A Large Customer Base of McDonald's - Research Paper Example

The Impact of Brand Image on Customer Retention in McDonald in spite of Increased Competition in the Hospitality Industry Student’s Name Institution Affiliation Executive Summary McDonald is one of the world largest chains of fast food restaurants and serves a lot of customer daily in 119 countries. This study will investigate how the company brand image enables it to retain its customers. There has been vigorous change of the competitive environment in the hospitality industry and for businesses like McDonald attracting customers and retaining them is regarded as a very important undertaking. With the increased competitiveness among fast food retailers, customers have already become the most important strategic resource for the company. Nevertheless, the company has a large customer base because of its already established brand image and this study will establish how this brand image assists the company to retain its customers in spite of increased competition in the industry. A survey will be employed and 200 respondents will be customers of McDonald fast food restaurants in 4 locations in New South Wales. Questionnaires will be used to collect data, which will be analyzed using descriptive statistics. Introduction In the face of increased competition as well as rigorous changes in the hospitality industry, companies have been sparing all their efforts to retain their customers. McDonald is a well-known brand in most parts of the world and it has built its image through service innovation and expansion thus managing to gain the loyalty of some of its customers. Through service innovation, it has also managed to set up its brand image completely to acquire customer satisfaction and loyalty. However, due to increased competition in the industry, customers have been awarded a wide array of restaurants which offer different offerings and whose marketing strategies are different. McDonald has still managed to retain most of its customer base and this study will seek to establish how the company brand image contributes to customer retention. Research Objectives Main objective To evaluate the impact of brand image on customer retention in McDonald Specific objectives To determine the connection between customer satisfaction and McDonald Brand image To appraise the correlation of McDonald brand image and client loyalty Literature Review Currently, customer retention with regard to customer satisfaction, is becoming increasingly important as the customers have the opportunity to choose from such as large range of products and services and because competition within almost all markets is becoming even fiercer (Robert & Dowling’s, 2002). Following the adage that one has to invest six times more in a new client as in an already active one, companies such as McDonald are discovering the new potential in the building up and maintenance of a stable customer base as it is a source of commercial success and long-term growth. Kapferer (2005) termed brand loyalty as “Marketers Holy Grail.” Benett and Rundle-Thiele (2005) argued that brand loyalty perfectly measures the health of a company. Other researchers have shown that an increase of 5% in client retention can result in a profit of 25-95% in more than 14 businesses (Reichheld & Detrick, 2003). In addition, these loyal customers usually promote the brand as well as offer recommendations to comrades, family as well as other possible customers (Schultz, 2005). Customer brand loyalty at times arises from its brand image. Wu (2011) showed that company image is an important precursor of customer satisfaction and loyalty. Davies et al. (2003) also showed a positive connection between customer satisfaction and the brand image of a company. Brand images are the various reflections that customers keep about various businesses and they mostly include purchasers’ intellectual perception regarding a store or organization. The company brand image is thus an intangible and important capital, which is hard to copy, and can assist a company to attain a superior and sustainable profitability (Roberts & Dowling’s, 2002). A broad theory associated with the brand image of a company shows that a good mindset by a customer regarding a brand has encouraging influences on customer behaviours resulting in buyers that are more faithful, positive verbal advertisings and better pricing chances to handle premium charges. Brand image is very important for marketing as customers usually suppose the quality of the products through the image and are further inspires by the purchasing behaviour. According to Ballantyne et al. (2005), brand image refer to the material property linked to a brand, for instance a product packaging and product name, which could make profits or sense for consumers and boost or increase describing the characteristics. Customer loyalty is thus indispensable in maintaining brand equity as it offer protection against aggressive competitors who could undermine brand equity and the assurance of a predictable level of sales. Brand loyalty is important in maintaining profitability as a loyal customer offers a steady profit stream (Ballantyne et al., 2005). Customer retention refers to preservation of the custom of persons having bought a company product or services as well as the expanding of replicate purchases. It takes place when a client is faithful to a firm, brand or a particular product or service, showing the long-term devotion in addition to declining to buy from competitors. Importance and Benefits of the Study This study is important, as it will show the way brand image contributes to customer loyalty and retention in McDonald especially with the increased competition. The study will demonstrate the importance of building a brand image in a bid to retaining customers. McDonald can use this study results, as it will portray the importance of building a brand image. It will unearth factors that McDonald should focus on to make an enduring as well as commonly profitable association with a client and increase customer retention as cut-throat advantages in the contemporary competitive market. Research Perspective The study will adopt a research framework, which is connected to three aspects of marketing: mutual brand image, client contentment, and client faithfulness and from which the research hypothesis will be based on. The framework will be based on the different studies reviewed in the literature review. The framework will present the preferred approach to the issue of customer loyalty to McDonald brand. The field of study that the research will take is marketing. The way customer satisfaction and brand image impact on customer retention in McDonald will be highlighted. Definition of Terms Brand Image: - The cluster of association and attributes, which customers connect, to a brand name. It consists of consumer perceived benefits, the consumer imagery, and the experiential areas. A strong brand image leads to increased customer retention Customer retention: This refers to the customer continuous purchase of a company products or services over an extended period. It occurs when the customers are faithful to a firm brand or a particular product or service. It is enhanced through superior products, customer service, relationship marketing, and customer relations. Customer Loyalty: This refers to voluntary commitment to a company’s product. The customers remain with the companies even when faced with increased prices or when offered a chance to change at any time when it increases its prices. It also entails attracting the right customers by a company, getting them to purchase often and in large purchases and even bringing in even more customers. Customer loyalty is brought about by customer satisfaction. Customer Satisfaction: it refers to the customer fulfilment response with a company’s product or service. It occurs when a product or service provides a satisfying level of consumption-related fulfilment. Scope and Limitations This study will only cover the issue of brand image and customer retention in McDonald. It will only be conducted in 4 locations in New South Wales. This study will only use a causal relationship design to examine the impact of brand image on customer retention in McDonald and hence will only be limited to hospitality industries and not other industries. Due to the shortage of resources, it will not be possible to research beyond these four locations. Ethical Considerations The following ethical considerations will be considered when conducting the study: Informed consent from respondents Privacy and confidentiality of respondents Free and voluntary participation Participants will be explained to what the research is all about and offered a chance to ask questions Research Methodology Research Design This will be a quantitative, exploratory, and explanatory study, which will be conducted through a survey to collect primary data. Statistical tests will be used to express the relationship between the study variables and questionnaires will be used to collect data. Documentation review and content analysis will also be done to generate secondary data. Documents to be reviewed include books, journals, research reports, and media reports. Data Collection Tool Questionnaires will be used in this study to collect data. It will be designed founded on preliminary study, applicable writings, and professionals’ suggestion. To resolve uncertain statements, after creating the draft, the questionnaire will be pre-tested through a pilot study and experts will be consulted. The questionnaire will have two parts; part A will contain demographic/ personal questions whereas part B will contain questions related to the research project. A 5-point Likert scale with items ranging from item 1= completely agrees to item 5= completely differ will be employed in assessing questions. Five of the items in the questionnaire will be developed to examine McDonald brand image, Five other items will be developed to test customer satisfaction, and five other items will be developed to test customer loyalty. Population of study, Sample Size and Method of Sampling The study population in this research will include 200 customers of McDonald’s restaurants in four locations in New South Wales. The questionnaires will be distributed to McDonald clients in a public place outside the major doorway of McDonald restaurant throughout a weekend in the four restaurants in New South Wales. A random sampling method will be used to select the respondents. The customers who will agree to take part in the study will be offered the survey questionnaires attached to a clipboard and given time to finish it after which it will be retrieved. Data Analysis Descriptive and inferential statistics will be used to analyze the data, generated from the questionnaires. The quantitative information that the survey will provide will be helpful in identifying the influence of brand image on client retention in McDonald in spite of increased competition in the hospitality industry. The statistical data presented in the study findings will be processed and analyzed manually. The use of figures will be focused on descriptive purposes. The data will also be analyzed through descriptive statistics and focused on graphical and tabular analysis. Tabular analysis will involved presenting the results of analysis in tables and in graphs. References Ballantyne R, Warren, A., & Nobbs, K. (2005). The evolution of brand choice. Brand Manage. 13(4/5), 339-352 Bennet, R., & Rundle-Thiele, S. (2004). Customer satisfaction should not be the only goal. Journal of Service Marketing, 18(7), 514–523. Davies, G., Chun, R., Da-Silva, R., & Roper, S. (2003). Corporate reputation and competitiveness. Routledge, UK: London. Kapferer, J. (2005). The roots of brand loyalty decline: An international comparison. Ivey Business Journal, 69(4), 1–6. Reichheld, F., & Detrick, C. (2003). Loyalty: A prescription for cutting costs. Marketing Management, 12(5), 24–25. Roberts, P., & Dowling, G. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23, 1077-93. Schultz, D. E. (2005). The loyalty paradox. Marketing Management, 14(5), 10–11. Wu, C. C. (2011). The impact of hospital brand image on service quality, patient satisfaction, and loyalty. African Journal of Business Management, 5(12), 4873-4882. Appendix A: Work Plan Research Schedule Days Activities Day One Visiting the study locations Day Two Giving respondents questionnaires Collecting the filled questionnaires Day four Analyzing acquired data Day six Compiling the entire research Day seven Typesetting and photocopy of the entire project Appendix B: Research Budget RESEARCH BUDGET Item Amount ($) Travelling expenditures (3 persons) $300 Stationary $200 Typesetting & Printing charges $500 Research Assistants (2) $600 Foods & Refreshments $300 Miscellaneous $250 Total Expenditure $2,150 Read More