The Impact Of Branding On Customer Loyalty

Branding is a promise of satisfaction which creates a relationship between consumer and producer. A branding’s success depends on how the product has been perceived by its audience. The method and mode of delivery also plays a crucial role in reaching its audience. Branding has established itself to become an important instrument in ensuring the successful growth of a product. The continuous fierce competition among brands has seen a progress in Branding concepts over the decades has made it a relevant part of any product. Numerous studies focused on branding activities and their impact on retention, attainment and loyalty of customers across industries within western countries already exist. (Michael, 2009) It is therefore relevant to research the impact Branding has on customers’ loyalty in a specific industry in Singapore. This study focuses ultimately on the fast food industry in Singapore. The benefits of applying Branding in the fast food industry are customer loyalty, Consumer trust and perceived risk to its reputation in-times of crisis (Ko, 2006). This study recommends that fast food outlets in Singapore should concentrate in their branding strategies and rejuvenate their branding activities in order to retain and keep their customers loyal towards a fast food brand, as well as attract new ones. Via an in-depth research of literature and analyzing the perception customers have towards Branding; this paper aims to study the impact of Branding on customers’ loyalty within the fast food industry in Singapore. Deductive approach and a quantitative methodology of analysis will be used. A set of research questions and objectives were established. The primary sources of data were collected through a physical questionnaire performed in person and online. By evaluating the results, one can understand customers’ perception towards Branding of a Fast Food name. A total of 200 individuals were approached to participate in the survey, out of which a total of 100 customers responded. After the collection of data the SPSS software was used to evaluate the results of the survey. The dimensions that are considered for this study are: 4Ps of Marketing Mix (Product, Place, Pricing and Promotion), customers’ expectation towards a brand of a fast food outlet which would lead to the customer’s loyalty towards the fast food outlet.

Background of Research

The world has evolved so much that both men and women are equally competing in all fields. This is due to the development of technology and globalisation. This does not just apply to technology but also the food industry. Everything is fast moving and demand has populated almost every industry to have products instantly. The food industry is also a victim of such demand that ‘Fast Food’ has taken over the world by storm back in early 90s in Singapore and has been a ever growing industry in Singapore. Such fast food is sought after in a country where 78% is working population. (Ministry of Manpower, Singapore Workforce, 2011)The younger generation of Singapore has also fallen prey to the fast food culture in Singapore. There are over 376 household fast food franchises operating successfully in Singapore (Economies Survey Series, 2011). This also brings about the fierce competition between the fast food giants in gaining market shares. Brands of such fast food outlets have become popular and competing against each other to be the No. 1 brand for fast food in Singapore. Fast food industry is dominated by foreign brands (Local Fast Food in Singapore, 2012)

It requires the fast food giants to look for strategies to better compete with their competitors and attract customers on a consistent basis. Maintaining and upholding their brand image to retain customers are the main challenges the industry is facing. One of the only ways to differentiate one another is to brand themselves uniquely to attract and retain customers. Branding has influence and have a perceived value towards customers. Timeline has also created such Branding image on products. (Tanja, 2008) Authenticity and tradition of a Brand is also considered when timeline comes in. If a fast food brand is able to survive the period with new brands popping day in, day out; then the brand is looked upon as sustainable on its own as it has already built upon its original grounds and managed to communicate it to the customers. (Michael, 2009)

Branding has created a competitive atmosphere among fast food names in the world. All names trying to gain recognition has turned their attention to Branding strategies in order to improve sales. (Steve, 2003)

Typically, consistent promotion and updating customers of their latest product via mass media has been the way fast food industry has been embarking on and in attracting its customers. This has been one of their strategies in pulling customers towards them. However the industry’s players have realized that not only keeping the customers updated about their products is important but winning customers’ loyalty is equally important.

Mark and Glynn (2010) have claimed that brand quality and reputation influences customer value and customer loyalty. Businesses should deliver a brand image that customers want as a tool to differentiate their products.

Laurence (2012) has mentioned that repetition and consistency are the ingredients of brands that win the memory game. Those who ignore these rules will end up being ignored by customers as well. Therefore branding has been a vital factor that has determine a company doing successful business in the food industry, Thus many of Singapore’s fast food franchises has turned their attentions to branding which has impact on customer loyalty.

Branding effects spread out positively aiding organisations in terms of donations. Fast food outlets have adopted certain societies which run on voluntary funding. Recognition is also gained through this manner where customers identify the respective fast food brand to be society conscious. (Giep and Moriarty, 2008)

Supporting environmental friendly campaigns has also made audience have a second look at such fast food brands. To think that fast food names are usually unhealthy but franchisers have made a point by embedding that health factors are also being looked into while their products are being produced with less harm done to surroundings. Such efforts are made known to the customers via their Branding strategies. (Eric, 2012)

The marketing mix which consists of Product, Place, Price and Promotion has a very crucial role in what is perceived by customers. Being the product it is supposed to satisfy the customer needs. But the product should be beyond satisfaction which should create trust and loyalty develops. Subsequently the place where items are acquired should be reachable to its audience making it friendly. Any item which is beyond reach is considered unfriendly. (Evert, 2002)

In Singapore Fast Food outlets have their own strategies in reaching out to its targeted audience. Although the mentioned fast food outlets has already well established in their country of origin, they are circumstances it is not necessary to be the same in Singapore. Asian countries had realised the power of branding rather late and country such as Singapore which depends on foreign investments have also jumped onto the bandwagon to support Branding. For example, A & W restaurant which was introduced in Singapore in 1991 ceased from operations in 2003. It was indicated that it was unable to sustain and keep up competition with its rivals within Singapore. (Andrew, 2007)

Fierce competition in terms of branding strategies has swallowed its victim in Singapore. The other players were able to create the loyalty in their brand was the factor which A & W restaurant was unable to replicate. Other fast food names such as Wendy’s and Dominos Pizza has re-entered the competition realising the marketing strategies of successful fast food outlets in Singapore. This means that there is space for competitors and the competition is gaining rivalry among the fast food chains. The strategies concerned concentrated on retaining customers and developing a bond between the brand and the customer. At the same time consistent communication with its audience via promotion lets the customers know that the brand keeps in touch with its customers. The bond is deemed as service quality towards its customers.

As a result, this type of branding strategies directly influences the perception of customers towards service quality which in turn ensures loyalty.

However, just knowing only branding as a crucial factor for doing successful business is not going to be enough for the fast food industry. Before building a successful brand image and increasing the advantages, it is important for fast food businesses to know and understand how the customer evaluates their brand as a base for improving their sales, encouraging people to buy frequency and gaining customer loyalty.

Research Philosophy

My philosophy in this dissertation is to state the impact of branding which influences customer’s loyalty to a certain fast food brand in Singapore and how the loyalty towards a brand contributes to the expectations of customers. At the same time how marketing elements create the brand’s image among customers. I will be also stating the importance of Marketing where trust is born on a brand. Marketing is part of Branding strategy whereby it is the base for building a name and trust. It creates demand for such items where there is competition.

Research Objectives

The first objective is to explore how marketing elements influence Branding and further stamp out the importance of marketing which has a vital role on Branding. A look at the marketing mix against Branding will give us a clearer picture on how the image of branding is built through time. Not all marketing approaches turns out to be positive for a Brand and to emphasize on the direction of marketing which will eventually built a positive image instead of a negative one as marketing done without any research will lead to disastrous results. Examining the marketing elements lets us learn the direct impact it has on Branding.

Another objective of this research is to realise the factors of customers’ expectations which affect Branding. A study of the factors which influences customers’ expectation will allow us to extract these factors and study its perks which have direct impact on the way a customer perceives a Brand. This factors comes in any form which will be further siphoned as in which factors are the major stakeholders of customers’ expectations. From the factors identified, emphasis can be placed on ratings as most important and less important factors which contribute to customers’ expectations.

The last objective of this research is to examine the relationship between Branding and loyalty. The study should give us a macro level and micro level image of the relationship between Branding and customer loyalty. By looking at the Branding image which creates loyalty towards a Brand will let us discover if loyalty towards a Brand is of perception or due to pure Branding effects which creates loyalty. On the other hand if it is the taste of the food made which creates the loyalty towards a fast food brand. This also indirectly reads out if loyalty is imposed by Branding statements or level of satisfaction gained by customers.

Research Question

The following research questions were raised to guide the research;

Q1: Is service quality important than Branding to customers of fast food outlets in Singapore?

Q2: What are the benefits to fast food chains applying Branding in Singapore?

Q3: Do Branding strategies influence the loyalty of customers towards their favourite fast food name?

Q4: Do customers support all the branding tactics of fast food outlets in Singapore?

Q5: How effective are fast food branding methods in retaining their customers?

Research Structure

The study attempts to gather specific information on Fast Food outlets in Singapore and their Branding policies. The collection of data will be carried out through a quantitative methodology approach. From the research questions we crack down on the facts that give importance leading to the objective. Once the objectives are recognised, it creates a flow of deep literature review. The hypothesis will be derived after an in-depth study of the literature materials. Specific tools for analysis will be utilised during the course of the study. Various calculable variables should be identified by utilising the quantitative method. A survey form consisting of multiple questions will be created after a look at literature review. The survey will be in the form of a web-questionnaire. The internet will be used as the basic form of data collection once the questionnaire is tabulated. A review of the data collected will be undertaken with the SPSS software package.

Summary

Most of the studies on Branding strategies are created and in place with western nations generally. Thus this study has focused on a Asian region which is Singapore. The study relates widely on Branding in the Fast Food industry in Singapore and its impact on customer loyalty. The study looks at the current trends being practiced in the industry and at the same time pointing out the increase of such knowledge in the industry. This also shows the importance being given by the stakeholders to the concept. Branding has become essential to fast food brands.

In this study the main objective was to find the relationship between Branding and customer loyalty and how Branding has an impact on customer’s loyalty in the fast food industry in Singapore. Through the use of the 4 Ps, the study attempts to identify the best way to retain a customer in the fast food industry. Apart from contributing to Branding and customer loyalty from a theoretical point of view the paper also highlights the dimensions of Branding, which becomes a criterion for customers to evaluate how efficient a fast food name is with its Branding outcome.

Chapter Two:

Literature Review

2.1 Introduction

Rapid growth of population has increased the number of patrons turning to fast food outlets to fulfil their daily hunger needs as mentioned. This has intensified the need to differentiate and attract customers in order to sustain and gain market share for fast food outlets hovering in Singapore. Such outlets have to turn to Branding strategies in order to gain a foothold in the market. Thus the design and implementation of Branding methods create trust as well as build a bonding between the fast food name and customers. Bonding in turn creates trust between both.

This chapter emphasises on the 3 main literature aspects of the research which are; Concept of Branding, Dimensions of Branding and Customer Loyalty. To start off, Branding history and Branding in Singapore will be analyzed theoretically. At the same time the current progress of Branding trends in Singapore will be highlighted.

Subsequently Branding and Fast food industry will be studied. Information of customer loyalty in Singapore will be also discussed. Finally understanding the relation between Branding and the impact on customer loyalty will be looked upon.

2.2 Concept of Branding

Geoffrey (2000) has mentioned that Branding is differentiated by providing perceived quality and an ability to perform to changes in customer taste. Rita and Sameena (2009) had identified that Brands are tricky. They are the most important concept which almost all CEOs are very worried about or having difficulty in delivering the actual meaning of Brand. Branding has become hard to tackle.

Dunn (2010) has argued that Branding is a complex idea which is demanding and not understood by many businesses. Branding has no time limitations and can be built within a short or a long period. However when it comes to today context, building it in a short time is the target of fast food brands.

Successful branding understands the needs and wants of customers and prospects. In order to achieve this, integration of brand strategies through the company at every point of public contact is needed. Brand is something that stays within the hearts and minds of customers, clients and prospects. Some can be influenced whereas some are not possible. Brand is a source of a promise to every customer. Branding is the foundation marketing communication (Laura, 2012)

Brand identity is part of Branding. Brand identity needs to be identified before Brand Image is developed. Brand image and Brand identity will shift according to times. Brand image will definitely change due to time and it needs to be refreshed according to time to maintain the image. (Wilson and Ira, 2008). Kapferer (2012) has quoted that ‘brand identity is not based on the latest advertisements seen: it is the sum of all previous contacts with the brand-its inertia’. We can understand that brand image is built on time and does not happen overnight. The perception of the product carries weight of the brand image concerning its age and quality as well.

2.3 Dimensions of Branding

Brand Actualization has 5 interlinked dimensions. Brand Experience, Brand Community, Brand Culture, Brand Communication and Brand Innovations (Brandxpress, 2005, 5 dimensions in Branding)

Figure 1.1: 7 Dimensions of Branding

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Muyiwa (2011) has concentrated on the 7 dimensions which he deems important to branding which are Brand Vision, Brand Value Proposition, Brand Positioning, Brand Identity, Brand Behaviour, Brand Communications and Brand Economics. He has mentioned that managers at times discover that branding strategies needs to be evolving in order to be successful. The 7 dimensions examine the principals of Branding from the perspective of an economy.

Figure 1.2: Burnett Model

This model consists of 4 dimensions with ‘essence ‘which is the brand factor at the centre.

The functions describe what the Brand is and what does it carry along with it in terms of the product.

The Personality/Image describes the form of imagery people have upon the Brand and affective deposition to the Brand

The Source represents what the company is about and their objectives.

Lastly the Differences portion explains how different the brand is from the rest and what makes it different from the rest of the competitors.

2.4 Marketing Mix (4Ps)

Marketing Mix is considered as a strategy and is a model framework. Marketing mix can be broke down into the 4 Ps which are Product, Price, Place and Promotion.

Figure 1.3: 4Ps of Market Mix, (McCarthy, 1960)

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2.4.1 Product

Rustler (2012) has mentioned that creativity is product. Product is more than just developing ideas. Dogra (2012) had defined that product means anything that is capable or can be provided to achieve a need or a want. It can be either tangible or intangible. She also has mentioned that being a product it must deliver minimum level of performance. If it fails, the other aspects of the marketing mix will not be of any good .Hong, Kotler and Nancy, (2007) have stated that a core product includes the benefits that the target audience will reap. Harsch (2012) had classified product of more to a physical item that a service rendered by firms as Product does not gain any currency in service business. It can be considered as functionality, quality, appearance, packaging, brand, service, support and warranty.

2.4.2 Price

Peter and Kerzner (1997) have argued that price is the easiest aspect a competitor can battle on during competition. However they also clarified that business with a significant cost advantage and reserves can never be easily matched. Don and Beth (2009) have also argued that Price has become increasingly irrelevant as markets are becoming very aggressive and in turn makes pricing attractive but no longer a profit statement. This is also aided by consumers who have more choice and resistant to prices. Shay and Cynthia (2009) mentioned that price can be defined as the value on audience member pays for to experience the brand. Price can be considered as an investment on the certain item or product a customer is willing to pay. Price can be considered as list price, discounts, financing, leasing options and allowances.

2.4.3 Promotion

Allan (2009) has indicated that promotion is talking about the different ways a product can be marketed. He further mentioned that promotion is the communicating tool to reach audience other than pricing. Promotion adds value to product being marketed. One of the primary goals of promotion is to escalate the perception of the product, firm or brand. Michael, Fredile and Terry (2010) defined promotion as a key pillar to the 4Ps which is referred to terms such as promotions and promotion activities which can be confusing. Both are different but relates to getting to the general targeted audience. And in turn gain audience trust which builds loyalty between the products to customer. Promotion can be also considered as advertising, public relations, message, direct sales, sales media and budget

2.4.4 Place

Place refers to products being available where ever and when ever customers need them. Place also refers to the physical distribution of the product concerned including storing and transportation. (Charles, Hair and Carl, 2011)Place is at times referred to as Distribution which is also carries the same terms as Place. Distribution decides the quantity to be produced for the place according to geographic location. (Gitman and Carl, 2008)The product needs to define its needs in order to fulfil as a product which a place or person requires. Once this is established, the Place can be determined. (Phil Stone, 2001)Distribution is essential in Place marketing. Distribution activities should be programmed within the choice of marketing channel. The distribution activities are programmed primarily consisting of activities aimed at development and maintenance of the relationship with retailing organizations and physical distribution. This ensures that products are available at point of purchase. (Herbert and MacFie, 1996). Place can be referred to as locations, logistics, channel members, channel motivation, market coverage, service levels, internet and mobile.

2.5 Fast Food Branding

According to Ed Pendrys (2011) fast food has matured since the days it has started to travel globally. Reaching out to the audience was not of a priority initially when fast food outlets were introduced. However as Fast food names were becoming dominant restaurants, branding was given a second look in order to gain or attract customers in creative manners. In times to come, it turned into business competition to retain and maintain profit through Branding mediums. Richard R. Wilki (2006) has stated that the competition has reached its levels that fast food names are toying with emotions to reach out to audience. Such methods create relationships among customers and the Brands concerned. According to S.Ramesh Kumar (2009) consumer behaviour is influenced by Branding strategies. Whether a fast food brand is able to retain its customers solely depends on how it reaches out to its audience It develops a relationship with customers which will have a everlasting bonding as long as the Brand is able to continue its efforts in building on its current relationship.

2.6 Customers Expectation

Customer expectations are related to Customer satisfaction. As satisfactions are fulfilled, expectations rise on the specific brand of product. However customers do still switch brands when they are satisfied as at times future products of the same brand or product might not meet their requirements, in other word expectations. Numerous studies have resulted that 60 to 85 percent of satisfied customers do switch brands. So it does not necessarily mean that customers expectations are met when sales are high.(Timothy and Terry, 2001)A customer does patronizes a brand without any expectations. When competitors in the market are scarce for the certain product, customers assume that their expectation is fulfilled as their having the best. By fulfilling the customers’ expectations, a certain degree of trust is gained. This can be considered as a motivation factor for customers to select a brand (Ziglar and Hayes,2001)

According to Neal, Quester and Hawkin, (2002) the customer’s expectations are matched to the performance of a product, is the main of marketing as it is important to achieve customer loyalty. However at the same time always a satisfied customer does not mean to be necessarily a loyal customer (Shrake, 1999)

Figure 1.4: Caresoft Model

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Source: Caresoft Global (2012)

The ‘Caresoft’ model consists of three major aspects which are; Efficiency, effectiveness and Flexibility. This model was created just for the meeting and exceeding customers’ expectations. The model emphasises on no backtracking and does not believe in service recovery as expectations are to be fulfilled at the first contact. Although service recovery option is definitely available, Caresoft are minimising the options to be used in order to stamp out the need to have the first impression. The model is named as an engagement model. The aim of the model is to provide quality service with or without a product at optimum levels to customers. At the same time to fine tune the commitment level and control. The level of investment required is also to be controlled via the model which will look at capitalising on maximum satisfaction fulfilled with cost savings initiatives. (Caresoft, 2012)

2.7 Customer Loyalty in Singapore

Many researches have been done worldwide for the dimensions of determining customer loyalty. David (2002) have argued that most studies have generalised customer loyalty as a single factorial construct without differentiating between repurchases, additional purchases and referrals. Richard (2010) has created a Matrix which looks into 2 dimensions of customer loyalty which are the value of a customer expressed in terms of Economic profit and customer loyalty elements that are most important to a company’s customer. Oliver (1997) also came up with a framework that breaks down Customer loyalty into 4 phases which are cognition-affect-conation-action. This phase describes the customers’ attitude towards a certain product until the last phase where the customer reaches loyalty to the product.

Moreover E.Hayes (2008) has indicated that customer loyalty can be conceptualised into three distinct types which are, Advocacy loyalty, purchasing loyalty and retention loyalty. Ruijian of Oklahoma State University (2007) has elaborated the customer loyalty into 2 dimensions as well which are attitudinal loyalty (antecedent) and behavioural loyalty. He has further broken it down into 4 segments which are true, latent, spurious and low loyalty.

Esther (2004) has stated loyalty is the regular repurchase of a brand or from a store based on commitment towards the specific brand or store. Clopton, Stoddard and Clay (2001) have mentioned that customer loyalty makes an enormous difference between the costs of retaining a loyal customer and winning new customers.

Singapore has a population which has about 91.6% consuming fast food and the numbers are ever growing. This is also partially due to the increase of population in recent years. At the same time fast food franchises have also grown in numbers throughout the years. The numbers of fast food outlets have exceeded the amount of primary schools in Singapore. This trend creates easy access to fast food where the findings were done on consumption of fast food (Health Promotion Board, 2010).The percentage of Singaporeans eating at fast food restaurants are rated at about 2 to 5 times a week by Lew and Barlow (2005). In 2010 the fast food industry has grown about 3.8% compared to 2009(Economics Survey Series, 2010) Industry experts expect that this trend will be increased and carried on in the next following years. Even though customers are spoilt for choices, they do return back to the very same product due to certain factors. It includes quality, service, taste, brand image, promotion, price and accessibility.

In Singapore, Naleeza and Yaw (2007) has claimed that customer loyalty at times depends on small factors like the chilli sauce provided by the fast food industries. In November 2011, McDonald’s fast food restaurant withdrew their ‘curry sauce’ temporarily due to supply issues (Jessica, 2011). It also caused an uproar of Singapore McDonald’s customers showing their grief over social networking websites over the lack of curry sauce availability.

Chapter Three:

Research Methodology

3.1 Introduction

Branding is defined by Kotler and Armstrong as a combination of name, term sign or design developed to identify a product or service provided by a seller or a group of sellers. At the same time it helps to differentiate them from each other to compete and excel in a market. There are studies which have been conducted to learn and analyze the relationship between Branding and its success. But there are also evidences that this fact could be contradicting. Kapferer (2008) has mentioned that Branding alone has no immediate effect as mentioned by Kotler and Armstrong. Just Branding without emotions leads to lesser effect of Branding is their argument. Thus we can determine that Branding has mixed reviews from its users. And there is a need for certain elements to be present for Branding to be a full success. Kumar (2009) had also listed that Branding is not a factor for loyalty of a customer but the customer’s experience in utilising a Brand plays a vital role when comes to customer’s loyalty towards a Brand. He has further mentioned that a customer will still consider all options available for a product before ultimately setting upon a Brand and loyalty has no place when branding is concerned. A limited few researches have been done pitting Branding being affected by emotions. And at the same time, experience of a Brand influences the decision of customer instead of the other factors. Experience of a Brand is targeted towards service received by customers from a Brand. So service quality is the main part of experience.

Hereby a framework will be structured to analyse the relationship among experience and emotional attachment towards a Branding which impacts the customer loyalty in Fast Food Industry in Singapore. It will also examine to what level a customer is willing to go with emotion as a factor towards a Brand and experience as a factor towards a Brand. We can also look at if Brandings of fast food given importance to emotional values when considering reaching out to customers.

3.2 Hypotheses

Hereby, the research is going to hypothesize that there is positive effect of Branding which does have impact on customer loyalty therefore emphasizing for a fast food Brand to be more Branding conscious in order to achieve customer loyalty. Such emphasis should lead to Branding as their core business strategy.

Hypothesis – Branding positively affects the customer’s loyalty in Fast food names in Singapore

Parsa and Francis (2002) have underlined that quality service has been undertaken by fast food outlets since the time it was introduced in Singapore as entrepreneurs followed up on the success it gained in the western countries. And in no time it was appreciated in Asian countries such as Singapore. Quality service has not just been a differentiator