Republic of the Philippines
Department of Education
Region I
Schools Division of Ilocos Norte
GOV. ROQUE. B ABLAN SR. MEMORIAL ACADEMY INC.
Solsona
______________________________________________________________________________
EXPLORING CUSTOMERS SATISFACTION AND ITS IMPACT ON BRAND
LOYALTY OF LOCAL ENTERPRISE
Inquiries, Investigation, and Immersion
(Quantitative Research)
(Researchers)
Precious Jenina G. Puso
Joyce D. Grande
Mark Jaylord P. Taylan
Charmaine Rose V. Agnir
Twinkle Shine A. Pascual
(Teacher)
March 2025
CHAPTER I
BACKGROUND OF THE STUDY
In today's competitive market environment, businesses are quickly arising, leading to an
increased number of businesses that offer the same products and services. Hence, customer
satisfaction has become one of the most important factors for success. In a market environment
where products and services are often similar, it is crucial for business owners to focus on the
customer experience in order to create a differential and build relationships with the customers. It
is generally accepted that satisfied customers are more likely to form positive feedback to a brand,
which in turn leads to their repeat of purchase, positive recommendation, and brand loyalty.
Customer satisfaction is crucial to the success of any business. In launching a business, the
owner's focus should think first of customers and only afterwards of profit. Those companies that
can satisfy customers’ needs will remain ahead in the market. Today, businesses realize the
importance of customer satisfaction and contribute to its enhancement in order to achieve growth
and enhance market value. In fact, customers are those who purchase goods and services to meet
their wants and needs. They make the purchases based on the price-quality equilibrium. Therefore,
companies have to set the price of their products according to the quality of the products they offer
so as to attract the customers and build a good relationship with them.
Additionally, Customer satisfaction has an important role for business sustainability.
Customer satisfaction is able to support the customers to have a positive impression on the product
and service offered by a business. Positive attitude has an important role in rebuilding the product
or service in the future (Dizfani, Mantralla, Yuzta and Ruiz, 2017). The satisfied customers will be
formed to rebuy in the same business despite the interesting offer from other businesses. In general,
a positive relationship between the customer satisfaction and the customer loyalty possibly
becomes the main factor or the moderation. In some previous marketing study, it is confirmed that
the customer satisfaction on their needs is one antecedent of loyalty either on the brand or the shop
Dizfani et.al (2017). Customer satisfaction is determined by the development of product and
quality conducted by a business, also the service and improvement in order to meet the customer
expectation.
STATEMENT OF THE PROBLEM
The goal of this study is to impart knowledge on why customer satisfaction is important
and provide tips for businesses on how to improve their customer's satisfaction and long-term
success. The purpose of this study is to answer the following questions:
The study aims to answer the main question:
What are the key factors that contribute to customer satisfaction in local businesses and its impact
on consumers' brand loyalty?
Specifically, this study aims to answer the following questions:
1. In what ways does product quality impact consumers' loyalty to a brand?
2. How do sellers’ attitudes influence customer loyalty?
3. How does product packaging affect brand loyalty?
4. What is the relationship between customer satisfaction and brand loyalty in local businesses?
OBJECTIVES OF THE STUDY
1. To explore the relationship between customer satisfaction and brand loyalty.
2. To identify the key factors affecting brand loyalty.
3. To investigate the impact of customer satisfaction on brand loyalty.
4. To identify barriers to customer loyalty in local enterprises.
SIGNIFICANCE OF THE STUDY
The study of Exploring Customer Satisfaction and Its Impact on Brand Loyalty of Local
Enterprises is crucial because it can demonstrate the meaning behind the customer satisfaction and
its usefulness to a business’s success, particularly in a highly competitive market. Considering
there is growing competition of nearly similar goods and services, being able to perfectly satisfy
the clients and exceed their expectations is very important for the long standing success of
businesses. This research aims to examine the levels of customer satisfaction as it relates to
marketing in order to provide useful business tactics and strategies that can be employed in
implementing competition differentiation and attaining brand loyalty. The scope of this study will
benefit the following;
Students. This study will be really helpful for students, especially those in the Accountancy,
Business, and Management strand. It will give them a better understanding of why it's so important
to meet customer expectations and how customer satisfaction plays a key role in business success.
Having knowledge regarding this will give students practical insights that they can use in their
future careers, whether they end up in management, marketing, or any other business-related field.
Business Owners. The result of this study would make business owners aware of how important
customer satisfaction is in their daily operation of business and how it affects their overall business.
Through this study, they will be able to improve the factors to reach customers' satisfaction or
expectation towards them.
Future Researchers. This study can be used by future researchers as a reference if they were to
conduct a similar or same research topic. Also, future researchers can use the findings to explore
new areas or test different variables if they want to.
SCOPE AND DELIMITATION
This study will focus on Brgy. Juan in Solsona, Ilocos Norte, specifically on three small
businesses: The Big Brew, Super Daddy, and Black Habit. The research will target consumers who
have been purchasing from and engaging with these businesses in Solsona for at least six (6)
months. The researchers will explore their perceptions of customer satisfaction, considering factors
such as product quality, pricing, customer service, and overall experience.
The scope of this study is limited to businesses within Solsona, Ilocos Norte, and does not
include consumers from other areas or businesses outside of this locality. The researchers will
randomly select consumers who have had consistent interactions with the specific businesses for
a minimum of six (6) months. A total of forty (40) customers will be chosen randomly.
This study will adopt a quantitative research approach, utilizing structured surveys to
gather data from the selected participants. The survey responses will be analyzed using statistical
methods to assess customer satisfaction levels based on the factors under investigation. The
research will be conducted during the second semester, with all stages—data collection, analysis,
and interpretation of results—completed within this period to ensure timely conclusions.
CHAPTER II
CONCEPTUAL FRAMEWORK
(DEPENDENT
VARIABLE)
(DEPENDENT
BRAND LOYALTY
VARIABLE)
(INDEPENDENT
CUSTOMER CUSTOMER
VARIABLE)
SATISFACTION RETENTION
PRICE/SERVIC
(INDEPENDEN
E
VARIABLE)
CUSTOMER
ADVOCACY
REVIEW RELATED LITERATURE
According to (Asabi et al.,2015) businesses strive to satisfy their customer, since customer
satisfaction serves as a foundation upon which other goals can be constructed and attained. They
also stated that, in order to attain customer satisfaction, it is necessary to comprehend, know, and
meet the market’s needs.
Kotler and Keller (2012) define satisfaction as the feelings of pleasure or disappointment
a person experiences when comparing a product's perceived performance (or outcome) to their
expectations. On the other hand, Jahanshahi et al. (2011) describe customer satisfaction as the
outcome of a customer's perception of the value received in a transaction or relationship, where
value is determined by the perceived service quality relative to price and customer acquisition
costs. This contrasts with the findings of Tu et al. (2013), who suggest that customer satisfaction
influences repurchase intentions and behavior, thereby impacting an organization's future revenue
and profits. A satisfied customer perceives that the product or service meets their expectations,
which motivates them to repurchase. Conversely, a dissatisfied customer may discourage others
from repurchasing, leading them to switch to a competing brand.
Kotler and Keller (2013) further explain that customer satisfaction is the feeling that arises
from comparing the performance of a purchased product with the consumer's expectations.
Satisfaction is the response to the perceived disparity between expectations and performance.
According to Oliver (2010), customer satisfaction involves a post-purchase evaluation, where
product performance surpasses customer expectations. Lovelock (2012) views customer
satisfaction as an emotional state, which can range from feelings of anger, dissatisfaction, and
irritation to excitement and neutrality, depending on the post-purchase experience.
Customer satisfaction directly influences customer loyalty, profits, and market share.
Satisfied customers, who perceive value in the products and services, are more likely to remain
loyal over time. Crosby, Evans, and Cowles (1990) and Kim and Cha (2002) argue that customer
satisfaction is shaped by the evaluation of whether the reality of a product or service exceeds
expectations. When the reality meets or surpasses expectations, customers are satisfied; when it
falls short, they are dissatisfied. Kotler and Armstrong (2012) define customer satisfaction as the
degree to which a product’s perceived performance aligns with a buyer's expectations. Satisfaction
can be measured by various indicators, such as loyalty, satisfaction, repurchase interest, a low
inclination to complain, willingness to recommend, and the company’s reputation (Kotler and
Keller, 2012; Nguyen and LeBlanc, 1998).
Kotler and Keller (2008) emphasize that satisfaction is the emotional response that follows
a comparison between product performance and customer expectations. Satisfaction is, therefore,
a function of the perceived performance relative to expectations. Additionally, experts define
customer satisfaction in services as the extent to which customer expectations are met through
service performance (Santouridis & Trivellas, 2010).
KEY FACTORS THAT CONTRIBUTE TO CUSTOMER SATISFACTION AND ITS
IMPACT ON CONSUMERS’ BRAND LOYALTY
According to the data that we have gathered to the consumers, there are five (5) factors that
affects customers’ satisfaction.
1. Product Quality - Product Quality is the collection of all the features and characteristics of
a product that contribute to its ability to meet the customer needs and requirements. It’s the
ability of the product to fulfil what the end user wants and perceives as value. Product
quality is single most important parameter for a product, brand or organization. The quality
determines the customer experience and repeat business. If the product quality is poor and
the product is not able to do its job reliably and safely then the brand image suffers. Product
quality refers to the ability of a product, service or combination of both to satisfy the
customer’s needs and meet necessary user and industry standards. Product quality is one
of the most important factors in determining consumer satisfaction, which ultimately leads
to the goal of repurchase.
2. Price - The price of a product plays an important role in consumer preferences as well as
being an important element of the marketing mix. Price can affect the product's value,
the perceived quality of the product, and the choice between different alternatives in
terms of consumers. The fact that the price is so effective in consumer preferences and
purchasing processes of consumers constitutes the starting point of the research.
3. Customer Service - Service quality is generally referred to as the output of a service
delivery system, which is directly linked to customer satisfaction. Customer service plays
a critical role in shaping consumer perception and opinions based on various contributing
factors such as responsiveness, professionalism, and problem resolution. The interest in
this issue has grown extensively over the last decade, making it a popular field for academic
and scholarly research (Zeithmal, 2000). Customer service interactions influence
satisfaction by setting expectations and delivering experiences that either meet or exceed
them. Even the best service efforts may be criticized due to customer mood, which can
impact how service is perceived. Frontline employees, such as waitstaff or customer service
representatives, often encounter customers whose psychological and physical conditions
influence their satisfaction levels. Therefore, the degree of discrepancy between customers'
expectations and their actual experiences may vary (Parasuraman et al., 1994).
4. Brand Image - Brand imagery, an essential component, significantly affects customers’
perceptions. Brand image has become a significant part of branding. It refers to the ideas,
beliefs, or perceptions about an entity. In competitive environments, businesses provide
high-quality services with exceptional brand images to achieve customer satisfaction and
loyalty. The brand image shows how the customer thinks about the brand and suggests how
consumers perceive it, which is reflected in the associations they hold in their minds.
Literature also indicates that a brand image comprises a group of organized, meaningful
perceptions. A brand image is an asset that shapes customer beliefs about a brand. The
accounting dimensions of brand image, such as brand meaning, attributes, and associations,
shape customer’s perceptions and influence their beliefs about the brand’s value.
5. Promotions/Discounts - Kotler and Armstrong (2017) identified promotional activities as
a key element of the marketing mix, playing a crucial role in influencing consumer
behavior and satisfaction. Powers and Loyka (2010) suggested that customer preferences
and motivations significantly shape their purchasing decisions, often driven by intensive
promotional efforts that directly target them. Marketing, at its core, involves developing
effective communication and distribution channels to deliver promotional messages,
products, and services to both existing and potential customers (Kotler & Armstrong,
2017). Much of the current literature emphasizes brand image and brand equity as key
determinants of customer satisfaction. However, this approach can be broadened by
incorporating brand loyalty as a mediating factor when analyzing the relationship between
promotional activities, consumer behavior, and customer satisfaction. Promotional
activities, such as discounts and special offers, enhance perceived value, making customers
feel they are receiving a good deal, which fosters positive emotions and strengthens brand
loyalty.
WAYS THAT PRODUCT QUALITY IMPACT CONSUMERS’ LOYALTY
INFLUENCE OF SELLERS’ ATTITUDE ON CUSTOMER LOYALTY
The ethical behaviour of salespeople can significantly impact customer perception of
thecompany’s ethics and customer–company relationship quality. The ethical behaviour ofsellers
is always associated with a higher evaluation of service satisfaction (Thomas et al.,2002).
Furthermore, it leads to gaining trust, commitment, communication with the buyerand subsequent
word-of-mouth advertising by the customer (Hansen and Riggle, 2009).Thus, ethical sales
behaviour positively and significantly affects customer satisfaction, trustand loyalty to the
organisation (Rom an, 2003). Reflecting increased loyalty, consumers arewilling to pay higher
prices for the products of companies that understand ethical behaviourand social responsibility
(Carvalho et al., 2010).
PRODUCT PACKAGING AFFECT ON BRAND LOYALTY
Packaging design is one of the critical elements in the consumer market contributing to
consumers’ behaviors and buying behaviors. The implications of these actions involve using
consumer psychology to make packaging that reaches beyond the receptors’ conscious recognition
through stimulating consumer responses that strengthen brand identity and loyalty. A good
example of packaging is when packaging communicates the brand story and the brand message to
the consumer thus enhancing the consumer loyalty and the level of consumer satisfaction. Product
packaging plays a vital role in consumer buying behaviour because it is buyers’ first exposure to
the product and creates lasting impressions during the time of purchase and consumption.
Packaging is defined as designing and producing the container for a product (Kotler & Keller,
2016). Similarly, Pride and Ferrell (2015: p. 282) also described “packaging as the development
of a container and a graphic design for a product”. Kotler and Armstrong 2012) emphasized that
the basic function of packag-ing in the past was to hold and protect the product in the distribution
chain. However, increased competition in the retail and self-service environment have changed the
role of packaging to perform an important marketing tool by seizing consumers’ attention,
describing the product’s features and creating consumer confidence and making sales (Kotler &
Armstrong, 2012; Kotler & Keller, 2016). Simms and Trott (2010) asserted that well-designed
packaging influences consumers’ buying decisions at the point of sale and can reinforce the
product’s success, particularly in the fast-moving consumer goods industry
RELATIONSHIP BETWEEN CUSTOMEE SATISFACTION AND BRAND LOYALTY
One of the most important aspects to ensure the attention of the customers is to provide
the best and the most favourable products at this competing market. With customer satisfaction
comes customer loyalty. The topic for this review article is to determine the relationship between
customer satisfaction and loyalty and the factors influencing these concepts. Further we will get
to know that how these concepts affect the relationship that customers have with the organization
that helps the organization to be at a better place in the market or beat the competitors. A highly
satisfied customer will spread positive WOM and a loyal customer leads to an increase in both
sales and profitability. Customer satisfaction affects the trust and customer trust is an antecedent
of loyalty. When customers connect with emotions through the product/ services of the brand
then it creates a bond between the customer and the brand. The relationship between satisfaction
and loyalty influences the profits. The more customer is satisfied, the more loyal towards the
brand. A loyal customer leads to an increase in both sales and profitability. Customer satisfaction
mediates the relationship between customer loyalty and service quality.
CHAPTER III
RESEARCH DESIGN
This research employed the quantitative research method to analyze how customer
satisfaction can influence brand loyalty of local businesses. This
quantitative method enables data collection in numbers, which will be analyzed in
order to determine the important factors that can influence customers' purchasing preferences. A
survey questionnaire was employed by researchers as the means of data
collection to obtain replies from random consumers. Descriptive statistics like frequency
distributions and percentages were employed in interpreting the data.
RESEARCH LOCALE
The study was conducted in Brgy. Juan, Solsona, Ilocos Norte. Solsona is a landlocked
municipality in the coastal province of Ilocos Norte, with a total land area of 166.23 square
kilometers (64.18 square miles), constituting 4.86% of Ilocos Norte's total area. Solsona is 28
kilometres (17 mi) from Laoag, 515 kilometres (320 mi) from Manila, and 93 kilometres (58 mi)
from Bangued. Solsona is politically subdivided into 22 barangays. [6] Each barangay consists
of puroks and some have sitios. Brgy. Juan was chosen as the research site because it is home to
the selected local enterprises and has a significant number of teenage consumers.
POPULATION AND SAMPLING
• Population: The study focused on consumers of three selected local enterprises in Brgy.
Juan.
• Sample Selection: A total of 40 consumers were randomly selected from the population
of Solsona.
• Sample Size: The study originally aimed for a sample size of 40. The sample size was
chosen for ease of data analysis while ensuring meaningful insights.
RESEARCH INSTRUMENTS
This study used questionnaire checklists that are used to the random consumers at Brgy.
Juan, Solsona, Ilocos Norte regarding the Customer Satisfaction and Its Impact on Brand Loyalty
of Local Enterprise. The survey questionnaire consists of two parts. The first part of the survey
questionnaire covers the Customer Demographics, this section collected information on the
respondents' age and gender and the second one is the survey questionnaire. This section contained
nine (9) core questions along with additional inquiries about factors influencing brand loyalty,
frequency of visits, and likelihood of recommendation. The survey used multiple-choice and Likert
scale questions to quantify customer responses effectively
DATA COLLECTION PROCEDURE
The data gathering process was done by the distribution of surveys among the randomly
chosen consumers of milk tea in Brgy. Juan, Solsona, Ilocos Norte. The respondents were assured
of clear instructions to provide correct and truthful answers. The survey was personally distributed
to enable higher response rates and address any questions about the questionnaire. Once the
consumers respond to the survey questionnaires, the researchers retrieve the questionnaire and read
through the survey to verify whether the responses are correct. All the responses were documented
systematically to ensure data accuracy and reliability.
DATA ANALYSIS PROCEDURE
After collecting the data, it was recorded and systematically categorized for analysis. Then,
the researchers tally all the collected data and used descriptive statistical methods, such as
frequency distributions and percentages in order to interpret the response. Tables are also used to
view trends in customer satisfaction and brand loyalty. The results were then interpreted in order
to establish key factors affecting consumer preferences and loyalty on the mentioned enterprises.
CHAPTER IV
PRESENTATION OF DATA AND ANALYSIS OF DATA
Table 1: Age
12.50%
87.50%
Under 18 18-24
From the data gathered in Table 1, 87.5% of the respondents are above the age of 18,
while 12.5% are below 18. This implies that milk tea shops are mainly drawing teenagers.
Table 2: Gender
32.50%
67.50%
Male Female Non-binary/Other 4th Qtr
From the Table 2, the survey indicates that 67.5% of the respondents are females, while
32.5% are males. This data suggests that milk tea stores are more favored by women, and it may
be due to marketing, menu items, or social media popularity that appeals to females more.
Table 3: How often do you visit milk tea shops?
12.50%
25%
37.50%
25%
Daily Weekly Monthly Rarely
From the Table 3, 12.5% of the consumers visits a milk tea shop daily, 37.5% weekly, 25%
monthly, and 25% are rarely visits a milk tea shop. It shows that most of the consumer visits a milk
tea shop weekly.
Table 4: Which milk tea shop do you visit the most?
25%
40%
35%
Black Habbit Big Brew Super Daddy
From the Table 4, 40% go to Black Habit the most often, 35% go to Big Brew, 25% go to
Super Daddy, and Black Habit is most popular, but Big Brew and Super Daddy also have a large
customer following.
Table 5: How satisfied are you with the quality of the product from the chosen brand?
12.50%
27.50%
60%
Satisfied Very Satisfied Neutral Dissatisfied Very Dissatisfied
In the Table 5, 60% of the respondents were very satisfied, 27.5% were satisfied, 12.5%
were neutral. Together having a satisfaction rate of 87.5%, it can clearly see that product quality
plays an important role in customer retention.
Table 6: How satisfied are you with the customer service they are giving?
15%
20%
65%
Very Satisfied Satisfied Neutral Dissatisfied Very Dissatisfied
In the Table 6, 20% of the customers were very satisfied 65% were satisfied, 15% were
neutral. It shows that, consumers are more satisfied on the customer service that businesses are
giving.
Table 7: Does the clean and comfortable store environment affect your loyalty at the chosen
brand?
5%
10%
5%
80%
Yes No Not at all Doesn't care at all
In Table 7, the customers were queried if store comfort and cleanliness influence their
loyalty and 30% indicated very likely, 45% said likely and 25% were neutral. 75% of
respondents view a clean and comfortable place as a significant consideration in their loyalty.
Table 8: How likely are you to recommend the chosen brand to your friends or family?
25%
30%
45%
Very likely Likely Neutral Unlikely Very unlikely
In Table 8, 30% of the respondents are very likely to recommend the brand they like,
45% will do so and 25% are neutral.
Table 9: Do you consider yourself as a loyal customer of the chosen brand?
22.50%
77.50%
Yes No
In Table 9, it was inquired whether they are a loyal customer and 77.5% claimed yes and
22.5% said no. With the majority being loyal customers, businesses have to keep serving high-
quality products and experiences so that this loyalty is sustained.
Table 10: If you are a loyal customer, what factors influence your loyalty to the chosen brand?
3.20%
6.50%
16.10%
54.80%
19.40%
Product Quality Price Customer Service
Brand Image Promotions/Discounts Store Environment
In Table 10, the key drivers of customer loyalty as rated by consumers are Product
Quality (54.8%), Price (19.4%), Customer Service (16.1%), Brand Image (6.5%) and Store
Environment & Promotions (3.2%). Product quality is the strongest driver in loyalty, validating
the importance of consistent taste, ingredient quality, and creative menu options.
Table 11: How likely are you to return to the chosen brand in the future?
17.50%
35%
47.50%
Very likely Likely Neutral Unlikely Very unlikely
While in Table 11, part of the customers is 47.50% Likely to come back to the brand, 35%
are Very likely and 17.50% are Neutral.
CHAPTER V
SUMMARY OF FINDINGS
CONCLUSION
RECOMMENDATION
REFERENCES
APPENDICES
