Full Project-THE EFFECT OF CONSUMER PROTECTION ON BRAND LOYALTY IN FAST MOVING CONSUMABLE GOODS IN LAGOS

THE EFFECT OF CONSUMER PROTECTION ON BRAND LOYALTY IN FAST MOVING CONSUMABLE GOODS IN LAGOS

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In 2002, World Health Organization stated that about 70 percent (%) of the drugs available in Nigeria were fake or substandard. Also, National Agency for Food and Drug Administration and Control (NAFDAC) states that 41 percent (%) of drugs alone were counterfeit. (Yankus 2006 & Akunyili 2007)

We can see that there is a problem which is reoccurring in Nigeria with respect to lack of protection to consumers. Consumers are not loyal to the brands which they continually purchase. Consumer sovereignty can be seen as the moral basis of Marketing theory. (Kelly 2005) Consumer rights are not respected and protected, which leads to lack of brand loyalty in Nigeria even in fast moving consumer goods (FMCG). Consumers have become so tired of the lack of respect shown by producers that make fake products and change the quality of their product which brought forth the term consumerism, to protect the interest of consumer’s right. (Arnt, Barksdale & Perreault, 1980)

The protection of consumers has brought about consumer orientation, consumer focus and consumer driven strategies which are strongly incorporated into marketing terminology. (Kelly 2005).  Consumerism has been defined as a social movement which seeks to improve the rights as well as power which consumers have. (Kotler 1972, Perreault & McCarthy 2002)

In Nigeria, businesses are driven by the need to make profit. This makes them do things which are unethical and immoral, which have come to make the lives of consumers endangered. This has led them to complain and show lack of patronage to their product. In Nigeria, and most developing countries there are lack of movements to support and help protect consumers. (Bello, Suleiman & Danjuma 2012) Consumerism is a missing factor in Nigeria that has brought about government policy through legislation and efficient way of enforcing their laws rather than supporting consumers’ interests and feelings. (Keynak 1985) The different democratic governments have been successful in implementing agencies aimed at protecting consumers from fake and sub-standard product. Some of these agencies are; National Agency for Drug and Administration and Control (NAFDAC), Standards Organization of Nigeria (SON), Nigerian Industrial Standard (NIS), Consumer Protection Council of Nigeria and Consumer Protection Council Act. These bodies try to protect consumers from harmful products of suppliers as well as producer. (Bello, Suleiman and Danjuma 2012)

Once consumers get protected from some of the harmful effect which make them switch between brands, they will show more patronage, satisfaction and referral to such brands which takes into cognizance their rights and interests. This will lead to repeat purchase of the brand which meet and supersede their expectation. Being protected especially in fast moving consumer goods which are used every day as a household item will keep them interested. Consumers are the heartbeat of companies because they produce goods and services to meet consumer needs. Once consumers are not protected and do not patronize such business, their production would slowly go down to a halt.

Barksdale & Darden 1971, states that consumers are the center of all Marketing activities as well as business activities. This makes them highly important to the sustainability of the business. There is a paradoxical feeling to this where business’ paramount focus is in the advertising of their product to consumers more than their welfare which can be seen as a servant or slave treatment. (Vetrivel & Mohanasvndari 2011). Nigeria as a nation has shown numerous factors which proves that there is a need for a strong consumer protection law that will protect their interest. This can also make them undividedly loyal to their brand. The lack of consumer protection has led consumers to make continuous purchase of products from road side hawkers and retailers with no brand names or unrecognized brand names with little reputation (Bello, Suleiman & Danjuma 2012). Consumers are faced with the difficulty of having the opportunity to reach out to manufacturers or dealers of products that are properly made with recognizable and highly reputable brands. This makes them acquire substandard products which they are not adequately protected from.  This has made a lot of Nigerian consumer show unstable loyalty to different brands by making purchase of any product with the cheapest price that meet their needs depending on their income levels.

Bello, Suleiman & Danjuma 2012, argues that consumers of Nigerian market can be  complacent. Taking the statistics from Mercy 2008 which proves that Nigerian complacency comes from the fact that consumers make the wrong choice to the purchase especially from electronics. The consumers tend to purchase from dealers with no reputation or are not major importers which do not offer them warranty or refunds of their money along with post purchase services. Nigerian consumers need to grasp the idea that they are very important, or they are the main source of income which flow into companies. Once they understand that then, they will be more interested in ensuring that they are protected in their rights as consumers. This will make consumers show more undivided patronage to reputable brands which will in turn give them satisfaction and they will make referrals of the brand which they use as household product. The fact that, there are no policies or proper law put in place to check the authenticity of manufacturers and their advertisement claims about their product, and the fact that consumer pay for packaged product without the ability to monitor the quality and quantity in some cases has led to challenges faced by consumers in Nigeria. This led to the establishment of laws to protect consumers. (Uche 1990)

In a market place, where there is little or no competition there arise defective goods and services, (Kanyip, 2005). However, if there are competition in the market for goods and service, consumers will express their preference for better judgement of their choice which will drive away undesired suppliers of goods and services in the market. According to Kanyip, (2005) Nigeria today with its sharp recession and sky rocketing prices of good’s brand name and goodwill, those cheaper products lack warranty and services to repair when damaged. Umenyin, (2007), states that a market with imperfection and lack of proper information as well as misleading information through deceptive advertisement has encouraged the increase of fake and substandard goods. In Nigeria and other countries around the world, consumer protection is the idea designed to ensure consumers right and interest, and are protected from bad practices of businesses, unscrupulous producers and service providers. (Bello, Suleiman & Danjuma 2012). Government has made an attempt to make provision for regulatory policies to protect and enforce right of consumers who pay for the goods and services rendered to them. Consumer protection law has two parts to it are details out the need to protect the interest, right and safety of end users of products and services. On the other hand, it tries to monitor and regulate the contractual transactions and private laws of relationship regulated for consumer’s protection. (Oko & Anyanwu, 2015)

It is highly important that Nigerian consumers are protected from companies, wholesalers, retailers, manufacturers and suppliers of unscrupulous product that is not only harmful to their health. This shows there is an interest to ensure that the money they pay for goods and services are properly monitored. Consumers that are protected as well as given good services will show an undivided loyalty to such products. However, when these consumers are not protected, and they begin to lose patience for producers of unethical product they will show divided, unstable loyalty. Their loyalty will lead to lack of patronage and satisfaction to the brand. Such brands will not be able to have good referrals from loyal customers that have made repeat purchase of their product for years due to lack of knowledge of their right and interest which have not been valued. In a nut shell, Nigerian consumers need to be protected and they need to be able to ascertain the product they buy are of good standard and quality which meet their wants and needs. These consumers will remain loyal to these brands especially in fast moving consumer goods in Nigeria.

1.2 Statement of the Problem

In developed countries, there are laws which protect consumers from unscrupulous, fake and sub-standard products. In developing countries like Nigeria however, there seems to be a situation where their existing laws are not enough to protect consumers from fake and sub-standard products. This makes consumers show lack of patronage, customer satisfaction and referral to the different brands in Nigeria. Consumers therefore, show unstable loyalty to the different brands in Nigeria. Most consumers change brands once they feel that the quality of that product has dropped. This also happens if they feel the quality has been contested by the government bodies put in place to make checks on practices of manufacturers. Okeke (1981) states, “business exist to firstly satisfy the interest of their owners, shareholders, the management, employee, and secondly meet the needs and demands of their consumers”.

In Nigeria, protection of the consumer has taken backstage which is seen as not paramount to business and manufacturers. Oko and Linus (2013), buttress this point by stating that in Nigeria as well as other developing countries, the interest of consumers especially in fast moving consumer goods, and those industries in that category exploit their different target market with the aim to actualize high margin of profit. This has led to the desire and the need for consumers right to be protected, as brands who put the health and wealth of their consumer first will experience more satisfaction, referrals as well as patronage from consumer. They have undivided loyalty to those brands.

Consumer protection have been inactive in Nigeria from the perspective of various marketers since 1970s in the view of Onah (1979), Agbonifo, Ogwo, Nnolim and Nkamnebe (2007) and Ayozie (2013). They all have stated that the business environment has not made adequate attempt to ensure that consumers are properly protected in Nigeria which is a huge issue as users of product. If products which are easily consumed by large number of Nigerians are not checked to be sure that they are up to standard, this leaves them open and exposed to different illness which could mean that the interest of the consumers are not protected. Consumers are the reasons for which business exist. Their lack of opportunity to go directly to the manufacturer has derived the need for more protection to consumer so that they remain loyal to the brand in which they put so much trust.

Consumers’ perception influence consumer behavior to remain loyal to a brand or to switch to better brands that protect their right as well as their interest. This point emphasized by Hawkins, Best and Coney (2001) states, “Perception influences the behavior of consumers in which they determine the rate and level of accepting public and private view of market offers”. Consumer knowledge about the best-in-class product with superior quality, best standard, and good quantity have been certified authentic by National Agency for Food and Drug Administration and Control, Standards Organization of Nigeria and Nigerian Industrial Standard. The protection of consumers should be brand’s number one priority rather than making profit only. This will lead to the perception of consumers that these brands are actually protecting them from unscrupulous practices and fake product. Thus, they will continually patronize them once certified by the different governmental bodies.

Lack of consumer protection, therefore, in developing countries especially Nigeria has led to unstable loyalty to the different brands which has made consumers to change brands frequently to satisfy their needs. From the forgoing, therefore, the problem that this study seeks to address is to find out the extent to which the available consumer protection laws and activities would have effect on loyalty of consumers on different brands of goods in Nigeria. What is the extent to which government, the society, organizations and manufacturers are striving to protect consumer rights especially in fast moving consumer goods in Nigeria? There is need to know 1. if manufacturers had looked beyond making profit 2. if they are adopting societal marketing concept as well as consumer-oriented marketing to improve their credibility to consumers to satisfy them, get referral from them, and have large number of patronage so their brands remain market niche in Nigeria.

1.3 Objectives of the Study

            The specific objectives of this study are to:

1. To examine the effect of consumer protection on brand loyalty of fast moving consumer goods in Nigeria
2. Find out the improvement on production process as a means of referral from consumer in their various brands especially in fast moving consumer goods in Nigeria.
3. To investigate the impact of health labeling on consumer patronage in fast moving consumer goods.
4. To examine the influence of expiration date on consumer Satisfaction in fast moving consumer goods of Nigeria.

 

1.4   Research Questions

1. What are the effects of consumer protection on brand loyalty in respect to fast moving consumer goods in Nigeria?
2. What improvement in production process on fast moving consumer goods in Nigeria will gain referral from consumer in their brands?
3. Can health labelling on fast moving consumer goods in Nigeria impact consumer patronage?
4. How can the knowledge of expiration date on fast moving consumable goods in Nigeria improve consumer satisfaction?

1.5   Research Hypothesis

H₀₍₁₎: There is no significant effect of consumer protection on brand loyalty in fast moving consumer good in Nigeria.

H₀₍₂₎: There is no significant effect on the improvement on production process as a means of referral from consumer in their various brands especially in fast moving consumer goods in Nigeria.

H₀₍₃₎: There is no significant effect of health labeling on consumer patronage in fast moving consumer good in Nigeria.

H₀₍₄₎: There is no significant effect on the influence of expiration date on consumer satisfaction in fast moving consumer goods in Nigeria.

1.6    Operationalization of the Variables

The variables for this research will therefore be operationalized here

Y = f(X)

Y = Brand loyalty

X = Consumer protection

where Y = Dependent variable

X = Independent variable

Y = f (x₁, x₂, x₃…x_n)

X₁ = Production Process

X₂ = Health Labelling

X₃ = Expiration Date

Y = (y₁, y₂, y₃)

y= Consumer Patronage

y = Consumer Satisfaction

y = Consumer Referral

y= f(x₁) __________________ (1)

y = f(x₂) __________________ (2)

y = f(x₃) __________________ (3)

The study will focus on equation (4) above.

Based on regression, we have

y_{1 = a0 +} β₁X_{1 +} μ…. (1)

y₂ = a0 + β₂X₂ + μ…. (2)

y₃ = a0 + β₃X₃ + μ…. (3)

Where, a is the constant of the equation, β is the coefficient of X the independent variable where μ is the error or stochastre term in the equation.

1.7 Scope of the Study

The study was focused mainly to investigate, the effect of consumer protection on brand loyalty in Fast moving consumable goods in Lagos. The target population of Lagos state is about 8,048,430 people based on the 2006 census. However, the sample size will be 400 which are made up of students, domestic mothers, lecturers, doctors and retailers. Simple random sampling technique was used to pick the respondents of the questionnaires. The survey will be done within two weeks between Ikeja and Berger axis of Lagos State Nigeria.

1.8 Significance of the Study

This research aimed at improving the general knowledge about consumer protection so that they become more loyal to the different brands in fast moving consumer goods in Nigeria. Once consumer interest and right are protected by the regulatory bodies it will have an impact on loyalty of brands in fast moving consumer goods.

1.8.1 Management Practices

Organizational management should see the importance of ensuring that they produce quality product and not just focus on quantities aiming at making profit only. They will begin to respect consumers who play a pivotal role in the success of the company. Management should integrate safe practices by using good quality substance; increase the quantity of the product as well as protecting their consumers. This will increase profitability and loyalty to the brands in fast moving consumer goods in Nigeria.

1.8.2 Industry

Industries in fast moving consumer goods in Nigeria will enjoy profitability as well as brand loyalty once they begin to protect their consumers by cutting out some of the unethical and unscrupulous activities which they perform. Industries should also adopt marketing philosophies by ensuring that they meet the needs of their consumers. This research will have impact on industries by allowing them understand they need to protect their consumer. This in turn would increase brand loyalty as well as increase profitability.

1.8.3 Government

Government play a vital role in ensuring that their citizens are protected from unscrupulous and immoral activities of business practices. This research will help the government to take a deeper look at the regulatory bodies whom should continually check Organization’s practices for unethical behaviors. The government should also take a look at the activities of National Agency for Food and Drug Administration and Control, Standard Organizations of Nigeria, Nigerian Industrial Standard as well as amend the Consumer Protection Council Act to ensure their citizens are properly and efficiently protected from different brands in fast moving consumer goods in Nigeria. This research would help the government to address issues of sub-standard, fake and adulterated products in the marketplace consumed by Nigerians. This will also help to meet and satisfy the needs of all Nigerians no matter their religious belief that need to be protected. The government should especially make provision of Halal products both in fast moving consumer goods as well as pharmaceutical products for the Muslims.

1.8.4 Society

This research looked to impact and educate the Nigerians that as consumers whose rights should be protected from bad practices of organizations who only want to make profit. Consumers and citizens of Nigerian should be educated enough to know they have the right to complain when organizations give them adulterated products which are harmful to their health. Consumers should be able to fight for their right hence the marketing concept called consumerism aimed at shielding consumers from the unethical and unscrupulous practices of businesses. This research also aims at helping consumer know that organizations that protect their interest are worth being loyal to and should continually purchase such products. It is hoped that this research will open the minds of consumers to know that they should not be silent, and take fake products from fast moving consumer goods. They should be able to call out to the government to make adequate policies to protect them.

1.9 Definition of Operational Term

Consumerism: an organized movement of citizens and government agencies to improve the rights and power of buyers in relation to seller.  It can also be said to be an organized effort of consumers aimed at promoting, protecting and enforcing the rights of consumers in their exchange relationships with all organization and individuals. Consumerism is an organized effort of concerned citizens, businesses and government to equate the balance of power between parties to an exchange, and redress and remedy injustices done to the consumers in the pursuit of a standard living. (Philip Kotler)

Consumer products: a product or service bought by final consumers for personal consumption. (Marketing Dictionary)

Brand: A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. (Philip Kotler)

Consumer-oriented marketing: A principle of sustainable marketing that holds that a company should view and organize its marketing activities from the consumer’s point of view. (Philp Kotler)

Consumers: Consumer are people who buy products and services provided by the producers. (Business Dictionary)

Consumer Loyalty: is a positive attitude and behavior related to the level of future re-purchasing commitment among consumers. Consumer Loyalty is a commitment of customers to do dealing with a particular firm, buy their product and services and refers it to colleagues. (Marketing Dictionary)

Consumer Protection; this is the protection of buyers of goods and services against low quality or dangerous products and advertisement that deceive people. Consumer Protection can also be defined as a means of safeguarding the interest and rights of consumers from unscrupulous and unethical malpractices by the business and to provide them speedy redresser of their grievances. (Investopedia)

Brand Loyalty: is a pattern of consumer behavior where consumers become committed to brands and make repeat purchases from the same brand over time. Loyal customers consistently purchase product from their preferred brands, regardless of convenience or price. Brand Loyalty can also be defined as the extent of the faithfulness of consumer to a particular brand, expressed through their repeated purchases irrespective of the marketing pressure generated by the competing brand. (Business Dictionary)

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