The Effects of Product Quality on Customer Satisfaction and Loyalty: Evidence from Malaysian Engineering Industry

Abstract

Organizations today are operating in an environment in which little is certain, the tempo is quicker and the dynamics are more complex. The customer is central to the organization and assessing customer satisfaction is a vital element in any strategy for business performance improvement. This makes customer satisfaction a driver for survival, competitiveness and growth. The key determinant for a sustainable business is customer loyalty as loyal customers not only increase the value of the business, but they also enable businesses to maintain costs lower than those associated with attracting new customers. By creating and preserving customer loyalty, organizations develop a long term, mutually beneficial relationship with the customers. The purpose of the research is to study the factors that can assist a company to build a sustainable competitive advantage through the effective enhancement of customer satisfaction and ultimately customer loyalty. The proposed conceptual model consists of the different dimensions of product quality as the independent variables with customer satisfaction. Garvin’s eight dimensions of Product Quality in Performance, Features, Reliability, Conformance, Durability, Serviceability, Aesthetics and Perceived quality are dimensions of Product Quality that affect Customer Satisfaction which impacts Loyalty. The results provide insights to understand the dimensions of Product Quality that affect customer satisfaction and higher satisfaction leads to higher customer loyalty in the engineering industry in Malaysia.