Measuring brand loyalty of consumers towards chicken brands in the KwaZulu-Natal Province of South Africa

Abstract

Brand loyalty is regularly categorised as one of the most vital drivers for ensuring the long-term sustainability of any organisation. Advantages of having a brand loyal customer base include lower sensitivity to price increases, lower brand switching intentions, high level of customer word-of-mouth marketing exposure and increased consumer profitability. The main focus of this study is to measure the brand loyalty of the KwaZulu-Natal consumers towards their uncooked chicken brand of choice using a validated model and its measuring instrument. The model was developed to measure brand loyalty in the fastmoving consumer goods industry but also successfully applied in agriculture, financial services and other industries. The model measures twelve of the most important antecedents influencing brand loyalty, namely perceived value, brand relevance, brand trust, repeat purchase, switching cost, brand affect, brand commitment, involvement, brand performance, relationship proneness, customer satisfaction and culture. The empirical study was conducted amongst 112 consumers in the KwaZulu-Natal Province of South Africa. A convenience sample was used to collect data through a product-specific adapted questionnaire designed to test how strongly each of the twelve antecedents relates to KwaZulu-Natal’s consumer loyalty towards its chicken brand. The sample showed the appropriate adequacy, had low sphericity and were proved to be reliable as measured by Cronbach Alpha coefficients. The empirical results confirm the importance of each brand loyalty antecedent in chicken brands. This study offers the most important brand loyalty antecedents as a managerial guideline to chicken brands for consideration to implement in their customer loyalty marketing strategies. Corresponding author: Christo Bisschoff Email addresses for the corresponding author: christo.bisschoff@nwu.ac.za First submission received: 20th May 2019 Revised submission received: 9th August 2019 Accepted: 21st August 2019 Introduction The South African Agricultural Sector The South African National Development Plan 2030 has identified agriculture, mining and manufacturing as significant drivers of job creation and growth in South Africa’s economy. Agriculture has the most possibilities compared to the other two sectors. Furthermore, agriculture and agroprocessing are anticipated to create at least one million jobs by 2030. The South African agricultural sector is also vital regarding their role in food security, rural development and poverty alleviation (Department of Agriculture, Forestry and Fisheries, 2017:8). Employment in the agricultural segment increased by 5% to 849 000 employees in the third to last quarter of 2017 (Department of Agriculture, Forestry and Fisheries, 2017:9). South African agriculture is confronted by increasing costs of production attributed largely to the high prices of inputs (fertilisers, seed and pesticides), electricity, fuel, mechanisation and labour. There are also additional challenges like frequent drought spells and outbreaks of pests and diseases. In the Department of Agriculture, Forestry and Fisheries’ Annual Report for 2016/2017, Minister Zokwana said that the government initiated and funded drought-relief programmes worth R263 million. This followed the 2016 season was classified as one of the worst droughts the country has experienced since 1904 (Department of Agriculture, Forestry and Fisheries, 2017:13). Journal of Business and Retail Management Research (JBRMR), Vol. 14 Issue 1 October 2019 www.jbrmr.com A Journal of the Centre for Business & Economic Research (CBER) 80 The regulatory agricultural environment has also changed dramatically since the onset of democracy in 1994. Government subsidies have been discontinued and commercial farmers are now more price sensitive. In addition to the rising farm expenditure, and specifically labour costs regulated by the minimum wage legislation, farming activities shifted towards mechanisation and the use of capital intensive buying behaviour of farmers (Grainger, 2018). On the political front, the announcement of President Cyril Ramaphosa in December 2017 at the ruling party’s conference that Land Expropriation without Compensation was going to be phased in after the Election in 2019, are a major concern for farmers. This, in conjunction with continued pressure on land reform from Julius Malema, leader of the opposing Economic Freedom Front party, have increased uncertainty in farming (The South African, 2019). Furthermore, the uncertain safety situation on farms and high volume of farm attacks (108) and murders (57.4%) (for the period March 2017 to March 2018) also have a negatively influence farm investments (Head, 2018). As a result, investment and capital expenditure in farming is limited because farmers are unsure of their fate in the future (Bisschoff & Grainger, 2019:4). The Department of Agriculture, Forestry and Fisheries (2018:10) also reported that the agricultural sector succeeded to contribute 2.4% to the Gross Domestic Product in 2017. The total worth of agricultural production for 2017 was valued at R277,6 billion; this is 8,4% higher than the previous year. The total worth of animal products contributed R137 billion, contributing nearly 50% to the overall agricultural value (Department of Agriculture, Forestry and Fisheries, 2018:12). The Department of Agriculture, Forestry and Fisheries is continuously aiming to implement strategies to expand the sector. Table 1 below shows some of the focus areas and accompanying forecasts of expansion in the agricultural sector. Table 1: Expansion of the Agricultural Sector Focus Area From 2012 To Increase number of Agricultural Smallholders 171,670 471,670 (2019) Increase value-added activities of sectors R42.5 billion R48.9 billion (2019) Increase the average value of annual exports R5.1 billion R5.8 billion (2019) The decrease in the average value of annual imports of diesel, fertiliser and machinery R9.6 billion R7.4 billion (2019) Increase the number of jobs in the sector 660,000 1 million (2030) The ZAR traded at $14,87 US Agriculture in the KwaZulu-Natal province Agriculture has always been a major contributor to KwaZulu-Natal’s economy, especially as KwaZulu-Natal is reckoned to be South Africa’s best watered province and boasting 6.5 million hectares of high-quality agricultural land. The area between Pietermaritzburg and the Drakensberg, known as the Midlands, is regarded as the heart of the province’s agricultural area. The North Coast region is another area of importance where several national leading agricultural products are produced. Some 82% of the province’s agricultural land is fit for extensive livestock production, while 18% of this region have arable land. Even though KwaZulu-Natal covers a small portion of South African borders, a substantial proportion of the nation's small-scale farmers are based here. The diversity of the province’s agriculture is also of note and relates to the patterns of the province’s topography. KwaZulu-Natal has specialist capabilities in several agricultural products as a result of its decent and reliable rainfall throughout the year and its fertile soils (KwaZulu-Natal Top Business, 2018). The main focus of KwaZulu-Natal’s agricultural sector consists of the following: • Horticulture: Sub-tropical fruits, especially bananas, pineapples, cashew nuts, potatoes and other vegetables. • Crops: Sugar and maize • Forestry: Black wattle, SA pine, eucalyptus, saligna and poplar. • Animal husbandry: poultry, beef, sheep (mutton and wool) and pigs (KwaZulu-Natal Top Business, 2018). Problem statement The South African uncooked chicken market, consisting of chicken pieces and also whole birds, is affected by feed cost that have increased significantly. The cost of feeding a chicken has increased by 157% Journal of Business and Retail Management Research (JBRMR), Vol. 14 Issue 1 October 2019 www.jbrmr.com A Journal of the Centre for Business & Economic Research (CBER) 81 from 2001 to 2012, while the selling price of a chicken remains under pressure due to cheap imports. During the same period, chicken prices have risen by only 61% (Davids et al., 2015:73). To survive and remain competitive, South African chicken producers are forced to continuously improve on efficiency and constantly generating new competitive strategies to attract new customers and maintain their current customer base (Esterhuizen, 2006:1). One such strategy is to effectively brand chicken products and target the different brands to specific market segments to acquiring a competitive advantage by creating a brand loyal customer base (Jandaghi et al., 2011:153). Kyriakidis and Rach (2010:7) among many other strategist’s state that there are many advantages in creating brand loyal customers. One such advantage is that such customers are usually less sensitive to price escalations of and loyal customers are also prepared to pay a premium price to obtain their brand of choice. By creating a strong brand and loyal customers, brand management can become a strategic thrust toward profitability. However, to effectively manage a brand and its loyalty, management must measure the levels of brand management across several key brand loyalty indicators (Moolla and Bisschoff, 2012a:342). This is where the problem in the chicken industry lies. There is no tailor-made model to measure brand loyalty in the chicken industry. This study then proposes to address the above problem by using a South African brand loyalty model developed for the fast-moving consumer goods industry, to measure the brand loyalty of uncooked chicken brands in KwaZulu-Natal. Objectives of the study 1. The primary objective of this study will be to measure the brand loyalty of KwaZulu-Natal consumers towards their chicken brand. 2. The secondary objectives are to: 3. Confirm the statistical validity of the twelve brand loyalty antecedents; 4. Measure the brand loya