Comparison of brand loyalty and customer satisfaction of

Brand A & Brand B

Brand A:
Brand B:

Toyota (Indus Motors Co)

Honda (Atlas Cars Pakistan Ltd)

Name
Yasser Raza

ID
mc090206156

Virtual University of Pakistan

Date of Submission
2014

May 09,

1.0 Introduction
The success of a firm depends largely on its capability to attract consumers towards its brands. In
particular, it is critical for the survival of a company to retain its current customers, and to make
them loyal to the brand. Former Ford vice president Basil Coughlan estimates that every
percentage point of loyalty is worth $100 million in profits to his firm (Serafin and Horton
(1994).
Brand loyal consumers reduce the marketing costs of the firm as the costs of attracting a new
customer has been found to be about six times higher than the costs of retaining an old one
(Rosenberg and Czepiel(1983)). Moreover, brand loyal consumers are willing to pay higher
prices and are less price sensitive (see e.g. IO-ishnamurthi and Raj (1991); Reichheld and Sasser
(1990)
Customer satisfaction is the result of purchase expectation and post purchase experience
comparison with incurred cost Serkan & Gkhan (2005). The customer might have high, low and
no expectation. It is also depends on the importance of brand as well as the cost. If the
expectation for brand/product performance is high, post purchase experience will determines
customer satisfaction even if the customers are low cost conscious.
In the world trade, Automobile Sector is one of the largest segments. It is the major driver of
economic growth and business activities. It puts multiplier impacts on the economy. Day-in, dayout around 200,000 vehicles roll off the worlds assembly lines with car as the dominant
segment of the industry.
In Pakistan the automobile components manufacturing industry consists of mainly units
producing original components for assembly under deletion program and units are producing
reconditioned and original components for local use.
There are more than 800 vendors in the country with a total investment of over eight billion
rupees; they are engaged in the manufacturing of original components for the assembly
operation under the deletion program as well as producing reconditioned and original
components for sale in the local market.

The models of Toyota Corolla and Honda City 1300cc car has been able to achieve the
popularity level among car lovers in Pakistan as the company expected before its import, the
companies source told that "The sales of Toyota Corolla and Honda City vehicle have Raised,
Before introducing Toyota Corolla/ Honda City 1300cc cars, the Toyota Company has
completely vanished its most popular brand Corolla, and Honda vanished by Civic whose
demand was up throughout the country. The demand for old Corolla cars is still moving up in the
second-hand car markets.
1.1 The Concept Of Brand Loyalty
Perhaps the most elaborate conceptual definition of brand loyalty was presented by Jacoby and
Chestnut (1978). According to this definition, bland loyalty is: The (a) biased, (b) behavioral
response, (c) represented over time, (d) by some decision making unit, (c) with respect to one or
more alternative brands out of set of such brands(f)i s a psychological Processes (Jacoby and
Chestnut (1978, p.80))".
1.2 The Concept Of Customer Satisfaction
Paurav Shukla (2004, p. 85) states that customer satisfaction is customers psychological
response to his/her or her positive evaluation of the consumption outcome in relation to his/her
expectation". Satisfaction is a subjective evaluation of the consumption experience. The
argument is based on disconfirmation satisfaction theory. The theory state that customer
evaluation of product/brand is based on comparison between expected performances with actual
performance. Disconfirmation theory of satisfaction has conceptualized as expectation,
performance, disconfirmation and satisfaction Gilbert & Carol Surprenant (1982).
1.3 Problem Statement
Customers are more loyal and satisfied towards the automobiles of Toyota then Honda. Various
researches have been conducted in the past to find out the reasons of this problem statement
concluding that customer satisfaction and brand loyalty has an effect on the sales of cars. So, we
are going to find out that is Toyota has more sales because of brand loyalty and customer
satisfaction? or there are any other reasons?

1.4 Objectives of the Study

To find out the level of customer satisfaction towards the product features
provided by the Indus Motor Company (Toyota) and Honda Atlas Company.

To find out the reason for the brand loyalty of the customers towards Toyota more
than Honda Atlas Car Company

To find out the opinion on promotional strategies of both the companies.

This study will enable us to understand how a brand can improve its sales by
raising the level of customer satisfaction.

1.5 Significance of the Project

This study will be a contribution in literature.

This research will help us to assess the strengths and weaknesses of both the companies

It will also analyze the customer satisfaction and brand loyalty impact on the sales
volume of the company.

2.0 Literature Review

Brand loyalty has been the center of attention among academicians and practitioners for many
decades Jan Mller & Torben Hansen (2006). In their attempt to conceptualize brand loyalty,
most academicians and practitioners focused on the behavioral aspect, less emphasis on the
attitudinal brand loyalty. The attitudinal aspect has gotten more attention when they notice
behavioral brand loyalty couldnt give them a comprehensive picture of loyalty. Behavioral
loyalty considers proportional purchase, purchase sequence and probability of purchase Dick and
Basu (1994). Behavioral brand loyalty cannot explain why customers who made a repetitive

purchase, sometime switch away and buy other competitive brands Allan & Joel Bubinson
(1996). Dick and Basu (1994, p. 100) also state that the behavioral definition is, consequently,
insufficient to explain how and why brand loyalty developed and modified up."
Dick& Basu (1994) developed a conceptual framework of brand loyalty based on relative
attitude and repeated patronage. According to them, attitude used to evaluate an object/ brand
position on a continuum favorable, so brand attitude range from high to low. An individual
customer may have a positive or negative attitude toward a brand, but in rare situation customers
may patronize a brand for which they have negative attitude Dick & Basu, (1994).
Expectation indicates the customers anticipated performance. There are various expectation
indicators that customers might expect from brand performance. Customers might expect brand
provide functional or other expectation, but that depends on customer's interest. Although all
customers might not be able to list out the entire possible brand benefits due to the fact that
customers might have little awareness or motivation to do so Joss & Hans (1995). Their brand
performance rating is based on the attributes' that they are familiar with or the attributes that
customers want to have from the brand.
Performance is how the product or brand carries out the intended purpose or operating character
Gilbert & Carol Surprenant (1982). It is highly influenced by customer expectation. Brand
performance is a baseline for comparison with the customer expectation. Brand performance
might exceed, meet or below expectation. The performance criteria are highly based on tangible
and intangible's brand attributes. Brand specific performance attributes include hardware,
software, stylishness or other attributes.
Brand satisfaction is one factor that influences brand loyalty (Youl & John 2010, Bennett &
Bove 2001; Bennett, Hrtel, &McColl-Kennedy 2005 and Jones & Suh 2000). The more the
customer satisfied with the brand the more they are willing to use the same brand in the future.
Feick, L., Lee, J. and Lee, J. (2001) stated that high level satisfaction strongly correlated with
increase brand loyalty.
3.0 Methodology

Quantitative method will be used to meet the purpose of this study, estimate the quantitative
effect of the causal variables upon the variable that they influence. Brand loyalty is the
dependant variable, which is influenced by the independent variables. The independent variables
are customer satisfaction, brand quality, brand experience, brand image, switching costs and
customer product involvement.
SPSS 17 will be used. Multiple regression models will be used to analyze the causal relationship
between dependant and independent variables. Correlation and Pair T test will be used to
compare and analyze the relationship between two brands.
Data will be collected by using questionnaire.
A sample of 300 respondent will be taken to conduct the survey.

Sample Questioner
Reasons for higher customer satisfaction about Toyota

Name: __________________
Female

Gender M

Age: _____________________

1. Which vehicle you have for yourself

Honda

Toyota

None of them

2. Which vehicle company you like more

Honda

Toyota

None of them

3. Which vehicle is more attractive

Honda

Toyota

None of them

Male

4. Which vehicle luxurious

Honda

Toyota

None of them

5. Which vehicle you have more seen on roads

Honda

Toyota

None of them

6. Which vehicle has best performance

Honda

Toyota

None of them

7. Which vehicle has good market value

Honda

Toyota

None of them

8. Which vehicle is economical regarding parts

Honda

Toyota

None of them