Investigating the Effective Factors on Enhancing Loyalty Level of Edible Oil Consumer: Case Study Tehran City

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Arefpour Mahdis; RAFIEE HAMED; Chizari Amirhosein

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Journal: AGRICULTURAL ECONOMICS: IRANIAN JOURNAL OF AGRICULTURAL ECONOMICS (ECONOMICS AND AGRICULTURE JOURNAL) Year:2020 | Volume:14 | Issue:1 Page(s): 95-117

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Title

Investigating the Effective Factors on Enhancing Loyalty Level of Edible Oil Consumer: Case Study Tehran City

Author(s)

Arefpour Mahdis | RAFIEE HAMED | Chizari Amirhosein | Issue Writer Certificate

Keywords

BrandQ1

Consumers loyaltyQ1

Multinomial Logit modelQ1

Edible OilQ1

Abstract

Introduction Customer loyalty is defined as a customer's repeat purchase behavior while including the emotional commitment or expression of a favorable attitude toward the service provider. Since the cost of attracting a new customer is about six times that of retaining an existing customer, creating customer loyalty saves marketing costs. Finally, it can be said that a large number of loyal customers to a Brand is the property of the company. Edible Oil is one of the most important foods consumed in the Iranian household basket, that’ s why there are numerous Brands in the Edible Oil market such as Tabiat, Ladan, Bahar, and etc. Due to the importance of this product in Iranian cuisine and the high proportion of volume consumed per purchase, consumers are more sensitive to product selection. Loyalty literature in the world has a long history and numerous studies have been carried out in various fields such as cosmetics, smartphones, restaurant types and cars. The food industry has also been a focus of loyalty in the literature, but this area has been less studied by domestic researchers. Theoretical and empirical analysis of the loyalty literature reveals that consumers are the key to corporate success. Because in the competitive market for food products, consumers are simply making more purchases and introducing more products and Brands to others, resulting in increased market share and more profitability. The purpose of this study was to investigate the factors affecting Edible Oil Brand loyalty among Tehran citizens. Methodology Multinomial Logit (MNL) Model was used to investigate the factors affecting customer loyalty. The reason for this choice is non-ordinal Brown’ s (1953) classification. Therefore, the results of multinomial Logit are appropriate in comparison with ordered Logit model. The loyalty variable is classified into four groups according to the Brown's (1953) loyalty category: (1) consumers who always use the one specific Brand; (2) consumers who use two or three specific Brands; (3) consumers who use various Brands; (4) Consumers who Brand does not matter in their purchase. The study sample consisted of Edible Oil consumers in Tehran. According to Cochran's formula with a confidence level of 95 percent, the sample size was 230 people. So, 250 face to face questionnaires were completed to ensure reliability. Results and Discussion According to the data analysis of the questionnaire, the average consumer consumes 2. 5 kg of Edible Oil per month. Of the 135 Edible Oil Brands available in the market, consumers know up to 8 and at least 1 Edible Oil Brand. Also, 91% of people also care about the Brand of Edible Oil which they use. The most frequent group is the "consumption of two or three specific Brands" with a frequency of 62 percent, whereas “ consumption of a specific Brand" group has a 30 percent frequency. As mentioned in methodology section, Multinomial Logit model is used in this paper. The first step in estimating Multinomial Logit model is to designate a group of dependent variables as the base group. In this study, the second category of dependent variable consisting of people consuming two or three specific Brands of Edible Oil is considered as the base group and the probability of loyalty of the other two groups is compared with this group. According to the results, if the Brand of Edible Oil consumption is important for a consumer, the probability of its inclusion in the "consumption of a specific Brand" group increases by 0. 283 units. If the price is important for oil consumers, the probability of consumers being relatively priced on their loyalty in the "consumption of a specific Brand" group will decrease by 0. 076, respectively. The results also show that the probability of consumers being placed on the price of their loyalty is significantly reduced in the "consumption of a specific Brand" and "consumption of various Brands" groups of 0. 270 and 0. 059, respectively. The results of the variable quality effect indicate the fact that, the importance of Brand quality variables for consumers increases their probability of being in the "consumption of a specific Brand" group by 0. 137 units. Conclusion This paper aims to investigate the effective factors on enhancing loyalty level of Edible Oil consumer in Tehran city, Iran. For this aim, multinomial Logit (MNL) model is used. Based on the results of Brand importance for the consumer, quality and packaging (at a very effective level) have a positive effect on the loyalty of the group "consumption of a specific Brand". Among the variables of the first group of loyalty, the variables of Brand importance, quality, number of known Brands, price (at the very effective level) and price benefits (at the very effective level) at the 10% level were significant. In relation to the third group of dependent variables, the variables of packing (at both levels of effectiveness), Brand access, priority of cash benefits, share of cost of Edible Oil, gender, number of known Brands and quality have a positive effect on consumer loyalty. In the "consumption of various Brands" group, five variables of packing (at the highly effective level), Brand access, price (at both levels of effectiveness), and price benefits (at the approximately effective level) were significant in the model. Based on the results, the following suggestion is proposed: Given the negative effect of knowing more Brands on consumer loyalty, applying proper marketing policies in introducing the Brand and its distinctive features can be an effective factor in customer retention. Effective efforts in this area include choosing a simple, creative and effective Brand for ease of remembering and allocating a slogan to connect consumers with the Brand.

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APA: Copy

Arefpour, Mahdis, RAFIEE, HAMED, & Chizari, Amirhosein. (2020). Investigating the Effective Factors on Enhancing Loyalty Level of Edible Oil Consumer: Case Study Tehran City. AGRICULTURAL ECONOMICS: IRANIAN JOURNAL OF AGRICULTURAL ECONOMICS (ECONOMICS AND AGRICULTURE JOURNAL), 14(1 ), 95-117. SID. https://sid.ir/paper/399677/en

Vancouver: Copy

Arefpour Mahdis, RAFIEE HAMED, Chizari Amirhosein. Investigating the Effective Factors on Enhancing Loyalty Level of Edible Oil Consumer: Case Study Tehran City. AGRICULTURAL ECONOMICS: IRANIAN JOURNAL OF AGRICULTURAL ECONOMICS (ECONOMICS AND AGRICULTURE JOURNAL)[Internet]. 2020;14(1 ):95-117. Available from: https://sid.ir/paper/399677/en

IEEE: Copy

Mahdis Arefpour, HAMED RAFIEE, and Amirhosein Chizari, “Investigating the Effective Factors on Enhancing Loyalty Level of Edible Oil Consumer: Case Study Tehran City,” AGRICULTURAL ECONOMICS: IRANIAN JOURNAL OF AGRICULTURAL ECONOMICS (ECONOMICS AND AGRICULTURE JOURNAL), vol. 14, no. 1 , pp. 95–117, 2020, [Online]. Available: https://sid.ir/paper/399677/en

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