A CASE STUDY OF INNOSON MOTORS, NNEWI
CHAPTER ONE
INTRODUCTION
BACKGROUND OF STUDY
Total Quality Management (Davies, 2003) is a management philosophy that focuses on the work process and people, with the major concern for satisfying customers and improving the organizational performance. It involves the proper coordination of work processes which allows for continuous improvement in all business units with the aim of meeting or surpassing customer’s expectations.
It emphasizes on totality of quality in all facets of an organization with the aim of reducing waste and rework to reduce cost and increase efficiency in production. Total Quality Management is applicable to any organization irrespective of size, and motives, even the public sector organization will soon start adopting the ideology in order to make them effective in meeting public demands.
Total Quality Management (TQM) is defined in many ways; in fact there is no agreement on what TQM really means, though the concept has gained much attention in recent years. The confusion is attributed to the fact that many different terms are used when discussing total quality management, such as “total quality improvement”, “total quality control”, “companywide quality control” and “strategic quality management.”
The difference, if any, is often unclear and generates confusion (Leonard & McAdam, 2012; Hellsten & Klefsjo, 2010).
Gurus of the total quality management discipline like Deming, Juran, Ishikawa and Feigenbaum define the concept in different ways but still the essence and spirit remains the same. According to Deming quality is a continuous improvement process towards predictable degree of uniformity and dependability.
Deming also identifies 14 principles of quality management to improve productivity and performance of the organization. Juran defines quality as “fitness for use.” According to Juran, every person in the organization must be involved in the effort to make products or services that are fit for use.
Juran also defines quality as conformance to requirements. Crosby focuses mainly on zero defects and doing it right the first time. Similarly, Ishikawa also emphasizes on the importance of total quality control to improve organizational performance.
Accordingly, quality does not only mean the quality of product, but also of after sales services, quality of management, the company itself and the human life (ibid.).
Feigenbaum defines total quality as a continuous work processes, starting with customer requirements and ending with customer satisfaction (Forza & Filippini, 1998). According to Rana, Imran, Ahmed (2005), total quality management is a way of doing things in an organization which enables the organization to plan and consistently
achieve continuous improvement in the quality, activities, process and have results of the purpose of satisfaction and even exceeding the need and expectations of both the internal and external customers. From this, one can deduce that the simple objective of TQM is to “Do the right thing the first time and every time”.
Much of the marketing specialists’ attention has been devoted recently to the concept of brand equity. It is widely recognized that the brand has developed into one of a company’s most important assets, which makes effective management of the brand a key factor in corporate success.
The development and long term enhancement of brand strength has been identified as a target function of any company that wishes to maintain a competitive position in the market, being it local, national, regional or international, allowing brand equity and hence the company’s enterprise value to be increased.
David A. Aaker considers that brand equity is “a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm/or to that firm’s customers”. Aaker’s brand equity model lists three ways of how brand assets create value for the customer.
Firstly, brand equity can help a customer interpret, process, store, and retrieve a huge quantity of information about products and brands.
Secondly, it can affect the customer’s confidence in the purchase decision; a customer will usually be more comfortable with the brand that was last used, is considered to have high quality, or is familiar. Finally, perceived quality and brand associations provide value to the customer by enhancing the customer’s satisfaction.
Indeed, one of total quality management’s objectives is a never-ending push to improve, which is referred to as continuous improvement (Stevenson, 2007); the other is a goal of customer satisfaction, which involves meeting or exceeding customer expectations.
Successful total quality management programs are built through the dedication and combined efforts of everyone in the organization (Brah, Tee & Rao, 2002). As noted in TQM literature, top management must be committed and involved; if not, total quality management will become just another fad that quickly dies and fades.
In the ‘new economy’ knowledge is a resource as well as increasingly a product with tangible goods becoming globally standardized (Arthur & Drucker, 2010), and best practices travelling fast, companies gain competitive advantage through constant innovation (Schneider, 2004), better targeting of customers and additional services (McColl & Schneider, 2000).
Those strategies cannot be applied to arm’s length type of customer relations. The higher the innovation and service component, the more the customer becomes part of the performance equation (Ambroz, 2004). Customer relations then constitute an important asset that should be mentioned just like physical assets.
To sustain the customer relations, service quality has become a cornerstone marketing strategy for companies. This highlights how important improving service quality is to organizations for their survival and growth, since it could help them tackle the challenges they face in the competitive markets.
This means that service-based companies are compelled to provide excellent services to their customers in order to have a sustainable competitive advantage. There is, however, a need for these organizations to understand what service quality is in order to attain their objectives.
In service marketing literature, service quality is generally defined as the overall assessment of a service by the customers (Eshghi et al., 2008, p.121) or the extent to which a service meets customer’s needs or expectations (Asubonteng et al., 1996).
Parasuraman et al. (1985) define service quality as “The discrepancy between consumers’ satisfaction/ perceptions of services offered by a particular firm and their expectations about firms offering such services”. If what is perceived is below expectation, customer judges quality as low and if what is perceived meets or exceeds expectation then customer sees quality to be high.
Most emerging approaches to the measurement of intellectual capital agree on the importance of customer capital, as expressed in sales, satisfaction and reputation (Edvinson & Malone, 1997; Kaplan & Norton, 1996; McColl & Schneider, 2000; Schneider, 2004; Sveiby, 2004). Accordingly, those approaches distinguish between reference customers (reputation), new customer or first trial customers (new sales) and repeated customers (satisfaction sale).
Independently of approaches of measurement of intellectual capital, marketing literature has suggested a wide array of industry-specific models to monitor customer satisfaction (Jha & Kumar, 2010; Bearden et al., 1996; Hayes, 2012) based on their perception of total quality of service delivery.
According to Shahin (2005), it is very important to measure total quality of service because it allows for comparisons before and after changes have been executed, to identify quality related problems, and help in developing clear standards for service delivery.
According to Stevenson (2007), “the primary role of management is to lead an organization in its daily operations and to maintain it as a viable entity into the future” and quality has become one of the driving forces of these two objectives.
Though customer satisfaction became a specific goal in late 1980s, providing high quality was recognized as a key element for success. Stevenson (2007) defines total quality management as “a philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.” total quality management can be defined as a systems approach to ensure quality in an organization.
In other words, TQM means that the organization’s culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, training among other components (Himanshu, 2009). Himanshu (2009) stresses that total quality management involves the continuous improvement of organizational processes, resulting in high quality products and services.
Total quality management programs are planned and managed into systems and are oriented towards the achievement of complete customer satisfaction. In simple terms, the author defines TQM as the system of activities directed at achieving delighted customer, empowered employees, higher revenue and low costs (ibid.).
According to Vouzas and Psyhogios (2013), in almost all total quality management definitions, a reference is made to its “soft” and “hard” side. They associated the “soft” side with management concepts and principles such as leadership, employee empowerment and customer focus, while the “hard” side refers to quality tool and techniques.
The work of Fotopoulos and Psomas (2009) points out that achieving quality management is not only through leadership, employee management and involvement, customer focus, continuous improvement among other factors. However, quality management is achieved through the support of quality management tools and techniques like flow chart, relationship diagram, QFD, Paretto analysis and so on.
Total quality management is an approach to improving the competitiveness, effectiveness and flexibility of an organization for the benefit of customer satisfaction. Excellent service affects the retention of existing customers and inducement of new customers.
As a result, it brings high customer retention and satisfaction that helps them for sustainable development of the company. In a context of global competition and decreasing profits from product sales, the after-sales services and activities constitute a relevant profit source as well as a key differentiator for manufacturing companies and resellers.
Profit generated by after-sales services is often higher than the one obtained with sales, the service market can be four or five times larger than the market for products and it may generate at least three times the turnover of the original purchase during a given product’s life-cycle.
STATEMENT OF THE PROBLEM
The impact of total quality management implementation on costumer relationship and brand equity is an important issue for researchers, resource managers and other stakeholders.
Total quality management and customer relationship include productivity enhancement, profitability improvement, improved work relations, competitive advantage and efficient use of resources at both intermediate level and organizational level (Parasuraman, 2005).
While institutions invest heavily in Total Quality Management resources both in developing and International Journal of Academic Research and Development 190 developed countries, much attention has not been given to the understanding of how total quality management impacts on customer relationship and brand equity especially in developing countries (Devaraj, 2003).
Considering the enormous benefits that are experienced by multinational organizations on the adoption of total quality management, the local business organizations have moved to adopt total quality management. Hence, the aim of this study is to examine the impact of total quality management on customer relationship and brand equity.
AIMS AND OBJECTIVES
The aim of this research is the impact of total quality management on customer relationship and brand equity: a case study of innoson motors, Nnewi. Other specific objectives include:
1. to determine the relationship between total quality management on customer relationship and brand equity.
2. to examine the impact of total quality management on customer relationship and brand equity.
3. to investigate the impact total quality management has on the productivity and effectiveness of an organization.
4. to examine factors that can enhance organization cum customer relationship and loyalty.
RESEARCH QUESTION
1. what is the relationship between total quality management on customer relationship and brand equity?
2. how does total quality management impact on customer relationship and brand equity?
3. what impact has total quality management on the productivity and effectiveness of an organization?
4. what are the factors that can enhance organization cum customer relationship and loyalty?
STATEMENT OF RESEARCH HYPOTHESIS
1. H0: total quality management has no significant impact on costumer relationship and brand equity.
2. H1: total quality management has a significant impact on costumer relationship and brand equity.
SIGNIFICANCE OF STUDY
The significance of this study is to contribute to the development of quality management toward customer value creation and relationship, where customer value is not merely about perceptions of customers in the market but it is also related with the way suppliers absorb and utilize the knowledge about customers and their value in order to manage quality.
The study will enlighten managers of firms and organizations to understand that total quality management with orientation on customer relationship will enable suppliers to develop and to market their competencies to create value to customers as well as improve brand equity.
Hence, the relationship between quality and customer value is bi-directional, meaning that the way an organization manages its quality will influence customers’ perceptions of its products, and the information (knowledge) about customers’ perceptions regarding the value of products can be used as input to manage quality in an organization.
The study will further will give a clear insight on viewing customer value as customers’ judgments on suppliers’ value creation potential “moves” the notion of value one “step” upward, from product-related to competence related. It is important for the suppliers that the customers “see” supplier’s value-creation potential because it may influence customers’ appreciations regarding the value of the products.
From the study; it will help different manufacturing companies to understand that a brand has an added value to the physical product beyond the core product. These may be aesthetic, emotional, psychological and philosophical values that are embedded in the minds and hearts of consumers.
Finally, the study will serve as a research tool to other researchers who wish to further investigate on the research topic.
SCOPE OF STUDY
The study will cover the impact of total quality management on customer relationship and brand equity: a case study of innoson motors, Nnewi.
LIMITATION OF STUDY
1. Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
2. Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
DEFINITION OF TERMS
Impact: the action of one object coming forcibly into contact with another.
Total quality management: Total quality management consists of organization-wide efforts to “install and make permanent climate where employees continuously improve their ability to provide on demand products and services that customers will find of particular value.”
Consumer relationship: Consumer relations are the relations which a company has with its consumers. Once an individual buys a product or a service form a company, the kind of bonding between the company and its consumer is the consumer relation
Brand equity: ‘Brand equity’ is a phrase used in the marketing industry refers to the perceived worth of a brand in and of itself. The commercial value that derives from consumer perception of the brand name of a particular product or service, rather than from the product or service itself.
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A CASE STUDY OF INNOSON MOTORS, NNEWI
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