The Effect of Product Quality and Price on Customer Loyalty Through Customer Satisfaction at Uniqlo Surabaya

Abstract

Increasingly fierce competition in the fashion industry resulted in apparel/retail companies having to maintain their customers’ loyalty. This study aims to examine and provide an in depth description of the formation of customer loyalty (Y) in terms of product quality (X1) and price (X2) mediated by customer satisfaction (Z). Research data was obtained by distributing Google Form questionnaires using a purposive sampling method to 140 customers who had purchased products of UNIQLO in Surabaya for more than 2 times. Data was analyzed using the StructuralEquation Model – Partial Least Square (SEM-PLS) analysis technique with the SmartPLS version 3.2.9 software. The results of this study indicate that each product quality and price has a positive effect on customer satisfaction, customer satisfaction has a positive effect on customer loyalty, and product quality and price has a positive effect on customer loyalty, either directly or indirectly through the mediation relationship of customer satisfaction. Furthermore, this study also found that the effect of product quality on customer loyalty is on a similar level with the effect of price on customer loyalty. However, price’s effect on customer loyalty decreased with the mediation ofcustomer satisfaction.