THE IMPACT OF BRAND LOYALTY WITHIN THE FAST MOVING CONSUMER GOODS (FMCG) IN GHANA. CASE STUDY: KUMASI METROPOLIS
The empirical research study aimed at presenting a research finding and result on the impact of brand loyalty on the performance of the FMCG markets. The primary objective of the study was to explore why loyalty developed in FMCG markets from the consumers’ perspective was the determining and sustaining factor high volume sales within the industry.
A problem statement for embarking on the research study further established the empirical research study for on the impact of brand loyalty on the performance of FMCG markets within the industry.
The Literature review relevant data and studies documented in the field of brand loyalty and FMCG markets as determinant variables in the thematic area of the study. Most of these written materials formed the basic understanding of the data collected on FMCG markets. The secondary data was the defining point for establishing the facts under the research investigation.
Increasing competition within the local Ghanaian FMCG markets has made the traditional price and quality producing leadership in an industry as too little. It is no longer enough to depend on these attributes for leadership in products and services. Organizations that realized the importance of product branding as a valuable asset towards providing substantial returns on investment in the long run highly set their objectives right.
The knowledge gained from the research enabled the researchers to draw conclusions on what strategies organisations operating within the highly competitive FMCG market could implement to create and maintain loyalty towards its brands.
TITLE TABLE OF CONTENT
Title Page i
Declaration Abstract Dedication Acknowledgement
Table of Content ii iii iv v vi
List of Figures x
List of Tables xi
CHAPTER ONE: INTRODUCTION
Background of study1-3
Purpose of Research4
Justification of Study5
Organization of Study6
Limitation of Study6
Scope of Study7
CHAPTER TWO: LITERATURE REVIEW
Brand for Existing Markets8-9
: Consumer Loyalty within FMCG9-10
Markets For FMCG10- 11
Competition within Markets11
Variable effects of FMCG11-13
Brand Loyalty for FMCG Markets13
Strengthening Brand Loyalty13-15
Brands and Brand Loyalty for FMCG15-16
Influence of Brand Loyalty16
CHAPTER THREE: METHODOLOGY
Research Design and Strategy18
Observation, Interview and Questionnaire21-22
Mode of Research Analysis23
CHAPTER FOUR: ANALYSIS OF DATA RESULTS
4.0 Introductions 24
4.1 Discussion on Finding 21-25
4.2 FMCG Industry and Markets 26-33
4.3 Brands and Loyalty with FMCG 34-38
4.4 EFFECTS and implication FMCG 38-41
4.5 ANALYSIS of results Analysis 42-43
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary of Study44- 45
Suggestion for further Research48
Appendix I 52-53
CHAPTER ONE: INTRODUCTION
BACKGROUND OF STUDY
The primary objective of the study was to explore why loyalty develops in Fast Moving Consumer Goods (FMCG) markets from the consumers’ perspective. In addition, this study was to explore the consumers’ perspective on the types of bonds that existed in FMCG markets and the role of bonds in the development of brand loyalty.
The empirical research indicated the need for strategies and managerial principles and policies to creatively and innovatively sustain customer loyalty to the brand for fast moving consumer goods market, hence the problem statement.
Established management thought and practice owe much to one major industry: the fast moving consumer industry. This industry, more than any other industry, demonstrated how firms could achieve stability and efficiency in design, manufacturing and marketing of products. Management principle rooted in this industrial sector epitomized effective ways of conducting businesses. In today’s knowledge economy driven by new modes of technological convergence, a new industrial sector of Super Fast Moving Consumer Goods is fast taking shape rewriting principles of management.
Some common FMCG product include food and dairy products, glassware, paper products, pharmaceuticals, electronics, plastic goods, printing goods, household products, photography, drinks etc, so here coffee, tea, greeting cards, gifts, detergents, soaps etc are all included.
The FMCG industry, or alternatively named Consumer Packaged Goods (CPG), deals mainly with the production, distribution as well as marketing of packaged goods for all consumers. The Fast Moving Consumer Goods (FMCG) has to do with those consumables which are regularly being consumed. Among the first activities of the FMCG industry there is selling, marketing, financing, purchasing, and so on. Recently this industry has also launched in operations, supply chain, production, and general management. Terblanche (2002).
The wide range of consumable goods provided by the FMCG industry turns over a large amount of money, while competition among FMCG manufacturers has become more and more fierce. Investors are putting more and more into the FMCG industry, especially in India, where the FMCG industry is the fourth largest sector, having a total market size of more than US$13.1 billion, and still estimated to double by in the next several years. In New Zealand as well, the FMCG industry accounts for 5% of Gross Domestic Product (GDP). Gonzalez (2012).
The factors that made the FMCG industry a highly competitive one are low operational cost, solid distribution networks, and emergence of new FMCG companies. In addition, the growth of the world’s population is another responsible factor for the huge success of this particular industry. Some of the leading FMCG companies all over the world are Sara Lee, Nestlé, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, and Mars etc. Gonzalez (2012).
In recessions, shoppers have a natural tendency to switch to private labels in order to save money. The logical thing for brands to do is to counter this tendency by either lowering their own price, or by offering sufficient non-price reasons to consumers to buy their brand. Consumers are more price-sensitive in recessions, so offering more price promotions makes a lot of sense. Surprisingly, price promotion activity for most brands actually decreases in recessionary times. Gonzalez (2012).
Due to increased competition, locally as well as internationally, organizations need a distinguishing element that will keep consumers identifying and buying their products. With competition increasing annually, the traditional sources of competitive advantage no longer provide long term security for a company, product or marketer. In other words, leadership in price and quality is not enough to ensure the success of a product anymore. Terblanche (2002).
The current recession is the most brutal economic downturn in a lifetime. One industry where the consequences of the recession are felt particularly hard is the fast-moving consumer goods (FMCG) industry. In the past, this industry was dominated by such well-known manufacturer brands as Ariel detergent, Nescafé coffee, Philadelphia cream cheese, Flora margarine, and Pampers nappies. However, in recent decades, so-called private labels or store brands – brands owned by retail giants such as Wal-Mart, Tesco, Carrefour and Aldi – have made huge inroads, especially in Western Europe and the US. Today they control 20 per cent of the US FMCG market, 35 per cent in Germany, and more than 40 per cent in the UK. Much of the loss of market share of manufacturer brands is initiated in economic downturns. Faced with a pressing need to save money, shoppers turn to (cheaper) store brands. They discover that the quality is good and, consequently, many stick with the brand when the economy improves again. FMCG Markers (2009).
PURPOSE OF RESEARCH
The research purpose explore and discover the conduct of the empirical investigation which usually is encompassed within the research questions posed, at the onset of study, and the related research objectives.
I. How would one identify the FMCG which are strong brands?
II. In what ways will price differentiation on FMCG ensure brand loyalty?
III. What effect has the factors that create FMCG had upon the competitive market?
IV. How do the effects and implications of determinant variables ensure markets for FMCG
The primary objective of the study was to explore why loyalty developed in FMCG markets from the consumers’ perspective was the determining and sustaining factor from its existing consumers. In addition, this study was to explore the consumers’ perspective on the types of bonds that existed in FMCG markets and the role of bonds in the development of brand loyalty. The specific objective of the study includes the following:
I. To identify FMCG which are strong brands
II. To examine the factors that create consumer brand loyalty
III. To draw conclusions on reasons to maintain brand loyalty in customers.
The above discussion indicated the need for strategies and managerial principles and policies to creatively and innovatively sustain customer loyalty to the brand for fast moving consumer goods market, hence the problem statement.
Of interest was the quest for the researchers to determine how an organisation could maintain brand loyalty from its existing consumers. The aim of the study was to obtain a solid base of information and opinions regarding the concepts of brands and building brand loyalty. The intended research problem: in what ways would strategies be implemented to maintain brand loyalty for the fast moving consumer goods product despite a fierce market competition.
JUSTIFICATION OF STUDY
The research was intended to extend existing understanding of the phenomena being investigated and to fill in gaps in our present knowledge. The influence of brand loyalty that motivates consumers’ patronage of FMCG markets cannot be overestimated. The clearly defined unit of analysis of the empirical study ensured the measurability of the process of investigation and its continuation overtime. A potential researcher may, in such a case, follow up on the activities of the research investigation. The reason for this was to provide a guiding policy and manual to the process of customer-brand loyalty on FMCG markets. An understanding of the study variables further enabled the exploration of significant conclusions and recommendations towards streamlining the overall marketing concept adopted by FMCG markets. The rationale for the study was also to deepen the existing understanding of the local regard for FMCG markets in the country, Ghana.
ORGANIZATION OF STUDY
The study arranged and distributed over the five chapters according to the institutional requirements for report writing. Chapter One introduced the subject under study. Chapter Two described Related Literature on the purpose of the degree of influence of customer relationship management as a marketing function on bank service quality of business organizations.
Chapter Three developed the design and Methodology for studying the research investigation. Sub-divisions for Chapter Four highlighted Research Findings and Results presentation. The study deployed an effective data collecting instrument like structured Interviews and Questionnaires and observation on which the analyses were based upon. Finally chapter finished off with the Summary, Conclusions, and Recommendations of the research phenomena.
LIMITATIONS OF STUDY
Case study limitations include the fact that definite findings cannot be drawn from causal conclusions. Different situations of the scope of study should equally indicate comparatively altered situations of the same determinant variables. There is limitation of resources as in budget and equipment for evaluating the determinant variables under the study. Some other constraints in the conduct of the study were with time, span of research process, and accessibility of secondary data for investigation. Document investigation is of utmost importance to the study but information and data were not forth coming. It is expected that the literature and empirical findings resulting from this research together with input from the researchers own experience will contribute greatly to the body of knowledge on the topic.
SCOPE OF STUDY
As explained by Kumekpor (2002), the focus and scope of the research investigation as a social survey enables the understanding of those determinant variables of the study. The focus of the social survey directly concerns social life as it exists at present. This study used survey technique to prompt the need to collect data on consumers’ perspective on the types of bonds that existed in FMCG markets, to be used in an objective a manner as possible.
The social survey technique sampled viewpoints from its main specific locality or geographical area. In this case the specific geographical area for conducting the research investigation was the urban Kumasi metropolis; Adum, Asafo, Kejetia, and Krofrom environs. These areas were mostly the densely populated for the performance and conduct of the research process.
These areas were chosen because the researcher realized that they were the area most of the big shops and distributors are found. Customers who buy on daily basis come to these locations and buy on daily basis..