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UNIVERSITY OF GHANA
BRAND POSITIONING AND CUSTOMER LOYALTY IN THE
GHANAIAN UNIVERSAL BANKING SECTOR: THE MODERATING
EFFECT OF SWITCHING COST
BY
EMMANUEL NTSIFUL
(STUDENT ID: 10508031)
THIS THESIS IS SUBMITTED TO THE UNIVERSITY OF GHANA,
LEGON IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
THE AWARD OF MPHIL MARKETING DEGREE
JULY, 2016
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DECLARATION
I hereby declare that this is the result of my own research and has not been presented by anyone
for any academic award in this or any other University. All references used in the work have
been fully acknowledged.
I bear sole responsibility for any shortcomings.
……………………………………….. …………………………
EMMANUEL NTSIFUL DATE
STUDENT
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CERTIFICATION
I hereby certify that this thesis was supervised in accordance with procedures laid down by the
University of Ghana.
…………………………………. …………………………..
DR. ADELAIDE KASTNER DATE
(SUPERVISOR)
……………………………………. …………………………..
DR. MAHMOUD A. MAHMOUD DATE
(CO-SUPERVISOR)
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DEDICATION
I dedicate this piece of academic work to my wife Mrs. Cecilia Ntsiful and my two daughters
Zipporah Amadwo Ntsiful and Natasha Ama Ntsiful.
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ACKNOWLEDGEMENTS
My first invaluable thanks and appreciation go to the Almighty God, Jehovah, for the
knowledge, wisdom, guidance and protection during all these years of my education. My
second special thanks go to my lovely wife, Mrs. Cecilia Ntsiful whose support has brought
me this far. Also, I deeply thank my supervisors Dr. Adelaide Kastner and Dr. Mahmoud A.
Mahmoud for the unyielding supports and corrections they gave to me in order to produce this
write-up. Finally, I would like to express my sincere gratitude and appreciation to John Paul
Kosiba and Adjoa Ocran for their supports and guidelines to bring this piece of work to a
successful end.
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TABLE OF CONTENTS
Content Page
DECLARATION..................................................................................................................... i
CERTIFICATION............................................................................................................... ..... ii
DEDICATION................................................................................................................... ...... iii
ACKNOWLEDGEMENTS......................................................................................................iv
TABLE OF CONTENTS ...................................................................................................... ... v
LIST OF TABLES ................................................................................ ...................................xi
LIST OF FIGURES.................................................................................................................xii
LIST OF ABBREVIATIONS……………………………………………………………….xiii
ABSTRACT ............................................................................................................................xv
CHAPTER ONE………………………………………………………………………………1
INTRODUCTION…………………………………………………………………….............1
1.0 Introduction………………………………………………………………………………..1
1.1 Background of the Study…………………………………………………………………..1
1.2 Statement of the Problem …………………………………………………………………5
1.3 Research Gaps……………………………………………………………………………..6
1.4 Objectives of the Study……………………………………………………………………8
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1.5 Research Questions………………………………………………………………………..8
1.6 Significance of the Study………………………………………………………………….9
1.7 Scope of the Study…………………………………………………………………………9
1.8 Chapter Deposition……………………………………………………………………….10
CHAPTER TWO……………………………………………………………………………..12
CONTEXT OF THE STUDY………………………………………………………………..12
2.0. Introduction……………………………………………………………………………...12
2.1. History of Ghanaian Universal Banking Sector………………………………………….12
2.2 Current Information in Ghanaian Universal Banking Sector……………………………. 13
2.3 Some Challenges Facing Ghanaian Universal Banking Sector…………………………..16
2.4 What Does The Future Hold For The Sector?.....................................................................18
CHAPTER THREE………………………………………………………………………......20
LITERATURE REVIEW…………………………………………………………………….20
3.0. Introduction……………………………………………………………………………...20
3.1 Positioning Theory……………………………………………………………………….20
3.2 The Concept of Brands……………………………………………………………………21
3.3 Strategic Positioning and Brand Positioning……………………………………………..21
3.4.0 Brand Positioning Dimensions…………………………………………………………24
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3.4.1 Image…………………………………………………………………………………...24
3.4.2 Trust…………………………………………………………………………………....25
3.4.3 Tangibles Cues………………………………………………………………………….26
3.4.4 Customer Intimacy……………………………………………………………………...28
3.4.5 Country of Origin……………………………………………………………………….28
3.4.6 Core Services…………………………………………………………………………...30
3.4.7 Price…………………………………………………………………………………….31
3.4.8 Distance………………………………………………………………………………...31
3.5 Customer Satisfaction……………………………………………………………………32
3.6 Customer Loyalty………………………………………………………………………...33
3.7 Switching Cost, Moderating Effect of the Customer Loyalty…………………………….35
3.8 The Relationship Between Brand Positioning, Customer Satisfaction, Customer Loyalty
and Switching Cost ………………………………………………………………………….37
3.9 Demographic Characteristics……………………………………………………………..38
3.10 Empirical Evidence……………………………………………………………………...39
3.11.0 Conceptual Framework/Model and Hypotheses……………………………………...42
3.11.1 Price Relationship With Customer Loyalty……………………………………………42
3.11.2 Trust Relationship With Customer Loyalty……………………………………………44
3.11.3 Core Service Relationship With Customer Loyalty…………………………………...45
3.11.4 Switching Cost as a Moderating Effect……………………………………………….46
3.11.5 Conceptual Framework of the Study………………………………………………….47
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CHAPTER FOUR……………………………………………………………………………49
RESEARCH METHODOLOGY…………………………………………………………….49
4.0 Introduction……………………………………………………………………………....49
4.1 Research Approach……………………………………………………………………….49
4.2 Research Design………………………………………………………………………….50
4.3 Population………………………………………………………………………………...51
4.4. Sampling Technique and Sample Size Determination…………………………………..52
4.5 Instruments Used To Collect Data………………………………………………………..52
4.6 Reliability of Data Collected……………………………………………………………..53
4.7 Data Analysis Procedure…………………………………………………………………54
4.8 Limitation of the Study…………………………………………………………………..55
CHAPTER FIVE………………………………………………………………56
DATA ANALYSIS AND DISCUSSION……………………………………..56
5. O Introduction……………………………………………………………………………..56
5.1 Demographic Characteristics of the Respondents……………………………………….56
5. 2 Descriptive Statistics……………………………………………………………………59
5.3 Confirmatory Factor Analysis (CFA)……………………………………………………60
5.4 Re-specification and Reliability of the CFA……………………………………………..63
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5.5: Correlation Matrix……………………………………………………………………….66
5.6 Stepwise Regression Analysis……………………………………………………………67
5.8 The Relationship Between Switching Cost Groups, Brand Positioning and Customer
Loyalty……………………………………………………………………………………….68
.9.0 Discussion of Results…………………………………………………………………..69
5.9.1 Core Service Relationship with Customer Loyalty…………………………………….70
5.9.2 Trust Relationship with Customer Loyalty……………………………………………70
5.9.3 Price Relationship with Customer Loyalty…………………………………………….71
5.9.4 Additional Analysis: Adjustment Effect of Switching Cost…………………………….72
5.9.5 Relationship Between Levels of Switching Cost and Trust……………………………73
5.9.6 Relationship Between Levels of Switching Cost and Core Service…………………….74
5.9.7 Relationship Between Levels of Switching Cost and Price……………………………..76
5.9.8 Relationship Between Levels of Switching Cost and Customer Loyalty……………….78
CHAPTER SIX………………………………………………………………...80
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS……………..80
6.0: Introduction……………………………………………………………………………..80
6.1.0 Summary……………………………………………………………………………….80
6.1.1 Major Findings…………………………………………………………………………81
6.1.2 Objective 1……………………………………………………………………………..81
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6.1.3 Objective 2……………………………………………………………………………..81
6.2.0 Conclusions…………………………………………………………………………….84
6.2.1 Objective 1……………………………………………………………………………..84
6.2.2 Objective 2……………………………………………………………………………...85
6.3 Contribution to Literature………………………………………………………………...86
6.4 Recommendation to the Banking Industry for Practice………………………………….86
6.4.1 Industry Regulators…………………………………………………………………….89
6.4.2 Recommendation and Suggestion for Further Studies…………………………………90
REFERENCES…………………………………………………………………………….....91
APPENDICES……………………………………………………………………………....109
APPENDIX 1: QUESTIONNAIRE………………………………………………………...109
APPENDIX 2……………………………………………………………………………….112
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LIST OF TABLES
Table 5.1 Demographic Characteristics of the Respondents………………………………....57
Table 5. 2 Descriptive Statistics………………………………………………………………59
Table 5.3 Index of fit of the Model……………………………………………………………61
Table 5.4 Internal Consistency and Final Revised Structure………………………………64
Table 5.5 Variable Correlation Matrix……………………………………………………….66
Table 5.6 Model Summary……………………………………………………………………67
Table 5.7 Stepwise Regression……………………………………………………………….67
Table 5.8 Analysis of Variance (ANOVA)…………………………………………………...68
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LIST OF FIGURE
Figure 2 The results of the empirical causal model (SEM)……………………………..........65
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LIST OF ABBREVIATIONS
POP - Point of Parity
POD - Point of Difference
SSA - Sub-Sahara Africa
MBA - Masters of Business Administration
BoG - Bank of Ghana
BGC - Bank of Gold Coast
IMF - International Monetary Fund
ERP - Economic Recovery Programme
GDP - Gross Domestic Product
VAT - Value Added Tax
GRA - Ghana Revenue Authority
FEA - Foreign Exchange Accounts
FCA - Foreign Currency Accounts
FATCA- Foreign Account Tax Compliance Act
GhIPSS - Ghana Integrated Payments and Settlement Systems
ACH - Automated Clearing House
ATM - Automated Teller Machine
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POS - Point of Sale
GCB - Ghana Commercial Bank
CFA - Confirmatory Factor Analysis
KMO - Kaiser –Meyer Olkin
SPSS - Statistical Packages for Social Science
ANOVA - Analysis of Variance
HND - Higher National Diploma
BECE - Basic Education Certificate Examination
SSCE - Senior Secondary Certificate Examination
WASSCE - West Africa Senior Secondary Certificate Examination
RMSEA - Root Mean Square Error of Approximation
GFI - Goodness-of-fit Index
AGFI - Adjusted Goodness-of-Fit-Index
SRMR - Standardised Root Mean Square Residual.
CFI - Comparative Fit Index
NNFI - Non-Normed Fit Index
SEM - Structural Equation Model
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ABSTRACT
The liberalization of universal banking sector in Ghana, has intensified competition within the
industry. To withstand this competition by banks and differentiate their services from
competitors, has generated interest in understanding the brand positioning which seeks to
design a firm’s offering and image or reputation to occupy a distinctive place in the mind of
the target consumers to become loyal to the service provider. The introduction of switching
cost as a moderator ensures that customers do not defect to a competitor because of keen
competition but rather remain loyal to the current service provider for a longer period of time.
The major objectives of this study was to assess the relationship between brand positioning
dimensions and customer loyalty, and also to examine the effect of switching cost on the
relationship between brand positioning dimensions and customer loyalty in the Ghanaian
banking sector. Data was collected using questionnaires from 272 customers of universal banks
within the Greater Accra Metropolis. The study found that price, trust, and core service as the
brand positioning dimensions had a significant positive effect on customer loyalty. Core service
was found to be the most important influence of customer loyalty, followed by trust and price
in the sector. Similarly, the study revealed that some universal bank customers are loyal to their
banks because of high switching costs and not because they are satisfied with the banks’
performance. The study recommends that if banks desire to achieve high customer loyalty,
managers must endeavour to understand the special needs of their customers and design the
core service to offer more value to customers. Banks’ managers should strive to establish a
clear and strong corporate image focused on the bank’s integrity, credibility and benevolence
to enhance trust. Banks should set fees or charges that are reasonable and affordable, and also
increase the switching cost to minimize customers’ defection.
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CHAPTER ONE
INTRODUCTION
1.0. Introduction
This Chapter of the study consists of the following: background of the study, research gaps,
statement of the problem, research objectives, research questions, significance of the study
scope of the study and chapter disposition.
1.1 Background of the Study
Companies in this era compete in markets that are saturated with many offerings. Thus, strong
brands are confronted with challenges of making differential advantages among competitors
(Clancy & Trout, 2002). Manhas (2010) argues that, as a result of the increasingly competitive
industrial scenario, a key challenge for marketers is to cut through the noise of competing and
substitute products to attract the attention of the consumer. With thousands of companies both
local and international now competing for attention, brands are becoming substitutable. From
the demand perspective, the outburst in brand choice and brand publicity material has increased
the confusion among potential consumers (Manhas, 2010). According to Kotler and Keller
(2012), no company can gain competitive advantage if its products and services resemble every
other product and service. For companies to compete effectively in the market place, marketing
managers must seek to establish appropriate brand associations in the mind of target markets
or consumers to differentiate their brand from competitors (Keller & Lehmann, 2006).
Positioning is perceived by academics (Blankson & Kalafatis, 2004; Hooley, Greenley, Fahy
& Cadogan, 2001; Kotler, 1997; Trout & Rivkin, 1996; Porter, 1996) to be one of the key
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elements of modern marketing management. The intent is to identify dimensions of brand
attractiveness representing positions that could be developed by firms to differentiate their
brand in a meaningful way to consumers (Blankson & Kalafatis, 2004). The key assumption
supporting this discussion is that effective positioning is a mutually beneficial process to both
the marketer and the consumer (Manhas, 2010). This is because positioning is underpinned by
the ideas of understanding and meeting unique consumer needs. Effective positioning offers
the customer benefits tailored to solve a problem related to their needs, in a way that is different
to competitors (Chacko, 1997). For the organization, the value of positioning lies in the link it
provides between the analyses of the internal corporate and external competitive environments.
This is fundamental to the definitions of strategic marketing, which point to the matching of
internal resources with environmental opportunities (Pike & Ryan 2004).
There is general agreement that the concept of positioning has been one of the fundamental
components of modern marketing management (Hooley et al., 2001). Its importance is further
supported by evidence that indicates a positive relationship between company performance (in
terms of profitability and/or efficiency) and well-formulated and clearly-defined positioning
activities (Porter, 1996; Devlin, Ennew & Mirza, 1995; Brooksbank, 1994). Dovel (1990)
asserts that positioning shouldn’t be just a part of the strategy, but should be the backbone of
any business plan.
The banking industry in Ghana has seen a considerable increase in the past two decades,
resulting from the liberalization of the financial services sector in 1988 and gradual changes in
the financial system over the years through legal, financial and institutional reforms (Aryeetey,
2008). The banking sector in Ghana forms about 70% of the financial services sector (Owusu-
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Frimpong, Omar, & Mmieh, 2011). The number of major banks with universal banking license
as of December 2014 stood at twenty-seven (27); (increasing from 8 in 1990) with a total of
904 branches across the country (Ghana Banking Survey, 2014). In addition, there are also a
number of financial service institutions such as insurance companies, investment houses, rural
banks, stock exchange, co-operative credit unions, savings-and-loans institutions, mutual funds
and other microfinance institutions set up in Ghana.
The liberalization of the banking industry in Ghana has fueled competition within Ghanaian
markets such that the sustenance of individual banks has come under serious threat (Anabila,
Narteh & Tweneboah-Kodua, 2012). To overcome this problem, banks must adopt brand
positioning strategies which seek to design a firm’s offering and image to occupy a distinctive
place in the minds of the target market (Kolter & Keller, 2012). The final result of positioning
is the successful creation of a customer-focused value proposition; a convincing reason why
the target market should patronize the product or service of a firm (Kolter, 2003). Keller,
(1993) and Wind, (1982) argue that a well-positioned brand should appeal to the specific needs
of a customer segment due to the differential advantage or value proposition it seeks to create.
Some authors also contend that brand positioning is expected to shape the desires of customers,
lead to customer satisfaction and customer loyalty (Kalra & Goodstein, 1998), consumer-
derived brand equity (Keller, 2003) and customers’ readiness to look for the brand (Schiffman
& Kanuk, 2007).
Brand positioning seeks to draw closer relationship or intimacy between the firm and the target
segment in order to deliver superior value to satisfy the customers and gain their loyalty (Keller;
2009). Banks are now building closer relationships with their customers in order to increase
loyalty and retain them as a result of fierce competition, changing trends of customer demand
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and progress in information technology (Chen & Popovich, 2003; Gonroos, 1997). The basic
idea underpinning this move is that it costs more to attract new customers than to nurture and
develop existing ones (Reichhield & Kenny, 1990). According to Ndubisi, (2003); Rosenberg
and Czepiel, (1983) the cost of maintaining or serving one loyal customer is five to six times
less than the cost of attracting and serving one new customer. Again Reichheld and Sasser
(1990) argue that, when a company retains just 5% more of its customers, profits could increase
by 25% to 125%. Furthermore, Kim and Cha (2002) contend that, by reducing customer
defection by 15% firms can improve their profitability by 25% to 85%. Kim, Park & Jeong,
(2004) posit that no business organization can survive under keen competition if it does not
have loyal customers who buy its products or services.
Customers experiencing high level of satisfaction are likely to remain loyal with their current
providers and continue with their subscription (Jones, Mothersbaugh, & Betty, 2002).
However, some studies have shown that as the intensity of competition become fierce within
the financial sector (banking sector), the inclination of customers shifting from one bank to
another or having two banks could increase (Aurier & N’Goala, 2010;Woldie, 2003; Owusu -
Frimpong, 2001). It is in this context that the idea of the switching cost is proposed (Jones, et
al, 2002). Switching cost seeks to establish a cost penalty for a customer changing to another
service provider, making that a comparatively unattractive option (Fornell, 1992). Aydin and
Arasil (2005) assert that it is a crucial factor, because it fosters customer loyalty and enables
the firm to be less influenced by fluctuations in the level of service quality in the short term. In
fact, both theoretical and empirical studies show that switching cost plays crucial role in
protecting firms’ existing customer bases and gaining competitive advantage (Klemperer,
1995; Farrell & Shapiro, 1988; Klemperer, 1987a).
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Brand positioning requires that marketers define and communicate point of parity (POP) and
point of difference (POD) between their brand and their competitors (Kotler & Keller, 2012).
Some scholars assert that advertising is the main communication tool used in building brand
positioning (Lilien & Rangaswamy, 2003; Krishman, 1996). Advertising serves as a means of
transport (vessel) of positioning such that any advertisement normally comprised of a creative
or artwork part and a positioning part containing brand information (Dillion, Domzal &
Madden, 1986; Seggev, 1982). According to Easingwood and Mahajan (1989) the attention of
the consumer is drawn and directed to the positioning of the brand through the creative element
of the advert. Trout and Rivkin (1996) argue that advertising with imagery alone and no
positioning claim gives consumers no reason to patronize the product or service. Thus, the
purpose of this study is to assess the relationship between brand positioning, and customer
loyalty from customers’ perspective in the Ghanaian universal banking industry with switching
cost serving as a moderating factor.
1.2. Statement of the Problem
The implementation of brand positioning dimensions efficiently and effectively has the
potential to build a powerful brand and customer loyalty (Haig, 2005). According to Keller
(2009), positioning a brand provide basis for which customers can hold a firm accountable for
providing good products or rendering bad services. Coffie and Owusu-Frimpong (2014) argue
that most of the service firms in sub-Saharan Africa and for that matter banking sector in Ghana
do not have clear positioning strategies. In view of this that the study seeks to use trust, core
service and price as brand positioning dimensions to influence customer satisfaction and
customer loyalty in the Ghanaian universal sector. However, Kim, Park and Jeong (2004) argue
that customer satisfaction does not necessary lead to customer loyalty and hence the need to
introduce switching cost. Switching cost impose some monetary and non-monetary cost on
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customers who wish to change current service provider (Mathews & Murray, 2007). This cost
or price is not regulated by Bank of Ghana and it varies from one bank to another.
Anabila, Narteh and Tweneboah-Koduah, (2012) posit that competition within the Ghanaian
universal banking sector has assumed such intensity that the very survival of individual banks
has come under serious threat. Anabila et al., (2012) explain further that the increase of mergers
and acquisition over the last two years attest to this fact. Further evidence from the Ghana
Banking Survey (2014) shows that there has been a fall in the market shares of some existing
banks as well as the frequent defection of customers from one bank to another. For universal
banks in Ghana to achieve competitive advantage, there is the need to adopt brand positioning
which seeks to shape the preferences of customers. This would lead to cutomer satisfication
which would in turn lead to customer loyalty, consumer-brand equity and a willingness to
search for the brand (Schiffman & Kanuk, 2007; Keller, 2003). In addition, the introduction of
switching cost seeks to minimize the rampant defection of customers from one service provider
to another (Jones, Mothersbaugh & Betty, 2002). It is against this backdrop that the topic was
selected to investigate the relationship between brand positioning and customer loyalty in the
Ghanaian universal banking sector using switching cost as a moderating factor.
1.3. Research Gaps
Research into market orientation and marketing practices in general has received relatively
good attention in some parts of Africa including Ghana, in the past two decades, the case of
positioning is an exception (Blankson, 2007; Blankson, Owusu-Frempong & Mbah, 2004).
Prior research on brand positioning in Sub-Sahara Africa (SSA) has encompassed themes like
Vodacom and MTN’s brand positioning based on the perceptions; Vodacom and MTN's brand
positioning based on the brand associations; impact of celebrities’ endorsement on brand
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positioning on mobile telecommunication (Martey & Frimpong, 2014); competitive advantage
for brand positioning (Ezeuduji, Lete, Correia & Taylor, 2014); and brand positioning through
corporate social responsibility (Ali, 2014). Nonetheless, these studies highlight the need for
more research to be conducted in the area of brand positioning and also its influence.
In other parts of the world, research on brand positioning has covered, brand positioning and
religious organisations (Abreu, 2006); brand positioning in the context of Indian insurance
(Ray& Pathak, 2007); brand positioning of MBA programs; brand positioning as an effective
tool for small and medium enterprises (Tudor, & Negricea, 2012); brand positioning and
sporting goods market (Lebrun, Souchet, & Bouchet, 2013); Indian shampoo and brand
positioning (Mohanty, 2012); brand positioning and fairness cream (Sahoo, & Das, 2013);
brand positioning and fashion (Nobbs, Foong, & Baker, 2015); brand positioning and airlines
(Erguven, 2015). Although there have been a number of studies conducted on brand positioning
in relation to the service sector, there is still the need for to be examined in relation to other
industries within this sector as some authors (such as Amonini, McCol-Kennedy, Soutar &
Sweeney, 2010; Zeithaml & Batner, 1996; Bateson, 1995) contend that the intangibility and
variability of service require different positioning dimensions. In view of this assertion, there
is a need for study on brand positioning (in relation to trust, price, and core service,) in the
Ghanaian universal banking sector.
Traditionally, positioning strategies have been mainly discussed from an organizational
perspective (example: Amonini, McColl-Kennedy, Soutar & Sweeney, 2010; Blankson &
Kalafatis, 2004; Dibb & Simkin, 1993). Dibb, Simkin, Pride & Ferrel, (1997) argue that
positioning dimensions from the organization’s perspective may not be able to reflect customer
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value and customer satisfaction. However, some scholars argue that competitive positioning
strategies expect a clear view of the customer requirement or customer perspective (Hooley &
Greenley, 2005; Bhat & Reddy, 1998; Dibb & Simkin, 1993). Yet , in recent review on brand
positioning, the authors investigated how brand positioning is achieved, evaluated brand
positioning and approaches for brand positioning, without examining its influence on customer
satisfaction or customer loyalty (eg. MacIntosh & Crow, 2011; Anana & Nique, 2010;
Muruganantham & Kaliyamoorthy 2009). Therefore, this study seeks to assess the customer
perspective of brand positioning and examine its influence on customer satisfaction and
customer loyalty.
1.4. Objectives of the Study
The following are the objectives of the study:
1. To investigate the relationship between brand positioning and customer loyalty in the
Ghanaian universal banking sector.
2. To examine the effect of the switching cost on the relationship between brand
positioning and customer loyalty in the Ghanaian universal banking sector.
1.5. Research Questions
The following are the research questions of the study:
1. What is the relationship between brand positioning and customer loyalty in the
Ghanaian universal banking sector?
2. What is the effect of switching cost on the relationship between brand positioning and
customer loyalty in the Ghanaian universal banking sector?
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1.6. Significance of the Study
The significance of the study can be seen along three dimensions: research, practice and policy.
Concerning research, this study seeks to contribute to the stock of knowledge about assessing
the relationship between brand positioning and customer loyalty in the Ghanaian universal
banking sector; with the effect of switching cost as a moderator, could help anyone working
towards this area of study in future research.
Concerning practice, the report seeks to send a signal to the players in the marketing fields
especially the bank managers in Ghana and the world at large about the best brand positioning
strategies that can be used to position their bank services that would yield to bring about
customer satisfaction and customer loyalty.
Concerning significance to policy, the study seeks to provide feedback which could be used as
guidelines for government policies in order to position Ghana well to take advantage of
numerous business opportunities.
1.7. Scope of the Study
This study seeks to focus on assessing the relationship between brand positioning and customer
loyalty in the Ghanaian universal banking sector using switching cost as the moderating factor.
The scope of the study is limited to the perception of customers only, though brand positioning,
customer loyalty and switching cost are issues that deserve the involvement of both the service
providers and customers. All the 27 universal banks in Ghana were included in the study and
all the branches that were selected were in Accra, the capital city, due to the concentration of
major economic activities there and the presence of many bank branches in the capital. The
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research sample was selected within Greater Accra Metropolis, the capital city for customers
who have bank accounts and also patronize various services of universal banks. The target
group was chosen because they perceived they had the requisite literacy to understand, interpret
and respond to the questionnaires appropriately (Ghana Statistical Survey, 2012; Winer, 1999;
Spector; 1992).
1.8. Chapter Disposition
This study was organized into six chapters. Chapter one consisted of introduction, background
of the study, the statement of the problem, objectives, research questions, significance, scope
of the study and chapter disposition.
Chapter two presented context of the study. This consists of history, current information and
some challenges faced by the banking sector in Ghana.
In chapter three, the relevant literature is reviewed. It discusses what some writers or authors
have said about the relationship brand positioning between and customer loyalty in the
Ghanaian universal banking sector with switching cost as a moderating factor. Theory,
empirical evidence and conceptual framework/model were also outlined here.
Chapter four highlighted research methodology which covered the research approach,
sampling technique, instruments that was used to collect data, the data analysis method and
limitation of the study.
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Chapter five covered the presentation and analysis of the data collected from the respondents
in the Ghanaian universal banking sector.
Finally, summary of findings, conclusions, recommendations and suggestions for further
research were presented in chapter six.
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CHAPTER TWO
CONTEXT OF THE STUDY
2.0. Introduction
This chapter or section of the study presents the overview of the Ghanaian universal banking
sector which covers the following: brief history of Ghanaian universal banking sector, current
information on Ghanaian universal banking sector, some challenges facing the Ghanaian
universal banking sector and what does the future hold for the sector?
2.1. History of Ghanaian Universal Banking Sector
Ghanaian universal banking sector is governed by the state-owned Central Bank or the Bank
of Ghana (BoG). The Bank of Ghana emanated from the Bank of the Gold Coast (BGC), where
it started operation. The commencement of the bank began from the time of Ghana’s political
struggle for independence, in the middle of the 1950s. Presently, the Bank of Ghana has overall
supervisory and regulatory authority in all matters relating to banking and non-banking
financial business with the purpose of achieving an effective and efficient banking system in
the interest of customers and the economy as a whole.
Ghana, like other African countries, experienced drastic economic decline and high rates of
inflation and unemployment in the 1970s (Loxley, 1988).To address this situation, in the early
1980s, the government of Ghana accepted to carry out an Economic Recovery Programme
(ERP) under the supervision and support from World Bank and the International Monetary
Fund (IMF). In line with this, the Financial Sector Adjustment Programme was introduced in
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1983 (Mmieh & Owusu-Frimpong, 2004). The aim of this programme was to revamp Ghana’s
financial sector which had suffered from undue political influence, weak management,
inadequate capital, backward information and accounting systems, poor internal controls,
inefficiency, lack of competition and a large portfolio of non-performing loans (Hinson,
Owusu-Frimpong & Dasah, 2009). According to Owusu-Frimpong (2008), the Financial
Sector Adjustment Programme targeted rehabilitation of financial markets through
improvements in regulatory framework, restructuring of financially distressed banks, and
injection of more domestic and foreign capital into the sector. As at the beginning of the 1990s,
Ghana could boast of only eight (8) licensed commercial banks and was acclaimed by the
World Bank and other international economic monitors to be at the threshold of economic lift-
off (Hutchful, 2002).
2.2. Current Information in Ghanaian Universal Banking Sector
The policy transformation within the financial sector has resulted in the dramatic growth of the
universal banking sector in Ghana (Narteh & Kuada, 2014).These reforms have brought about
the entry of ten of Nigeria’s biggest banks into Ghana’s banking industry (Hinson, Owusu-
Frimpong & Dasah, 2009). Hinson et al (2009) explain that, the reasons these international
banks extended their operations into Ghana are that the country enjoys political stability,
consistency in implementing political and economic policies and commercial production of
crude oil . Initially banking sector was regulated in Ghana where banks are established either
as a commercial, development and merchant bank, and it was termed as a three tiered structure
(Narteh & Owusu-Frimpong, 2011). In 2006, the Bank of Ghana deregularised the banking
sector by phasing-out its three tiered structure of commercial, development and merchant banks
in support of a universal banking license (Narteh & Owusu-Frimpong, 2011). According to
Narteh and Owusu-Frimpong, (2011), this policy allows banks to do business in all sectors of
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the economy, depending on their risk appetite. At the end of the year 2014, the number of
banks that had acquired universal banking licenses stood at twenty-seven (27) traditional banks
with a total of 904 branches across the country, 137 rural and community banks, and 58 non-
banking financial institutions including savings and loans, leasing and mortgage firms (Ghana
Banking Survey, 2014). This clearly shows the keen competition in the financial sector in
Ghana. During the year 2014, the Bank of Ghana tightened its supervision and regulation on
non-bank financial institutions which led to the closure of those which did not meet the
regulatory requirements. Furthermore, the minimum capital for the deposit and non-deposit
taken by micro-finance institutions was increased to three hundred thousand Ghana Cedi
(GH¢300,000) and five hundred thousand Ghana Cedi (GH¢500,000) respectively in August,
2013. And, the capital requirement was increased to an upward adjustment of two hundred
thousand (GH¢200,000) for institutions with five branches. Primary liquidity reserves have
also been set at 10% of total deposits.
Bank of Ghana in 2006 raised the minimum capital requirements for universal banks to sixty
million Ghana Cedi (GH¢ 60m) and the banks were expected to meet this directive by the end
of 2012 (Narteh & Owusu-Frimpong, 2011). In 2011, the Bank of Ghana further increased the
minimum capital requirement to one hundred and twenty million Ghana Cedi (GH¢120m) with
the provision that the existing banks only needed to maintain a stated capital of GH¢60m it
had previously set. The idea was that existing banks would gradually increase their capital to
GH¢120m in line with their business. However, the underwriting capacity of banks has eroded
because of the negative impact of inflation and depreciation of the Ghana Cedi. .The Bank of
Ghana gave a directive that with effect from July 2, 2013 cash payments in honour of cheques
to third parties at bank counters shall not be more than ten thousand Ghana Cedi
(GH¢10,000.00) or ten thousand dollars ($10,000.00) (Ghana Banking Survey, 2014). The
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survey explain that the limit does not apply to third party cheques that are presented for the
credit of an amount through clearing as well as instances where the payee is the drawer of the
cheque. This formed part of measures by the regulator to encourage the use of non-cash modes
of transaction settlements and greater scrutiny of money laundering activities.
Banks measure their operating abilities by the resources available to earn a returns for the
shareholders, lenders and the depositors. Together, these resources with earning capacity make
up the operating assets which are the key business performance indicators as well as the bases
from which stakeholders’ value is derived. Operating assets are usually defined to include all
assets that are directly deployed to generate interest, income or related fee income. These
include cash and liquid assetssuch as investments, loans and advances. It excludes investments
in property, plant and equipment that provide a platform to facilitate a bank business. Despite
economic challenges facing the banking sector, the sector grew by 32% from GH¢25,755m in
2012 to GH¢43,296m in 2013. The growth can be attributed to 30% increase in deposit and
borrowings. Loans and advances are the main important part of the industry’s operating assets
accounting for 43% of these assets (Ghana Banking Survey, 2014).
The industry’s profit before tax margin persistently improved from 37.3%in 2012 to 45.3% in
2013 (Ghana Banking Survey, 2014). The survey indicates that during the global financial
crisis between 2008 and 2011, the banking industry did not suffer much losses but it appears
that the sector’s profitability was reduced due to the slowdown in the global economy. The
improvement in profit before tax is attributable to the increase in total income by 38% from
GH¢3,346m in 2012 to GH¢4,591m in 2013 with less than proportionate increase in expenses.
Interest income from loans raised by 32% from GH¢1,993m in 2012 to GH¢2,623m in 2013.
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The industry’s cost grew by 20% from GH¢1,800m in 2012 to GH¢2,145m in 2013 but cost
income ratio which took a dip in 2011 has improved from 54% in 2012 to 47% in 2013. As
part of the service sector, employee emoluments or remuneration is the largest part in the cost
structure as it constitutes 48% of the total sector’s selling general and administrative cost.
Employee numbers did not change much due to slowdown in branch expansion in 2013, but
staff cost raised from GH¢642m in 2012 to GH¢741m in 2013. The increment of cost can be
linked to pension and provident fund costs upward adjustment in allowances relative to
inflation and the exchange rates. The banking sector’s return on asset has consistently improved
over the last three years (2011 to 2013). Return on asset raised from 2.4% in 2011 to 3.5% in
2012 and is now at 4.2% in 2013. During periods total assets grew by 33% from GH¢27,100m
in 2012 to GH¢36,100m in 2013 but the steeper growth in net profits by 64% from GH¢940m
in 2012 to GH¢1,530m in 2013 accounted to the favourable returned.
2.3. Some Challenges Facing Ghanaian Banking Sector
According to the Ghana Banking Survey (2014) one of the challenges facing the Ghanaian
universal banking sector is the introduction of Value Added Tax (VAT) on certain financial
transactions and services by the Ghana Revenue Authority (GRA). The directive is feared to
negatively impact banking in the country. A large proportion of the Ghanaian population is
already unbanked and the new tax is simple aggravating the situation. Many people are opting
to keep their monies at home and avoid banking services as much as possible especially
majority of the newly introduced e-banking services which are becoming key sources of non-
interest income for the banks. Apart from the fact that some people in Ghana would usually not
want to pay any additional tax, the issue is worsened by the lack of clarity in the mind of the
ordinary Ghanaian about what is to be taxed and what will not be taxed.
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Another challenge facing the banking sector in Ghana are the existing rules on the operations
of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA), Foreign
Currency Denominated Loans and introduced a Margin Account for Imports Bills. As
explained by the Bank of Ghana, these were to help reduce the depreciation of the cedi. The
bankers in principle supported the measures,however, there are currently concerns over
“unintended consequences” with the regulator having to revise some of these directives. The
call now is for the total withdrawal of these new directives on FEA and FCA. Furthermore, a
unified formula for the calculation of the base rates quoted by universal banks was also
introduced in the year 2013 and is considered to be a challenge facing Ghanaian universal
banking sector. Many expected the new formula to bring some sanity in the base rates quoted
by universal banks and perhaps assist in reducing lending rates given the transparency to be
associated with the new formula. The formula highlights the cost of funds to the banks but
many now wonder whether reference should be made to the money market interest rates at
which Government borrows which are arguably betterdeterminants of the base rates of these
universal banks. (Ghana Banking Survey, 2014).
Ghanaian banks also registered to help enforce the Foreign Account Tax Compliance Act
(FATCA), an initiative of the tax authorities in the United States of America(USA) and this
has added to the challenges facing universal banks in Ghana. The obligation of the Ghanaian
universal banks is to provide information on citizens of United States with a certain minimum
bank account balance to the US tax authorities. Ghanaian universal banks are already
considering using this minimum balance as a requirement for US citizens interested in opening
accounts. There are concerns about whether the corresponding banks and tax authorities in the
United States will reciprocate and provide similar information on Ghanaians in the United
States (Ghana Banking Survey, 2014). Again, frequent power outages is considered to be
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another challenge confronting the sector. Persistent power outages means a universal bank has
to spend thousands of Ghana Cedis on fuel to ensure uninterrupted power supply. This has
increased the operational cost and reduced profit levels of firms that are doing business in
Ghana specifically in the universal banking sector.
2.4. What Does The Future Hold For The Sector?
There is a persistent financial deepening of the Ghanaian universal banking sector with the
industry always rising to the occasion regarding new developments in the global financial
markets. Majority of the universal banks in Ghana are now venturing into complex financial
products including swaps and derivatives and are supporting many trade related services
associated with the new found oil production sector of the economy.
For universal banks in Ghana to realise their full potential, then the sector must embrace certain
types of technology in the future. It is in view of this that the Bank of Ghana has introduced
Ghana Integrated Payments and Settlement Systems (GhIPSS) and its various platforms,
systems, and products such as the national switch (e-Zwich) and related biometric card (e-
Zwich card), and Automated Clearing House (ACH). All of these platforms and systems have
been introduced to promote the increased use of electronic banking and payment methods. This
requires increased public education in the banking industry which would deepen the banking
customers’ awareness, knowledge, and understanding of the operations of these electronic
platforms and systems.
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The future certainly looks bright for those universal banks who are able to positioning their
services well in the customers’ minds and grab the opportunities to come. The regulation will
continue to play a key role in shaping the destiny of the Ghanaian universal banking sector and
help the regulator in enforcing and achieving its monetary policy objectives (Ghana Banking
Survey, 2014).
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CHAPTER THREE
LITERATURE REVIEW
3.0. Introduction
Under this section relevant literature is reviewed. The chapter consists of the following:
positioning theory, the concept of brands, differences between brand positioning and strategic
positioning, discussion of brand positioning dimensions, customer satisfaction, customer
loyalty, switching cost, relationship between brand positioning, customer loyalty and switching
cost, demographic characteristics, empirical evidence and the onceptual framework/model.
3.1. Positioning Theory
Positioning theory is based on three propositions (Ries & Trout, 1986). First, we live in an over
communicated society, that is bombarded with information on a daily basis. Second, the mind
has developed a defense system against the mess. Third, the only way to cut through the clutter
to reach the mind is through simplified and focused messages.
Marketing battles are not fought in the customer’s office or in supermarkets (Manhas, 2010).
These are only distribution points for the merchandise whose brand selection is decided
elsewhere. Manhas (2010) argues that, marketing battles are fought in a mean and ugly place.
A place that is dark and dump with much unexplored territory and deep pitfalls to trap the
innocent. Marketing battles are fought inside the mind (Ries & Trout, 1986). The brand
positioning strategies are considered to be important for the operationalization of the concept.
Fill (1999) states that the successful positioning can only be achieved by adopting a customer’s
perspective and by understanding how customers perceive products and services in the class,
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and how they attach importance to particular attributes that can be grouped under a construct
(Sweeney & Soutar, 2001). In marketing, in order not to succumb to marketing myopia (Levitt,
1986), and to benefit from long-term survival, there is a growing need for firms to assess their
offerings (Bernstein, 1992; Park, Jaworski, & MacInnis, 1986) and manage their organizations
in relation to their competitors (Wright, 1997; McKenna, 1986; Ries & Trout, 1986).
3.2. The Concept of Brands
The concept of brand and branding have been discussed by several contemporary marketing
scholars (Bertilsson, 2009; De Chernatony & McDonald, 2003; Jones & Slater, 2003). A brand
is defined as a name, term, sign, symbol, design or a combination of these that identifies the
maker or seller of a product or services (Kotler & Keller, 2009; Aaker, 1991). Brands have also
been viewed to go beyond the physical components of what they stand for to encompass
additional attributes which are important considerations for consumers’ buying decisions (De
Chernatony & McDonald, 2003). In modern times, brands function as symbols that enable
consumers to identify and separate one producer from another; empowering consumers with
the ability to trace one product back to the manufacturer and hold them responsible for its
quality (Bertilsson, 2009). Moreover, today, brands are ascribed with almost divine
characteristics that serve as strategic business assets essential for firms to develop if they are to
compete successfully (Bertilsson, 2009).
3.3. Strategic Positioning and Brand Positioning
To make clear the meaning of the positioning concept, it is necessary to differentiate between
brand positioning and strategic positioning (Ellson, 2004; DiMingo, 1988). Strategic (market)
positioning according to Evans, Moutinho and Vaan Raaij (1996) and Porter (1979) is related
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to the market standing of a firm against its competitors. It is the process in which firms seek to
ascertain ways for mobilizing specific resources and assets to build positional advantages in
product-markets or service-markets. Another role of strategic positioning is to help drive the
communication program. If done effectively, it should help the organization to achieve
congruence between its achieved or intended positioning and the communication message
(Blankson & Kalafatis, 2007). Coffie and Owusu-Frimpong (2014) argue that, strategic
positioning of a firm also helps to express the values and culture of the organization to its
customers and other stakeholders as to what the organization stands for. A well-positioned
brand, for example, will resonate with customers, differentiate the organization from its
competitors, and represent the public face of the adopted business strategy (Aaker, 2011). The
implication is that organizations need to understand both customers and competitors on the
perceived values of products and alternatives in the market (Coffie & Owusu-Frimpong, 2014).
Brand positioning, which is the subject of this study, focuses on the perception of consumers
about a company’s products or brands (Crawford, 1985). Hooley, Piercy and Nicoulaud (2007)
assert that, strategic positioning normally gives direction for the development of the brand
positioning. Brand positioning is also known as perceived positioning or consumer–generated
positioning which is referred to as a complex set of beliefs, thoughts, feelings and impressions
that consumers hold for the brand as against competitors’ brand (Ellson, 2004; Ries & Trout,
1986). Ries and Trout (1970) contend that, brand positioning is not what you do to a product
or service but what a firm does to the mind of the consumers. That is, a firm places the product
or service in the mind of the customers. Brand positioning refers to the place the brand occupies
in the consumer’s mind (Trout & Ries, 2001). Keller (2009) argues that positioning a product
or service in the mind of target customers, enables consumers to recognize point of parity and
point of difference about a product or service which also influences their perceptions.
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Positioning does not refer to the way in which the seller wants to be remembered by the target
market but what the consumer understands about the respective brand of a service provider or
bank. A brand must have something special in order to be remembered by the target market.
This objective can be achieved by offering a specific market benefit or offering better
conditions than the competitors (Tudor & Negericea 2012). Kotler and Keller (2006) contend
that brand positioning has the same weight as the 4Ps as resources for the company and state
that an offer can be positioned in the prospect’s mind as being better and/or different through
the use of points of parity and points of difference.
Urban and Hauser (1993) also contend that, positioning is crucial for new products and
services. Not only must a new product deliver the benefits the customer needs, but it must do
so better than competition (Manhas, 2010). Manhas (2010) further argues that, in developing a
positioning strategy, the marketer must consider four things:
1. The target market
2. How the product or service is different or better than competitors
3. The value of this difference to the target market
4. The ability to demonstrate or communicate this difference to the target market
These elements roughly relate to the components of a brand’s positioning as described by
Aaker (1996); they are target audience, subset of identity/value proposition, create advantage,
and actively communicate. Brand also represents an investment which creates an incentive to
maintain quality and customer satisfaction (Grant, 2005). This may give the potential customer
some assurance when selecting a product. Furthermore, Kotler and Keller (2006) specified that
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brand image is the different perceptions and beliefs consumers hold, as reflected in the
associations consumers’ memory may grasp.
3.4. Brand Positioning Dimensions
The special features of services compared to those of physical goods make it difficult for
consumers to compare competing services, thus posing challenges in their positioning (Bitner,
1997; Zeithaml & Bitner 1996; Fisher, 1991,). In view of this, Batson (1995) and Zeithaml
and Bitner (1996) contend that, specific brand positioning dimensions should be applied in a
particular service sector. It is in this direction that the following brand positioning typologies
have been chosen for the banking sector in Ghana: image, trust, tangible cues, customer
intimacy, country of origin, core services, price and distance. These dimensions are discussed
below:
3.4.1. Image
Keller (2009) described brand image as the perceptions and beliefs held by consumers about
the brand. Brand image depends on the external properties of the product or service, such as
the ways in which the brand attempts to meet customer’s psychological or social needs (Keller,
2009). Keller (2009) argues that it is the way people think about a brand generally rather than
what they think the brand actually does. Normally, the image of the service company has been
shown to have a positive impact on consumer responses toward the firm, including their loyalty
in such sectors as telecommunications and education (Nguyen & Leblanic, 2001), food
retailing (Juhl, Kristensen & Ostergaard, 2002) as well as banking and financial services
(Ngugen & Lablanc, 1998). Corporate based brand associations can engender positive replies
from consumers in the banking industry for three main reasons;
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The first reason relates to the complexity of the offering. Banks regularly offer various types
of services, many of which can be highly technical and, as such difficult to assess and compare
by customers (Phan & Ghantous, 2013). Devlin (2004) posits that the banks overall image can
act as an authority that helps customers save time and effort in assessing the bank’s offering
particularly under high complexity. The second reason has to do with the risk perceptions
associated with banking services (Phan & Ghantous, 2013). Corporate image has been shown
to play a vital role in achieving consumers trust both in traditional and internet banking
(Flavian, Guinalı & Torres, 2005). This comes about as a result of the fact that corporate
reputation on the market shows service quality at the level of credence attributes and the firm’s
ability and willingness to keep the promises made to its customers (Dall’Olmo Riley &
Chernatony, 2000).
The third reason relates to the difficulty confronting many banks and financial service providers
particularly in highly competitive markets, in differentiating themselves with features that can
be easily copied by competitors in many instance (O’Lolighlin & Szmigin, 2005). Chun and
Davies (2006) assert that, strong corporate image associations can positively affect customer’s
perceived differentiation and drive customer satisfaction and customer loyalty to the services
brand (Davies, Chun, da Silva & Roper, 2003).
3.4.2. Trust
According to Morgan and Hunt (1994) trust exists when one party has confidence in an
exchange partner’s reliability and integrity. Dalziel, Harris and Laing, (2011) argue that, trust
has to do with the confidence that a party’s word or promise is reliable and that the party will
fulfill his or her duties in an exchange relationship. Cognitive trust is a customer’s confidence
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or willingness to rely on a service provider’s competence and reliability (Moorman, Deshpande
& Zaltman, 1993). DuPlessis (2010) asserts that, before customers conduct business with an
organization, they must be able to trust the service provider. Phan and Ghantous (2013) posit
that, the banking sector has suffered from several important financial crises in the last decade
that could add to consumer perceived uncertainty. Some scholars argue that brand trust acts as
a risk-reducing device. (De Chernatony & Cottam, 2006; De Chernatony & Dall’Olmo Riley,
1999). A recent study in a retailing context conducted by Ghantous (2012) discovered that
customers’ interaction with frontline employees directly affects their perception of the services
brand trustworthiness in keeping its promises, and indirectly affects loyalty through the brand’s
perceived trustworthiness and expertise.
Brand trust plays a vital role in building long-term relationships between consumers and
goods/services providers in the presence of high perceived risk (Sichtmann, 2007; Fischer,
Meffert & Perrey, 2004). More specifically, brand trust acts as a major antecedent of
customer’s commitment toward a brand and subsequently of customer loyalty. Some authors
argue that, trust has been found to play a significant role in maintaining service relationship
with one’s bank (Ndubisi, Wah & Ndubisi, 2007; Lewise & Soureli, 2006). Ndubisi and Wah,
(2005) assert that, an abuse of this trust by a service provider will result in customer
dissatisfaction and defection.
3.4.3. Tangible Cues
Some scholars argue that, customers associate quality service with tangible cues provided by
banks (Al-Eisa & Alhemoud, 2009; Jamal & Naser, 2002). In view of the perceived importance
of the physical evidence dimension of service delivery, some authors have designed specific
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scales to measure the construct. TANGSERV (Raajpoot, 2002) and DINESCAPE (Ryu & Jang,
2008) were designed to enhance the measurement of physical evidence dimension in service
delivery. Tangible cues in the commercial banking sector may be shown in physical
attractiveness of the bank’s servicescape, the degree of modernity of its equipment and
technology, and the appearance of its employees (i.e. dress codes) (Tuzovic, 2008; Jabnoun &
Al-Tamimi, 2003). Tangible cues may also include the ambient conditions such as temperature,
ventilation, noise, and scent prevailing in the bank’s premises, extent of the physical layout of
equipment, beautiful buildings, nice vehicles and visually appealing signs and symbols (Barber
& Scareclli, 2010; Jamal & Naser, 2002). These tangible cues provide some satisfaction to
customers and this may also retain their loyalty.
The introduction of information technology into the banking sector has implications for
customers’ perception of the service provider’s activities and core dimensions of the bank
services (Reimer & Kuehn, 2005). It is now accepted that e-banking in particular has provided
additional channels for providing banking services to customers (Al-Eisa & Alhamoud, 2009)
and has put some influence on how service providers interact with their customers
(Lallmahamood, 2007). Narteh and Kuada (2014) assert that with installations of Automated
Teller Machines (ATM), electronic funds transfers, credit-cards, debit cards and point of sale
(POS) terminals banks have increased the ability to offer their customers fast and efficient
products or services 24 hours a day in Ghana. This has increased the tangible cues of the banks
as well as the degree of complexity with which commercial banks render their services
(Almossawi, 2001). The research work of Al-Eisa and Alhemoud (2009) shows that the
introduction of self-banking services has a positive effect on customer satisfaction which may
lead to customer loyalty.
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3.4.4. Customer Intimacy
Customer intimacy has to do with the long term relationship a firm seeks to develop with its
customers. Gronroos (1994b) defines customer intimacy as a firms ability to “identify and
establish, maintain and enhance, and when necessary, terminate relationship with customers
and other stakeholders, at a profit so that the objectives of all parties involved are met; and this
is done by mutual exchange and fulfillment of promises”. Some scholars observe that within
the banking industry, specifically, there is clear indication that banks have been using
relationship marketing or customer intimacy strategy to attract, satisfy and retain customers
(Molina, Martin-Consuegra & Estabeban, 2007; Levergin & Lilijander, 2006; O’Loughlin,
Szinigin & Turnbull, 2004). It has been contended that customer relationship helps firms to
differentiate their bank service offerings (Aurier & N’Goala, 2010), facilitates cross-and up-
selling (Molina et al, 2007), and enhances customer lifetime value (Gupta, Lehmann; & Stuart,
2005; Gustafsson, Johnson & Roos, 2005).This is therefore seen as a more effective means to
sustainable competitive advantage for banks (Dimitriadis, 2010). Frontline employees have
been seen as important in implementing customer intimacy concept in bank services (Wilson,
Zeithaml, Bitner & Gremler, 2008). The skills and competence (Ndubisi, 2007), friendliness
and willingness to help customers (Al-Eisa & Alhemoud, 2009), and service recovery
effectiveness (Priluck & Lala, 2009) have all been found to positively impact customer loyalty.
3.4.5. Country of Origin
In today’s era of globalization, country of origin of the manufacturing or service brands is
increasingly becoming more important than the actual country of manufacture. Country of
origin refers to the country that a manufacturer’s or service’s product or brand is associated
with (Blankson & Kalafatis, 2004). Traditionally, this country is called the Home-Country or
the country from which the brand or service brand initially originated. Coffie and Owusu-
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Frimpong’s (2014, page 539) work on alternative positioning of services in Ghana revealed
that, sometimes customers feel some kinship with banks from the home country. This is evident
from the comments of the marketing director of a bank: “… consumers perceive the bank as
the property of Ghanaians for which reason it has to go all out to serve the populace. For this
reason, they resisted fiercely when the government proposed to sell the bank. Ghana
Commercial Bank (GCB) also put in every effort to meet customer needs.” In a study by Wang
and Yang (2008), the country of origin of a car was found to be a positive moderator in the
relationship between brand personality of a car and consumers’ purchase intention.
Specifically, they affirmed that, a positive country of origin image could enhance brand
personality’s positive impact on purchase intention, whereas a negative country of origin image
could significantly decrease the positive brand personality effect on purchase intention.
However, researchers have suggested that the effect varies from one product category to
another (Wu & Lo, 2009; Pappu, Quester & Cooksey, 2005). Andaleeb (1995) hinted earlier
that consumers, in some instances, have had perceptions about products and services brands
based on their country of origin and might thus have a positive or negative connotation towards
them when it comes to purchasing brands from stereotyped countries. The concept of country
of origin effects on consumer purchase decisions have also been studied by several scholars
(Diamantopoulos, Schlegelmilch, & Palihawadana, 2011; Samiee, 2010; Balabanis &
Diamantopoulos, 2008; Usunier, 2006; Samiee, Shimp & Sharma, 2005). Other studies have
also reported external factors such as consumer’s family, reference groups and the consumer’s
role and status as major influencers of product or service selection (Schiffman & Kanuk, 2009)
and these influence customers’ loyalty to a particular service provider or bank.
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3.4.6. Core Services
Sureshchandar, Rajendran and Anantharaman (2002) contend that, core service denotes the
main product or service being rendered by the bank to its target customers. According to
Brogowicz, Delene and Lyth (1990), a core service denotes the “what” of a service offering.
Al-Eisa and Alhemoud (2009) implore firms to intentionally adopt various strategies that
highlight the core benefits of their services to both current and prospective customers. This
enables customers to form realistic expectations concerning the services and their role in the
co-creation process (Garry, 2008). Some work in retail banking has shown that the complexity
of core service delivery impacts positively on customer satisfaction (Al-Eisa & Alhemoud,
2009; Jamal & Naser, 2002). Sophistication in this context includes the difference types of
services provided as well as the competence and accuracy with which the services are rendered,
how the bank branches are networked, the hours within which the services are provided, how
fast the services are delivered, and the price at which the services are offered (Jamal & Naser,
2002).
The introduction of electronic banking systems such as automated teller machines (ATMs) and
internet banking has added extended dimensions to how the core service is rendered by
universal banks. Electronic banking assists banks to standardize service delivery, lower the
cost of services, ensure improved customer relationship management, and above all, achieve
higher levels of customer participation in the service delivery process (Bauer, Hammerschmidt,
& Falk, 2005; Chen, 2005). The core service is so important that the banks’ failure to deliver
on it could cause customer switching to other competitive providers. Keaveney (1995) observes
that core service failure as the dominant factor, accounting for 44% of the reasons for customers
switching service providers.
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3.4.7. Price
Price is an attribute that must be given up or sacrificed in order to get certain types of products
or services (Zeithaml, 1998). Some authors assert that customers are usually price sensitive or
conscious in their purchasing behaviour (Beckett, Hewer & Howcroft, 2000; Levesque &
McDougall, 1996). Engel, Blackwell, and Miniard (1995) argue that price is a significant
element in choice situations as a consumer’s choice normally relies heavily on the price of
alternatives. Furthermore, Varki and Colgate (2001) discovered that the role of price, as an
attribute of performance, may have a direct effect on customers’ satisfaction and behavioural
intentions. In Keaveney’s (1995) seminal research, the pricing factor involved all critical
switching behaviours that include prices, rates, fees, charges, surcharges, service changes,
penalties, price deals, coupons, and or price promotions.
In the financial service industry, price has a wider implication than in many other services
industry (Gerrard & Cunningham, 2004). According to Gerrard and Cunningham (2004), price
in the financial service sector includes fee implementation, bank charges, and interest rates and
paid. Some studies have shown that the concept of perceived price has been introduced by
taking into account time, effort, search costs and psychic costs involved in the buying process
as well as the monetary price (Grewal, Baker, Levy & Voss, 2003; Zeithaml, 1988). This
implies that price must be properly controlled to impact positively on customers’ satisfaction
and customers’ loyalty.
3.4.8. Distance
One area that has been of immense interest with regard to literature on consumer brand decision
making is the convenience with which consumers are able to obtain their choice of brands
(brand strategy, 2010). Lin and Chang (2003) assert that convenience of a brand has an
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important impact on consumers’ brand choice. According to Levesque and McDougall (1996),
a convenient location is a significant factor influencing customers’ assessment of a firm’s
performance. Levesque and McDougall (1996) argue that, convenience to a bank location is a
vital factor influencing customers’ switching behaviour because location directly determines
whether the customers can access their banks on a regular basis.
Keaveney (1995) posits that, under the inconvenient category, a service provider’s location is
a significant factor that may trigger switching. Clemes, Gan and Zhang (2010), explain that
customers may defect to a new provider if the new provider is closer to their workplace or
home. Kiser (2002) concludes that location is a crucial matter for household’s choosing
depositor institution due to the limited geographical accessibility of alternatives banks. Gerrard
and Cunningham (2000) studied the bank switching behaviour of Singapore graduates and
ascertained that inconvenience location has an impact on those graduates who prefer face-to-
face communication. In a nutshell, a convenient location can encourage customer’s retention
at their existing bank and postpone switching (Lee & Cunningham, 2001).
3.5. Customer Satisfaction
Oliver (1997) defines customer satisfaction as customer reaction to the state of fulfillment, and
customer judgment of the fulfilled state. Narteh and Kuada (2014) explain that customer
satisfaction is a post consumption experience. Olorunniwo, Husu and Udo (2006) posit that
customer satisfaction is a fulfillment response following the consumption experience. More
precisely, customer satisfaction is an individual’s perception of the performance of the product
or service compared to expectation (Torres & Kline, 2006). Meng, Tepanon and Uysal (2008)
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contend that the differences in definition could be linked to the diverse opinions authors have
applied to model of customer satisfaction.
Some research has proved that a firm’s ability to satisfy customer needs in retail banks is crucial
to their long-term business success (Gursoy & Swanger, 2007; Day, 2003). Again, studies have
also shown that when customers are satisfied, they remain loyal to their bank (Ndubisi, 2007),
communicate or recommend their bank to prospective customers (Chi & Grusoy, 2009), less
price sensitive and reduces operating costs (Fornell; 1992). This imply that when a firm is able
to position its service from the perspective of customers, the firm’s services are differentiated,
and increases its ability to render better service to customers which will in turn result in
customer satisfaction (Fuchs & Diamantopoulos, 2010).
3.6. Customer Loyalty
According to Oliver (1999), customer loyalty is referred to as a deeply held commitment to re-
purchase or re-buy a preferred product/service continuously in the future, thereby causing
repetitive same-brand or same brand-set buying despite situational influences and marketing
efforts having the potential to cause switching behaviour. Lovelock, Lewise, and Vandermerve
(1999) argue that in a business context, loyalty can be used to describe the willingness of a
customer to consistently purchase a firm’s goods and services over a long period of time and
on the free will of the customer referring the firm’s products or services to friends and
associates. In their opinion, customers will continue to be loyal to a specific firm if they believe
that better value is being rendered. Kotler (2000) argues that the most important or vital
consideration in attaining high customer loyalty is for the firm to deliver higher customer value.
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Customer loyalty is seen as the key driver or indicator of success (Anabila, Narteh &
Tweneboah-Koduah, 2012).
Customers experiencing a high level of satisfaction are likely to remain with their current
service providers and maintain their accounts (Kim, Park & Jeong, 2004). Kim et al., (2004)
assert that, the importance of customer loyalty is its close link to the firm’s continued survival
and future growth. Loyalty can be seen as both an attitudinal and behavioural dimension (Dick
& Basu, 1994). Customers who are behaviourally loyal to a firm show more favourable
disposition towards the firm relative to competitors (Leverin & Liljander, 2006). However,
some authors like Aldlaigan and Buttle, (2005); Liljander and Roos, (2002); Reinartz and
Kumar, (2002) have displayed that in some cases behavioural loyalty like repeat purchase does
not always denote attitudinal loyalty, due to other underpinning limiting factors such as
distance and monopoly powers that might serve as barriers to customer switching. Loyal
customers are less likely to defect as a result of price of the product or service and buy more
than non-loyal customers (Reichheld & Sasser, 1990).
Raman (1999) argues that loyal customers provide strong recommendation, create business
referrals, provide references, and serve as an advisory boards. Raman (1999) said that loyal
customers serve as a fantastic marketing force by providing recommendations and
disseminating positive word-of-mouth; increasing sales by patronizing various types of the
bank’s products: making more frequent purchases; and costing less to serve, in part, because
they are aware of the product or service and need less attention. According to the literature,
positioning is expected to shape the needs and wants of consumers, lead to customer
satisfaction and customer loyalty (Kalra & Goodstein, 1998), customer derived brand equity
(Keller, 2003) and willingness to look for the brand (Schiffman & Kanuk, 2007).
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3.7. Switching Cost, Moderating Effect of the Customer Loyalty
Some authors argue that a well-positioned brand should appeal to the specific needs of a target
segment or market because when differential advantage/value proposition is created (Keller,
1993; Wind, 1982), consumers’ needs are more specifically satisfied (Day, 19984). This means
that customers experiencing high levels of satisfaction are likely to stay with their current
service providers and maintain their subscriptions (Kim, Park & Jeong, 2004). However,
research has also shown that customer satisfaction, whilst positively influencing customer
loyalty is not always a sufficient condition, and in most cases fails to produce the expected
effect (Jones, Mothersbaugh & Betty, 2002). Furthermore, these authors have proposed that it
is imperative to look at other potentially influential factors. It is in this direction that the idea
of the switching cost was introduced (Jones et al, 2002).
Mathew and Murray (2007) define switching costs as various kinds of financial and non-
financial costs occurred in changing suppliers. Lee and Cunningham (2001) assert that
switching costs can be measured by the cost that comes from defecting to another provider.
Switching cost is also defined as the cost involved in changing from one service provider to
another by a customer (Porter, 1998). According to Jackson (1985), it is the sum of economic,
psychological and physical costs. These perceived penalties for disloyalty deter customers from
switching to a competing brand (Aydin & Arasil, 2005). In the banking sector, switching costs
can be explained in terms of money, time, risk, emotion and effort required for actitivities such
as transferring funds, opening a new account, and registering for online banking systems
(Clemes, Gand & Zhang, 2010).
The monetary cost has to do with financial penalties customer pays to the bank for defecting
to another bank. It can also be loss of rewards or status gained through relationship longevity.
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Monetary or financial switching cost can be thought of as a “sunk cost”, which appears when
a customer changes his/her brand (Aydin & Arasil, 2005). Klemperer (1987b) gives examples
of financial switching cost to be the costs of closing an account with one bank and opening
another with a competitor, the costs of changing one’s long-distance telephone service.
Time cost means time and energy the customer spent in searching for alternative service
provider or bank to do business (Egan, 2004). Aydin and Arasil (2005) posit that time cost is
also known as procedural switching cost stems from the process of customer decision-making
and the buyer’s implementation of the decision. The five-stage process entails; need
recognition, information search, evaluation of alternatives, purchase decision and post-
purchase behaviour. Aydin and Arasil (2005) contend that a customer contemplating switching
should ideally evaluate alternative operators with regard to different criteria, such as, fees
charges, customer complaint handling procedures, customer service or added value, and
purchase a new service.
Risk involves a customer switching to new service provider of whom he or she has no
experience. Emotional cost refers to loss of emotional ties the bank has with the customer for
many years of relationship due to the defecting to another bank. (Egan, 2004). Risk and
emotional cost are also referred to as psychological cost which is perceived cost stemming
from social bonds that form in the course of time (for example, staff-customer relations)
(Patterson & Sharma, 2000) and the uncertainty and risk associated with switching to an
unfamiliar brand or service provider (Sharma, 2003). The degree of perceived risk is highest
when the consumer cannot evaluate service quality before purchasing (Sharma, Patterson,
Cicic, & Dawes, 1997).
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Research has shown that the switching cost plays the role of an adjustment element in the
interrelationship between customer satisfaction and customer loyalty (Kim, Park & Jeong
2004). Some scholars argue that when the level of customer satisfaction is identical, the level
of customer loyalty can vary depending on the magnitude of the switching cost (Jones et al
2002; Colgate & Lang, 2001; Lee & Cunningham, 2001). This means that switching cost could
have positive impact on customer loyalty and also negative influence on customer loyalty. Lee,
Garland and Wright, (2007) argue that the direct and opportunity costs of switching may
discourage customers from leaving the current organization because customers may perceive
switching costs to be higher than the expected benefits of changing banks or service providers.
According to Lee and Cunningham (2001) when customers perceive high financial cost,
availability of alternatives is not in their evoked set, and a good relationship investment as well
as good service recovery deter them from defecting to competitors and this constitutes high
switching cost. This is a positive influence of switching cost because it has retains the
customers in the organization for continue business. However, switching cost could also have
no direct or positive influence on customer loyalty when customers perceive low financial
cost, availability of alternatives, poor service recovery and poor relationship investment
(Colgate & Lang, 2001). This implies that customers perceive switching cost to be low and
therefore could defect to alternative service provider.
3.8. The Relationship Between Brand Positioning, Customer Satisfaction, Customer
Loyalty and Switching Cost
A well-crafted brand position is expected to bring about customer satisfaction which in turn
results in customer loyalty (Kotler & Keller, 2012). As a general rule, customer satisfaction
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and customer loyalty are closely related (Kim et al., 2004). Kim et al (2004) argue that customer
satisfaction functions as an antecedent of customer loyalty. It prevents customer churn or
defection and brings about retention, thereby constituting a vital cause of customer loyalty
(Reichheld, 1996; Fornell, 1992). Furthermore, whilst affected by market structure, customer
type and customer’s individual ways of solving problems, the connection between customer
satisfaction and customer loyalty are not always a linear relation, even though they have a
positive relationship (Soderlund, 1998; Fornell, 1992). When customers defect, they tend to
perceive a burden or risk which becomes the switching cost which can influence customer
loyalty (Kim, Park & Jeong, 2004).
3.9. Demographic Characteristics
Studies show that customers’ demographic characteristics can be utilized to differentiate the
behaviour of one target segment from another segment (Quester, McGuiggen, Perrault &
McCarthy, 2007; Siles, Robinson, & Hanson, 1994). Customers’ demographic can be grouped
as age, income, education, gender and experience (Strombeck & Wakefield, 2008; Quester et
al., 2007). According to Mittal and Kamakura (2001), these characteristics can contribute to
various kinds of customers’ thresholds or tolerance levels which can affect customers’ repeat
purchase and behaviour. The demographic characteristics of customers can also influence their
choice of product or service (Clemes, Gan & Zhang, 2010). Clemes, Gan and Kao (2007b)
explained that in New Zealand, younger customers are the most likely segment to switch banks.
Colgate and Hedge (2001) further argue that bank switching is more common among younger,
high income earners and highly educated group of customers than those customers’ older, low-
income earners and less educated demographic groups. In China, people who act as business
professionals have gained particular social prestige and can be categorized as holders of white-
color jobs (Duthie, 2005). Generally, the white-colour group tends to switch banks because
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they receive high incomes and have a higher educational background (Duthie, 2005). However,
Siles et al., (1994) depict that bank customers in the USA with different educational
backgrounds share the some behaviour in switching banks.
3.10. Empirical Evidence
Positioning of an organization can significantly affect its financial fortunes, as evidenced by
internationally well-known brands such as Virgin Atlantic Airlines and IBM. The positioning
by Virgin—quality of service and value for money—has been used extensively through the
establishment of about 100 companies in different product and service lines around the world
(Aaker, 2005).
Research work conducted by Brooksbank (1994) between higher and lower performing United
Kingdom (UK) companies in terms of their marketing practices, has discovered that to be
successful over the long term, a firm’s offering must be well positioned in the market place.
This is confirmed by authors like Clement and Werner-Grotemeyer (1990) and Devlin, Ennew
and Mirza, (1995) who discovered that just as marketing has become an increasingly important
element of strategic management process, so has the positioning concept become fundamental
to the success of the firm. This position is reinforced by Fisher (1991) who contends that a
differentiated position generates high return on profits. The above assertion is further supported
by empirical research, conducted by McAlexander, Becker, and Kaldenberg (1993) in the
United States, who declare that the selection of appropriate positioning strategy correlates
significantly with financial performance.
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Tudor and Negricea (2012) found out in their research work that branding and positioning are
interrelated. Tudor and Negricea (2012) discovered that a brand cannot be built and/or
preserved without a proper positioning in the minds of the target market. A positioning on the
other hand cannot be a long-lasting one without a strong brand. A strong brand and an enduring
positioning dimensions should be the most important long-term marketing goals of any firm
because these two can differentiate the survivors from the perished, the winners from the losers
and the leaders from the pursuers.
Siebers, Zhan and Li (2013) conducted research work on retail stores in China and the results
show that different retail formats achieve success through the implementation of similar
positioning strategies leading to customer satisfaction and customer loyalty.
Amonini , McColl-Kennedy, Soutar & Sweeney (2010) conducted a study in Australia on how
professional service firms compete in the market and the findings shows that professional
service firms seek to differentiate themselves by implementing brand positioning dimensions
such as developing long term relationships, providing better service quality and greater value,
and developing brands with strong reputations. The findings indicate that generating positive
perceptions of long-term relationships, service quality, value, and the brand reduces clients’
perceived risk, retains customers, and helps spread positive word of mouth. The results also
suggest service quality and value-added services, as well as a strong brand, can differentiate
professional service firms and helps to establish and maintain relationships.
Again Fuchs and Diamantopoulos (2010) conducted a research titled evaluating the
effectiveness of brand-positioning strategies from a consumer perspective on compact cars in
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Denmark. The outcome of the study depicts that the type of positioning strategy used affects
the positioning success of a brand. More specifically, the study confirms normative assertion
about the overall relative efficacy of main positioning strategies by revealing that benefit-based
positioning and surrogate (user) positioning generally outperform feature-based positioning
strategies along the three effectiveness dimensions. The findings also demonstrate that no
single strategy outperforms all the others on all dimensions. Some authors recommend that in
order to be successful, companies only need to be outstanding in one of these brand positioning
dimensions and at average or pass levels in the remaining aspects (Matear, Gray, & Garrett,
2004; Kalafatis, Tsogas, & Blankson, 2000). These scholars imply that firms may compete by
offering more than one competitive positioning element.
In the United Kingdom, Ryanair achieved a steep growth with price advantage to mirror than
what Direct Line did in distribution (Coffie & Owusu-Frimpong, 2014). The price advantage
came from the airline’s ability to keep cost low through a number of initiatives: operating from
smaller airports, shorter flights within the United Kingdom and Europe mostly requiring little
or no food service, quick and effective turnaround of flights (capacity utilization), and making
customers feel that everyone can fly (Coffie & Owusu-Frimpong, 2014). In general, low-price
positioning advantage is possible only by keeping cost low, while premium price advantage
often has to work in conjunction with the high perceived quality and differentiation (Hooley,
Saunders, & Piercy, 2004).
Aydin and Arasil (2005) conducted a study on the customer loyalty and the effect of switching
costs as a moderator variable: a case in the Turkish mobile phone market. The findings of this
study show that the switching cost factor directly affects loyalty, and has a moderating effect
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on both customer satisfaction and trust. Therefore, it plays a crucial role in winning customer
loyalty.
Jones, Mothersbaugh and Betty (2002) research into the relationships between switching costs
and outcomes like customer retention by using correlation analysis. The author’s results show
that switching costs are positively and significantly related to repurchase intention. Colgate and
Lang (2001) studied switching barriers in the New Zealand financial industry and ascertained
that switching costs play a vital role in forcing customers not to defect, though they have
seriously thought of switching providers.
3.11.0. Conceptual Framework/Model and Hypotheses
Shields and Rangarajan (2013) define conceptual framework as the way ideas are organised to
achieve a research project’s objective. Shields and Rangarajan (2013) note that conceptual
framework has to do with how ideas are connected to the research project’s objective that direct
the collection and analysis of data. Haug (2013) asserts that it is the framework that hypotheses
are formulated to accomplish the objective of the research project. In this study the variables
that are used to form conceptual framework are brand positioning dimensions (price, trust, core
service), switching cost and customer loyalty. Narteh and Kuada (2014) conducted a study on
customer satisfaction with retail banking services in Ghana using three elements and were able
to achieve customer satisfaction among retail bank customers in Ghana. Base on this the three
typologies were chosen for the Ghanaian universal banking sector.This study uses these
variables to achieve the stated objectives. The variables have been discussed below:
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3.11.1. Price Relationship with Customer Loyalty
Zeithaml (1988) define price as something that must be sacrificed to obtain certain kinds of
products or services from customers’ cognitive conception. According to Rothschild (1979)
price is the most common indicator of customer involvement in the purchasing of a product or
service. In real sense, customers do not always know or recall the actual price of products or
services but they do usually code prices in ways that are important to them such as a normal or
‘expensive’ or ‘cheap’ (Dickson & Sawyer, 1990). In the banking sector, the concept of
perceived price has been introduced by taking into consideration time, efforts, search costs and
psychic costs involved in the purchase process as well as the monetary price (Grewal, Baker,
Levy & Voss, 2003). Schmitz (2009) states that in the European market price is the key reason
for customers to shop in discount stores, for instance in Germany, but in the US market, price
is not classified in the top five attractive attributes.
According to Gerrard and Cunningham (2004), price in financial service sector includes fee
implementation, bank charges, and interest rates and paid. Siebers, Zhang and Li (2013)
conducted a study on retail positioning through customer satisfaction and discovered that price
is one of the positioning dimensions that influence customers’ satisfaction and customers’
loyalty. Martin-Consuegra, Molina and Esteban (2007) conducted a study on an integrated
model of price, satisfaction and loyalty in the service sector in Spain and the results from the
study provide practical support, signifying that perceived price fairness influences customer
satisfaction and loyalty. The analysis also suggests that customer satisfaction and loyalty are
two important antecedents of price acceptance. It is perceived that banks’ customers expect
bank fees and other charges to be affordable or reasonable. Base on this, the study hypotheses
that:
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H1: Price has a positive relationship with customer loyalty in the Ghanaian universal banking
sector.
3.11.2. Trust Relationship with Customer Loyalty
Moorman Deshpande and Zaltman, (1993) defined trust as a readiness to rely on an exchange
partner in whom one has confidence. More specifically, Anderson and Narus (1990) defined
trust in manufacturer-distributor relationships as a firm’s belief that another company will
perform actions that will result in positive outcomes, and that the other company will not take
unexpected actions that end in negative outcomes for the firm. Ganesan (1994) found that long-
term orientation is affected by the extent to which customers and service providers trust each
other. Caceres and Paparoidamis (2007) state that each partner’s ability to provide positive
outcomes to the other determines commitment to the relationship.
Morgan and Hunt (1994) argue that trust is a major element of relationship commitment and
exists when there is confidence in a partner’s reliability and integrity. Also, Ganesan (1994)
suggested that a vital component of trust is the extent to which the customer believes that the
service provider has intentions and motives beneficial to the customer and is concerned with
creating positive customer outcomes. Service providers who are perceived as being concerned
with positive customer outcomes will therefore be trusted to a greater extent than service
providers who appear interested only in their own welfare (Caceres & Paparoidamis, 2007).
The banking sector is potentially associated with high perceived risk and trust acts as a risk-
reducing device by reassuring customers’ security and safety of their funds (DeChernatony &
Cottam, 2006). Sweeney and Swait (2008) conducted a study on trust in retail banking and
report that trust brings about brand credibility which has significant impact on customer
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satisfaction and customer loyalty. Phan and Ghantous (2013) also conducted a study on
managing brand associations to drive customers’ trust and loyalty in Vietnamese banking and
the empirical findings show that trust is by far the strongest antecedent of brand loyalty among
the different antecedents included in the study. Base on this the study hypotheses that:
H2: Trust has a positive relationship with customer loyalty in the Ghanaian universal banking
sector.
3.11.3. Core Service Relationship with Customer Loyalty
The core service refers to all the components of a service (Sureshchander, Rajendran, &
Anantharaman, 2002) and signifies the basic product or service being rendered by the service
provider. Marketing researchers encourage firms to consciously embrace strategies that stress
the core benefits of their services to existing and prospective customers (Al-Eisa & Alhemoud,
2009). Garry (2008) argue that highlighting the core benefits by a service provider helps
customers to form realistic expectations about the services and their role in the co-creation
process. Core service here includes the variety of services provided as well as the competence
and accurateness with which the services are delivered, how the bank branches are networked,
the hours within which the services are delivered, how fast the services are delivered, and the
price at which the services are offered (Jamal & Naser, 2002). Furthermore, Chen (2005)
contend that the introduction of electronic and internet banking systems have assisted banks
to standardize service delivery, lower the cost of services, ensure improved customer
relationship management, and, above all, achieve higher levels of customer participation in the
service delivery process. All these core services are perceived to have some impact on customer
satisfaction and customer loyalty in the bank sector. Al-Eisa and Alhemoud (2009) conducted
a study using a multiple-attribute approach for measuring customer satisfaction with retail
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banking services in Kuwait and found that core service like speed with banking service delivery
is one of the major indicator of customer satisfaction and customer loyalty in Kuwait retail
banking. Base on this the study hypotheses that:
H3: Core service has a positive relationship with customer loyalty in the Ghanaian universal
banking sector.
3.11.4. Switching Cost as a Moderating Effect
Switching costs may be referred to as the sacrifices or fines consumers feel they may incur in
moving from one service provider to the next (Jones, Reynolds, Mothersbaugh & Beatty,
2007). Clemes, Gan and Zhang (2010) argue that in order to reduce the numbers of customers
switching banks, banks managers should endeavour to increase switching barriers or switching
cost to make the switching process more involved and less attractive to customers. Berry and
Parasuraman (1991) state that switching costs can be adjusted upward once customers raise
their dependency on the firm for a long-term relationship. Burnham, Frels, and Mahajan (2003)
assert that, even if only impassive loyalty is created by switching costs, such behavioural
restrictions can prompt relationship-improving investments by encouraging voice over exit.
Fornell (1992) argues that high switching costs can reduce frequent defection by making it
expensive for customers to change service providers. Gronhaug and Gilly (1991) posit that a
customer who is dissatisfied may continue to be with the existing service provider because
customers may perceive defecting costs to be higher than cost of remaining with the current
service provider. This presupposes that mercenary customers who are satisfied but still want to
switch would remain with their existing service provider. Colgate and Lang (2001) studied
switching barriers in the New Zealand financial industry and ascertained that switching costs
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play a vital role in forcing customers not to defect, though they have seriously thought of
switching providers. Jones et al. (2002) research into the relationships between switching costs
and outcomes like customer retention by using correlation analysis. The authors’ results show
that switching costs are positively and significantly related to repurchase intention. Base on
this the study hypothesis that:
H4: Switching cost has a positive effect on the relationship between brand positioning
dimensions and customer loyalty in the Ghanaian universal banking sector
Conceptual Framework/Model
Adapted from: (Siebers, Zhang & Li, 2013)
Brand Positioning Dimensions
Price
pppppppppP H1
Trust Customer
H2
Loyalty
Core Service
H3
H4
Switching
Cost
Deriving from the literature so far reviewed, the conceptual framework has been adapted from
Siebers, Zhang and Li (2013). The framework depicts brand positioning dimensions deemed
relevant for ensuring customer satisfaction, which if sustained should generate customer
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loyalty. However, perceived switching costs can influence the achievement of customerloyalty.
These switching costs have been depicted as moderators in the framework.
Some authors content that in order to be successful, firms only need to be outstanding in one
of these aspects of brand positioning dimensions and at average or pass levels in the remaining
aspects (Matear et al., 2004; Kalafatis, Tsogas, & Blankson, 2000). These authors also suggest
that companies may compete by offering more than one competitive positioning element. Base
on this assertion that three brand positioning dimensions were selected out of the eight
discussed.
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CHAPTER FOUR
RESEARCH METHODOLOGY
4.0. Introduction
In this chapter, the study discusses the following: research approach, research design,
population sample size, sample technique, instrument used to collect data, reliability of data
collected, data analysis procedure and limitation of the study.
4.1. Research Approach
The research approach for this study is positivist which normally uses the quantitative method
of analysing data (Boateng, 2014). The quantitative method was used for this study because it
is normally perceived as more reliable and objective. Quantitative method is often employed
when the variables are clearly defined and the study is focused on the ability to generalise
results to the larger population. This method looks at relationships between variables and can
establish cause and effect in highly controlled circumstances. Again, the quantitative method
assumes the sample is representative of the population and the subjectivity of researcher in
methodology is less recognised (Boateng, 2014). The study used cross-sectional data which
was collected from respondents who were customers of the 27 universal banks licensed in
Ghana. This approach has been chosen for this research design because it has been found to be
suitable for analysing issues about cross-section of the population at a particular point in time
(Robson, 1993).
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4.2. Research Design
One reason for using quantitative method was to obtain a large data set suitable for this study.
Primary data was collected from respondents by using questionnaires which were administered
to the targeted customers of banks within the Greater Accra Metropolis. The questionnaire was
influenced by the work of Coffie and Owusu-Frimpong (2014) in the area of positioning
strategies for services in Ghana. The questionnaire used a five point Likert scale ranging from
1 (“strongly disagree”) to 5 (“strongly agree”). Again, the questionnaire was designed using
the elements in the conceptual framework and were self-administered to the respondents (target
customers) by the researcher and two assistants.
Conceptual framework was adapted from Siebers, Zhang and Li (2013). The elements in the
conceptual framework were as follows: brand positioning dimensions, customer loyalty and
switching cost as a moderating factor. The brand positioning dimensions consisted of three
elements or variables namely: price, core service and trust. Each of these elements has sub-
variables under them. The element ‘price’ consists of: reasonable fees, value for money,
affordability and attractive promotion and were tapped from (Blankson & Kalafatis, 2004;
Siebers, Zhang and Li, 2013). The factor ‘core services’ comprises: accurate services, fast
services, reliability and skills and competence adapted from (Narteh & Kuada, 2014; Al-Eisa
& Alhemoud, 2009). The factor ‘trust’ was tapped through five items adapted from Phan and
Ghanteous, (2013) and this scale covers the three conventionally accepted aspects of trust that
are the brand’s integrity, benevolence and credibility. The three (3) brand positioning
dimensions constituted an independent variables and one dependent variable was customer
loyalty with switching cost serving as moderating factor.
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The customer loyalty was adapted from Phan and Ghanteous (2013) which measured five
statements which were as follows: ‘‘I intend to continue using my bank’s services in upcoming
years’’, ‘‘I recommend my bank to friends and relatives ’’, ‘‘I prefer my bank to other banks’’,
‘‘I will continue to be a customer of my bank even if it moderately increases its fee’’ and ‘‘this
bank is my first choice when I need to use banking services’’. The last item in the conceptual
framework was the switching cost which was also adapted from Aydin and Arasil (2005)
measured with four statements which were as follows: ‘‘Switching to a new operator is
financially costly’’, ‘‘I will not defect because of the expenditure of time and energy in looking
for alternative bank’’, ‘‘I will not defect because I have enough experience with my bank’’,
and ‘‘I will not defect because I have a good long-term relationship with my bank’’.
4.3. Population
The researcher carried out the study in the Greater Accra Metropolis and the population chosen
was heterogeneous in nature. The researcher considered Greater Accra Metropolis because of
the concentration of major economic activities there and the presence of many banks branches
in the capital. Furthermore, majority of the population in Greater Accra City were perceived
to own bank accounts because of trading activities and members of the public who patronized
variety of services of the universal banks the study was concerned with (Spector, 1992). The
majority of the target group was also perceived to have the requisite literacy ability and
understanding to interpret and respond to the questionnaires more appropriately (Ghana
Statistical Survey, 2012; Spector, 1992; Winer, 1999).
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4.4. Sampling Technique and Sample Size Determination
In the absence of sample frame from which sample size would be drawn, the sampling
technique used was purposive sampling. Purposive sampling is a non-probability sampling
technique where respondents are chosen to be part of the sample with a specific purpose in
mind (Investopedia). With this study, the researcher selects only those respondents who have
bank accounts and also patronize various services of universal banks within the capital city
Accra. Again this method was used because it would be difficult to know the total number of
all the universal banks’ customers in Accra. The choice of this method was principally
influenced by works done by Narteh and Kuada, (2014); Anabila, Narteh and Tweneboah-
Koduah, (2012); and Fuchs & Diamantopoulos, (2010).
The study is a cross sectional survey which considered a large number of population unknown.
In determining sample size where population size is unknown, Krejcie and Morgan (1970)
recommended a sample size of three hundred and eighty (380) and above, and this was also
confirmed by Cochran (1977). A total of three hundred and eighty-four (384) questionnaires
were self-administered to the target respondents by the researcher and two assistants. Also
respondents were sampled on the streets of Accra Metropolis. The questionnaires were first
pretested with twenty (20) Ghanaian universal bank customers within Greater Accra
Metropolis.
4.5. Instruments Used To Collect Data
The only instrument the researcher used to collect data for the study was questionnaire, copies
of which were administered to target respondents within Greater Accra Metropolis by the
researcher and two assistants. Both open and close ended questions were used and this allowed
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respondents to express their views. The closed-end questions require less effort from
respondents in completing the questionnaires and they are easy used for analysis. The open-
ended question was incorporated to give an opportunity for the customers to express their
opinions regarding the service delivery. The questionnaire was divided into three sections. The
first section was to solicit data on implementation of brand positioning dimensions which may
lead to customer loyalty. The second section was designed to address data regarding customer
loyalty and the cost a customer might pay in defecting to a competitor called switching cost.
The third section was included to uncover data on demographic characteristics of the
respondents. The questionnaire consisted of twenty-seven (27) items split between the
variables that measures price, core service, trust, customer loyalty, switching cost and five
demographic characteristics questions. The completion of the questionnaires were entirely on
a voluntary basis.
4.6. Reliability of Data Collected
The data was first subjected to descriptive analysis before validation and further analysis
(Pallant, 2003).The descriptive statistics used the mean and standard deviation to display the
reliability of the individual elements which were used in the research instrument. In statistics,
reliability is the consistency of a set of measurements or measuring instrument, often used to
describe a test. Reliability is inversely related to a random error (Coakes & Steed, 2007). There
are several different reliability coefficients. One of the most commonly used is called
Cronbach’s Alpha (Cronbach’s α). Cronbach’s Alpha is based on the average correlation of
items within a test if the items are standardized. It has an important use as a measure of the
reliability of a psychometric instrument. It was first named as alpha by Cronbach (1951), as he
had intended to continue with further instruments. This is usually used as a measure of the
internal consistency or reliability of the psychometric test score for a sample of variables. As a
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general rule, a coefficient greater than or equal to 0.7 is considered acceptable and a good
indication of construct reliability (Hair, Black, Babin, Anderson, & Tatham, 2010). All the
variables price, core service, trust, customer loyalty and switching cost were tested for their
reliability (referred to page 64 for Cronbach Alpha product)
Furthermore, a correlation matrix was constructed to ascertain the relationship among the
elements used (Blankson et al., 2009). Again, as a result of the number of variables which were
used for the survey, a data reduction strategy (Malhotra & Birks, 2007) using confirmatory
factor analysis (CFA) was deemed appropriate. Confirmatory factor analysis (CFA) was used
because the constructs or scales were adapted from previous studies. Confirmatory factor
analysis (CFA) is a statistical technique used to verify the factor structure of a set of observed
variables (Hair, Black, Babin & Anderson, 2006). Confirmatory factor analysis allows the
researcher to test the hypothesis that, a relationship between observed variables and their
underlying latent constructs exists (Hair et al, 2006). The common underlying dimensions were
referred to as factors (Hair, et al, 2006). In addition, factors have to get an eigenvalue of at least
0.5 for them to be retained (Hair et al., 2006; Malhotra & Birks, 2007).
4.7. Data Analysis Procedure
Furthermore, through Statistical Packages for Social Sciences (SPSS) Version 22 stepwise
regressions was used to analyze the data set. Stepwise regression is the step-by-step iterative
construction of a regression model that involves automatic selection of independent variables
(Investopedia). To provide many explanatory variables utilized in the current study, it was
perceived that a stepwise regression analysis would be suitable to establish the relationship
between the brand positioning dimensions of the banks and customer loyalty (Narteh & Kuada,
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2014). The purpose of a stepwise regression is to select from a large number of predictor
variables, a subset of variables that explains most of the variation in the dependent variable
(Malhotra & Birks, 2007). Moreover, to analyse the moderating role of switching cost, a multi
group analysis with ANOVA, was conducted (Tweneboah-Koduah, 2014). The ANOVA refers
to analysis of variance and is a statistical procedure used to test the degree to which two or
more groups vary or differ in an experiment (Investopedia). ANOVA allows comparison of
two or more groups at the same time to determine whether a relationship exists between them.
This was also done to determine if there was a statistically significant difference between
individuals with low, medium and high switching cost (Garee, 1997). In order words, ANOVA
was conducted to ascertain the independent variables (price, trust and core service) and levels
of switching cost effect on the dependent variable (customer loyalty) (Baron & Kenny, 1986).
4.8. Limitation of the Study
The following are the limitation of the study:
The study is only limited to the banking industry, which does not cover other financial
sectors like insurance, rural and community banks, savings and loans firms, regulatory
banks like ARB Apex Bank and Bank of Ghana.
The study was conducted in Accra, the capital city of Ghana, and therefore did not cover
the whole country.
Respondents feel reluctant in answering the questionnaire and as a result some
respondents did not even return the questionnaire given to them.
The researcher was not able to get access to every information needed for the
completion of the study.
Time constraint militated against the study did not permit the researcher to widen the
scope of the study.
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CHAPTER FIVE
FINDINGS AND DISCUSSIONS
5.0. Introduction
This section of the chapter presents and discusses the findings of the study conducted using
272 customers of universal banks in Accra to assess the relationship between brand positioning
and customer loyalty with moderating effect of switching cost. Under this section, the study
considers the following: demographic characteristics of the respondents, descriptive statistics
or analysis, reliability test or Cronbach alpha, variable correlation matrix, confirmatory factor
analysis (CFA), stepwise regression and ANOVA. All these were used to analyse the data
collected from the respondents.
5.1. Demographic Characteristics of the Respondents
This has to do with the background information of the respondents of the study. Here, the study
concentrates on customers of universal banks within Greater Accra Metropolis. Demographic
characteristics considered consist of the following: gender, age, years of doing business with
the bank, academic qualification and annual salary or income.
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Table 5.1a. Demographic Characteristics of the Respondents
Profile of respondents n %
Gender
Male 131 48
Female 141 52
Total 272 100
Age (in years)
Below 19 16 5.9
20-29 82 30.1
30-39 87 32.0
40-49 44 16.2
50-59 33 12.1
60 above 10 3.7
Total 272 100
Academic Qualification
BECE/ SSCE/WASSCE 96 35
Technician/Post-Secondary 26 9.6
Diploma/HND 61 22.4
Bachelor’s Degree 58 21.3
Master’s Degree 22 8.1
PhD 9 3.3
Total 272 100
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Table 5.1b: Demographic Characteristics of the Respondents
Profile of respondents n %
Annual Income/salary (in GHȻ)
Below 10,000 64 23.5
10,000-15,000 87 32.00
16,000-20,000 75 27.6
21,000-25,000 22 8.1
26,000-30,000 13 4.8
Above 30,000 11 4.00
Total 272 100
Transaction of Business (in years)
Less than 5 78 28.7
5-10 86 31.6
11-15 63 23.2
16-20 23 8.5
21-25 17 6.3
26 above 5 1.8
Total 272 100
Source: Field Study 2015/2016
The descriptive analysis from Table 5.1a revealed that 48% representing 131 of the respondents
were male and 52% representing 141 of the respondents were female. From the results
presented in Table 5.1a majority (32%) of the respondents were between 30 and 39 years of
age. This is followed by those who were between 20 and 29 years (30.1%), 40 and 49 years
(16.2%), 50 and 59 years (12.1%), below 19 years (5.9%) and 60 years above (3.7%)
respectively. In general 84.2% of the respondents fall in the youthful age (19-49 years).
Furthermore, the respondents had varied educational backgrounds. Majority of the respondents
representing 35% had BECE/SSCE/WASSCE, 22.4% of them had Diploma/Higher National
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Diploma (HND), followed by 21.3% of them had bachelor’s degree, while 9.6% of the
respondents had technician/post-secondary, 8.1% of them had master’s degree and 3.3%
remaining of the respondents had PhD degree. These qualifications are in various disciplines.
With respect to income/salary, the respondents had wide variations in income/salary due to the
fact that some were workers while others were self-employed. From Table 5.1b, the annual
income/salary ranges of the respondents revealed that, 23.5% percent earned less than GHC
10,000 annually, 32% percent earned between GHC 10,000 to GHC 15,000 annually, 27.6%
percent earned from GHC 16,000 to GHC 20,000 annually, 8.1% percent earned from GHC
21,000 up to GHC 25,000 annually, 4.8% percent earned between GHC 26,000 and 30,000
annually whilst 4% percent remaining of the respondents have annual earnings of above GHC
30,000. Subsequently, a look at the number of years the customers have been patronizing banks
services within Greater Accra Metropolis. 28.7% of the respondents have patronized bank
services for less than 5 years, between 5 to 10years years is 31.6%, 23.2% is between 11 to 15
years, 8.5% is between 16 to 20 years, 6.3% is between 21 up to 25 years whereas the rest
1.8% is between 26 years and above.
5. 2. Descriptive Statistics
Table 5.2 provides the descriptive statistics of the variables. The table displays the means and
standard deviations of the various variables used in the questionnaire. The results indicate
moderate to high mean values. From Table 5.2, the highest mean was 3.5460 (core service)
whilst the lowest was 3.0248 (switching cost).
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Table 5.2: Descriptive Statistics
Variables Mean Standard T Df P
Deviation
Trust 3.5349 0.80655 72.282 271 0.000
Price 3.2923 0.84721 64.090 271 0.000
Core Service 3.5460 0.82271 71.084 271 0.000
Customer Loyalty 3.3559 0.92913 59.568 271 0.000
Switching Cost 3.0248 0.98680 50.554 271 0.000
Source: Field Study 2015/2016
5.3. Confirmatory Factor Analysis (CFA)
The scales used in this study were all adopted from the literature and presumed that exploratory
factor analysis has been done already. The study, therefore proceeded to perform a
confirmatory factor analysis, in order to analyse the constructs’ validity on units adopted from
the literature to indicate that they generally satisfied validity evaluation standards. Adopting
the structural equation modelling method (Joreskog & Sorbom, 1993), the study verified the
five-item model for the banking sector respectively, and scrutinize the construct reliability by
confirmatory factor analysis (CFA) as suggested by Blankson and Kalafatis (2004). The general
model’s chi-squared, the CFA standards, the Cronbach’s alpha (α), item-total correlation and
the item regression loadings have been used to assess the model fit. The outcomes of the
verification of the scale analyses are shown in Table 5.3. From Table 5.3, all the construct
values for the brand positioning dimensions, switching cost and customer loyalty were within
the recommended criteria.
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The recommended criteria are : root mean square error of approximation (RMSEA) < 0.06 (Hu
& Bentler, 1999); the goodness-of-fit index (GFI) value 0.95 (Miles & Shevlin, 1998), adjusted
goodness-of-fit index (AGFI) 0.90 value (Hooper, Coughlan, & Mullen, 2008), standardised
root mean square residual (SRMR) is valid at less than 0.05 (Byrne, 1998); the comparative fit
index (CFI) is least affected by sample size (Fan, Thompson, & Wang, 1999) and a value
greater than 0.90 is acceptable to ensure specified models (Hu & Bentler, 1999; Stanford, Singh
& Magnusson, 2012); the non-normed fit index (NNFI) value 0.90 (Hooper et al. (2008).
After the confirmative factor analysis of the study, one construct was removed because it was
not loading well to enhance model fitness. The study had: RMSEA (0.05), GFI (0.91), AGFI
(0.88), SRMR (0.07), CFI (0.95), NNFI (0.89), Df (176), Chi-square (1.66) and these satisfied
the validity evaluation standards. The study model does satisfy all the indexes, hence it can be
recommended as the optimal model.
Table 5.3:
Index of fit of the model
Index of fit Chi-Square (df) P GFI AGFI NNFI CFI RMR RMSEA
Value 1.66 (176) 0.000 0.91 0.88 0.89 0.95 0.07 0.05
Source: Field Study 2015/2016
The index of fit for the study model is shown in Table 5.3. Taking degrees of freedom (176)
into consideration, all index values meet the general standards for index of fit. The results of
hypothesis tests of the relationship between constructs, including brand positioning dimensions
(trust, price, and core service), switching cost and customer loyalty are shown in Table 5.3,
Table 5.4 and Figure 1. The test of hypothesis 1, which shows that factors establishing price
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positively relate to customer loyalty, revealed that reasonable fees, value of money, attractive
promotion and service affordability are significant. This reinforces the fact that price of bank
service is one of the top issues that enable a customer to become loyal to a bank. It also
highlights the importance of value-added services including internet and electronic banking,
free charges on ATM card users and discounts in creating customer loyalty.
The test of hypothesis 2 shows that factors creating trust positively affect customer loyalty.
The factors forming trust are (as represented on the questionnaire): shows interest in customers,
continuously seeking to better answer customers’ needs, assuring customers’ security, quality
services and these factors were found to be significant. With these variables, quality services
were deemed to be most significant in the banking service (refer to Table 5.4).
Tests of hypotheses 3 also indicates that factors establishing core service have a positive effect
on customer loyalty. The factors forming core service are: reliable services, skills and
competence, fast services and accurate services. They were all found to have a significant
positive effect on customer loyalty. From Table 5.4, reliable service creates the most
significant positive effect on customer loyalty in the universal banking service in Ghana.
Finally, the test of hypothesis 4 indicates that factors creating switching costs positively affect
customer loyalty. Financially costly, expenditure of time and energy, enough experience with
my bank and good long-term relationship were all significant in this regard. Tests of these
hypotheses confirmed that interpersonal relationships between universal banks in Ghana and
customers have a significantly positive effect on the switching cost. This shows that the factors
creating the switching costs are closely connected to bring about customer loyalty.
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5.4. Re-specification and Reliability of the CFA
The internal reliability of the five factors were analysed through Cronbach’s alpha coefficient.
Only factors that met the minimum value of 0.7 as suggested by Hair, Black, Babin, Anderson
& Tatham, (2010) were accepted for further analysis. Also, in order to test the value of the
variables that loaded onto the factors, item–to total correlation was set above 0.3 (Parasuraman,
Zeithaml & Berry, 1988). One construct was subsequently dropped on the basis of conceptual
fitness. The result is illustrated in Table 5.4. Consequently, the brand positioning dimensions
that determine customer loyalty in universal banking industry in Ghana are labelled as price,
trust and core service. The initial factors and the final revised factors are presented in Table
5.4. As a result of the respecification, a three-factor solution appeared as the major brand
positioning dimensions effecting customer loyalty in the Ghanaian universal banking sector.
Factor 3 covers the core service dimension, and has four items; factor 4 covers trust dimension
and has four items; and factor 5 relates to the price dimension and has four items. Reliability
estimates for the factors were further determined using Cronbach’s alpha, and based on the
recommendations of Hair et al. (2006), a cutoff value of 0.7 was adopted. The results indicated
that all the factors exceeded the reliability threshold of 0.7 with reliabilities of 0.848 for core
service dimension, 0.805 for trust dimension, and 0.758 for price dimension.
The variables measuring switching cost and customer loyalty were also checked for their
loadings and Cronbach’s alpha. Results showed that all the variables used had high loadings
between 0.641 and 0.827 for switching cost, 0.854 and 0.590 for customer loyalty with a
satisfactory Cronbach’s alpha values of 0.844 and 0.850 respectively, giving an indication that
the variables used also represent a complete structure measuring switching cost and customer
loyalty in Ghanaian universal banking sector.
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Table 5.4: Internal Consistency and Final Revised Structure
Factors and Items Num Loadi Item- Cronba
ber ngs total ch's
of Correla Alpha
Item tion
s
Factor 1: Customer loyalty 5 0.850
Enjoy this bank’s services 0.854 0.733
Recommendation 0.870 0.738
Prefer my bank 0.694 0.642
Continue to be a customer 0.592 0.592
My first choice 0.590 0.603
Factor 2: Switching cost 4 0.844
Financially costly 0.641 0.542
Expenditure of time and energy 0.772 0.718
Enough experience with my bank 0.864 0.788
Good long-term relationship 0.824 0.684
Factor 3: Core service 4 0.848
Bank services are reliable 0.818 0.692
Skills and competence 0.787 0.692
Delivers fast services 0.680 0.666
Accurate service 0.735 0.714
Factor 4: Trust 4 0.805
Interest in its customers 0.659 0.582
Better answer customers’ needs 0.660 0.582
Assure me security 0.740 0.647
Quality services 0.792 0.660
Factor 5: Price 4 0.758
Reasonable fees 0.742 0.605
Value of money 0.714 0.600
Attractive promotion 0.453 0.392
Affordable service 0.758 0.542
Source: Field Study 2015/2016
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Source: Field Study, 2015/2016
Figure 1. The results of the empirical causal model (SEM)
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5.5. Correlation Matrix
Table 5.5 depicts the correlation matrix for the variables used in the study, which indicates that
the variables are highly correlated.
Table 5.5: Variable Correlation Matrix
VARIABLE CORE
S PRIC SERVIC CUSTOMER SWITCHIN
TRUST E E LOYALTY G COST
TRUST Pearson Correlation 1
Sig. (2-tailed)
N 272
PRICE Pearson Correlation .302** 1
Sig. (2-tailed) .000
N 272 272
CORE Pearson Correlation
.544** .321** 1
SERVICE
Sig. (2-tailed) .000 .000
N 272 272 272
CUSTOMER Pearson Correlation
.459** .343** .555** 1
LOYALTY
Sig. (2-tailed) .000 .000 .000
N 272 272 272 272
SWITCHING Pearson Correlation
.128* .200** .158** .187** 1
COST
Sig. (2-tailed) .035 .001 .009 .002
N 272 272 272 272 272
**. Correlation is significant at the 0.01 level
(2-tailed).
Source: Field Study, 2015/2016
The variables under brand positioning dimensions implementation (trust, price and core
service) and the moderating variable (switching cost) all have significant positive correlations
with customer loyalty (P<0.01 for all). This means, an improvement in their practices would
lead to an improvement in customer loyalty. Note all correlation is significant at the 0.01 level
of significance.
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5.6: Stepwise Regression Analysis
In order to assess the relationship between the brand positioning dimensions and customer
loyalty in the Ghanaian universal banking sector with moderating effect of switching cost, an
initial stepwise regression analysis was used. Customer loyalty was used as the dependent
variable whilst brand positioning dimensions (price, trust and core service) were used as the
independent variables. Table 5.6 presents a summary of the regression whilst Table 5.7 shows
detailed results for the dependent variable and independent variables.
Below is the stepwise regression analysis for brand positioning dimensions and customer
loyalty in the Ghanaian universal banking sector.
Table 5.6: Model Summary
Adjusted R Std. Error of
Model R R Square Square the Estimate
1 .555a .308 .306 .77423
2 .586b .343 .338 .75578
3 .604c .365 .358 .74472
Dependent Variable:
Table 5.7: Stepwise Regression Customer Loyalty
Unstandardized Standardized
Coefficients Coefficients
Model Std.
B Error Beta T Sig.
1 (Constant) 1.133 .208 5.444 .000
Core service .627 .057 .555 10.967 .000
2 (Constant) .710 .232 3.065 .002
Core services .490 .067 .434 7.367 .000
Trust .257 .068 .223 3.788 .000
3 (Constant) .399 .251 1.594 .112
Core service .451 .067 .399 6.742 .000
Trust .224 .068 .195 3.313 .001
Price .172 .057 .157 3.009 .003
Source: Field Study 2015/2016
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The results of the initial stepwise regression presented in Table 5.7 show that the model,
consists of price, trust, and core service as the brand positioning dimensions of the universal
banks were highly significant and explains 36.5% of the differences in customer loyalty. On
the individual brand positioning dimensions, core service was found to be the most important
influence of customer loyalty in the Ghanaian universal banking sector (Beta=0.399, T=6.742
and P=0.000<0.05). This is followed by trust with Beta=0.195, T=3.313 and P=0.001<0.05,
and price (Beta=0.157, T=3.009, and P=0.003<0.05). The result therefore, provide support for
hypotheses 1, 2, and 3.
Table 5.8: The relationship between switching cost groups, brand positioning and
customer loyalty
Table 5.8: Analysis of Variance (ANOVA)
Switching
Costs N Mean F Sig.
TRUST Low 76 3.4178 1.766 .173
Medium 121 3.5289
High 75 3.6633
PRICE Low 76 3.0329 6.274 .002
Medium 121 3.3223
High 75 3.5067
CORE SERVICE Low 76 3.4079 3.492 .032
Medium 121 3.5083
High 75 3.7467
CUSTOMER LOYALTY Low 76 3.2658 6.646 .002
Medium 121 3.2116
High 75 3.6800
Source: Field Study 2015/2016
To analyse the moderating role of switching costs, a multi group analysis with ANOVA, was
conducted. This was done to determine if there is a statistically significant difference between
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individuals with low, medium and high switching cost. The result of the analysis indicated that
the difference between switching groups is statistically significant of price (F = 6.274, sig. =
0.002), core service (F = 3.492, sig. = 0.032) and customer loyalty (F = 6.646, sig. = 0.002).
The level of switching costs did not significantly affect trust (F= 1.766, sig. = 0.173). From
Table 5.8, the independent variables are trust, price and core service serving as the brand
positioning dimensions. The dependent variable is customer loyalty and the variable playing
moderation role is the switching cost. The multi group analysis in Table 5.8 revealed that, price
was the highest determinant of customer loyalty when group moderation was conducted with
the switching cost and followed by core service, and this provide support for hypothesis 4.
However, level of switching cost with trust did not produce any significantly different effect
on customer loyalty in the Ghanaian universal banking sector. Again with this analysis,
switching cost was ascertained to have a direct positive relationship with the customer loyalty
(F = 6.646, sig = 0.002).
5.9.0: Discussion of Results
The findings from this study are consistent with results from previous studies by authors such
as Phan and Ghantous, (2013): Siebers, Zhan and Li (2013): Al-Eisa and Alhemoud, (2009);
Blankson and Kalafatis, (2004); Colgate and Lang (2001). Leverin and Liljander, (2006) state
that customer loyalty in universal banks is determined by many factors. The results show that
Ghanaian universal banks’ customers attach much importance to price, trust and core service
of brand positioning dimensions of banking services rendered by universal banks just as their
counterparts in Western societies do. The three brand positioning dimensions presented in this
study have different degrees of influence on customer loyalty in the Ghanaian universal
banking sector. The levels of switching cost with price and core service have a direct positive
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influence on customer loyalty in universal banking sector in Ghana but trust with levels of
switching cost did not produce any significant effect on customer loyalty.
5.9.1: Core Service Relationship with Customer Loyalty
From the results of the study, core service variables emerged as the most significant brand
positioning dimension which bring about customer loyalty in universal banking sector in
Ghana. The competence and accuracy with which the services are rendered, how the bank
branches are networked, the hours within which the services are provided, how fast the services
are delivered, and reliability of service offered are essential core service factors that determine
customer loyalty in the universal banks in Ghana. The study likewise discovered that the
introduction of internet and e-banking systems as part of the core service has impacted
positively on customer loyalty. The outcomes of the study also support the views of scholars
who argue that core service delivery impacts on customer loyalty (Al-Eisa & Alhemoud, 2009;
Jamal & Naser, 2002; Keaveney, 1995; Levesque & McDougall, 1996). For example, the study
confirmed the work of Al-Eisa and Alhemoud (2009), who discovered that fast service delivery
advances customer satisfaction and customer loyalty in retail banks in Kuwait. Again, the study
found that some of the Ghanaian universal banks serve their customers after normal banking
hours and that is one of the reasons these customers are loyal to the bank.
5.9.2: Trust Relationship with Customer Loyalty
Apart from the core service, the study also discovered that trust is another brand positioning
dimension that influences customer loyalty in the Ghanaian universal banking sector. The
interest banks show in their customers, quick response to customers’ problems, the willingness
of the bank to satisfy customers’ needs and quality services delivered are important trust
variables that determine customer loyalty in the universal banks in Ghana. From the study, it
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was found that many customers have been with their banks for a long period of time and do
not want to change banks for fear of risk. These findings support the opinions of researchers
who contend that high perceived risk associated with banking services highlights the important
role trust play in reassuring the consumers by acting as a risk-reducing device (De Chernatony
& Dall’Olmo Riley, 1999; De Chernatony & Cottam, 2006). This implies that brand trust plays
a particularly vital role in building long-term relationships between consumers and their service
providers in the presence of high perceived risk (Fischer et al., 2004; Sichtmann, 2007). It was
revealed from the study that customers are willing to rely on their bank. This willingness came
about as a result of the service provider intention of fulfilling its promises to the consumers
(Dalziel et al., 2011). More precisely, brand trust acts as a major antecedent of customers’
commitment toward a brand and subsequently of customers’ loyalty. For instance the study
confirmed the work of Moulins, Phan & Philippe (2012) who found that trust has a strong
impact on customers’ commitment toward their bank in the Vietnamese banking sector. The
study also support the work of Phan and Ghantous (2013) who conducted a research on
managing brand associations to drive customers’ trust and loyalty in Vietnamese banking and
the empirical findings show that trust is by far the strongest antecedent of brand loyalty among
the different antecedents included in the study.
5.9.3: Price Relationship with Customer Loyalty
Finally, price was also a significant determinant of customer loyalty in the universal banking
sector in Ghana. The reasonable fees, value for money, attractive promotion and affordability
of service have an impact on how customers view banks service delivery which subsequently
influence customer loyalty with universal banks in Ghana. From Table 5.7 the p-value of price
is less than 0.05 (p<0.05) and it is considered as one of the brand positioning dimensions which
influences customer loyalty in universal banks in Ghana. In Ghana, universal banks’ customers
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are careful when it comes to price charge for bank service delivery. This support the views of
researchers who argue that customers are usually price sensitive or conscious in their
purchasing behaviour (Beckett, Hewer & Howcroft, 2000; Levesque & McDougall, 1996). It
was revealed from the study that customers compare prices of their service providers to those
of competitors in order to make a choice. This is the reason why Engel, Blackwell, and Miniard
(1995) argue that price is a significant element in choice situations as a consumer’s choice
normally relies heavily on the price of alternatives. Customers do not want to spend much time
and effort at banking hall as time and effort are recognise as the price they are paying for the
services of the bank. Some researchers have shown the concept of perceived price by taking
into account time, effort, search costs and psychic costs involved in the buying process in
addition to the monetary price (Grewal et al., 2003; Zeithaml, 1988). These findings are
confirmed by Varki and Colgate (2001) who discovered that the role of price, as an attribute of
performance, may have a direct effect on customers’ satisfaction and behavioural intentions.
5.9.4. Additional Analysis: Adjustment Effect of Switching Cost
In addition, the study analysed the adjustment effect produced by the switching cost on brand
positioning dimensions and customer loyalty. The result of the multi group analysis with
ANOVA is summarized in Table 8. This reveals that the switching cost is a factor directly
affecting customer loyalty, and its influence on customer loyalty is produced through multi
groups’ analysis of switching cost with brand positioning dimensions. The four main results
are discussed below:
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5.9.5. Relationship Between Levels of Switching Cost and Trust
First, a multi group analysis of switching cost was done and the result revealed that there is no
significant relationship between switching cost and trust. That is, the levels of switching costs
did not significantly affect trust (F= 1.766, sig. = 0.173). From the Table 8, there are three
levels of switchers namely low, medium and high, there is no statistically significant difference
taking their means into consideration. This indicates that combining switching cost with trust
would not be able to prevent customers from defecting to a competing bank. That is, the various
levels of switchers view trust as insignificant and for that matter upon switching, they would
not lose any value. One reason for this could be that the customers perceived all the universal
banks in Ghana to be trustworthy and therefore leaving their current bank, they could easily
establish new relationship with another bank. This implies that the regulator of the sector, Bank
of Ghana has played its role very well to the extent that customers believe no bank can defraud
any customer. The customers in this case have the luxury of joining any bank without having
cause to worry about the credibility and integrity of that bank. It presupposes that switching
cost’s relationship with trust is low. This supports the views of Colgate and Lang (2001) who
assert that when customers perceived switching cost to be low and perceived alternative to be
equally good, customers would certainly switch.
Furthermore, services delivered by some universal banks in Ghana do not meet customers’
expectation. This is due to the fact that some of the universal banks are not able to deliver
promised services made to customers and this has made customers to lose confidence and
credibility in their service provider. The study revealed that some of the banks frequently
experienced networked challenges getting to the end of the month where workers both private
and public would be coming for their salaries. The Automated Teller Machines (ATM) of
some banks which are expected to deliver speedy services to customers 24hours, more often
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than not experience network problems and frequent breakdowns. These frequent service
failures have motivated some customers to switch to a competitor they perceived to be doing
relatively better. This supports the work of Gerrard and Cunningham (2000) who investigated
the Asian banking market and found that service failure is one of the factors accounted for bank
switching by customers.
From the study some customers thought they had been taken hostage and they could not get
out of the relationship with their respective banks. A situation like this has negative
consequence for the service provider. This confirmed what Huefner and Hunt (2000) posit that
customers who find themselves locked into relationships that they would prefer to not be in
may become resigned, hostile, or even aggressive, and may engage in behaviours that have
undesirable long-term results for the firm, such as negative word of mouth or sabotage. In this
case the relationship must be terminated amicably to preserve the good name of the service
provider.
5.9.6. Relationship Between Levels of Switching Cost and Core Service
Secondly, a multi group analysis of switching cost with core service was conducted and did
produce significant difference. The result of the analysis indicated that the difference between
switching groups is statistically significant to core service (F = 3.492, sig. = 0.032). Here it
presumes that all the three levels of switchers namely low, medium and high recognize core
service as important brand positioning dimension considering their ‘means’ and therefore do
not have any intention to switch. It suggests that when these customers defect to an alternative
bank, they perceived they would not be able to receive the same services currently being
received from their service provider, and it would be a great loss or cost to them. One reason
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could be that customers perceived their bank to be delivering good customer services and right
communications compared towhat competing banks are providing. This supports the views of
Colgate and Lang (2001) who argue that good customer service and the right communications
are the first line of defense against customers leaving. The core services in this context includes
the difference types of services provided as well as the competence and accuracy with which
the services are rendered, how the bank branches are networked, the hours within which the
services are provided, how fast the services are delivered, and the price at which the services
are offered (Jamal & Naser, 2002). Some universal banks in Ghana render these core services
better than others.
Another reason is that some banks have introduced electronic and internet banking system
which have assisted them to standardize service delivery, lower the cost of services, ensure
improved customer relationship management, effective service recovery, and, above all, help
to achieve higher levels of customer participation in the service delivery process. This outcome
of the study supports the view of Berry and Parasuraman (1991) who suggest that effective
customer relationship management increase customers’ dependency because they raise the
costs of switching to competitors. For instance, consumers may stay with a service provider
they have experienced a problem with before because there were satisfied with the service
recovery process after they had complained (Zemke, 1993). A service recovery strategy and
fast service delivery are recognised as a crucial elements in achieving long-term customer
repurchase intention (Tax, Brown & Chandrashekaran, 1998; Al-Eisa & Alhemoud, 2009).
The study revealed that some banks employees communicate well both on phone and face-to-
face encounter with their customers than others. The three levels of switchers view these core
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services as very vital to their dealings with the current service provider which they are not sure
they would get the same services from competing bank. This indicate that all these core services
have increased the switching cost and have deter customers from switching banks. This is in
line with the work of Mavri and Ioannou (2008) who investigated customers’ switching
behaviour in Greek banking services and revealed that the quality of the banking products and
services on offer had a positive effect on decreasing switching behaviour.
5.9.7. Relationship Between Levels of Switching Cost and Price
In the third place, a multi group analysis of switching cost with price was done and produced
significant difference. The result of the analysis revealed that the difference between switching
groups is statistically significant to price (F = 6.274, sig. = 0.002). Considering the ‘means’ of
all the three levels of switchers, it suggests that customers see price as essential brand
positioning dimension and hence do not have any intention to defect. The customers perceive
that they would incur some cost and therefore do not want to switch to a competitor. One reason
is that, the charges or fees being paid by the customers for receiving services from some of the
universal banks are affordable and reasonable. This supports the views expressed by Campbell,
(1999) who contend that imposing affordable or lower prices on customers in a banking sector
discourage them from switching banks. That is favourable price perceptions can influence
customers not to switch bank (Clemes, Gan & Zhang, 2007a).
Some banks have introduced internet and electronic banking system which have reduced the
cost being paid by customers in transacting business with their banks. This is consistent with
what Gan, Clemes, Limsombunchai and Weng (2006) argue that electronic banking plays a key
role in reducing service costs. Customers using electronic banking can experience lower fixed
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and variable costs that are connected with banking operations, due to decreases in human error
and savings in labour costs.
Another reason is that most of the banks give their customers enough information about why
there has been an increase in banks’ charges or fees and this is referred to as perceived price
fairness. It is believed that when customers become aware of the price they are supposed to
pay for a service, they do so without raising any questions. This supports the opinion of
Campbell (1999) who asserts that customers tend to focus on the fairness of price, especially
on price increases and any price increases that customers perceive as fair may result in
discouraging switching actions. That is favourable price perceptions can influence customers
not to switch bank (Clemes, Gan & Zheng, 2007a).
In banking sector, the concept of perceived price has been introduced by taking into
consideration the monetary price as well as time, efforts, search costs and psychic costs
involved in the purchase process (Grewal, Baker, Levy & Voss, 2003). The study found that
most of the universal banks branches have been established close to their target customers. The
intent was that customers need not to travel far distances to get access to banking services. For
instance, Levesque and McDougall (1996) argue that, a convenience to a bank location is a
vital factor influencing customers’ not to switch because location directly determines whether
the customers can access their banks on a regular basis.
The study also revealed that most of the customers have patronized varieties of banking
services such as insurance, savings and current accounts, fixed deposit accounts, borrowed
money from their bank and bought government treasury bills from their respective bank. Other
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banks in turn have been given some financial rewards like free monthly charges on the use of
ATM cards, discounts on some bank transactions and instant gifts to the customers on regular
basis. This did not pertain to all the banks, it varied from one bank to another. The implication
here is that should a customer switch to alternative bank, the customer would incur high
financial cost. This supported the views of Gronghaug and Gilly (1991) who argue that a
dissatisfied customer may remain ‘’loyal’’ because of high switching costs. From the study it
was revealed that some of the customers were not satisfied with their bank, but switching would
also have high financial implication on them. Looking at the three levels of switchers (namely
low, medium and high), high financial switching cost which involved loss of financial benefits
from the existing bank have discouraged them from defecting. Thus, the study confirmed the
opinion of Colgate and Lang (2001) who posit that whenever a customer is intended to switch
but perceived high financial cost, it discourages them from defecting.
5.9.8 Relationship Between Levels of Switching Cost and Customer Loyalty
Finally, a multi group analysis of switching cost with customer loyalty was done and it
produced significant difference. The result of the analysis showed that the difference between
switching groups is statistically significant to customer loyalty (F = 6.646, sig. = 0.002). Here
too, all the three levels of switchers perceived customer loyalty as an important factor
considering their ‘means’ which have significant difference. This assumes that the three levels
of switchers suggest cost of switching to be high which emanate from core service and price.
For example, the study is consistent with the work of Colgate and Lang (2001) who conducted
a study on switching barriers in the New Zealand financial industry and ascertained that high
switching costs play a vital role in forcing customers to remain loyal though they have serious
intentions of switching services. This also confirmed the work of Ping (1993) who looked at
the relationship between switching cost and customer loyalty, and discovered that when
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customers perceived the switching cost associated with leaving the current relationship and
establishing the alternative to be high they tend to be loyal. Perceived price fairness is another
reason that increases customer loyalty and reduced customer switching in the banking sector.
This is consistent with the study conducted by Martin-Consuegra, Molina and Esteban (2007)
on an integrated model of price, satisfaction and loyalty in the service sector in Spain. The
results from the study provide practical support, signifying that perceived price fairness
influences customer satisfaction and loyalty. Quality service is also another variable that
positively influences customer loyalty and decrease customer switching. For instance, the
study confirmed the work of some scholars (Gronroos, 2000; Julian & Ramaseshan, 1994;
Zeithaml et al., 1996) who showed that service quality plays a vital role in assisting business
development as service quality has positive impact on customer satisfaction, repurchase
behaviour, business profitability and reducing customer switching.
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CHAPTER SIX
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
6.0. Introduction
This study employs quantitative research methods to explain the extent of relationship between
brand positioning dimensions and customer loyalty in the Ghanaian universal banking sector
with moderating effect of switching cost. The study identifies a set of three brand positioning
dimensions strategies and switching cost as constructs in the Ghanaian universal banking sector
that potentially influence the level of customer loyalty. This last chapter summarizes the major
findings and implications of the study and also highlights striking revelations and lessons
drawn from the study which will guide the conclusions drawn based on the interpretation of
output results of the study and related literature reviewed. This chapter concludes by offering
suggestions and recommendations for further research.
6.1.0. Summary
In today’s increasingly competitive and volatile business environment, developing and
maintaining a loyal customer base is viewed as the single most important driver of long-term
financial performance (Reichheld & Sasser, 1990). It is therefore of prime importance for bank
managers to identify and understand the strategies that drive customer loyalty and implement
them in order to prevent customers from switching to competitors. This research drew from
existing literature to develop a conceptual framework intended to identify the extent of
association and relationship that exist between the three independent variables (price, trust and
core service) name as brand positioning dimensions constructs and customer loyalty as the
dependent variable with switching cost serving as moderating variable.
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6.1.1. Major Findings
6.1.2. Objective 1
The first and foremost objective of this study was to investigate the relationship between brand
positioning dimensions and customer loyalty in the Ghanaian universal banking sector. A
stepwise regression model was employed to test how the three variables found in the brand
positioning dimensions construct influence customers continual patronage of universal banking
services in Ghana. The result of the analysis clearly revealed that there is positive significant
relationship between brand positioning dimensions (price, trust, core service) and customer
loyalty. From the analysis, core service emerged as the most significant determinant of
customer loyalty followed by trust and price. The meaning here is that loyalty strategies such
as long term relationship, service recovery, value of money and service reliability through core
service, trust and price all determine the tendency of the customer to be retained.
6.1.3. Objective 2
The second objective of this study sought to examine the effect of the switching cost on the
relationship between brand positioning dimensions and customer loyalty in the Ghanaian
universal banking sector. A multi group analysis with ANOVA, was conducted for each of the
three brand positioning dimensions serving as an independent variables and resulted in three
outcomes.
First, a multi group analysis with ANOVA was conducted for trust, and found that the level of
switching costs did not significantly affect trust (F= 1.766, sig. = 0.173). From Table 8, the
ANOVA results show that the levels of switching cost and trust is not statistically significant
difference taken the ‘means’ into consideration. What this means is that when switching cost
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is attach to trust, customers may still defect to alternative service provider. One reason could
be that some customers thought they have been taken hostage and they could not get out of the
relationship. Some customers considered the alternative service providers in the banking
industry in Ghana to be trustworthy and delivering superior service to customers. Low
switching cost, frequent service failure and customers not perceiving any form of risk when
they switch are some of the reasons. Another reason could be that Bank of Ghana as a regulator
in the banking industry has played its role very well to the extent that costumers believe that
no universal bank in Ghana can defraud any customer. Therefore, customers of universal banks
in Ghana see all the banks to be trustworthy.
Secondly, a multi group analysis with ANOVA was conducted for core service and it was
ascertained that the level of switching costs significantly affect core service. That is, the result
of the ANOVA analysis indicated that the difference between switching groups is statistically
significant of core service (F = 3.492, sig. = 0.032). This implies that combining core service
and switching cost produced positive significant effect and customers may not switch to
alternative service providers. The study revealed that some of the universal banks in Ghana
provide speedy services to their customers through the use of internet and electronic banking
systems. Another reason could be that most of the universal banks in Ghana have networked
their branches, and with the use of ATM cards the customers could get access to their accounts
in whichever regions they may find themselves.
Good customer relationship service was another reason some customers would not switch to a
competitor. The research found that some customers received best wishes from their banks on
their special days like birthdays. In addition, some of the banks officials attended funeral rites
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of their valued customers. Furthermore, some of the banks’ employees willingly approached
customers to offer help. All these services provided by the universal banks in Ghana made
switching to a competitor less attractive.
In the third place, another multi group analysis with ANOVA was conducted for price, and the
result of the analysis indicated that the difference between switching groups is statistically
significant of price (F = 6.274, sig. = 0.002). That is the analysis of price and levels of switching
cost clearly shows a positive significant difference. Considering the ‘means’ of all the three
levels of switchers, it suggests that customers see price as essential brand positioning
dimension and hence do not have any intention to defect. The study found out that the charges
or fees being paid by the customers for receiving services from some of the universal banks are
affordable and reasonable. Again it was revealed in the study that some banks gave financial
incentives such as free charge on the use of ATM cards, and discounts on some bank
transactions.
Another reason customers would not defect was that, some of the universal banks gave instant
rewards like mobile phones, phone credit, some gallons of petrol and many others to customers
who deposited or left a specified amount of money in their account for three to six month
periods. This attractive promotion was ran by some banks for the purposes of retaining their
existing customers and also attracting new ones. Moreover, the study ascertained that some
customers have multiple transactions such as saving, current and fixed deposit accounts with
their banks and other customers have also borrowed money, bought shares, bought government
treasury bills and patronized insurance from their respective banks. These activities have
increased the switching barriers making switching process more involving and unattractive.
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This implies that it would be financially costly for a customer to switch to alternative service
provider.
Finally, the result of the analysis showed that the difference between switching groups is
statistically significant to customer loyalty (F = 6.646, sig. = 0.002). Here too, all the three
levels of switchers perceive customer loyalty as an important factor considering their ‘means’
which have significant difference. This assumes that the three levels of switchers’ perceive cost
of switching to be high which emanate from core service and price.
6.2:0. Conclusions
The research was conducted with overall objective to ascertain the relationship between brand
positioning dimensions and customer loyalty in the Ghanaian universal banking sector with
switching cost serving as a moderating effect. This general objective has two specific
objectives with conclusions drawn on each one of them as outlined below:
6.2.1. Objective 1
The first objective of this study was to investigate the relationship between brand positioning
dimensions and customer loyalty in the Ghanaian universal banking sector. The brand
positioning dimensions used in this were price, core service and trust, the results depicted that
these dimensions significantly relate to customer loyalty. In order words, the study, showed
that the price, core service and trust dimensions of brand positioning were the important drivers
of customer loyalty. Furthermore, the study established that trust, core service and price
dimensions of banking service design, which were ascertained to be the brand positioning
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dimensions of customer loyalty in the Western societies as well as other emerging markets such
as China, also drive customer loyalty among universal banks customers in a developing country
like Ghana. In conclusion, the study found that the implementation of brand positioning
dimensions price, trust, and core service effectively has influenced customer loyalty in the
universal banks in Ghana.
6.2.2. Objective 2
The second and last objective of the study has to do with examining the effect of switching cost
on the relationship between brand positioning dimensions and customer loyalty in the Ghanaian
universal banking industry. The high competition in the sector could be perceived that
customers who are satisfied with their current service provider can still defect to alternative
service provider. In view of this notion, that switching cost was introduced as a moderation
factor to curtail frequent defection of customers from one service provider to another.
To analyse the moderating role of switching costs, a multi group analysis with ANOVA, was
done to determine if there is a statistically significant difference between individuals with low,
medium and high switching cost. The result of the analysis indicated that the difference
between switching groups are statistically significant to price and core service but trust is not
significant. In order words, switching groups working together with price and core service
positively influence customer loyalty but trust was found not having any significant impact on
customer loyalty in the universal banking sector in Ghana. With respect to this objective, the
study concludes that some universal bank customers are loyal to their banks because of high
switching costs and not because they are satisfied with the banks’ overall performance.
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6.3. Contribution to Literature
The study makes a modest contribution to the literature on bank marketing in Ghana in terms
of universal banks positioning their offerings in the minds of target customers using price, trust
and core service. These dimensions have led to customer satisfaction and customer loyalty in
the banking sector in Ghana. Another contribution to the literature is that price (reasonable,
affordable, value of money and attractive promotion) and core service (reliable service, skills
and competence, fast service and accurate service) working together with the levels of
switching cost have positive influence on customer loyalty on bank marketing in Ghana.
6.4.1. Recommendations to the Banking Industry for Practice
The findings of this study carry some useful implications for managing universal bank
customers in Ghana. The increasing level of competition within the universal banking sector
in Ghana suggests that brand positioning strategies must be highlighted to offer custom-made
services to customers and raise their overall level of loyalty with their banks. For managers in
the universal banks sector to achieve customer loyalty, their offerings must be positioned from
the perspective of customers (Ries & Trout, 1986).
Another recommendation is that Ghanaian universal banks must endeavour to understand the
special needs of their customers and design the core service to offer more value to customers.
Increased service portfolios to meet customers’ ever changing needs, offered in a timely
manner and also with minimal service failure, are likely to be cherished by the customers. The
banks must also develop effective service recovery strategies to remedy occasional service
failures. Although some customers appear loyal to their banks, the intensity of competitive
pressures within the universal banking sector suggests that frequent service failures
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experienced in any particular bank can seriously wear away customers’ image of the bank and
inspire them to switch to other universal banks. Furthermore, the bank services must be
executed with some level of competence and accuracy, and banks branches being networked
for the customers to get access to their account wherever they may find themselves in Ghana.
The banks’ managers must establish easy complaint procedures and must ensure that
complaints made by customers are promptly resolved. In addition, the automated teller
machine (ATM) should be regularly serviced and checked to provide 24-hour service to
customers. This encourages self-banking and prevent customers from crowding at the banking
hall, and also minimizes time wastage.
Bank management needs a strategic focus on delivering high service quality as a competitive
differentiation method. Service product creativities such as ease of access to accounts,
provision of financial information, and presenting innovative products, can enhance customer
loyalty (Moutinho & Smith, 2000; Nguyen & Leblanc, 1998). Bank staff should have good
banking knowledge, act professionally, and have a courteous attitude towards all customers.
An appropriate people management strategy is necessary in order for professional service staff
to consistently deliver high-quality services (Gronroos, 2000).
Universal bank managers in Ghana should strive to establish a clear and strong corporate image
focused on the bank’s integrity, credibility and benevolence to enhance customer trust. More
precisely, brand trust acts as a major antecedent of customers’ commitment toward a brand and
subsequently of customers’ loyalty. This implies that the managers of universal banks in Ghana
should assure customers of their security in this era of cyber fraud. Again, the bank managers
must ensure that competent and skilful employees are recruited to deliver quality services to
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customers. The bank employees must be trained to be friendly, willingly approach customers
to help when the need arises and communicate well with the customers. The employees must
also learn to say thank you to customers after successful execution of every bank transaction.
The study revealed that price is considered to be one of the most important brand positioning
strategy considered by customers in the Ghanaian universal banking sector. Customers or
consumers are generally considered to be price sensitive, hence banks should set fees or charges
that are reasonable and affordable. This can be done by encouraging customers to use the
internet and electronic banking systems in order to reduce the service cost. The banks service
delivered should commensurate with the amount of money customers pay.
Ghanaian universal banks could give some financial rewards to their customers. For instance,
they can give discount on some bank transactions, free ATM charge, coupons, scratch and win
promotion. The valued customers who have been with the bank for a long period of time could
be rewarded with a token of money or any valuable item annually. For customers especially
those who own businesses, free consultancy service at some point could be rendered to them
on how to manage their work and finances for the long term survival of the business. They
could also be advised to invest in the bank by way of buying shares, fixed deposit account,
insurance and buy government treasury bills. This would increase the switching cost of the
customer making it relatively difficult to switch to alternative bank.
From the study, levels of switching cost, price and core service have a positive effect on
customer loyalty. This presupposes that combining switching cost with price and core service
are important factors that determine customer loyalty in the Ghanaian universal banking sector.
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Bank managers must henceforth devote much attention and resources on these to ensure that
customers are retained in the bank for a long period of time. However, the study revealed that
levels of switching cost and trust did not produce significant effect on customer loyalty in the
Ghanaian universal banking industry. What this means is that customers do not recognise
switching cost combined with trust as potent factors to determine customer loyalty. However,
the combination switching cost and trust should serve as ‘hygiene’ factor (a factor which is not
readily recognised by customers but theabsence of which could be disastrous).
The bank managers in Ghana must make it a point to communicate their adopted brand
positioning strategy to the target customers in order to create awareness. This will enable the
bank to promote point of parity (POP) and point of difference (POD) between their brand and
competitors’ brand to customers as indicated by Kotler and Keller (2012). The communication
of brand positioning strategies through advertising affords the service provider the opportunity
to point out some unique attribute of the bank services to customers.
6.4.2. Industry Regulators
It is recommended that in spite of the level of loyalty conveyed by customers of universal banks
in Ghana, industry regulators such as the Ministry of Finance and the Bank of Ghana should
be aroused to take practical measures to ensure that customers get value for their money.. This
can be done by encouraging and sensitizing universal banks to focus their attention and
resources on service quality dimensions, avoiding activities that leads to defrauding customers
and charging high bank fees. This would enable the universal banks to build on their goodwill
and gain loyalty from customers in Ghana.
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6.4.3. Recommendations and Suggestions for Further Studies
In terms of future research, the study suggests that future work should consider other service
industries like airlines industry, private healthcare industry and insurance industry. The study
covered respondents staying in Greater Accra the capital city of Ghana. A further study
covering respondents from the other major cities such as Kumasi, Tema, and Sekondi-
Takoradi, as well as other municipal and rural communities, would help reinforce the validity
of this research results. This study could be replicated in other Africa countries to see if it
produces similar effect. Future research could consider other brand positioning dimensions
discussed in extant literature to compare results. Finally, since price was found to have a strong
impact on customers’ loyalty after combining with switching cost, it would be interesting to
explore the constituents of this dimension more closely in subsequent studies.
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APPENDICES
APPENDIX 1
QUESTIONNAIRE SENT TO RESPONDENTS (CUSTOMERS) OF THE
UNIVERSAL BANKS IN GHANA
Dear Sir/Madam,
The researcher is an MPhil student of the University of Ghana Business School and Department
of Marketing and Entrepreneurship. This questionnaire has been designed to solicit information
from you as a customer of any universal bank in Ghana. Please you assured of the
confidentiality of your responses and your identity. The information you provide will be used
for only academic purposes. Please use this scale in answering the questions.
1. Strongly disagree 2. Disagree 3. Neutral 4. Agree 5. Strongly agree
Please indicate you are loyal to your bank because of the following:
SECTION A TICK ONLY ONE
BRAND POSITIONING DIMENSIONS OPTION (1-5)
TRUST
1. This bank is shows interest in its customers 1 2 3 4 5
2. I think this continuously seeks to better answer 1 2 3 4 5
customers’ needs.
3. This banks’ services assure me security 1 2 3 4 5
4. I trust the quality of this banks’ services 1 2 3 4 5
5. This bank is always sincere with its customers. 1 2 3 4 5
PRICE
6. This bank charges reasonable fees 1 2 3 4 5
7. This bank’s service merits the value of money 1 2 3 4 5
8. This bank runs attractive promotion 1 2 3 4 5
9. This bank’s service is affordable 1 2 3 4 5
CORE SERVICE
10. This bank’s service are reliable 1 2 3 4 5
11. This bank’s employees have exquisite skills and 1 2 3 4 5
competence to service customers
12. This bank delivers fast services to its customers 1 2 3 4 5
13. This provides accurate services 1 2 3 4 5
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SECTION B
CUSTOMER LOYALTY
14. I intend to continue to enjoy this bank’s services in the 1 2 3 4 5
upcoming years
15. I recommend this bank to my friends and relatives 1 2 3 4 5
16. I prefer my main bank to other banks 1 2 3 4 5
17. I will continue to be a customer of this bank even if it 1 2 3 4 5
moderately raises its fees
18. This bank is my first choice when I need to use banking 1 2 3 4 5
services
SWITCHING COST
19 Switching to a new operator is financially costly 1 2 3 4 5
20. I will not defect because of the expenditure of time and 1 2 3 4 5
energy in looking for alternative bank.
21. I will not defect because I have enough experience with 1 2 3 4 5
my bank
22. I will not defect because I have a good long-term 1 2 3 4 5
relations with my bank.
DEMOGRAPHIC CHARACTERISTICS OF THE RESPONDENTS
SECTION C
1. Please indicate your sex
Male Female
2. Please indicate your age group
Below 19 years 20-29 years 30-39 years
40-49 years 50-59 years 60 years and above
3. Please write the number of years you have been transacting business with your bank
Less than 5 years 5-10years 11-15years
16-20years 21-25years 26years and above
4. Please indicate your highest academic qualification
BECE/SSCE/WASSCE Technician/Post-Secondary
Diploma/HND Bachelor’s Degree Post-graduate
Diploma/Master’s Degree PhD
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5. Please indicate your annual income or salary (GH¢)
Below 10,000 10,000-15,000 16,000-20,000
21,000-25,000 26,000-30,000 Above 30,000
Any further comment………………………………………………………………………........
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APPENDIX 2
STRUCTURAL EQUATION MODELLING (SEM) RESULTS
Model Fit Summary
CMIN
Model NPAR CMIN DF P CMIN/DF
Default model 55 292.115 176 .000 1.660
Saturated model 231 .000 0
Independence model 21 2722.204 210 .000 12.963
RMR, GFI
Model RMR GFI AGFI PGFI
Default model .066 .910 .882 .694
Saturated model .000 1.000
Independence model .353 .343 .278 .312
Baseline Comparisons
NFI RFI IFI TLI
Model CFI
Delta1 rho1 Delta2 rho2
Default model .893 .872 .954 .945 .954
Saturated model 1.000 1.000 1.000
Independence model .000 .000 .000 .000 .000
Parsimony-Adjusted Measures
Model PRATIO PNFI PCFI
Default model .838 .748 .799
Saturated model .000 .000 .000
Independence model 1.000 .000 .000
NCP
Model NCP LO 90 HI 90
Default model 116.115 73.019 167.106
Saturated model .000 .000 .000
Independence model 2512.204 2347.533 2684.239
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FMIN
Model FMIN F0 LO 90 HI 90
Default model 1.078 .428 .269 .617
Saturated model .000 .000 .000 .000
Independence model 10.045 9.270 8.662 9.905
RMSEA
Model RMSEA LO 90 HI 90 PCLOSE
Default model .049 .039 .059 .531
Independence model .210 .203 .217 .000
AIC
Model AIC BCC BIC CAIC
Default model 402.115 411.834 600.434 655.434
Saturated model 462.000 502.819 1294.940 1525.940
Independence model 2764.204 2767.915 2839.926 2860.926
ECVI
Model ECVI LO 90 HI 90 MECVI
Default model 1.484 1.325 1.672 1.520
Saturated model 1.705 1.705 1.705 1.855
Independence model 10.200 9.592 10.835 10.214
HOELTER
HOELTER HOELTER
Model
.05 .01
Default model 193 207
Independence model 25 26
Minimization: .016
Miscellaneous: 1.403
Bootstrap: .000
Total: 1.419
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