5 ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 | 5-23 IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND LOYALTY – CASE OF CROATIAN FOOD MARKET MARTINA FERENČIĆ 1 Received: 2 January 2014 ANA WÖLFLING 2 Accepted: 23 April 2015 ABSTRACT: Attracting and keeping consumers’ loyalty in Fast Moving Consumer Goods segment became the main concern for all producing companies and retailers, too. Many marketing researchers argue that product or service quality perception is one of the key elements in brand loyalty building process. When talking about food market, one has to be aware that food consumption has direct impact on human health and, in that context, process of building brand loyalty for food brands is not possible, or it can be hard, if the product quality of food brands is not on the expected level and according to defined food quality standards. The goal of this paper was to understand aspects of connection between food product quality and brand loyalty process better and to explore how problems with negative quality inconsistency in different food categories can influence brand loyalty. An empirical research (on-line survey) was conducted to prove and explain the connec- tion between food product quality and food brand loyalty. The research results shows that the main reasons for being loyal to a certain food brand or product are related mostly to positive brand experience, high and stabile product quality, and recognizable taste. In the context of these research results, it can be concluded that long term consumer satisfac- tion as a factor in food brand loyalty process depends on stabile product quality, so food manufacturers or food brand owners should be focused on preventing or minimizing the aspect of negative quality issues. Regarding research limitations, the study was conducted only on users from Croatian market; so broadening the survey to other markets should give a clearer view on the connection between food product quality and brand loyalty process. Keywords: food business, food product quality, food brand loyalty process, brand loyalty JEL Classification: JEL Classification: M31, L66 INTRODUCTION Even though food products are a part of Fast Moving Consumer Goods (FMCG) mar- ket and brand building process can be applied on the same conditions as all the other FMCG goods, there are some specifics. Specifics are mainly connected to the fact that food consumption is directly connected to human health and consuming bad food can cause health problems. That is the reason why minimum quality standards are also regulated 1 Podravka d.d., Koprivnica, Croatia, e-mail: martina.ferencic@podravka.hr 2 Podravka d.d., Koprivnica, Croatia, e-mail: ana.wolfling@podravka.hr ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 6 by law and numerous regulations (for example Croatian Food Law or EU Food Safety Regulations) and food producers are often communicating different quality standards and certificates which they have implemented in their businesses to show they care about their consumers. Since product quality is one of the bases of consumer satisfaction and brand loyalty, according to numerous marketing researchers (for example: Aaker, 1996; Kotler, 2001, Vranešević, 2007. or Pavlek, 2008), this paper is focused on understanding the as- pects of connection between food product quality and food brand loyalty. In that context, it is even more important to examine the impact of negative quality inconsistency on food brand loyalty with the hypothesis that the impact is negative and long term. When it happens that a fault in some product has been detected and producer decides to withdraw that product from the market, producer needs to inform the public about that situation. When faced with information about quality issue in food product consumers start to be afraid how this “bad” product will affect their health and rather avoid it (stop buying) in total. Understanding the motivations of consumers to behave this way can be described through theory of reasoned action. The theory of reasoned action focuses on cognitive factors (beliefs and values) that determine motivation (behavioural intention). The theory has been useful in explaining behaviours, particularly behaviours under voli- tional control (Montano and Kasprzyk, 2008). In order to answer how negative quality inconstancy influences food brand loyalty, this paper is structured so that it firstly gives general answers, based on previous research in the field, that explain brand loyalty models and their connection with product quality (chapter 1). Those previous researches are the basis for the construction of the survey with two goals (chapter 2): 1) to answer how negative quality inconsistency affects food brand loyalty and 2) to examine if negative impact is proven, is it also long term? The conclusion of the research results (chapter 5) should give an insight into the specific problem of food brand management process by application of brand loyalty theory, thus making a contribution to the development of brand management and strengthening of the connection of product quality and brand loyalty in the special field of food market- ing. In opposite to previous research regarding product quality inconsistency and cases of product withdrawal which are manly focused on understanding how brands can over- come product-harm crises (see eg. Dawar and Pillutla, 1997; Dutta and Pulling, 2011 and Cleeren, Heerde and Dekimpe, 2013) this paper provides a slightly different perspective. The most important contribution of the paper is providing the managerial tool for under- standing the impact of negative quality inconsistency to food brand loyalty. 1. LITERATURE REVIEW - WHAT DOES BRAND LOYALTY STAND FOR? In the process of investigating how negative quality inconsistency of a certain branded product can affect brand loyalty the first step is to define through the literature review: - What does brand loyalty stand for? - Can we measure brand loyalty? - How is product quality connected to brand loyalty? M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 7 1.1. Defining brand loyalty Building and maintaining brand loyalty has always been one of central themes for re- searches in marketing theory, as well as in practice. Simply described, loyalty to a certain brand can be seen through repetition of purchases that a consumer is willing to do for one or more product/services under the same brand. But brand loyalty has much more layers than that. It is directly linked to consumer psychology so it has to be described in more details. One of the definitions says: brand loyalty is a deeply held commitment to re- buy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviour (Oliver, 1999, 34). Also, brand loyalty can be divided in two dimensions: attitudinal and behavioural. Where the attitudinal brand loyalty includes cognitive and affective dimension and behavioural intent dimension is an intermediary between attitude and behaviour, representing the in- tention to act in the buying decision process. Behavioural intent appears in various forms such as a predisposition to buy a brand for the first time or a commitment to repurchase a current brand (Gommans, Krishnan and Scheffold, 2001). On the other hand Aaker (1996) defines brand loyalty as the core dimension of brand equity and argues that a loyal customer base represents an entry barrier, a basis for a price premium, time to respond to competitor innovations, and a bulwark against deleterious price competition. A vast number of researches contributes to defining brand loyalty from numerous aspects and points of view, for example Chaudhuri and Holbrook (2001) explore the relationship among brand trust, brand effect and brand performance outcomes in relation to brand loyalty; or Keller (2003) who argues that for understanding brand knowledge, one must take into account its multiple dimensions (awareness, attributes, benefits, images, thought, feelings, attitudes and experiences); etc. Some newer researches also extend to e-marketing, for example Gommans, Krishnan and Scheffold (2001) explained that conventional brand loyalty development efforts have re- lied substantially on brand image building through mass media communications, howev- er in e-marketing process, database technology makes it possible to put more emphasis on the cognitive dimension by offering customized information. Generally speaking, loyalty implies satisfaction, but satisfaction does not necessarily lead to loyalty. Consequently, there is an asymmetric relationship between loyalty and satis- faction (Oliver, 1999). To show difference between satisfaction and loyalty we can also refer to Kotler who explains that on the one side we have brands on the market that are unknown to consumers and on the other side we have: • brands with high level of brand awareness (measured with consumer remembering or recognition), • brands with high level of acceptance (which most consumers will not refuse to buy), • brands with high level of advantages (those which consumers will choose before others in one store, but if they are not available they will just choose second best) • and finally, brands with high level of loyalty (Kotler, 2001). ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 8 Brands with high level of advantages are satisfactory for consumers, but consumers are really loyal to a brand when they are ready to take extra cost, time and effort (for example drive to another store if necessary) to buy that specific brand. From a consumer’s point of view, in the buying process one is faced with a multiple choice of products that can satisfy his specific need and there is a possibility of making bad pur- chasing choice. In other words, a consumer wants to reduce the risk of making a mistake when choosing a product. One of the ways to reduce this risk is to buy the specific branded product which was satisfactory in the past and the consumer had a good experience with it and to become loyal to it. W e can say that the greater the perceived risk is, the more loyal the consumer is. Most loyal consumers strongly believe that “their” brand of a product has significantly better characteristics then other products (Kesić, 1999, p. 129). The following have been identified as the most common benefits that brand owners can get from brand loyalty (Moolla, 2010.): • Higher sales volume • Premium pricing ability • Retain rather than seek - brand loyalist are willing to search for their favourite brand and are less sensitive to competitive promotion (Moolla, 2010, p. 89) • Creating perception – premium pricing creates the perception of premium quality • Increased usage and spending • Contributions to Return on Investment (ROI) • Financial benefits • Customer acquisition • Enhanced return • Strategy for reducing ongoing expense • Lower price elasticity • Referrals 1.2. Brand loyalty measuring scope Brand loyalty has a lot of layers and when we talk about measuring brand loyalty we have to see through all of its layers and investigate one by one. Research agencies offer different tools which can help in brand management, like measur- ing brand awareness, buying willingness, price sensitivity, market shares, retail distribu- tion, etc. Information gathered in market and consumer researches when combined with internal company data (like sales growth, gross margin growth) can give brand managers a significant insight into their company’s brand. Different researchers in past decades were trying to give a unified model for measuring brand loyalty from several points of view but none of these theoretical models really came to life in practice. In preparations to propose his own model for brand loyalty measure- ment in FMCG, Moolla listed and gave a short description of more than fifteen theoretical M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 9 models for measuring brand loyalty proposed from different authors in past fifty years. He concludes: Most brand loyalty models presented have been researched well and possess merits, although the differences between models are vast. One can never select one model as the most significant. (Moolla, 2010, p. 137) Nevertheless, Moolla has identified twenty six influences on brand loyalty from previous concepts and concluded that they can be filtered to twelve influences relevant for FMCG as shown in figure 1. Figure 1: Influences on Brand loyalty in FMCG Source: adopted from Moolla (2010, p. 145) Moolla and Bisscoff put Moalla’s model for measuring brand loyalty in FMCG on the test to prove if the model can be operationalized as managerial tool. They concluded it can, but it should be subjected to further evaluation to ensure that the model measures loyalty in a wide range of FMCG products similarly (Moolla and Bisscoff, 2012). 1.3. Connecting product quality and brand loyalty concept The last question stated at the beginning of this chapter regards the connection between product quality and brand loyalty. In its basic, simplified meaning, a brand is mostly perceived like a quality warranty recog- nizable on the market (Vranešević, 2007) or more precisely, as a means of identification ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 10 of individual product or service for which a producer or brand owner gave warranty for promised performances or level of, so-called, functional quality (Pavlek, 2008, p. 89). When talking about quality, the market perceived quality needs to be taken in consider- ation regarding product’s ability to (Vranešević, Vignali and Vrontis, 2004, p. 239): • be functional in it its basic purpose, • liability to perform its basic purpose, • be long-lasting and easy to maintain, • be simple and safe to use • be well designed and styled • have good company reputation and brand image • lead to total satisfaction during continuous use of the product. If all of the seven above mentioned points are on satisfactory level for customers/consum- ers, we can say that the perceived quality of the product is high. In general, satisfaction can be defined as a feeling of comfort or disappointment that comes from comparing expected and received values or performances of the product. If performance is not on the expected level, the consumer is not satisfied; if it is, the consum- er is satisfied. And if the product performance is over the expected level, the consumer is very satisfied or even overwhelmed (Kotler, 2001, p. 40). Customer satisfaction is directly linked with brand loyalty building process and product quality is a base for customer satisfaction. It is clearly obvious that in long term, creating brand loyalty is not possible if the product quality is not on the expected level. 2. RESEARCH GOALS During 2013, consumers in Croatia ware frequently (or at least more than usual) faced with different kinds of food products withdrawal from the market caused by different kinds of quality mistakes. For example, during first few months of 2013 Konzum’s private label Rial tuna cans had to be removed from the market because of high level of histamine and the biggest food affair in Croatia in past few years occurred when in short period of time even three milk producers (Dukat, Vindija and Meggle) had to withdraw several production series of their milk due to containing high level of aflatoxin. All of these qual- ity inconsistencies of the mentioned food products affected their consumers. Consumers could been afraid that those products may seriously affect their health. Food is directly connected to human health, so those fears are understandable and normal. Food industry is one of the most important pillars of Croatian economy (largest industry in terms of sales values according to Statistical Yearbook of the Republic of Croatia for 2014 (Ostroški ed, 2014)) and managing product quality in this sector, the image of its brands and building loyalty is a very important issue for Croatian economy in total, es- pecially now when Croatia joined the European Union. Croatian market represents just a small part of total EU market where big multinational companies like Unilever or Nes- tle are leaders among branded products (FoodDrinkEurope, 2014) and big international retail chains like Tesco, Carrefour or Aucan dominate the private label segment (Kantar retail, 2013). M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 11 The previous chapter describes brand loyalty and what affects brand loyalty. Based on previ- ous researches we can conclude that customer satisfaction directly affects brand loyalty. We can also conclude that customer satisfaction is based on perceived product quality. As it was already explained in the introduction, research goal of this paper is to find out how problems with negative quality inconsistency in food products can affect customer satisfac- tion and if ultimately they have a negative impact on food brands loyalty in the long run. 3. RESEARCH METHODOLOGY Empirical research Impacts of quality inconsistency on customer satisfaction of food brands in Croatia was conducted in 2013 on the sample of Coolinarika.com users. Coolinarika. com is in top ten Croatian web portals with the reach of 22.34 %, or more than 0.5 million visitors on a monthly base (geminusAudince.com.hr, 2013) and with more than 97.000 registered users (Coolinarika.com, 2013). Coolinarika.com is considered leading cooking web site, not only in Croatia, but also in the region of South Eastern Europe, for all food and cooking related topics as well as for exchanging and sharing recipes. The most import- ant thing when constructing a research sample of users of Coolinarika.com is that these users are considered opinion makers in segment of food related topics so we can say that they can be also considered the relevant sample for the research. Questionnaire for the research was constructed, besides from opening demographic ques- tions, from series of closed-ended (some with multiple choice) and open-ended questions. Questions were positioned in a specific order to lead the participants gradually from more general questions about their food shopping process to more specific ones about how they experience the problems with quality of the food products of their choice. The process of constructing questions in the questionnaire was based on previous experiences from applied researches on food brands and food consumers. Experiences are collected through interviews with brand and research managers from some of the largest Croatian food manufactures. Data collecting process was organized by sending invitations to 5.123 randomly selected Coolinarika.com users from Croatia to take part in the survey and answer the listed ques- tions with a goal to collect a minimum of 500 filled questionnaires. The collected data was processed with the Statistical Package for the Social Sciences or SPSS software. 4. INTERPRETATION OF THE RESULTS 4.1. Sample characteristics Data collecting process described in the previous chapter finally resulted with 681 par- ticipants who entered and fully answered the questionnaire, with respond rate of 13.3%. Demographic characteristics of the sample are described in detail in table 1. ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 12 Table 1: Demographic data N % Total sample 681 100 Sex Male 66 9,7 Female 611 89,7 Unanswered 4 0,6 Age Less than 15 0 0,0 15-24 62 9,1 25-34 301 44,2 35-44 200 29,4 45-54 82 12,0 55-64 31 4,6 65 and more 5 0,7 Education Unfinished elementary school 0 0,0 Elementary school 3 0,4 Secondary school 299 43,9 Advanced school 112 16,4 University 237 34,8 M.A. degree /doctorate 30 4,4 Working status Full time job 413 60,6 Part-time job 68 10,0 Unemployed 161 23,6 Retiree 34 5,0 Unanswered 5 0,7 Members of household 1 39 5,7 2 148 21,7 3 167 24,5 4 217 31,9 5+ 108 15,9 Unanswered 2 0,3 Marital status Single 161 23,6 Married 483 70,9 Divorced 24 3,5 Widowed person 9 1,3 Unanswered 4 0,6 Personal income Without any income 67 9,8 up to 2000 kn 54 7,9 2001 to 3500 kn 94 13,8 3501 to 6000 kn 235 34,5 6001 to 8500 kn 73 10,7 up to 8500 kn 54 7,9 I do not want to answer 104 15,3 Settlement size up to 2000 citizens 73 10,7 2000 to 10000 citizens 152 22,3 10000 do 100000 citizens 202 29,7 more than 100000 citizens 254 37,3 Source: Survey M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 13 4.2. Major findings The majority of the research participants (65%) says that they equally buy food products branded with producers owned brands and from retailers owned brands (private labels). Others buy solely producers’ brands (30%), or solely private labels (5%). Research also shows that there are some differences between different food categories in preferring producers’ brands or private labels, for example categories in which producers’ brands are preferred are milk and dairy products, meet products, coffee and tea, products for cake baking, spices; and categories in which private labels are preferred are snack, pas- ta and rice, chocolate and cookies, tomato products, flour. An interesting finding in those data is the fact that two categories with the least chance to be preferred as a private label are baby food and honey; only 23 respondents said that they prefer private label when choosing baby food and only 26 when choosing honey. Table 2 shows preferences in choosing brands or private labels by category. Table 2: Top five categories for producers’ brands vs. top five categories for private labels (multiple choice answers N=681) Top five categories where consumers prefer producers’ brand over PL Top five categories where consumers prefer PL over producers’ brand Food category Respond frequency (sample 681) Food category Respond frequency (sample 681) Milk and dairy 475 Snack (chips, flips etc.) 361 Meet and meet products 458 Pasta, rice 307 Coffee and tea 405 Chocolate, cookies 266 Cake baking products 370 Tomato products 248 Spices 343 Flour 239 Source: Survey To the question “Is there a particular brand among the food products to which you are totally loyal?” 80% of participants said YES. Research participants named 154 different brands from the top of their mind. Table 3 shows sixteen of them with highest response frequency. Table 3: Food brands that have totally loyal consumers (N=681) Brand Frequency % Brand Frequency % Podravka 304 20,3 Barilla 36 2,4 Vindija 107 7,1 Zvijezda 35 2,3 Ledo 98 6,5 Pik 33 2,2 Kraš 85 5,7 Nescafe 21 1,4 Vegeta 81 5,4 Jamnica 18 1,2 Franck 63 4,2 Nutella 18 1,2 Dukat 56 3,7 Z bregov 15 1,0 Gavrilović 48 3,2 Dr.Oetker 15 1,0 Source: Survey ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 14 An interesting observation that can be drown from the results in table 3 is that among the listed brands to whom consumers are totally loyal are only three that do not have Croatian origin and that the first of them, Barilla is barely on the ninth position with only one vote more than Zvijezda. When asked why they are loyal to the particular brand, as the main group of reasons (frequency in answers above 400) participants single out: 1) positive brand experience, 2) high, stabile product quality and 3) recognizable taste. The second group of reasons with still significantly high frequency in answers (between 150 and 400 answers) are: it meets all of my expectations, it is available in most stores, it has the best quality vs. price ratio, purchasing habits; as shown in figure 2. Figure 2 also shows that characteristics like manufacturing tradition, top packaging de- sign, long-term presence in the market, innovation or positive image in the public, which in Marketing theory are believed to be basics for marketing strategy and brand building processes, are not significant reasons for the research participants for being loyal to their brand of choice (frequency in answers less than 150). Figure 2: Reasons for being loyal to food brands (multiple choice answers, N=681) Source: Survey The factors (and their relevance) that can affect the reduction of brand loyalty are shown in figure 3. M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 15 Figure 3: Reasons for reduction of brand loyalty (multiple choice answers, N=681) Source: Survey The main factor in brand loyalty reduction is connected with product distribution cover- age in the market. The second and third reasons are connected with the product quality problems (noticed lacks during last consumption of the product, specific production se- ries of the product was withdrawn from the market), both with significantly high frequen- cy in responses. The following reasons are the ones connected to price and promotional activities, which are not in focus of this research. Research participants were also asked to define what (from their point of view) a product with low or pour quality is; answers are shown in figure 4. Figure 4: What is a product with low or pour quality? (multiple choice answers, N=681) Source: Survey ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 16 Other than organoleptic characteristics (taste, smell, visual appearance) which are for ob- vious reasons the most important characteristics in terms of food, research participants are mainly concerned about product safety (can some product affect their health if it con- tains some substances that are not allowed in food products or they are over permitted limits). At the end, they also pay attention to product packaging and labelling but those factors are not of top concern. Research participants (66%) can name products that have been recently withdrawn from the market. Milk stands out from the list with high frequency in answers (47%). Table 4: Products withdrawn from the market (N=672) Product Frequency % Milk 318 47 Tuna, canned fish 133 20 Baby food 81 12 Crust, dough, strudel pastry 45 7 Meet, meet products 25 4 All other answers 70 10 Source: Survey Following to naming products that have been withdrawn from the market, research par- ticipants can also name the specific brands involved in withdrawal. Three milk brands, Dukat, Vindija (Z bregov) and Meggle, have the highest percentages in answers. K plus, Rial and Konzum are also high on the list in table 5, which can be connected to secondly named products from table 4 (tuna/canned fish). Table 5: Brands withdrawn from the market (N=715) Brand Frequency % Dukat 232 32 Vindija (Z bregov) 180 25 K plus 62 9 Meggle 56 8 Clarum 32 5 Rial 23 3 Hipp 19 2 Konzum 14 2 Alnatura 12 2 Nestle 8 1 Dm 8 1 All other answers 69 10 Source: Survey M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 17 53% of research participants stated that they remembered exactly what the reason for market withdrawal had been. If we take a look at table 6 we can also notice that research participants can (63%), with relatively high accuracy, name the quality inconsistency or the quality defect of the prod- uct they name as a product that was withdrawn from the market. Table 6: Quality defect that was the reason for market withdrawal of food products (N=427) Quality defect that was reason for market withdrawal Frequency % Too high level of aflatoxin 157 37 Product contains unauthorized substances 40 9 To high level of some substances 37 9 Histamine 32 8 Harmful substances 24 6 Pieces of glass in baby food jars 22 5 Unauthorized preservative / additives 17 4 Too much of something 14 3 Some poison 11 3 Bacteria 10 2 Presence of metal / mercury / lead 10 2 Carcinogenic ingredients 8 2 Products are not safe for health 8 2 GMO ingredients 7 2 All other answers 30 7 Source: Survey From the results in answers to questions about product type, brand and quality defect we can identify the following cases of product withdrawal that had happened in less than a year before the research was conducted according to Croatian Ministry of Agriculture through Croatian Rapid Alert System for Food and Feed (HR RASFF): 1. In February 2013 there were several notices about milk product withdrawal from dif- ferent producers or brands: Dukat and Vindija – on 8th February, Dukat, Meggle, Mer- cator and Lidl – on 19th Ferbruary. The reason for withdrawal in all of the listed cases was increased level of aflatoxin. (Ministry of Agriculture, 2013) 2. Also in February there was a notice about tuna can withdrawal under brand name Rial that is a private label of Konzum retail chain. The reason for withdrawal was an increased level of histamine. (Ministry of Agricul- ture, 2013) 3. In March the Ministry issued a notice for baby food in jar from Alnatura distributed by retail chain DM. The reason for withdrawal was possible presence of glass pieces in the content of the product. (Ministry of Agriculture, 2013) 4. Last year, in October 2012 a notice for withdrawal of fresh strudel dough from the producer Clarum was issued. The reason for withdrawal was usage of unauthorized additive in product content. (Ministry of Agriculture, 2013) ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 18 Those four cases can be easily recognized within the answers gathered through the re- search since most of the participants described them very accurately. The participants were also asked what they thought about the food producer that had made the decision for market withdrawal. Respondents’ answers are illustrated in figure 5. Figure 5: Opinions about the producer that made the decision for product withdrawal (N=681) Source: Survey More than one third or 38% have a negative opinion about producers that have under- taken the measures of withdrawing a product from food market, because they cannot understand why a product with some quality problems is even available on the market. Table 7 shows how market withdrawal will influence the decision making process in the following purchase of this kind of product. Table 7: Future decision making process for the products that were withdrawn from the food market (N=681) Frequency % I would proceed to buy the same product from my favourite brand – no influence 40 6 I would temporarily stop buying the product from my favourite brand but as soon as I were certain that the inconsistency or defect were removed, I would return to my normal shopping behaviour – temporary influence 420 62 I would permanently stop buying the product from my favourite brand – significant influence 63 9 I would start buying the same product from different brand 135 20 I would stop buying this sort of product entirely 23 3 Source: Survey Producers or brand owners might find comfort in the fact that 62% of their loyal con- sumers would gradually come back to buying their product after a short brake or after the M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 19 market withdrawal was finished. But they should also be aware of the fact that more than 20% of consumers, according to these research findings, can be lost. If we take a closer look at the collected data and we further look into the difference in an- swers between the participants that stated they were loyal to a certain brand (80%), with their attitude (positive, negative or neutral) towards brand owners decision about product withdrawal (shown in the figure 5) and its influence to further decision making process of purchasing products that have been withdrawn from the market (shown in table 7), we can see that there is no noticeable difference in stating the negative opinion between the research participants who said they were loyal to some brand and those who said they were not. Table 8: Difference in opinions and purchasing decision making process between loyal and disloyal consumers (N=681) Future decision making process for the products that were withdrawn from the food market Opinions about the producer that made the decision for product with- drawal No influ- ence Tem- porary influ- ence Significant influence Would buy another brand Would stop buying the product in total Total freq. Loyal Positive 20 115 11 21 3 170 Negative 6 113 28 55 6 208 Neutral 5 117 12 29 4 167 Total freq. 31 345 51 105 13 545 Not loyal Positive 3 27 4 9 0 43 Negative 2 25 6 9 7 49 Neutral 4 23 2 12 3 44 Total freq. 9 75 12 30 10 136 Total freq. Positive 23 142 15 30 3 213 Negative 8 138 34 64 13 257 Neutral 9 140 14 41 7 211 Total freq. 40 420 63 135 23 681 Source: Survey From table 8 we can also see that, although product market withdrawal has temporarily influence with most of the research participants, the research participants who said they were loyal to some brand and had a negative opinion of market withdrawal of their brand will be the most likely candidates for changing their purchasing habits and switching to another brand. ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 20 If we extract the data for the example of milk withdrawal (research participants that named Dukat, Vindija and Meggle as the example of a product withdrawal), we can see consistency in the previously shown data, see table 9. Table 9: Difference in opinions and purchasing decision making process between loyal and disloyal consumers of milk (N=266) Future decision making process for the milk products that were withdrawn from the market Opinions about the milk producer that made the decision for product withdrawal No in- fluence Tem- porary influence Signif- icant influ- ence Would buy another brand Would stop buy- ing the product in total Total freq. Loyal Positive 5 44 3 8 2 62 Negative 2 44 13 21 2 82 Neutral 0 53 6 13 2 74 Total freq. 7 141 22 42 6 218 Not loyal Positive 0 12 1 4 0 17 Negative 1 6 1 4 2 14 Neutral 1 11 1 3 1 17 Total freq. 2 29 3 11 3 48 Total freq. Positive 5 56 4 12 2 79 Negative 3 50 14 25 4 96 Neutral 1 64 7 16 3 91 Total freq. 9 170 25 53 9 266 Source: Survey 5. CONCLUSION Today’s consumers are very sophisticated and aware of the importance of product quality as one of the main factors in building brand loyalty. For years, branded products in FMCG became a synonym for higher level of quality and consumers have higher expecta- tions, than for example, from private labels or unknown products. Previous researches show that perceived quality is closely related to product’s ability to satisfy certain consumer needs or expectations like to be functional in its basic purpose, to be liable to perform its basic purpose, to be long-lasting and easy to maintain, to be simple and safe to use, to be well designed and styled, to have good company reputation and brand image and to lead to total satisfaction during continuous using of the product, even above the expected level. Also, premium level of price positioning has an influence on the perception of product quality as a higher one. The main goal of this paper was to confirm product quality as one of the most important factors in food brand loyalty process and to investigate if and how negative quality in- M. FERENČIĆ, A. WÖLFLING | IMPACT OF NEGATIVE QUALITY INCONSISTENCY ON BRAND.... 21 consistency of a product influences brand loyalty. The research which was conducted to prove and explain the connection between product quality and brand loyalty shows that the main reasons for being loyal to certain brand or product are related mostly to positive brand experience, high, stabile product quality and recognizable taste. When it comes to product quality issue, consumers emphasised disadvantages like unusal taste, smell and visual appearance. Also, they mentioned doubtful product safety and un- reliable product packaging and labelling. One of the most interesting findings was that more than a half of the research partic- ipants could name products, categories and brands that have been recently withdrawn from Croatian market becuse of a quality problem. It is important to notice that 63% of research participants could, with relatively high accuracy, clearly indicate the negative quality inconsistency or the quality defect of the product they specified as a product that was withdrawn from the market. This research showed that withdrawal from the market has a huge negative impact on buying willingness in execution phase and a certain period after it and in that way is con- sistent with the hypotesis that negative quality inconsistency affects food brand loyaty in a negative way and that the effec is long term. Despite that fact, producers or brand owners might be calm because 62% of their loyal consumers would gradually come back to their favourite brand or product after they were sure that negative inconsistency or defect had been totally removed. But also they must be aware that there is a huge risk of loosing a certain percentage of loyal consumers who could not find an excuse for such failure. According to above mentioned, customer/consumer satisfaction as a factor in food brand loyalty process, in the long term depends on product quality issue. Food brand owners should manage every negative product quality inconsistency with great care and through total quality management prevent or minimize possibilities for future quality issues. Regarding research limitations, study was conducted only on Croatian market, so one should be aware of that fact when applying conclusions from this research in general food brand management. In respect of possible future research there are a few possibilities that should be consid- ered: broadening the research to other markets (outside Croatia), and investigating how different food brand owners manage the situations when they are faced with product withdrawals. ECONOMIC AND BUSINESS REVIEW | VOL. 17 | No. 1 | 2015 22 REFERENCES Aaker, D. A. (1996). Measuring Brand Equity Across Products and Markets. 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