The Impact Of Product Safety Policies On Customer Loyalty: A Case Study Of Woolworths

Background of the Problem

Question:

Discuss About The Product Safety Policies Applied Enhancing?

Product quality is a dominant factor of customer loyalty and is considered as an important aspect in management theory (Foschia et al. 2013). The research mainly aims for evaluating the impact of products safety policies on customer loyalty. This research study highlights the fact that in order to attain more customers, an organization should offer safe and quality products to their customers. The organization that is taken into consideration is Woolworths, the largest supermarket chain in Australia. The concept of product quality encompass a variety of drivers and implications for business performances and one such aspect is the brand reputation as customer prefer the brand compared to any other organization. The research paper comprises of six chapters that describes background of the problem, problem definition, literature review, research design and method, additional issues and conclusion. The details about the chosen methods to conduct the whole research is describes in this proposal.

In Australia, unsafe products are banned under the Competition and Consumer Act 2010 (CCA) imposed by Australian Competition and Consumer Commission (ACCC), so that correct information regarding the products can be incurred (ACCC.gov.au 2017). Goetsch and Davis (2014) depicted that this legislation is especially appropriate for the traders but local marketers should also adhere this legislation. Moreover, if any breaching of the mandatory standards is observed by any marketers, legal actions are taken against them. In this research the scenario of Woolworths is considered where they mislead their consumers through wrong information of the product’s safety. Woolworths is the largest retail industry in Australia that operates in over 1000 stores, 968 supermarkets and 19 convenience stores across the nation (Woolworths.com.au, 2017). Three of their products that are Abode 3L Stainless Steel Deep-Fryer, Homebrand Safety Matches and Woolworths Select Drain Cleaner consists of false or misleading representations that results in malfunctioning and explosion (ABC News, 2017). The customers were affected from nose bleeding and burns. Moreover, another products that is the folding chair also contain false information that the chair is capable to bear weight of 115kg though it only has the capability of bearing 92kg weight (Australian Competition and Consumer Commission, 2017)

The project thus aims to highlight the significance of the correct information of the products on ensuring the loyalty of a consumer and brand loyalty. Thus, two research variables are taken- product safety regulation being the independent variable; while, the customer loyalty is the dependent variable.

Product Safety Policies and Customer Loyalty

This investigation worth a research so that accurate scenario can be evaluate whether or not larger organizations adhere all the legislations and follow all the management concept through which customer loyalty can be assessed (Jahanshani et al. 2014). Thus, this research will highlight one of the important cases of product safety regulation that is breached by a leading organization, Woolworths. The impact of the same on customer loyalty will be highlighted through this research. The boundaries of this research is that only one management issue is researched and that also for one organization only. Thus, not considering more than one organization or sectors for assessing the impact of products safety regulation on loyalty of the customer can be the delimitation of this research study.

The major aim of this research study is to evaluate the factors that are liable for driving the loyalty of the customers regarding a product and its image. The case study that is considered is the Woolworths in which there several products do not follow the products safety regulation and consists of misleading information.

• To find out the aspects the Woolworths has included in the products safety requirements
• To determine the quality of the existing product.
• To examine the impact of false safety guidelines on organization’s image and customer loyalty.
• To identify the factors that can help Woolworths to improve their brand loyalty.

This section describes different theories and concept that explains the all the research variables. The detail about perceived quality and perceived risk is discussed in this chapter. Moreover, the determinants of the perceived quality and risks and impact of products safety regulation on customer loyalty is also illustrated in this section.

Choi and Kim (2013) stated that the concept of perceived quality refers to the customer’s perception for assessing quality or superiority of a product. These qualities can be based on three kinds of perceived quality- actual or objective quality, product-based quality and manufacturing quality. Shi et al. (2014) furthermore depicts that perceived quality of a product is also based on what customer think is important to them. This quality is intangible and shows the actual image of the brand’s reliability and performance. There are some dimensions of perceives quality in terms of product’s context- performance of the products, features that makes the products different from other products, conformance with specifications, reliability and durability of the products and adherence to the products safety regulations (Oh et al. 2017).

The uncertainty that a customer posses in buying an item and is especially witnessed for the products that are expensive like home appliances. There are four categories of perceived risks- functional risks, social risks, financial risks, physical risks and time risks.

This risk highlights the situation of fear and hesitation when a customer purchases an expensive product (Chang and Tseng 2013). Slovic (2016) stated that the fear is regarding whether or not the products will function properly and they have to pay for extra financial resources in preparing the same product.

The Case of Woolworths

Martin et al. (2015) portrays that this risk resembles the fear of not being able to be accepted in society or community. Mitchell (2015) furthermore affirms that in this aspect, people, who belongs to a wealthy social class never intends to buy things that are less expensive as it might impact their social status among their peers.

Petersen and Kumar (2015) depicted that this kind of risk arise when a customer desire to purchases such a costlier things that it might left them with no money in future and consumes all their savings. Thus, customer always prefers a reliable brand from where their investment gets valued.

The product that can cause physical harm is the major reason for the physical risks (Wu and Ke 2015). This can be explained through two situations, firstly, when the customer purchased objects like- gun and weapons that can cause an accident. Secondly, if some products physically harm people like bursting of some appliances or malfunctioning of the gadgets (Mitchell 2015).  

Hong (2015) stated that people always desires to buy products that is durable and can be used for longer time. Thus, the risk that the products may break or fails to perform within a few days of purchase highlights the situation of time risks.

Beneke et al. (2013) portrays that if a products is every expensive, there might be some unethical proceedings supported by organization. In such cases, the customers started doubt on the quality and services of the products and may not prefer the same brand from the next time.

It is evident that based on a products warranty, people intends to purchase a products from some organization (Baxter et al. 2013). The greater the warranty for a product, the more the customer will believe on the durability of the products.

Sethuraman and Gielens (2014) stated that prior to purchase any products especially the expensive products, customer research about the items from other resources so that they can buy the best products. In that time, people often prefer reputed organization as they can rely on them easily.

Liao et al. (2014) stated that to a consumer, product safety means family protection and in this case theories of perceives quality and perceived risk can be witnessed. These regulations are established so that a consumer can invest in safe products.

The warranty and guaranty on products allows people to realize that the products that they are purchasing are durable and safe. However, in case, products safety is breached, customer has the right to ask for refund and regulatory actions are also performed against the organization, which represents ethical business approach.

Literature Review

Government in all nations develops products safety guidelines that assure the quality and durability of the products (ACCC.gov.au 2017). However, these regulations also lead to provide a minimum standard of the products. According to ACL, two mandatory notification are established that is a products must be “recalled” if it cause harm to any human being and secondly, a “mandatory reporting” within two days in case the supplied products cause serious injury, illness and even death.

Sethuraman and Gielens (2014) stated that product safety issues can damage the business reputation that on the other hand affects the customer loyalty. Thus following all the governing rules and have lawyers in their organization to handle all the legal matter, the safety concern of the products can become high. Thus, this help an organization to gain faith of their customers towards their brand. 

Objectives	Relevant External Secondary Data	Findings	Gaps Requiring Primary Data
To find out the aspects the Woolworths has included in the products safety requirements	·                    ACCC.gov.au., 2017	Woolworths does not follow product safety regulation in the past Several customers get affected from the misleading information	None
To determine the quality of the existing product.	·                    Website of the organization ·                    Newspaper articles regarding recent products quality	The quality of the products does not met the standard Penalty has been imposed on Woolworths	The details of the products quality of the exact products is not present in details even in the newspaper articles and the company’s website
To examine the impact of false safety guidelines on organization’s image and customer loyalty.	·                    Martin et al. 2015 ·                    Wu and Ke 2015 ·                    Hong 2015	It is found that customer possess the quality of perceived quality and perceived risk. Determinants of the perceived quality and risks are also identified that are- ·                      Warranty on the purchase products ·                      Brand reputation that drives customer Loyalty ·                      Unjustified additional charges	The details are not only related to the electronic products that is selected for the organization Woolworths. Details of different products are also given.
To identify the factors that can help Woolworths to improve their brand loyalty.	·                    Jahanshani et al. 2014 ·                    Liao et al. 2014 ·                    Shi et al. 2014	·                   Satisfied customers ·                   Adherence to standards ·                   Effective brand reputation	Only the ideas from these ideas are taken that can be implemented by Woolworths so that they can get more satisfied customers

Table 1: New Research Objectives, Relevant Secondary Data & Findings and Knowledge Gaps

(Source: Created by Author)

This section shows the research techniques that will be used in the research so that desired outcome can be obtained that can satisfy the research objectives.

Objectives	Needed Knowledge	Research Approach	Research Technique
To find out the aspects the Woolworths has included in the products safety requirements	Only the Woolworths website and sustainability report is sufficient to answer this question	N/A	N/A
To determine the quality of the existing product.	The difference between the previous a d present products quality The gap between the products safety adherence in past and present	Positivism Descriptive	Questionnaire
To examine the impact of false safety guidelines on organization’s image and customer loyalty.	The result analysis from the customer survey provides the idea of the actual situation of the organization’s image.	Descriptive	Questionnaire
To identify the factors that can help Woolworths to improve their brand loyalty.	The plans and ideas that the managers of the Woolworths are planning to consider for improving the quality of their products	Descriptive	Questionnaire And interview from managers

Table 2: Research Approach

(Source: Created by Author)

Hair (2015) stated that exploratory research is chosen when the problem has not been highlighted or explained in any research papers. In this research paper, exploratory design will be first used so that in-depth knowledge can be attained based on the product safety regulations. In this research, the impact of the breaching of products safety will be analyzed based on the case studies of Woolworths. There are many researches on employee motivation or job performance for the same organization but studying the legislations related to the misleading information is never researched before. Thus, it can be said that the exploratory stage will help to test the main concept of research. If, the exploration is successful, hypothesis based on the research topic can also be drawn. However, in this research no hypothesis will be formulated and the research will be explained concerning the research objectives and questions. Silverman (2016) also depicted that, exploratory research is often selected when secondary research is followed and in this case, this research can be obtained while developing the literature for the research.

This research design is considered so that exact scenario of the Woolworths case study can be observed in support with literature based on the case study. In addition to that, several factors of breaching the product safety regulation can also be observed in a preliminary stage of investigation, which will help in gaining insights and familiarity for later investigation.

Research Design and Method

The main purpose of choosing a research design is to gather knowledge and understanding of the research variables. Blumberg et al. (2014) stated that there are two types of research design- explanatory and descriptive. In explanatory research design, the major focus is to evaluate the association between the two research variables; on the other hand the descriptive research design emphasis on the proper explanation of the research study. Descriptive design mainly emphasizes on the primary research question that explains the data of the research with proper justification.  In this research study, the descriptive research design will be used.

The data collected for the research is primary and thus survey data is analyzed through quantitative methods. The questions asked by the customers are collected and evaluated quantitatively and the analysis related to the brand loyalty will be then properly described. The questions are constructed properly and comprehended aligning with the research objectives. Thus, descriptive design is considered to get the actual explanation of the research topic and finding the proper association between the research variables.

In order to assess the outcome of the research topic, data are collected for the research based on which a conclusion is drawn. Palinkas et al. (2015) stated that there are two kind of data collection- primary data collection and secondary data collection. The data that are collected directly from the research respondents is known as primary data collection. The greatest strength of this primary data collection is that it represents the current scenario regarding the research topic (Wahyuni 2012). Terrell (2012) stated that since the respondent’s answers based on their perception and experience; thus, the accuracy of the obtained research outcome is greater than any other data collection. On the other hand, secondary data collection focuses on the collection of data through different articles, journal, peer research papers, authentic sites like company’s website and government sites (Bryman and Bell 2015). Bryman (2015) stated that the secondary data has the advantages that are the information is always authentic but suffer from the greatest disadvantage that is the data is outdated. In secondary data, there is no chance of respondents and administration error. However in this research study, the primary data collection will be taken into consideration. The main reason for this selection is that the research is based on one particular organization and thus questioning from the employees and managers of the organization can provide the relevant answers to the research question.  

Conclusion

Fowler Jr (2013) depicts that there are two kinds of sampling techniques- probability and non-probability sampling technique. In probability sampling technique, all the research respondents get the equal chance to participate in this study or the probability of all the respondents to get selected is equal. On the other hand, Hair (2015) describes that when all the research respondents are not getting the equal chance to participate in the research refers the non-probability sampling. In this research study, both the sampling methods that are probability and non-probability sampling techniques will be taken into consideration. The selection of all the employees for the survey is based on the probability sampling techniques; whereas, the selection of the managers of the interview will be accomplished based on the non-probability sampling techniques.

Bhattacherjee (2012) explains that the total number of research respondents participated in the research is known as sample size. In this research only 53 respondents will be taken into consideration among which 50 respondents will be the employees of the organization; on the other the remaining three respondents will be the managers of the organizations. In addition to that, only those managers will be selected that are liable for handling the product safety regulation.

The data that is collected during the research is finally assessed so that desired research outcome can be obtained. Silverman (2016) depict that data analysis methods are of two types- quantitative data analysis method and qualitative data analysis method. In quantitative data analysis, only the numerical data are analyzed in order to get the research outcome. On the other hand, in qualitative data analysis only the theoretical data are analyzed. No numerical or statistical calculations are considered in this method (Flick 2015). In this research study, both quantitative and qualitative data analysis method will be used. The survey questions asked by the research respondents will be analyzed quantitatively; whereas, the question that is asked from managers of the company will be analyzed quantitatively.

Conclusion

The conclusion of the entire research will be based on the data collection. It is expected that the research shows a positive relationship between the research variables that is the products safety regulations drives the customer loyalty. It is expected that the final data that is obtained from central tendency will be in favor of the fact that all the organizations should follow products safety regulation for better brand recognition and stable customer loyalty. All the research ethics will be followed effectively and accurate scenario of the Woolworths in terms of following the products safety regulations will be accomplished properly. Evidences from the Australian Government will also be considered in order to explain the accurate scenario. In addition to that, authentic research articles, websites details and research papers along with the journal articles is used for completing the entire research. It is also expected that all the research objectives can be properly justified from the obtained research results and based on which appropriate recommendations can also be suggested.

The major limitation of this research is that only primary research will be considered; if secondary research is also included, the part and current scenario related to research topic can be evaluated properly. In addition to that, another research limitation is the sample size that is only 50 and it will be better if more employees can be taken into consideration. As mentioned above, considering only one organization and one sector is another research limitation as this research will only be significant for the selected organization.

Miller et al. (2012) stated that research ethics is crucial to adhere as it provide the permission to conduct the research effectively. In this research also, number of ethics followed. Firstly, all the respondents are provided with a consent form that is duly signed from them. This will be a proof that all the respondents will be willingly participate in the research. Moreover, all the collected data will be protected by adhering the legislation of Data Protection Act 1998. In addition to that, all the data will be utilized for research purpose only and not for other research benefits. All the details of the respondents will not be disclosed without their permission. In this research study, no research respondents will be influenced or force to change their answers for the research questions.

Main activities/ stages	Week 1st and 2nd	Week 3rd and 4th	Week 4th and 5th	Week 5th and 7th	Week 8th and 10th	Week 11th and 12th
Topic Selection
Data collection from secondary sources
Framing layout of the research
Literature review
Selection of the Appropriate Research Techniques
Primary data collection
Analysis & Interpretation of Data Collection
Conclusion of the Study
Submission of Final Work

Table 3: Timeframe of the research

(Source: Created by Author)

Reference List

ABC News., 2017. Woolworths ordered to pay m over product safety concerns. [online] Available at: https://www.abc.net.au/news/2016-02-05/woolworths-ordered-to-pay-3m-over-product-safety-case/7144442 [Accessed 13 Aug. 2017].

ACCC.gov.au., 2017. Product Safety. [online] Available at: https://www.accc.gov.au/business/treating-customers-fairly/product-safety#selling-safe-products [Accessed 12 Sep. 2017].

Baxter, R., Bedard, J.C., Hoitash, R. and Yezegel, A., 2013. Enterprise risk management program quality: Determinants, value relevance, and the financial crisis. Contemporary Accounting Research, 30(4), pp.1264-1295.

Beneke, J., Flynn, R., Greig, T. and Mukaiwa, M., 2013. The influence of perceived product quality, relative price and risk on customer value and willingness to buy: a study of private label merchandise. Journal of Product & Brand Management, 22(3), pp.218-228.

Bhattacherjee, A., 2012. Social science research: Principles, methods, and practices.

Blumberg, B.F., Cooper, D.R. and Schindler, P.S., 2014. Business research methods. McGraw-hill education.

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.

Bryman, A., 2015. Social research methods. Oxford university press.

Chang, E.C. and Tseng, Y.F., 2013. Research note: E-store image, perceived value and perceived risk. Journal of Business Research, 66(7), pp.864-870.

Choi, E.J. and Kim, S.H., 2013. The study of the impact of perceived quality and value of social enterprises on customer satisfaction and re-purchase intention. International Journal of Smart Home, 7(1), pp.239-252.

Flick, U., 2015. Introducing research methodology: A beginner’s guide to doing a research project. Sage.

Foschia, M., Peressini, D., Sensidoni, A. and Brennan, C.S., 2013. The effects of dietary fibre addition on the quality of common cereal products. Journal of Cereal Science, 58(2), pp.216-227.

Fowler Jr, F.J., 2013. Survey research methods. Sage publications.

Goetsch, D.L. and Davis, S.B., 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Hair, J.F., 2015. Essentials of business research methods. ME Sharpe.

Hong, I.B., 2015. Understanding the consumer’s online merchant selection process: The roles of product involvement, perceived risk, and trust expectation. International Journal of Information Management, 35(3), pp.322-336.

Jahanshani, A.A., Hajizadeh, G.M.A., Mirdhamadi, S.A., Nawaser, K. and Khaksar, S.M.S., 2014. Study the effects of customer service and product quality on customer satisfaction and loyalty.

Liao, K.H., Chen, S.H. and Jhou, Y.S., 2014. The Effect of Price, Quality, Sacrifice, Risks and Value on General Consumers’ Perceptions with Aesthetic Medicine. In INTERNATIONAL ACADEMIC CONFERENCE ON SOCIAL SCIENCES (p. 163).

Mackey, A. and Gass, S.M., 2015. Second language research: Methodology and design. Routledge.

Martin, J., Mortimer, G. and Andrews, L., 2015. Re-examining online customer experience to include purchase frequency and perceived risk. Journal of retailing and consumer services, 25, pp.81-95.

Miller, T., Birch, M., Mauthner, M. and Jessop, J. eds., 2012. Ethics in qualitative research. Sage.

Mitchell, V.W., 2015. 30 years of perceived risk: Some research issues. In Proceedings of the 1994 Academy of Marketing Science (AMS) Annual Conference (pp. 350-355). Springer, Cham.

Neuman, W.L. and Robson, K., 2014. Basics of social research. Pearson Canada.

Oh, H., Oh, H., Kim, K. and Kim, K., 2017. Customer satisfaction, service quality, and customer value: years 2000-2015. International Journal of Contemporary Hospitality Management, 29(1), pp.2-29.

Palinkas, L.A., Horwitz, S.M., Green, C.A., Wisdom, J.P., Duan, N. and Hoagwood, K., 2015. Purposeful sampling for qualitative data collection and analysis in mixed method implementation research. Administration and Policy in Mental Health and Mental Health Services Research, 42(5), pp.533-544.

Petersen, J.A. and Kumar, V., 2015. Perceived risk, product returns, and optimal resource allocation: evidence from a field experiment. Journal of Marketing Research, 52(2), pp.268-285.

Sethuraman, R. and Gielens, K., 2014. Determinants of store brand share. Journal of Retailing, 90(2), pp.141-153.

Shi, Y., Prentice, C. and He, W., 2014. Linking service quality, customer satisfaction and loyalty in casinos, does membership matter?. International Journal of Hospitality Management, 40, pp.81-91.

Silverman, D. ed., 2016. Qualitative research. Sage.

Slovic, P., 2016. The perception of risk. Routledge.

Smith, J.A. ed., 2015. Qualitative psychology: A practical guide to research methods. Sage.

Taylor, S.J., Bogdan, R. and DeVault, M., 2015. Introduction to qualitative research methods: A guidebook and resource. John Wiley & Sons.

Wahyuni, D., 2012. The research design maze: Understanding paradigms, cases, methods and methodologies.

Woolworths.com.au., 2017. Shop-Discover-About-us-Product-safety. [online] Available at: https://www.woolworths.com.au/Shop/Discover/about-us/product-safety [Accessed 13 Aug. 2017].

Wu, W.Y. and Ke, C.C., 2015. An online shopping behavior model integrating personality traits, perceived risk, and technology acceptance. Social Behavior and Personality: an international journal, 43(1), pp.85-97