Product quality and customer satisfaction on cosmetic products

Kiran Bhattarai

Roll number: 411/020

A proposal submitted in partial fulfillment for the degree of Master of Business

Administration- Banking and Finance (MBA-BF)

Submitted to the
Master of Business Administration-Banking and Finance (MBA-BF)
Department of Business Administration
Lumbini Banijya Campus
Tribhuwan University

Butwal
April, 2022
1. Background of the study
Consumer satisfaction is the ultimate aim of any business. Both survival and growth
of the business depends on its consumer satisfaction. The main objective of the
business is to satisfy the consumer needs and want. The term "cosmetic" comes from
the Greek word kosmetikos, which meaning "decorator." Cosmetics, sometimes
known as makeup that are applied to the human body to improve its look or odor.

The legal definition of a cosmetic varies slightly by country, but in general,

"cosmetic" refers to any article intended to be applied to the human body by rubbing,
sprinkling, or other similar means for cleaning, beautifying, promoting attractiveness,
and maintaining the health of the skin and hair, provided that the action of the article
on the human body is mild.

Various psychological, social, cultural, personal, and economic factors influence the
purchase decision of a buyer. Among them, product quality is one major factor.
Product quality is the main key for each company to run their business. The
requirement for a good quality product to be the main criteria for consumers is that it
can give more benefits to the consumers. Kotler and Keller (2016) argue that the
product quality is the privilege had by a product to generate appropriate and better
output as expected by consumers.

Today, the global cosmetics business faces enormous demand and obstacles in
ensuring the quality of cosmetic products. Consumers have been more aware of
hygiene and attractiveness in recent years as a result of technological advancements,
globalization, and higher purchasing power, which is the primary cause for the
cosmetic industry's rapid growth. The desires of any female group to look beautiful
and desirable are complicated and dynamic, thus female conduct is complex and
dynamic. Cosmetics are regarded as a potent weapon that women believe would alter
their ordinary appearances into attractive and presentable ones.

Companies should understand the importance of customers' satisfaction as it is easier

to possess old customers than getting the new ones (Chen et al, 2018).

Consumers purchase goods depending on their need, preferences, and financial

means. Customer viewpoint, self-concept, social and cultural background, age and
family cycle, attitudes, beliefs, values, motivation, personality, socioeconomic level,
and a variety of other characteristics all influence consumer buying behavior.
Consumer opinions, in particular, might have a significant impact on purchasing
patterns.

Nepal imports a wide range of cosmetics from a wide range of manufacturers

throughout the world. In recent years, scholars and practitioners have focused a lot of
emphasis on the issue of concern for consumable things. The needs and preferences of
the Nepal's market have been identified, notably in terms of customer satisfaction and
product quality. The purpose of this article is to ascertain the level of customer
satisfaction with the quality of food production enterprises. In this study, I'd want to
look at the impact of product quality and customer satisfaction on cosmetics items in
Nepal, specifically in Butwal.

2. Statement of Problem
The suitability of a product for its function, the comfort of the product when used, the
value of the price paid, sales service, and psychological criteria such as consumer.
perceived prestige are all examples of quality. Product quality, according to Kotler
and Keller (2016), is the ability of a product to exceed customers' expectations.
According to Tjiptono (2015), product quality refers to the characteristics of goods
and services, people, processes, and the environment that go above and beyond what
is expected and has given some indicators of product quality, such as: 1).
Performance, it denotes the levels of benefits received by customers from the product,
based primarily on the product quality, which comes in a variety of product varieties;
2) Reliability, it is the product quality that has been captured. 3). Conformity to
Specifications, the product should have the standardized characteristics and
compositions.

Product quality has a positive and significant effect on customer satisfaction. Brand
Image does not significantly influence customer satisfaction. Product quality and
brand image have a positive and significant effect on customer satisfaction through
purchasing decisions (Tjahjono, 2021). Similarly, Restiana, L., 2020 found that
product quality has significant effect on customer satisfaction. Quality of the product
is one of the indicators in measuring customer satisfaction. In order to survive, the
company is required to pay more attention to the wants, needs, and satisfaction of
consumers, especially on how to maintain customer loyalty in order to win the
competition (Restiana, L., 2020).

Various varieties of the products are available in the market consumers prefer the
variety of products for high quality, and low price. Quality is more than just the
appearance of a finished product. Of all, a company's ultimate goal is to provide a
high-quality completed product, and this is precisely what customer’s demand.
However, in order to attain the required quality in the finished product, the whole plan
must contribute to building quality into the product, from the procurement of raw
materials through the stage when the final product reaches the consumers.

From this study it is found that quality is playing major role in the mind of the female
customer in regard with cosmetic product. The spending habit of the customer in this
present scenario has been increased in purchasing the cosmetic products.

Even after the product has been delivered to the customer, the feedback must be fed
back in order for the product to continue to sell. Quality encompasses all aspects of
life.

This study contains only a few determinants of Product quality like Performance,
Ingredients, reliability, responsiveness, and Conformity. In the context of other
countries and in Nepal, no such evidences using more recent date exists in the context
of cosmetic products in Butwal city.

3. Research Question
i. Does product’s performance affect the satisfaction of customers?
ii. Does ingredient of cosmetic product have impact on satisfaction of
customers?
iii. Is there significant impact of reliability to product quality on customer
satisfaction?
iv. Is there significant impact of conformity to product quality on customer
satisfaction?
4. Research Objectives

This research aims to measure the impact of product quality dimensions on customer
satisfaction regarding cosmetic products in Nepal. The specific objectives are as
follows:
  To examine the effect of products performance on customer satisfaction.
 To assess the effect of products ingredients on customer satisfaction.
 To examine the effect of product liability on customer satisfaction.
 To assess the effect of products conformity on customer satisfaction.
5. Literature Review

(Chhetri, A. D., 2021) study primarily focused on various factors like age, occupation;
marital status and educations and found to have positive influence towards cosmetic
products.

The assurance of the production quality generally starts with the materials, production
process and even until the final goods. By having the quality control on a product, it
aims to give the customers a guaranteed standardization that the preferred product has
fulfilled the criteria of giving benefits toward the customers' daily needs. (Tjahjono,
2021).

Research in Bojonegoro done by Noor and Utari (2020) also showed that product
quality significantly brought impact to customers' satisfaction through purchase
decision. Furthermore, Ernawati's research (2019) done in Bandung revealed that
product quality brought positive influence towards purchase decision.
6. Research Framework

Independent Variable Dependent Variable

Product’s performance

Ingredients
Customer satisfaction
Reliability

Conformity

7. Hypothesis:
This research question leads to the following hypothesis
H1: There is significant influence of product performance on customer satisfaction in
cosmetic product.
H2: There is significant influence of product ingredients on customer satisfaction in
cosmetic product.
H3: There is significant influence of product reliability on customer satisfaction in
cosmetic product.
H4: There is significant influence of product conformity on customer satisfaction in
cosmetic product.
8. Research methodology
8.1 Research design
In this study, a quantitative research approach is used. Descriptive research design is
adopted with the deductive approach. Similarly, this study is causal comparative
study. Descriptive research includes surveys, fact findings inquiries of different kinds
to best describe the current situation. This design will be implemented for examining
information concerning product quality among the customers of cosmetic products in
the Butwal.

8.2 Population and Sample

There is a total number of 84 cosmetic stores registered in the Butwal area and the
total number of female customers is 70454. So, the total population for the study is
70454.Using the Yamane’s approach of sample size determination, the following
sample

By taking 95% confidence level and a margin of error (e) of ±5%

N
n=
1+ N (e) ²

70454
=
1+ 70454(0.05) ²

= 398

Thus, the sample size would be 398 respondents from different wards of Butwal city.
Out of 19 wards of Butwal, 50% will be sample frame, data will be collected from 9
wards on the basis of simple random sampling. About 400 questionnaires will be
administered to each selected ward equally. The respondents will be however based
on judgment of the researcher, to get the relevant and reliable data from the users of
cosmetic products.

8.3 Sources of data and data collection procedures

Primary data regarding the total no. of customers on cosmetic products in Butwal will
be collected by administrating questionnaires to the female customers of Butwal. The
data will be collected from the total female customers of cosmetic product in Butwal.
A structured questionnaire will be handed to each sampled customer by visiting the
respective cosmetic stores in Butwal.

8.4 Data Analysis Plan

This study will be based on a descriptive and quantitative method for the presentation
and analysis of data to prepare the final report. The collected data will be statistically
analyzed using software i.e., SPSS. The validity and reliability of the questionnaire
will be checked using Cronbach alpha. Various tools such as: Descriptive statistics
and Regression model will be used to analyze the data.

8.5 Model of the study

The following multiple regression model are run to achieve the results of the
mentioned objectives.

The model will be concerned with the relationship between customer satisfaction and
product quality variables as depicted by the following:

Y = β0 + β1 X1+ β2X2+β3X3+β4X4+ ε……………... (1)

Where:

Y= Customer Satisfaction

X1=Product’s performance

X2=Ingredients

X3=Reliability

X4=conformity

β0 = Constant Term

β1, β2, β3, β4= Intercept of respective independent variables

ε = Error term

9. Expected outcome

This research is expected to find the significant relationship between dependent and

independent variables. Expected result of this study is, there will be significant

relationship between product quality variables and customer satisfaction.

10. Research work time schedule

Task Approximate Time Required

Pilot work 7 days

Selection of sample and tools, preparing questionnaire & 15 days

printing

Collection of data 30 days

Processing of data 7 days

Analysis of data 15 days

Preparing report 20 days

Total time 94 Days

REFERENCES

Chen, T., Drennan, J., Andrews, L., dan Hollebeek, L.D. (2018). User experience
sharing: understanding customer initiation of value co-creation in online
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Chhetri, A. D. (2021). Consumers attitudes towards cosmetic products in Chitwan,

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Ernawati, D. (2019). Pengaruh kualitas produk, inovasi produk dan promosi terhadap
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Tjiptono, F. (2016). Service quality and satisfaction. Yogyakarta: Andi.