September 26]. Chen, A. C. 2001. Using Free Association to Examine the Relationship between the Characteristics of Brand Associations and Brand Equity.Journal of Product & Brand Management.10(7): 439-451 Clarke, R. C., Doraszelski, U., Draganska, M. 2009. The Effect of Advertising on Brand Awareness and Perceived Quality: An Empirical Investigation using Panel Data [online]. Available: http://facultygsb.stanford.edu/draganska/documents/AnEmpiricalInvestigationoftheEf fectofAdvertising.pdf [2012, September 27]. Glossary of statistical terms. 2012. [Online]. Available: http://www.statistics,com/index.php?page=glossary&termid=851 [2012, September 16]. Hoyer, W. D. 1984.An Examination of Consumer Decision Making for a Common Repeat Purchase Product.Journal of Consumer Research.11(3): 822-829 Jacoby, J. &Kyner, D.B. 1973.Brand Loyalty vs. Repeat Purchasing Behavior. Journal of Marketing Research.10(1): 1-9 Jones Combs, L. & Swan, J.E. 1976.Product Performance and Consumer Satisfaction: A New Concept. Journal of Marketing. 40(2): 25-33

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Kempf, D. S. & Smith, R. E. 1998. Consumer Processing of Product Trial and the Influence of Prior Advertising: A Structural Modelling Approach. Journal of Marketing Research.35(3): 325-338 Mouton, J. 2001.How to Succeed in Your Masters and Doctoral Studies.Pretoria: Van Schaik Publishers My marketing research methods. 2011. [Online]. Available: http://www.mymarketresearchmethods.com/descriptive-inferential-statisticsdifference/ [2012, September 26]. Mid-year population estimates. 2011. [Online]. Available: http://www.statssa.gov.za/publications/P0302/P03022011.pdf [2012, September 25]. NonProbability Sampling. 2006. [Online]. Available: http://www.socialresearchmethods.net/kb/sampnon.php [2012, September 23]. Pearson's Correlation Coefficient, r. 2007.[Online]. Available: http://hsc.uwe.ac.uk/dataanalysis/quantinfasspear.asp [2012, September 26]. Primary tables Western Cape.2005 Report.[Online]. Available: http://www.statssa.gov.za/census01/html/WCPrimary.pdf [2012, September 25]. SAARF.2012. [Online]. Available:http://www.saarf.co.za/lsmdemographics/LSM%20Demographics%20Table%20AMPS%20Jan%20%20Dec%2010.pdf [2012, September 26]. Serving the world. 2011. [Online]. Available:http://www.yum.com/annualreport/pdf/2011_AR.pdf [2012, September 26]. Thomson, S.B. (2011). Sample Size and Grounded Theory. JOAAG, Vol.5. No.1 Zikmund, W.G. & Babin, B.J. 2010. Exploring Marketing Research, 10th Edition.China: Cengage Learning.

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7. Annexures Declaration of Group Member Contribution

This declaration serves to state that all group members have contributed towards this project. Below is a tabular presentation of the percentage contribution of each group member as agreed upon by all members.

Initials

Surname

% Contribution

Signature

32

Plagiarism Declaration:
1. Ons weet dat indien ons iemand anders se idees gebruik en voorgee dat dit ons sn is, dit dan neerkom op plagiaat. Ons is bewus van die potensile strafmaatrels vir hierdie oortreding. / We knowthatusinganotherpersonsideasandpretendingthatit is onesownconstituteplagiarism. We are aware of thepotentialpenaltiesforthismisdemeanour. Ons het die Harvard metode vir aanhalings en verwysings gebruik. Elke substansile bydrae tot, en aanhaling in hierdie opstel/opdrag/projek uit die werk of werke deur ander persone het volledige erkenning ontvang by wyse van aanhalings of verwysings in sowel die teks as bibliografie. / We haveusedtheHarvardmethodforcitationandreferencing. Eachsignificantcontributionto, andquotation in, this essay fromthework, orworks, of otherpeoplehas been acknowledgedthroughcitationandreference in thetextandbibliography. Hierdie is ons eie werk. / This is ourownwork. Ons het nie toegelaat nie, sal ook nie toelaat nie, dat enigeen ons werk kan kopieer met die doel om voor te gee dat dit hulle eie werk is nie. / We havenotallowed, andwillnotallow, anyonetocopyourworkwiththeintention of passing itoff as theirownwork.

2.

3. 4.

Handtekening / Signature.................................................... Datum / Date............................... Handtekening / Signature.................................................... Datum / Date............................... Handtekening / Signature.................................................... Datum / Date................................ Handtekening / Signature.................................................... Datum / Date................................

Verklaring van eie werk / Declaration of ownwork:

1. Ons het deur die projek gelees om spelfoute en taalfoute uit te skakel om sodoende die professionaliteit van die dokument te verhoog. / We havereadthroughtheprojecttoeliminate spelling errorsandgrammarerrorstoincreasetheprofesionalism of thedocument. 2. Hierdie projek is ons eie werk. / Thisproject is ourownwork.

Handtekening / Signature.................................................... Datum / Date................................ Handtekening / Signature.................................................... Datum / Date................................ Handtekening / Signature.................................................... Datum / Date................................ Handtekening / Signature.................................................... Datum / Date................................

33

MARKETING 344 Research Project Assessment Sheet

Name:

Mark summary 1. Abstract 2. Introduction - background / literature review - purpose of study - objectives 3. Methodology 4. Results 5. Conclusion and recommendations 6. Bibliography 7. Technical presentation - title page, table of contents, spelling, in-text referencing, etc. Total 5

10 10 5 25 15 10 5

15 100

General comments

34

Questionnaire Copy

35

36

LSM Group Total: 1 2 3 4 5 6 7 8 9 10 661000 1793000 2117000 4248000 6080000 7828000 4014000 2921000 3093000 2177000 34932000 47.1 52.9 25.5 15.6 22.7 36.2 563002 304810 383702 541486 0.1 1793 0.8 16936 2.2 93456 3.8 231040 12.2 955016 22.6 907164 666855 1287144 1824000 2191840 1027584 508080 998280 1434880 2035280 867024 461506 968544 1538240 1917860 1131948 480559 994032 1282880 1690848 987444 791591 642620 756539 730250 19.8 578358 733041 637158 832017 890784 20.5 634065 31.4 17 21.4 30.2 31.5 24 21.8 22.7 30.3 23.5 22.8 23.4 30 23.6 25.3 21.1 28 26 24.5 21.6 25.6 21.6 28.2 24.6 27.1 22 25.9 25 23.7 20.6 26.9 28.8 42.1 57.9 46.5 53.5 48.6 51.4 47.7 52.3 48.8 51.2 48.4 51.6 50.2 49.8 48.7 51.3 52.2 47.8 25.9 17.3 31.1 25.8 563843 376621 677047 561666 48.03 51.97 27.9 21.12 25.06 25.94 9817455 7907869 8817450 8399231 10.2 92.2 222054 3639882

Calculations Table

37
0 0 0 0 0 0

Totat SA Population Gender Male Female Age SA % 15-24 25-34 35-49 50+ Age 15-24 25-34 35-49 50+

168555 103116 150047 239282

Percentage Western Cape Population Western Cape Age WC 15-24 25-34 35-49 50+

% of WC 563.002 5334.84 28317.17 69312 267404.5 232234 156735 150273.4 57511.99 967685.9 26.57704 304.81 4064.64 21962.16 54525.44 248304.2 195947.4 127238.8 130617.4 38415.34 821380.1 22.55882 383.702 3692.048 21307.97 58453.12 233978.9 255820.2 149794.7 170563.5 69058.79 963053 26.4498 541.486 3844.472 21868.7 48749.44 206283.5 223162.3 144589.5 182610.7 57289.93 888940.1 24.41433 3641059