Research Proposal

On

A Customer Loyalty Model for Aerated cold beverages

Advanced Marketing Research
PGP 2004-2006, TERM-IV

With reference to
A CUSTOMER LOYALTY MODEL FOR E-SERVICE CONTEXT
Authors:
Bin Luarn
Department of Business Administration
National Taiwan University of Science and Technology
luarn@ba.ntust.edu.tw
Hsin-Hui Lin
Department of Business Administration
National Taiwan University of Science and Technology
brenda@ocit.edu.tw

Submitted by:
Sandip Yuwanati pgp19221
Submitted to:
Santosh Nair abm01018
Prof. Satyabhushan Dash
Harmonjot Singh pgp20090
(Marketing Group)
Sumit Mehra pgp20129
S.S. Ravishanakar pgp20185
Kavin K. K. pgp20225

Section- A

INDIAN INSTITUTE OF MANAGEMENT, LUCKNOW

August 6, 2005
 Background

The primary purpose of this study is to explore the factors (i.e., customer
satisfaction, trust, and perceived value) that influence customer preferences and
purchase loyalty in a retail environment in the cold beverages market. The
constructs of interest remain the same as being used in the model for the study
of the loyalty model in the eservice context. But the loyalty dimension in our
context would be more meaningfully replaced by brand loyalty of the customer
and the commitment be replaced by the customer preferences(Vidhya Philar
Mulky, 2000).Oliver (1999) defines brand loyalty as “a deeply held commitment
to rebuy or repatronize a preferred product/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 behavior.” In this study, customer preferences are defined as the
priorities that the customer assigns while making a purchase decision in an
intensively competitive segment (Beatty and Kahle, 1988). Trust has been
conceptualized by previous research in a variety of ways, both theoretically and
operationally, and researchers have long acknowledged the confusion in the field
(e.g., Lewis and Weigert, 1985; McKnight et al., 1998, 2002; Shapiro, 1987).
In the present scenario where the Indian cold beverages industry has
been badly affected by the alleged chemical contamination and the findings of
pesticide residue has perceivably reduced the trust by the customers on the
beverage manufacturing companies. The results of our study will also be a
manifestation of whether these recent allegations have weakened the trust-brand
loyalty relationship significantly.
Problem Statement

Over the period the cold beverage market has witnessed high levels of
competition, but the fact remains that Coke and Pepsi Co. controls almost 71% of
main markets worldwide. This high concentration suggests very high brand
loyalty among the consumers.
The above mentioned research paper discusses the empirical customer loyalty
model in E-Service context and its validation using factor analysis technique
(Principle Component Analysis).
This particular study is an attempt to relate the aforementioned customer loyalty
model in context of Indian cold beverage market.

Concept Building

The research model used to guide the study is shown below, which suggests that
customer satisfaction, trust, and perceived value are all directly and indirectly
related to loyalty, with the indirect path occurring through commitment.
Research Model:

Trust

Loyalty

Customer
Satisfaction

Commitment
Perceived
Value

***We are not considering hypotheses regarding commitment as shown in

customer loyalty empirical model at this point of time as we are not sure whether
we would get a factor relevant to commitment. But in case we come up with
factor underlying certain commitment then we may add up few more hypotheses.
Research Objective

• To determine the parameters for choice of cold beverage brand

• To determine the theoretical construct from the comprehensive variable
list through factor analysis
• To identify the underlying relationship among the key parameter and the
strength of the relationship
• To develop and validate the empirical model for customer brand loyalty

Research Questions

• What are attributes considered by consumers while making purchase

decision for cold beverages?
• Awareness level regarding cold beverage brands
• What are the main underlying factors contributing towards purchase and
consumption of cold beverage brand?
• What are the cold beverages in their consideration set and which one they
prefer most?
• What are the reasons for consuming cold beverages?
• What are the rational and emotional benefits sought by consumers of cold
beverages?
• What are the internal and external factors affecting the choice of cold
beverage brand?
• What are the consumers’ perceptions about cold beverages?
• Who are the referral entities influencing choice of cold beverage brand?

Hypotheses

• H1A: Trust will positively affect Brand loyalty

• H1B: Trust will positively affect Consumer Preferences
• H2A: Consumer satisfaction will positively affect Brand loyalty
• H2B: Consumer satisfaction will positively affect consumer preferences
 • H3A: Perceived value will positively affect Brand loyalty
• H3B: Perceived value will positively affect consumer preferences
• H4: Consumer Preferences will positively affect Brand loyalty

Methodology

FGD and Interviews

(To bring out consumers
Secondary purchase criterion,
Research perceptions, opinions and
Literature survey attitude in an unrestrained
environment)

Questionnaire
Pre-Testing
Design
(Of Research
(Based on findings of
Instrument)
FGD and interviews)

Questionnaire Data Analysis

Survey (Underlying factors
(Data collection) for choice of brand,
relationship among
the factors)

Conclusion and
Discussion
(Model validity and
hypothesis testing)
Data Collection

 Secondary Data:
 Internet websites
 Journals
 Books
 Primary data
 Focused Group Discussion
 In-depth interviews
 Questionnaire Survey

Sample Plan

For qualitative study:

Sample size estimation for qualitative study would be through convenient
sampling (Non-probability Sampling). This includes interviews and discussions
with 10-12 personnel (students) from relevant information source destinations.
This study is limited to IIM Lucknow campus only.

For Questionnaire Survey:

 Probability Sampling- Stratified Random Sampling for questionnaire
survey
 Target Audience:
IIM Lucknow Students (PGP, ABM)
Gender: Male/Female
Marital status: Single/Married
 Sample Size ( Given)
Total Sample Size = 100
 Number of respondents
Fresher Work Fresher Work Total
(Males) Experience (Females) Experience
(Males) (Females)
PGP-I 20 10 6 4 40
PGP-II 20 10 6 4 40
ABM-I 4 6 0 0 10
ABM-II 4 6 0 0 10
Total 48 32 12 8 100

We will be monitoring the proportion of respondent as per above mentioned

plan so that the best possible response are captured from student community
with fair representation.

Tools & Techniques Used for Data

Analysis
 Chi-square Test Statistics:
To find out is there any significant association between
• Trust and Brand Loyalty
• Consumer satisfaction and Brand Loyalty
• Perceived value and Brand Loyalty
 ANOVA (Analysis of Variance)
To find out any cause- effect association of one or more factors of choice
of brand of cold beverages
 Factor Analysis
By analyzing correlations between variables associated with choice of cold
beverages brand
Deliverables

 Profile of cold beverage consumer

 Selection parameters for choice of cold beverage brand
 Awareness level regarding cold beverages
 Rational and emotional benefits sought by consumers
 Perceptions about cold beverages
 Referral entities influencing the choice of brand

Limitations

 The scope of the study will be limited to IIM Lucknow with 10-12
respondents for qualitative study and 100 respondents for quantitative
study.