Product Package as Determinant of Brand Loyalty in Food and Beverages Markets of Lagos State, Nigeria

Kesinro Olalekan Rasheed^*

Department of Administration and Management, College of Business and Social Sciences, Crawford University, Igbesa, Ogun State, Nigeria

Abstract

The main objective of the study is to determine the relationship between package design and brand loyalty in FMCGs markets of Lagos State, Nigeria. The descriptive survey design was adopted for the study. 2374 consumers of packaged food and beverages products were proportionally sampled across the 20 local government areas of Lagos State. Questionnaire was the main instrument for data collection rated on a 6 – point Likert scale. Data were analysed using the descriptive statistical techniques of Pearson Product moment correlation (r) and Simple Regression Analysis. The results of the study revealed that package design significantly influence customer involvement in a brand (p < 0.05, r = 0.320; 0.289; 0.291; 0.368; 0.363) in the food and Beverages Industry and this could be achieved through effective choice of label information, logo, brand size and shape. The study however, recommended that marketing practitioners must ensure that product package is consumer – friendly, package design must be done to enhance adequate sensory pleasure and stimulation, aesthetic components should be soothing for the consumers eyes, brand label and logo should be simplified and contain accurate information.

Keywords

Product, Packaging, Package Design, Brand Loyalty

Received: June 21, 2015
Accepted: July 15, 2015
Published online: August 4, 2015

@ 2015 The Authors. Published by American Institute of Science. This Open Access article is under the CC BY-NC license.

http://creativecommons.org/licenses/by-nc/4.0

1. Introduction

It is the preference of the consumers to make a purchase of a particular brand due to its attributes, image, quality, features and price, and they normally committed to purchase and refer to other people, Due to brand loyalty their occasional purchase becomes normal by increasing frequency of purchase. Brand loyalty is very important for the organization to enhance their sales volume, to get premium price, to retain their customers rather than seek. There is a significant difference between replicate purchase and brand loyalty because replication purchase is buying of brand frequently and loyalty is the result going on by actions (Bloemer, 1995). Brand loyalty occur when client have significant relation towards the brand expressed by replicate purchase. Such loyalty will be beneficial for the firm because ultimately clients will be agreed to purchase at premium and may also be involved in introducing new client to the firm (Reichheld, 1990). The customers who are brand loyal do not evaluate the brand, they just make a purchase confidently on the basis of their experiences (Sidek, Yee, & Yahyah, 2008).Some organizations make the customers loyal forcedly due to their monopoly even they do not want to become loyal and some organization make customer loyal by having low price and the other brand conscious organizations make a lot of effort for customer’s satisfaction and to establish brand and they do not have high loyalty (Grönholdt et al, 2000).

In the marketing and consumer behaviour literature, there is a widely accepted assumption that customer loyalty is a conscious behaviour (Solomon et al., 2006; Kotler and Keller, 2006). Loyalty is discussed in the context of consciousness and the fact that non-loyal customers are unconscious was emphasized. However, the most basic problem encountered in the reviewed studies is the failure to achieve a shared definition of loyalty because although customer loyalty may be a key variable that explains keeping the customer at hand (Wong and Zhou, 2006; Pritchard and Howard, 1997), it has been discussed in time whether loyalty is an attitude or combination of attitude and behaviour. Behavioural approach explained loyalty based on the criteria including the share in consumption, consumption probability, probability to consume the product again, repeated consumption behaviour, multi-directional behaviours (Kumar and Shah, 2008). Consequently, it was generally agreed that loyalty is recognised through repeated consumption of any good or service when the customer has a positive attitude towards the good or service or company providing the good or service (Wong and Zhou, 2006).

Nevertheless, today’s managers should understand that they must commit to relationship management, try to develop and maintain long-term relations with customers and also regard customer loyalty as their ultimate goal in developing business strategies (Reichheld & Schefter, 2000). It’s also important to notice, that loyalty can be gained but marketers should act continuously on maintaining that loyalty.

2. Statement of Problem

Most successful multinational manufacturing companies in the foods and beverages industry in Nigeria appreciate the fact that customer loyalty can be of substantial value to both their organization and customers (Ladipo & Olutayo, 2011). Loyal customers often will, overtime, bring in substantial revenues and demand less time and attention from the firms they patronized. Perhaps this is why most indigenous companies in this industry are not doing well (Ladipo & Olufayo, 2011). A cursory look at the industry reveals a systematic and steady decline in the activities of indigenous foods and beverages companies. As a result, customer loyalty can be a major source of sustained growth and profit and a strong asset (Anderson & Mittal, 2000). According to the work of Kim, Lado &Torres (2009), brand loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, thereby causing repetitive same-brand or same-brand set purchasing despite situational influences and marketing efforts having the potential to cause switching behaviour. Brand loyalty increases the motivation of consumers towards purchasing behaviour (Ou, Shih, Chen and Wang, 2011). Parraga and Gonzalez (2008) also explain brand loyalty as continual purchasing manners which help the company in order to get customer preference, purchase intention and secured profitability. Brand loyalty has a positive effect on purchase intention (Jalilvard, Samiei and Mahdavania, 2011).

3. Objective of the Study

To determine the relationship between package design and brand loyalty.

4. Research Question

To what extent does package design affect brand loyalty?

5. Statement of Hypothesis

H_o: Package design does not significantly affect customer brand loyalty.

H₁: Package design significantly affect customer brand loyalty.

6. Literature Review

Today, the importance of marketing managers knowing how to influence customer loyalty is constantly growing (Reichheld & Sasser, 1990). With competition increasing day after day, customer maintenance and growth has become the first goal of many companies (Chegini, 2010) and loyal customers can be considered as a key to success in many service businesses (Tripathi, 2009). According to Morgan (1999), in today's environment of one-to-one marketing, the need to understand the mechanisms that control consumers’ purchasing behaviour is continuously growing. This is caused by the marketers need to start identifying consumer loyalty behaviour or provide signals of individuals about to defect to another brand (Morgan, 1999).

It is also important for marketers to be able to identify different kinds of loyalty. In their research of behavioural and attitudinal loyalty, Dick and Basu (1994) argue that managers often overlook a type of customer commitment called spurious loyalty. This kind of loyalty consists of both strong behavioural loyalty and low attitudinal loyalty. Such a loyalty cannot benefit a firm’s profit since customers with spurious loyalty do not truly identify with the firm, and they often only care about discount sales in order to buy the product at low prices. Managers who only focus on this worthless loyalty will fail to see any long-term financial result. Thus, it is important for managers to know the marketing tools that can have an impact on attitudinal and behavioural loyalties; otherwise it would be difficult for managers to develop effective strategies for generating customer loyalty.

Increased retention through loyalty leads to increase in market share and the benefits of having a loyal customer base become even more relevant in mature markets as increases in market share become increasingly expensive (Pleshko & Baqer, 2008). Reichheld (2001) manages to summarize the benefits deriving from a loyal customer base: lower customer acquisition costs through lower customer exchange, loyal customers usually buy more over time and possibly at a premium price, loyal customers spread positive word-of-mouth about the company, ability to resist marketing efforts of competitors and lower serving costs.

On the other hand, the approach of loyalty-connected profitability also has its critics.

Reinartz & Kumar (2002) have found results proving that the link between loyalty and profits is much weaker. In their study they claim that to generalize long-term clients to be more profitable is a gross oversimplification since there is a lot of contradicting evidence especially in a non-contractual environment. They claim that this is a following of low switching costs and the impact of competition. They suggest caution and deeper analysis of customer profitability since some customers are very profitable in the beginning, but turn unprofitable in the long run (Reinartz & Kumar, 2002). It has been claimed that loyal customers know their value and demand better service and spread positive word of mouth only if they feel and act loyal (Kumar & Rajan, 2009). Chegini (2010) also points out, that creating loyalty in all customers is not possible. Thus, in order to avoid serving the wrong customers the customers should be screened for profitability and served accordingly, by investing only in the most profitable relationships.

Nevertheless, empirical reviews have given credence to the uniqueness and environmental factors of packaging design that affect consumers’ acceptance of a product. The design of a package can be regarded as the main tool to stimulate consumer demand, convey knowledge about the commodity and establish brand recognition (Ju, 2003). Most busy shoppers will not stop to look carefully at a certain product. The best way to determine the quality of package design is demonstration of product features and building of brand identity by means of visual and psychological attraction (Gobé, 2001). Therefore, package design expresses distinguishing features of a product in a visual manner and help specific group of consumers conduct expected behaviour of purchase (Klimchuk and Krasovec, 2006).

Although packaging is most commonly regarded as a way to protect the product, an often overlooked component of packaging is the capability of better reflecting the sense of product attributes to consumers who might assess these attributes valuable. Using new and innovative packaging designs, increasing perceived benefits to consumers – thus increasing value added – can be achieved. Value is added when packages are designed for aesthetics and ability to deploy positive information to consumers and at the same time preserve the product qualities through time and the environment (Gonzalez, et al., 2007). For decision made at the point of purchase, packaging undertakes elevated importance relative to other communication tools because of its easy availability (Underwood & Klein, 2002).

The food and beverages industry requires packaging materials that provide efficient barriers, preserve product effectively and increase the life of food products. Packaging helps consumers to understand the contents of product and usage. Consumers’ packaging choice is generally an economic decision made by comparing costs and benefits ratio. However, packaging has not only functional utilities. As a marketing tool, packaging has some important roles (Peters-Texeria and Badrie, 2005). Packaging can create competitive advantage to firms. Distinctive and innovative packaging with aesthetic presentation can intrigues consumers and changes their interests. Innovative packaging impresses consumers with its color, image, scent, design, etc. Therefore packaging has a vital role on consumers’ perceptions and also firms’ competitiveness. Besides functional usage of packaging, consumers’ hedonic choice criteria are also effective in creating packaging designs, especially in predominantly aesthetic feelings oriented products.

However, a further review of the package visual elements revealed that may consumers shop under higher levels of perceived time pressure and tend to purchase fewer products the intended (Herrington and Capella, 1995). Products often appear to be chosen without prior planning, representing a form of impulse buying (Hausman, 2000) because a package that attracts consumers at the point of sale will help them make decisions quickly. It was also revealed that package visual recall is better for verbal stimuli when the copy is on the right hand side of the package and better for non-verbal stimuli when it is on the left hand side. This may imply that, in order to maximize consumer recall, pictorial elements, such as product photography, should be positioned on the left hand side of the package (Rettie and Brewer, 2000).

7. Methodology

The current study adopted a descriptive survey design to enhance a comprehensive review of the active variables: Packaging (Independent Variable) and Brand Loyalty (Dependent Variable).

However, the packaging attributes that guided respondents’ responses include:

i.     Packaging design (attraction to buyer and convenience in handling).

ii.   Communication through package (colour, symbols or logo, brand image, size and shape).

iii.  Usability of package (ease of handling, disposability and moisture protection).

The mediatory role of customers’ perception of product value was investigated through relevant parameters such as brand reputation, quality and credibility to determine the level of repetitive purchase behaviour (loyalty). This helped us to achieve the main objective of this study, which is to provide a better understanding of how product packaging could be a determinant of brand loyalty in the Food and Beverages Industry.

8. Population of the Study

The target population comprised 17,552,940 individuals and different consumers of packaged products resident in Lagos State (Lagos State Bureau of Statistics, 2005) which is one of the biggest economic and commercial nerve centres in Nigeria. The sample frame for the study is the forty-two (42) Food and Beverages companies registered in Lagos State.

9. Sample and Sampling Procedure

The stratified sampling method was used to select sample from the target population while its variant, proportionate sampling technique was used to reflect the proportions of the people in each of the twenty (20) Local Government Areas of Lagos State.

10. Research Instrument

This main research instrument was a structured questionnaire with two parts A and B. Part A covered respondents demographic data while Part B contained instruments for the measurement of the independent variable (packaging), the dependent variables (brand loyalty) .

The major constructs of the questionnaire had two major constructs namely Packaging (independent variable) measured on five attributes – package label, logo, shape, size, colour (Ulrich et al.,2004) and Loyalty (Zeithaml et al.,1996).

The questionnaire items were rated on a 6- Point Scales as follows: Very Low (VL) = 1, Low (L) = 2, Medium (M) = 3, High (H) = 4, Very High (VH) = 5, Extremely High (EH) = 6.

A total of 2500 questionnaires were painstakingly administered with the support of four trained research assistants to guarantee high response rate of 95% (2374) from the respondents that are consumers of packaged food and beverages products or items from the 42 target companies in Lagos State.

11. Results and Analysis

Table 1. Respondents’ aggregate responses on package design and brand loyalty.

From the table above, 29.1% of the customers rate loyalty extremely high; 33.9% very high and 23.04% high as a result of well and adequately designed product package.

Only 9.4% rate brand loyalty to be average, 2.8% to be low and 1.8% to be very low.

This however shows that there is significant relationship between package design and customer brand loyalty; hence research objective and question have been addressed.

It is obvious therefore that brand loyalty can only be achieved through strong brand positioning which means creating and managing a brand’s unique, credible, sustainable and valued place in the customers’ minds to make it stand apart from competition.

Table 2. Model summary of the relationship between package design and customer brand loyalty.

Table 3. Summary showing the Analysis of Variance (ANOVA) on the relationship between package design and customer brand loyalty.

Table 4. Summary of the relationship between package design and customer brand loyalty.

Table 4 shows R = 0.462 and R² = 0.213 indicating that there is a weak positive relationship between "not purchasing another brand because I value the brand" (y₅) and other independent variables (twenty two) which are categorized under brand label, brand logo, brand size, brand shape and brand colour. Only 46.2% variation in people’s opinion on not buying another brand is caused by the joint effect of the independent variables. Moreover, only two out of thirteen independent variables used affect customers opinion negatively while the remaining eleven impact positively.

The model is derived as;

y₅ = 1.545 + 0.047X₁ +0.059X₂ +0.124X₃ + 0.056X₄ + 0.100X₆ + 0.082X₇ – 0.057X₈ +0.036X₉ + 0.043X₁₀ + 0.141X₁₁ + 0.051X₁₂ – 0.046X₁₄ + 0.047X₁₆

However, table 4 shows the overall performance of the model and it is significant. The p – value is 0.000 which is less than 0.05 and we accept the alternative hypothesis and conclude that package design significantly affect customer brand loyalty.

12. Discussion and Conclusion

The empirical reviews have given credence to the uniqueness and environmental factors of packaging design that affect consumers’ acceptance of a product. The design of a package can be regarded as the main tool to stimulate consumer demand, convey knowledge about the commodity and establish brand recognition (Ju, 2003). Most busy shoppers will not stop to look carefully at a certain product. The best way to determine the quality of package design is demonstration of product features and building of brand identity by means of visual and psychological attraction (Gobe, 2001). Therefore package design expresses distinguishing features of a product in a visual manner and help specific group of consumers conduct expected behaviour of purchase (Klimchuk and Krasovec, 2006).

However, customer loyalty is one of the key factors that will help a company sustain its long – term success (Kunsik, 2007). Novo (2011) described customer loyalty as a tendency of a customer to choose a particular brand or product to fulfil their needs. It has also been claimed that loyal customers know their value and demand better service and spread positive word of mouth only if they feel and act loyal (Kumar and Rajan, 2009). Chegini (2010) also points out that, creating loyalty in all customers is not possible; thus in order to avoid serving wrong customers, the customers should be screened for profitability and served accordingly, by investing only in the most profitable relationships.

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