ABSTRACT

In competitive business environments companies have identified the need to understand their supply chain management and increase customer loyalty. This study sought to determine the influence supply chain management has on customer loyalty on brewery industries in Douala. This research conceptualizes and develops five SCM practices that can influence customer loyalty (delivery, customer relationship, after-sale service, Delivery, standardization and specification), factors that impact customer loyalty (customer value, logistics service quality and trust and commitment, Product Availability, On-Time Delivery, Continuous Improvement) and as well as the importance of customer loyalty to an organization. Data for the study were collected from 131 respondents out of a total population of 140 using the purposive sampling technique and the research design adopted for this study was the ex-post factor research design which  were analyzed using the descriptive method of tables and bar chart for presentation of findings. Findings indicated that standardization and specification, Delivery, after-sale service deliveries and customer relationship are positively significant related to customer loyalty. It is believed that this study is able to enhance the literature gap since not much researchers had emphasized on SCM and its influence on customer loyalty on brewery industries. In addition, the top management of the Guinness company should look into those areas in SCM that may have significant impact on customers loyalty in order to increase their customer loyalty so they can gain from the various benefits of establishing such loyalty on customers.

Keyword: customer loyalty, supply chain management, delivery, customer relation, after sales,

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background to the study

Business scholars have long proposed that firms with a good understanding of the sources of customer loyalty can gain market advantages (Wind, 1970; Palmatier, Scheer and Steenkamp, 2007) such as increased revenues, lower costs and increased profitability, to name a few (Dick and Basu, 1994; Gundlach, Achrol and Mentzer, 1995; Christopher, 2016). Loyalty is a central concept in the relationship marketing paradigm because customer loyalty contributes to lower customer acquisition costs and thus positively affects the firm’s profitability and market share (Anderson, Fornell and Lehmann, 1994). Traditionally, customer loyalty has been defined as buyers’ deeply held commitment to stick with a product, service, brand or organization in the future, despite new opportunities or competitive situations that influence switching (Oliver, 1999). Morgan and Hunt suggest that ‘loyalty is increasingly similar to our conceptualization of commitment’ (1994, p. 23). Thus, this dimension is like relationship commitment in buyer-seller interactions where customers have a permanent intent to maintain long-term relationships (Anderson and Weitz, 1992).

According to various scholars in the field of industrial marketing, customer loyalty has been studied as a relationship between customer and supplier (Dwyer, Schurr and Oh, 1987; Biong, 1993; Innis and La Londe, 1994; Bloemer and De Ruyter, 1999; Ellinger, Daugherty and Plair, 1999; Davis and Mentzer, 2006; Wallenburg, Cahill, Michael Knemeyer and Goldsby, 2011; Blocker, Flint, Myers and Slater, 2011; Watson, Beck, Henderson and Palmatier, 2015). As research progressed, scholars suggested that loyalty might be bi-dimensional, incorporating both attitudinal and behavioral loyalty (Day, 1969). Attitudinal loyalty represents a buyer’s emotional or psychological commitment to a brand, provider or a supplier (Rauyruen and Miller, 2007; Cater and Cater, 2009), while behavioral loyalty captures a buyer’s intention to repurchase from the same provider in the past, present or future (Stank, Goldsby and Vickery, 1999; Homburg and Giering, 2001; Hewett, Money and Sharma, 2002; Guenzi and Pelloni, 2004; Davis-Sramek, Mentzer and Stank, 2008). Subsequently, researchers adopted this two-dimensional view, often referred to as composite loyalty (Oliver, Rust and Varki, 1997; Dick and Basu, 1994; Blocker et

al., 2011). Some scholars exploring business relationships test for both affective commitment (attitudinal) and repurchase intention constructs, which coincide with the two loyalty dimensions mentioned above (Gundlach et al., 1995; Verhoef, 2003; Lam, Shankar, Erramilli and Murthy, 2004; Blocker et al., 2011). Attitudinal loyalty has been extensively explored compared with behavioral loyalty, particularly in relation to its experiences. In contrast, when considering the outcomes of loyalty as financial performance, behavioral loyalty affects performance more compared with attitudinal loyalty. In summary, loyalty has been defined in terms of repeat purchasing, long-term commitment, intention to continue the relationship and likelihood of not switching from a given supplier (Davis-Sramek et al., 2008). In relation to repurchase intentions, customer loyalty includes customers’ perceptions of continuity expectations, such as business relationship renewal. Scholars have acknowledged the multidimensional nature of customer loyalty; however, a consensus has not been reached regarding the dimensions that should be incorporated in its measurement.

Recently, Watson et al. (2015, p. 26) stated that ‘customer loyalty is a collection of attitudes aligned with a series of purchase behaviors that systematically favors one entity over competing entities’ (p. 804). Further, they underline the systematic divergence between conceptualization (What is customer loyalty?), measurement of loyalty (How is it measured?) and, finally, the implications for strategy and performance (What actually matters?). Various studies have been conducted on loyalty in the B2B context in the major journals of marketing and supply chain and logistics. The majority captured the data from the customer’s side of the dyad. Thus, in our business context we define loyalty in terms of a customer’s intent to repurchase and to do business with the supplier in the future. Keeping loyal customers means having customers whose lifetime value is greater than that of a customer who seldom purchases company products and services and is likely to easily switch to another supplier or service provider.

The importance of customer loyalty is summarized by the concept of the ‘lifetime value’ of the customers. Customer lifetime value looks at a customer’s financial value to the firm based on predicted future costs and transactions; measuring the lifetime value of a customer requires an estimation of the likely cash flow from a customer over the life of his or her relationship and loyalty with the firm (Gupta et al., 2006; Kumar, 2008; Ritter and Andersen, 2014). In a few words, if customers remain loyal to a supplier, their lifetime value can be enhanced. Understanding the antecedents and the reasons for customer loyalty should help in developing the most appropriate supply chain strategy. That is a great effort but it deserves higher attention on customer complaints and customer dissatisfaction. Typically, a company takes more energies in getting customers rather than in keeping them. Consequently, many practitioners have failed to comprehend the importance of customer loyalty as a driver of profitability and hence have tended to concentrate just on short-term perspective with the aim of increasing market share (Christopher and Peck, 2012). However, successful firms have realized the importance of customer loyalty and are investing significant resources towards customer retention. To explain the sources of customer loyalty better within the B2B and supply chain and logistics context, researchers have introduced various antecedents and developed several models to better digest the concept of customer loyalty in the supply chain.

Also, the increased span of supply chains and emerging global distribution networks along with increasing competition in the production environment have highlighted the importance of optimizing the supply chain networks to enhance their performance and increase their Delivery to the customers’ changing demands (Badri, Bashiri, & Hejazi, 2013; Goetschalckx, Vidal, & Dogan, 2002). The fundamental objective of SCM is to develop effective supply chain networks among businesses toward creating supply chain networks (Kopczak, 1997; Lee & Ng, 1997). SCM focuses on the agility and Delivery in supply chain networks s for quickly reacting the changing market requirements (Roh, Hong, & Min, 2014; Wu & Barnes, 2011).

Many firms cooperate with customers through a variety of information and material flows toward achieving a balance between supply and demand (Cheng, Chen, & Chen, 2014).A loyal customer is regarded as a type of competitive asset for an organization (Dekimpe, Steenkamp, Mellens, &Abeele, 1997). Customer loyalty has a tremendous impact on business profits for business survival (Oliver, 1999; Olsen & Johnson, 2003) and paves the way for modern organizations to achieve sustainable competitive advantage (Grönroos, 2009; Gummesson, 2008). Keeping a long-term customer relation is a challenge for business practitioners (Grönroos, 2009). The consensus in business literature is that firms benefit from the creation of customer loyalty (Dick &Basu, 1994; Jacoby & Chestnut, 1978). Improving customer value and workgroup performance requires the adoption of the appropriate human resource practices in order to enhance the level of innovation (Kasemsap, 2013). Customer value, customer loyalty, and brand loyalty have the strengths to mediate the positive effect on CRM performance (Kasemsap, 2014).

1.2 Statement of the Problem

Supply chain management is closely linked to customer loyalty. Effective supply chain management ensures that products or services are delivered to customers in a timely manner, at the right place, and in the desired condition. This leads to customer satisfaction, which in turn drives customer loyalty.

Customer loyalty has been identified as the main concern in business due to the fact that enhancing inter-management relationships will go a long way to making a company successful. Nowadays, the business climate is worlds apart compared to the business environment of the past years. As more and more corporations enter the brewery industry, striving for the customers’ attention becomes tougher.

To manage a supply chain optimally is to have complete control and coordination on all the following tasks; ensures lower cost to clients, fast and reliable services without compromising on quality, product availability, quality control, communication and transparency, after sales service. It is important to effectively manage supply chain management toward Customer loyalty to maintain the number of loyal purchasers. This can be achieved through the transparency and efficiency of its service initiatives with clients expecting producers to provide them with perfect order deliveries, real time management, through supply chain management.

Therefore, from the above analysis, it is clear that a well-structured supply chain management will highly influence customers loyalty in a brewery industry in Douala and vice versal. Hence, this study seeks to fill the research gap by analyzing the influence of supply chain management on customer loyalty by looking into some brewery industries in Douala. Such as Guinness Cameroon SA

1.3 Research Objectives

Main Objective

To examine the influence of Supply chain management on customer loyalty of brewery companies in Douala.

1.4 Specific Objectives

• To examine the influence of after sales service on customer loyalty.
• To evaluate the importance of standardization on customer loyalty.
• To examine the impact of delivery on customer loyalty.

1.5 Research Questions

• What is the influence of after sales services on customer loyalty?
• How is standardization important to customer loyalty?
• How is delivery important to customer loyalty?

1.6 Hypotheses of the study

H0: There is no significant influence of SCM on customer loyalty.

H1: There is a significant influence of SCM on customer loyalty.