Project – Effect of product quality on customer retention in manufacturing companies in Nigeria.

ABSTRACT

The study examines the effect of product quality on customer retention in manufacturing companies in Nigeria. The study focus was on Dangote Flour Mill, Apapa, Lagos. Four research objectives were used namely: to examine the relationship between product quality and customer retention in manufacturing companies in Nigeria; to identify the product quality that most significantly impact customer retention in the Nigerian manufacturing sector; to assess the perception of customers regarding the quality of products produced by manufacturing companies in Nigeria; and to evaluate the strategies employed by manufacturing companies in Nigeria to improve product. Simple random sampling was adopted for the study. To select the needed samples for this study, the researcher used a total number of one hundred (100) management and workers of Dangote Flour Mill, Apapa, Lagos. The study recommended that the Nigerian manufacturing sector should prioritize product quality as a key business strategy. The study concluded that Product quality has significant impact on customer retention in the Nigerian manufacturing sector.

CHAPTER ONE

INTRODUCTION

• Background to the Study

Product quality is a critical factor that influences customer retention in manufacturing companies, particularly in Nigeria. According to Adebisi and Gbegi (2013), product quality significantly impacts customer satisfaction, which in turn affects customer retention. The authors conducted a study on manufacturing companies in Nigeria and found that customers tend to remain loyal to companies that consistently provide high-quality products. This finding aligns with the assertion by Kaura, Durga Prasad, and Sharma (2015) that product quality is a key determinant of customer loyalty in the manufacturing sector.

The relationship between product quality and customer retention is further supported by the work of Olorunniwo, Hsu, and Udo (2006). They found that product quality directly influences customer satisfaction, which subsequently affects customer retention. The authors argue that manufacturing companies that prioritize product quality are more likely to retain their customers. This is because high-quality products meet or exceed customer expectations, leading to customer satisfaction and loyalty.

However, the effect of product quality on customer retention is not always straightforward. According to a study by Osarenkhoe and Bennani (2007), other factors such as price, brand image, and customer service also play significant roles in customer retention. The authors argue that while product quality is important, it is not the only determinant of customer loyalty. This suggests that manufacturing companies in Nigeria need to consider other factors in addition to product quality to retain their customers.

Despite the complexity of the relationship between product quality and customer retention, there is a general consensus among scholars that product quality is a critical factor. For instance, a study by Ogunnaike, Borishade, Sholarin, and Olokundun (2014) found that product quality significantly influences customer retention in the Nigerian manufacturing sector. The authors argue that high-quality products create a positive perception in the minds of customers, which leads to customer loyalty.

However, it is important to note that the effect of product quality on customer retention may vary depending on the specific context. For example, a study by Oke, Idiagbon-Oke, and Ajiboye (2010) found that in the Nigerian food and beverage industry, product quality has a significant effect on customer retention. However, in the automobile industry, the effect of product quality on customer retention was found to be less significant.

Furthermore, while product quality is a critical factor that influences customer retention in manufacturing companies in Nigeria, it is not the only determinant. Other factors such as price, brand image, and customer service also play significant roles. Therefore, manufacturing companies in Nigeria need to ensure that they provide high-quality products while also considering other factors that influence customer retention.

• Statement of the Study

The problem of product quality affecting customer retention in manufacturing companies in Nigeria is a significant issue that needs to be addressed. The manufacturing sector in Nigeria has been facing numerous challenges, including the production of low-quality products. This has led to a decrease in customer retention, as customers tend to switch to competitors who offer better quality products. The lack of customer loyalty is a significant problem for these companies as it leads to a decrease in sales and profitability.

The second aspect of the problem is the lack of adequate quality control measures in these companies. Many manufacturing companies in Nigeria do not have stringent quality control measures in place. This leads to the production of substandard products, which in turn affects customer retention. Customers who are not satisfied with the quality of the products they purchase are less likely to continue patronizing the company.

Thirdly, the problem is exacerbated by the lack of customer feedback mechanisms in many of these companies. Without a proper system to gather and analyze customer feedback, these companies are unable to identify the specific areas of their product quality that need improvement. This lack of information makes it difficult for them to implement effective strategies to improve product quality and increase customer retention.

Furthermore, the problem is also linked to the lack of training and development for employees in these companies. Without proper training, employees may not have the necessary skills and knowledge to produce high-quality products. This lack of expertise can lead to the production of low-quality products, which in turn affects customer retention.

The fifth aspect of the problem is the lack of investment in research and development. Many manufacturing companies in Nigeria do not invest enough in research and development. This lack of investment hinders their ability to innovate and improve their product quality. Without innovation, these companies are unable to meet the changing needs and expectations of their customers, leading to a decrease in customer retention.

Lastly, the problem is also related to the lack of effective marketing strategies. Many manufacturing companies in Nigeria do not effectively communicate the quality of their products to their customers. This lack of communication can lead to misconceptions about the product quality, which in turn can affect customer retention. Therefore, it is crucial for these companies to develop effective marketing strategies that highlight the quality of their products.

• Aim and Objectives of the Study

The aim of the study is to examine effect of product quality on customer retention in manufacturing companies in Nigeria. The specific objectives are:

1. To examine the relationship between product quality and customer retention in manufacturing companies in Nigeria.
2. To identify the product quality that most significantly impact customer retention in the Nigerian manufacturing sector.
3. To assess the perception of customers regarding the quality of products produced by manufacturing companies in Nigeria.
4. To evaluate the strategies employed by manufacturing companies in Nigeria to improve product.

• Research Questions

The research questions are buttressed below:

1. What is the relationship between product quality and customer retention in manufacturing companies in Nigeria?
2. Which aspects of product quality most significantly impact customer retention in the Nigerian manufacturing sector?
3. How do customers perceive the quality of products produced by manufacturing companies in Nigeria?
4. What strategies are employed by manufacturing companies in Nigeria to improve product quality?

• Research Hypothesis

The hypothetical statement of the study is buttressed below:

Ho: Product quality has no significant impact on customer retention in the Nigerian manufacturing sector

H₁: Product quality has significant impact on customer retention in the Nigerian manufacturing sector

• Significance of the Study

The significance of studying the effect of product quality on customer retention in manufacturing companies in Nigeria is multi-faceted. Firstly, it provides an understanding of the importance of product quality in retaining customers. In a competitive market, retaining customers is crucial for the survival and growth of a company. High-quality products can lead to customer satisfaction, which in turn can lead to customer loyalty and retention.

Secondly, this study can help manufacturing companies in Nigeria to identify the specific aspects of product quality that most significantly impact customer retention. By understanding these aspects, companies can focus their efforts on improving these areas, thereby enhancing their product quality and increasing customer retention.

Thirdly, this study can provide insights into the perception of customers regarding the quality of products produced by manufacturing companies in Nigeria. This can help companies to understand their customers’ expectations and preferences, which can guide them in designing and producing products that meet or exceed these expectations.

Fourthly, this study can evaluate the strategies employed by manufacturing companies in Nigeria to improve product quality. This can provide valuable information for other companies in the industry, who can learn from these strategies and implement them in their own operations.

Fifthly, this study can contribute to the existing body of knowledge on the relationship between product quality and customer retention. This can be useful for academics and researchers who are interested in this area of study.

Lastly, the findings of this study can have implications for policy-making. If the study finds that product quality significantly affects customer retention, then policymakers can consider implementing policies that encourage companies to improve their product quality. This can lead to improved customer satisfaction and retention, which can contribute to the overall growth of the manufacturing sector in Nigeria.

• Scope of the Study

The study examines the effect of product quality on customer retention in manufacturing companies in Nigeria. The study is restricted to Dangote Flour Mill, Apapa, Lagos.

• Operational Definition of Terms

“Effect”: In the context of this study, “effect” refers to the impact or influence that one factor, such as product quality, has on another, such as customer retention.

“Product”: A product is a tangible item or intangible service that is produced or manufactured, often on a large scale, by a business. In the context of manufacturing companies, products are typically physical goods.

“Quality”: Quality refers to the standard or level of something when compared to other things like it. In terms of a product, quality can refer to aspects such as its durability, reliability, functionality, and whether it meets the customer’s expectations.

“Customer Retention”: Customer retention is a business strategy aimed at keeping existing customers and preventing them from switching to competitors. It involves satisfying customers’ needs to the extent that they continue purchasing and using a company’s products or services.

“Manufacturing Companies”: These are businesses that use components, parts or raw materials to make a finished good. These finished goods can be sold directly to consumers or to other manufacturing businesses that use them to make a more complex product. In the context of Nigeria, manufacturing companies can range from food and beverage companies to textile, automotive, and electronics companies.

Project – Effect of product quality on customer retention in manufacturing companies in Nigeria.