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1. Choose a topic from Micro economics that matters to you and find a recent news article covering that topic
I have selected the following topic “With costly bananas, apples and grapes, orange becomes favourite fruit this season” was published in The Economic Times on 6th May 2014. The concept of demand and supply and price has been discussed very clearly.
2. Evaluate the article using Economic concepts. You should include
According to the President of Orange association of India has been stated about the increasing demand of Oranges and production of Oranges in Nagpur city of India. He has been discussed the main reason of high demand of Oranges in south part of India that is high prices of grapes and apples. In Kerala due to heavy rain in June and July month the banana’s crop has been affected and due to shortage of banana and due to high demand the prices increased. There is a significant raise in the price which is noted as 20 Rupees per kg. He has been discussed that main sources of Oranges like Nagpur and Amravati and the production of Oranges in both cities fulfil the demand of oranges in Chennai, Kerala and Bangalore. According to the AB vegetable and Fruits owner Mr. Liaqat Ali in Chennai that although due to high supply of Oranges the price should be down, but due to high price in transportation, there will be no lower prices in the orange and it will be available in the market on previous year price that was Rs 35 per kg. He has been stated that the price will be changed (rise) because in the month of January and February there will be more demand of orange and according to supply and demand rule the prices will go up, so it is early to predict the demand and supply. Due to high quality of Kerala oranges in January and February the demand will be increased and it will increase the price up to Rs. 40 per kg and also will increase the supply. Apple quality is not good that’s why traders import the apple due to high demand of quality apple from other countries and the prices will increase. Nazar Muhammad a wholesaler has been stated that as some days ago the orange was available at the price of Rs. 14 to 15 per kg, and due to increase in demand it is now available at Rs. 18 to 22 per kg, the harvesting of orange is in process, in January as the new crop will reach in the market the demand will remain same but the supply will be increased and the prices will go down again. As there is a clear cut picture of demand and supply, and price. With the new crop the supply of orange increase, due to shortage of bananas the prices went up because due to high demand and low supply and shortage of bananas. All the concepts of demand, supply and their affect on price have been covered. Mr. Nazar Muhammad fruit wholesaler of Kalamna market in Maharashtra stated that the wholesale price orange some days ago was round about Rs 14 to 15 per kg, but now there is an increase in the price which is Rs. 18 to 22 per kg in wholesale market. And the prices will again come down due to high supply and low demand in January when new crop will reach in market as harvesting is in process.
Explain how you can present the issue in terms of economic concepts and theories you have learnt in class
According to the article published in “The Economic Times” that the president of Orange Association of India Mr. Amol M. Totey has been stated that the orange production recorded in this year is the double in Nagpur city. And the demand of Oranges in the southern of the country has been increased significantly this year.
Rise in Price Rs. 20/ kg due to high demand of banana.
Due to high supply of Oranges/ commodities the price should be low (High demand high price, high supply lower price). The price of oranges was down due to high supply but due to high transportation charges, Oranges will be available in the market at previous year rate.
There is a direct relationship between demand and supply, more demand always raise the price if the supply is low.
As in January and February there will be an increase in the demand of orange and its prices will be increased that will be Rs. 40 per kg, it means that due to high demand the supply will be increase and there will be increase in the price of orange.
In Kochi per day market gets about 100 tonne. Increase in the demand of quality apple will increase the prices and will increase the supply.
When demand remains same and supply increased due to new crop then the prices come down due to high supply. High supply will lower down the prices due to short demand.
Explain what actions you would recommend to the key players and/or policy holders.
This sudden increase in the Orange demand from south part of India is due to the high pricing of apples and grapes in the southern part of India. People living in Vizag, Kerala, Chennai, Bangalore and Hyderabad has demanded for more Oranges. Due to heavy rain in month of June and July and other climate changes has significant effect on Banana’s crop and damaged the yield of bananas that also cause in raising the banana price due to its shortage. The banana price that was available in the local market at price of Rs. 30 to 40 per kg in the past years are now selling at Rs. 50 to 60 per kg. In the southern markets the Oranges are now available and usually Orange availability in the southern market was started in the start of October till November and remained till summer season. Although the supply of the Oranges is so high this year but it will not lower the price due to high price of diesel and in this way the transportation charges will be high and the Orange will be available in the market as per last year price that was Rs. 35 per kg. In January and February the Orange demand will go up and in this way it will affect the price. There is daily supply is about 150 tonne in the main market of Chennai, and as the production of the Orange is clear evident in Kerala and consequently supply will be increased in coming weeks. Due to high quality of Orange there will be increase in its demand and the price of orange will be increased about Rs. 40 per kg. And the supply will be increased because the production is also increased. Traders import the high quality of apple from other countries and the prices of apple will be doubled due to high demand of high quality apples.
Explain how the above analysis supports your conclusion (1 to 2 paragraphs)
3. You may provide graphs/charts/diagrams where necessary to enhance your presentation style.
3.1 Supply Curve
Shift in supply curve (Rising Cost)
Source: Author
Supply curve is always upward because according to supply law that high prices, more quantity of commodities is supplied (high price more supply), that’s why the supply curve goes upward. So when the price of orange will be high the supply will be increased and the supply curve will be gone up.
Shift in supply curve (Lower cost)
Source: Author
3.2 Demand Curve
Increase in demand
Source: Author
According to the law of demand that when price of commodities higher that time quantity of demanded product is less, so the curve of demand will be downward sloping curve. Due to high price the demand curve will be downward. And supply will be upward.
Decrease in Demand
Source: Author
3.3 Equilibrium
An increase in the supply S, with constant demand D will be decrease and equilibrium price P* and increase equilibrium quantity Q*.
Similarly decrease in supply S, with constant demand D will increase equilibrium price P* and decrease with constant quantity Q*
Source: Author
When the demand and supply becomes equal that state is called equilibrium point, the point where the demand and supply of commodities meet together. If the price is above the equilibrium point it means that commodities are in surplus and if the real price is below the equilibrium point it means that the shortage of commodities.
3.4 Shifting the supply Curve
Source: Author
With the change in economy there is always a change in supply curve either left or right. A change in price can be occur due to change in supply of commodities such as change in price of oil due to new technology or discovery of new well. Change in supply due to new crop may shift he supply curve.
In order to understand the implications for women at leadership position of Inequalities regimes in organizations we need to understand the inequalities first, basically it is the difference between employees in control and power over the resources, decisions taken by management at work placement, promotion, wages, reward, equal opportunities to all employees, job security and respect in achieving organizational goals (Aker, 2006). In organizations inequalities are different, equalities can be found in very few organizations and in job security and employee’s benefits equality may occur in some organizations. There is always discriminations on the bases of race, colour, sex, region, religion (Acker, 2000).
There are two basically implications for women in leadership positions of Inequalities regimes in organizations
1. Individualized wage settings (that produce the inequality)
2. Wage setting system (It is necessary to investigate the wage setting system)
Acker, (2006) has been stated that almost all inequality regimes can be found in all organizations including processes, actions and inter related practices. He also stated that different inequalities can be presented in different organizations, he also given preference to the class and race are the most two prominent factors beside the gender she also highlighted the other factors like sexual preferences at the work placement beyond the class, race and gender. It is assumed that heterosexuality is the organizational practices and processes can disturb the organizational work (Glass, 2004). Women are scare in leadership positions because of inequality regimes including race, gender and class, in most of the organizations white men and women from dominant racial group are at top positions (Davis, 1981). The relations at supervisory level can be affected because of race and gender leadership behaviour with subordinator always has an impact of inequality. It has been observed that the white man at top positions do not focus and listen the women at leadership positions due to (colour difference) race and class difference and ignore them in meetings and devalue women excluding white women at leadership position. In some organization women employees are supposed to sexually attract customers. Basically Acker has conducted the research with the aims to understand the power and work relations in an organization (Aker, 2006).
Ackers has defined the inequality as disparities among the participants in the following areas
Opportunities
Respect
Wages
Job security and rewards
Resources allocations
Assigning tasks
Power/ authority and decision making sharing
Inequality in the politics, culture, society and history has strong link inequalities regimes in organizations (Collins, 1995).
The main base of inequality in an organization is the Class rather than the sex, religion, wage and race. One more basis of inequalities is the difference between accessing and controlling resources in an organization in achieving organizational objectives. But the class is main important because the CEO (national) in an organization always lead and command the rest of the employees from different countries (Brown, et al., 2003).
Lower level jobs are always done by women and men always manage them, most women are doing job such as clerks, customer care services, personal assistance and secretary, although in some organizations women are doing job at managerial level (Charles & David, 2004).
The disturbance in the organization is always started from women, women always started to disturb men at work. Race is another base of inequality in the organization. Race means the region, particular group, particular belief and culture (Burawoy, 1979).
With the height of hierarchy salary varies in organization. Top most person (CEO) always earned more than the staff members, whereas in the organizations white men always earn more as compared to other nationals even if he or she is doing job in bottom level. Professional associations and labour unions can play their important role in minimizing this variation (Ely & Debra, 2000). Same as in salary variation there is also variation in the powers and that is connected with the height of hierarchy but professional associations and labour unions can play their important role in minimizing this variation. Race and sex are always very important in giving power and authority in an organization all the managers do not have same powers and authorities, so this is the class difference (Acker, 1991). Even then if the men and women are the manager in an organization there will be a wage difference, power difference and authority difference. First of all the main reason of inequality is the nature of work at an organization (Enarson, 1984). As the managerial work is carried out by the white people and they do not have the children responsibilities and other work at home, they just need to go office given directions to the subordinators and get heavy salaries, whereas women worker at low level has no flexibility they are responsible to look after their home and family members. There is an unjustified wag gap exist among the gender type, at the same level women are earning low wages as compared to men wages (Glass, 2004). Similarly skilled men are earning high wags as compared to skilled women at the same level in an organization. So this gender difference wage gap also creating inequality at work placement. Similarly it has been observed that women workers at managerial level do not credited whereas the men managers always credited by their performance. Some scholars have stated that from some organizations the middle management level has removed to create equality among men and women at job particularly in wage area (Brown, et al., 2003).
Basically the first implication of for women at leadership position in inequality regime organization is the supervisory practices, because the relations between supervisor and subordinator can be influenced because of race and gender. Leader’s attitude with its subordinators may be different as compared to job nature requirement because of race and gender and can lead to inequality (Charles & David, 2004). Women working at low level and earn low wages as compared to top level managerial and they need to do more work as compared to their managers so this difference of wages and work load create inequality among men and women (Acker, 1989). Job descriptions always associated with the task and nature of job and the wages rates are as according to the responsibilities. Women jobs are related with the lower wages and most of the sexy women doing job in organizations as secretary level or at clerical level, whereas at the same position men wages are high as compared to women as the same level.
According to Ackers (2006) that at the work placement when men and women interact with each other, they involve in class, gender and race inequalities and they made different assumptions about their wages. Inequalities created by the interaction practices are complex to document. Employers believed that women workers must be pretty and sexually attractive to attract the customers to increase the sales volume (Ely & Debra, 2000). Inequalities can be controlled by maintaining the authority and power among managers, by reducing the gap between wage differences (Brown, et al., 2003). Management should start reward system to control the racial and gender difference and punishment system should be introduced for non compliance with rules and regulation (Acker, 1991). Bureaucratic system should be finished and power must be maintained among all managers as per their task nature to access and control the resources in achieving organizational objectives.
These are class practices and the top level managers manage and control the workers by dividing work and allocating resources and set the wages as per the skills and competencies and job nature. Some scholars stated that race and gender have impact in wage setting and supervisory practices and create inequality at work placement and lead class to the unfair wage settings (Collinson & Jeff, 1996). The organizations must consider the fair wage process in order to reduce the inequality. The difference among the wage rate between men and women has been increased that produced the inequalities in organizations. To reduce the inequality the managers must reward the high performance employees with more wages for more productivity (Aker, 2006). The bases and practices those produces the inequalities in organizations have been discussed above in details and the implications for women at leadership level in inequality regime organizations have been discussed. The organizations need to review their supervisory practices and wage gap existed among men and women worker in the organizations to reduce the inequalities from organizations for more productivity. Equality can be produced by reducing the inequalities in wages, retirement benefits and in medical allowance. Whereas in order to reduce the labour cost the organizations need to do downsizing and using outsourcing for more productivity and efficiency, in this way inequalities can be reduced. Organizations must compliance with the equal employment opportunity laws to create equality in the work placement.
Brown, M. K., Carnoy, M., Currie, E., Duster, T., Oppenheimer, D. B., Shultz, M. M. & Wellman, D. (2003) White-washing race: The myth of a color-blind society, 1st ed.Berkeley: University of California Press
Burawoy, M. (1979) Manufacturing consent. 1st ed. Chicago: University of Chicago Press
Charles, M. & David, B. G. (2004) Occupational ghettos: The worldwide segregation of women and men. 1st ed. CA: Stanford University Press
Cockburn, C. (1991) In the way of women: Men’s resistance to sex equality in organizations, 1st ed. NY: ILR Press
Collins, P. H. (1995) Comment on West and Fenstermaker. Gender & Society, 11(9), pp: 73-84
Collinson, D. L. & Jeff, H. (1996) Men as managers, managers as men, 1st ed. London: Sage Publishers
Davis, A. Y. (1981) Women, race & class, 1st ed. New York: Vintage Publishers
Ely, R. J. & Debra, E. M. (2000) Advancing gender equity in organizations: The challenge and importance of maintaining a gender narrative. Organization, 12(13), pp: 323-334
Enarson, E. (1984) Woods-working women: Sexual integration in the U.S. Forest Service. 1st ed. AL: University of Alabama Press
Glass, J. (2004) Blessing or curse? Work-family policies and mother’s wage growth over time, Work and Occupations, 14(21), pp: 34-76
Featherstone, L. (2004) Selling women short: The landmark battle for workers’ rights at Wal-Mart. New York: Basic Books
Fenstermaker, S. & Candace, W. (2002) Doing gender, doing difference: Inequality, power and institutional change, 1st ed. New York: Routledge Publishers
In reviewing definitions of evidence based practice, a frequently cited one is the definition offered by Sackett, identified as the father of the evidence based medicine movement in England. He stated that evidence based practice is the conscientious, explicit and judicious use of current best evidence in making decision about the care of the individual patient. It means integrating individual clinical expertise with the best available external clinical evidence from systematic research (Gibbs, 2003). Evidence quality can be assessed based on the source type from meta analyses and systematic reviews of triple blind randomized clinical trials with concealment of allocation and no attrition at the top end, down to conventional wisdom at the bottom, as well as other factors including statistical validity, clinical relevance, currency, and peer review acceptance. EBM recognizes that many aspects of health care depend on individual factors such as quality and value of life judgments, which are only partially subject to quantitative scientific methods. Application of EBM data therefore depends on patient circumstances and preferences, and medical treatment remains subject to input from personal, political, philosophical, ethical, economic, and esthetic values. The Institute of defines evidence-based medicine as the integration of best researched evidence and clinical expertise with patient values. This evidence based medicine movement has morphed into a more generic focus on evidence based practice, and the discussions can now be found in the broad health and behavioral health arena, as well as in the context of education, criminal justice, and child welfare services (Institute of Medicine, 2001). In the social work profession, evidence based practice is receiving increasing attention. The scholar has been addressed several basic premises that support a social work focus on EBP, including commitment to clients best interest, values guided practice, goal directed practice, accountability, and commitment to scientific standards of evidence. Some scholars suggested that placing the client’s benefits first, evidence based practitioners adopt a process of lifelong learning that involves continually posing specific questions of direct practical importance to clients, searching objectively and efficiently for the current best evidence relative to each question and taking appropriate action guided by evidence. In response to this call to use evidence-based interventions, concerns arise that evidence based interventions might be too prescriptive because services will be developed according to guidelines without attention to individual client needs (McCall and Green, 2004). A comprehensive definition of EBP is intended, however, to take into account the values, ethics, and individual situation of the client. Evidence based practice is a process for making practice decisions in which practitioners integrate the best research evidence available with their practice expertise and with client attributes, values, preferences, and circumstances. Evidence based practice involves a practitioner bringing their own knowledge and skills together with best quality evaluation research to make a decision about selecting what programme/intervention is most appropriate to the parents/children they are working with. The results of population based research form the foundation of evidence based medicine. It aims to use the experience of a population of patients reported in the research literature to guide decision making in practice. This practice of evidence based medicine, which later evolved to evidence-based health care, requires the application of population based data to the care of an individual patient. In the past, we have relied on the experience of physicians or other health care workers to make decisions about therapy. In the current information era, this approach would be suboptimal as health care workers rapidly find themselves unable to cope with the influx of a huge variety of new information, from the irrelevant to the very important (Rosen, 2003). Therefore, Evidence-based decision making gradually emerged as a solution to integrate the best research evidence with clinical expertise and patient values and expectations as practiced by the individual health care provider. The concepts and ideas attributed to and labeled collectively as EBM/EBHC have now become a part of daily clinical lives, and health care professionals increasingly hear about evidence-based guidelines, care paths, questions and solutions. The controversy has shifted from whether to implement the new concepts to how to do so sensibly and efficiently, while avoiding potential problems associated with a number of misconceptions about what EBM/EBHC is and what it is not. The EBM/EBHC related concepts of hierarchy of evidence, meta-analyses, confidence intervals, study design, and so forth are so widespread, that health care professionals have no choice but to become familiar with EBM/EBHC principles and methodologies (Sackett et at., 1996).
Inquiries, in my view, should be conducted as far as possible in the public domain. This issue arose recently in respect of the Shipman Inquiry in which a decision to hold a substantial part of the inquiry in private was overruled by the High Court (Collins, 2000) It is important that inquiries are carried out in such a way that there can be no appearance of a cover up, while ensuring that the proceedings are not a substitute for a criminal or disciplinary process. It is also necessary to make sure that individuals’ rights are protected as far as possible. However, a balancing of a number of peoples’ rights will often have to be undertaken. Relevant to that difficulty is whether inquiries should be conducted in an inquisitorial or adversarial manner. Many inquiries, it has been said, claim to prefer the former approach (Carr and Kemmis, 2006). In other words, the inquiry is not restricted to evidence produced by the parties and the way they present it. The inquiry can, through a counsel to the inquiry, carry out its own thorough investigation. However, it is essential, in my view, that there is cross-examination of witnesses. The trend recently has been only to permit counsel to the inquiry to question witnesses. The reality is probably that inquiries, apart from internal ones, are mostly a mixture of the inquisitorial and adversarial approaches. The introduction of ‘Salmon Letters’, named after a well-known judge, has ensured that potential witnesses are informed of allegations which may be made against them and of possible criticism. This has become standard procedure in inquiries. The messages from the Care Inquiry evidence sessions, that the system should be one that enables positive relationships to be established and maintained, are absolutely consistent with by feedback from the research in practice network. This year our members have asked us to focus on relationship based practice, managing contact, working effectively with families at risk of entering the care system, and supporting carers (Dingwall, 2003). What of the practical impact of inquiries? In the child care field, we have learnt of the terrible abuse that has taken place in, for example, residential children’s homes. As a result, some children and young people have been able to come to terms with what happened to them and, in some cases, to obtain compensation in the civil courts. Some very necessary reforms have taken place. Some remain gathering dust. Overall I believe there is a feeling that we are still generally awash with recommendations that have not been implemented, or effectively implemented. No one can doubt that there will be more scandals in the future and there are bound to be more recommendations about more effective inter-agency working in the child care field (Fahl and Markand, 2007). It has been mooted that child care inquiries have failed at great cost to the public purse and should, therefore, be discontinued. There has certainly been a trend towards many more internal reviews which, unfortunately, have far less public exposure. I do not think that public inquiries should, or will, be made redundant. Their role is still, in appropriate circumstances, of great importance and it is vital that energetic people of integrity are prepared to carry out thorough investigations. There is a clear desire within the sector to understand how to improve these areas and it is a real privilege to be working alongside people to this end. To get a complete picture, it is important to take a systematic and ongoing approach to collecting, analysing, and interpreting data in order to gain a wide variety of useful evidence. Useful evidence is evidence that helps provide answers to the questions or hypotheses being investigated (Fisher, 2009). This means that the tools and approaches used to gather data must relate to the purpose of the inquiry and the context in which it is taking place. Site based inquiry can draw on informal evidence, such as observations and interviews, and formal evidence, such as standardised achievement data. Related research findings by others from outside the immediate context are another valuable source of evidence, provided it too is collected and actively interpreted for the purpose and the context. The distinction between inquiry and research also points to the centrality of research to a culture of inquiry. Published research should be a rich source of information for those engaged in reflecting on their work practices or in developing policy, provided that it is not simply transferred un problematically but is read in the context of the issues being explored through inquiry. Once the inquiry report is completed and handed over, matters are then left in the hands of central and/or local Government and so often seem to get lost. It has been suggested that recommendations from inquiries should become legislative proposals immediately. I think that this is too ambitious and, constitutionally and practically, too difficult (Hall, 2006). However, there is scope for a small body to be set up to monitor the progress of the implementation of the results of inquiries on a regular basis. In respect of children, this is another important function that could be carried out by an independent children’s commissioner. Such a post is, in my view, urgently required in England.
Good quality of care requires competently delivered services that meet the client’s needs by practitioners who are appropriately supported and accountable. Practitioners should give careful consideration to the limitations of their training and experience and work within these limits, taking advantage of available professional support (Kirk and Reid, 2007). If work with clients requires the provision of additional services operating in parallel with counselling or psychotherapy, the availability of such services ought to be taken into account, as their absence may constitute a significant limitation. Good practice involves clarifying and agreeing the rights and responsibilities of both the practitioner and client at appropriate points in their working relationship. Dual relationships arise when the practitioner has two or more kinds of relationship concurrently with a client, for example client and trainee, acquaintance and client, colleague and supervisee. The existence of a dual relationship with a client is seldom neutral and can have a powerful beneficial or detrimental impact that may not always be easily foreseeable. For these reasons practitioners are required to consider the implications of entering into dual relationships with clients, to avoid entering into relationships that are likely to be detrimental to clients, and to be readily accountable to clients and colleagues for any dual relationships that occur. Practitioners are encouraged to keep appropriate records of their work with clients unless there are adequate reasons for not keeping any records (Lang, 2004). All records should be accurate, respectful of clients and colleagues and protected from unauthorised disclosure. Practitioners should take into account their responsibilities and their clients’ rights under data protection legislation and any other legal requirements. Clients are entitled to competently delivered services that are periodically reviewed by the practitioner. These reviews may be conducted, when appropriate, in consultation with clients, supervisors, managers or other practitioners with relevant expertise (McIvor, 2005).
All counsellors, psychotherapists, trainers and supervisors are required to have regular and on-going formal supervision/consultative support for their work in accordance with professional requirements (Gibbs, 2003). Managers, researchers and providers of counselling skills are strongly encouraged to review their need for professional and personal support and to obtain appropriate services for themselves. Regularly monitoring and reviewing one’s work is essential to maintaining good practice. It is important to be open to, and conscientious in considering, feedback from colleagues, appraisals and assessments. Responding constructively to feedback helps to advance practice. A commitment to good practice requires practitioners to keep up to date with the latest knowledge and respond to changing circumstances. They should consider carefully their own need for continuing professional development and engage in appropriate educational activities. Practitioners should be aware of and understand any legal requirements concerning their work consider these conscientiously and be legally accountable for their practice (Institute of Medicine, 2001).
The practice of counselling and psychotherapy depends on gaining and honouring the trust of clients. Keeping trust requires:
Attentiveness to the quality of listening and respect offered to clients
Culturally appropriate ways of communicating that are courteous and clear
Respect for privacy and dignity
Careful attention to client consent and confidentiality
Clients should be adequately informed about the nature of the services being offered. Practitioners should obtain adequately informed consent from their clients and respect a client’s right to choose whether to continue or withdraw. Practitioners should ensure that services are normally delivered on the basis of the client’s explicit consent. Reliance on implicit consent is more vulnerable to misunderstandings and is best avoided unless there are sound reasons for doing so (McCall and Green, 2004). Overriding a client’s known wishes or consent is a serious matter that requires commensurate justification. Practitioners should be prepared to be readily accountable to clients, colleagues and professional body if they override a client’s known wishes. Situations in which clients pose a risk of causing serious harm to themselves or others are particularly challenging for the practitioner. These are situations in which the practitioner should be alert to the possibility of conflicting responsibilities between those concerning their client, other people who may be significantly affected, and society generally. Resolving conflicting responsibilities may require due consideration of the context in which the service is being provided (Rosen, 2003). Consultation with a supervisor or experienced practitioner is strongly recommended, whenever this would not cause undue delay. In all cases, the aim should be to ensure for the client a good quality of care that is as respectful of the client’s capacity for self-determination and their trust as circumstances permit. Working with young people requires specific ethical awareness and competence. The practitioner is required to consider and assess the balance between young people’s dependence on adults and carers and their progressive development towards acting independently. Working with children and young people requires careful consideration of issues concerning their capacity to give consent to receiving any service independently of someone with parental responsibilities and the management of confidences disclosed by clients. Respecting client confidentiality is a fundamental requirement for keeping trust (Sackett et at., 1996). The professional management of confidentiality concerns the protection of personally identifiable and sensitive information from unauthorised disclosure. Disclosure may be authorised by client consent or the law. Any disclosures should be undertaken in ways that best protect the client’s trust. Practitioners should be willing to be accountable to their clients and to their profession for their management of confidentiality in general and particularly for any disclosures made without their client’s consent. Practitioners should normally be willing to respond to their client’s requests for information about the way that they are working and any assessment that they may have made. This professional requirement does not apply if it is considered that imparting this information would be detrimental to the client or inconsistent with the counselling or psychotherapeutic approach previously agreed with the client. Clients may have legal rights to this information and these needs to be taken into account. Practitioners must not abuse their client’s trust in order to gain sexual, emotional, financial or any other kind of personal advantage. Sexual relations with clients are prohibited. ‘Sexual relations’ include intercourse, any other type of sexual activity or sexualised behaviour (Carr and Kemmis, 2006). Practitioners should think carefully about, and exercise considerable caution before, entering into personal or business relationships with former clients and should expect to be professionally accountable if the relationship becomes detrimental to the client or the standing of the profession. Practitioners should not allow their professional relationships with clients to be prejudiced by any personal views they may hold about lifestyle, age, gender, disability, gender reassignment, race, sexual orientation, pregnancy and maternity, religion or belief, marriage and civil partnership. Practitioners should be clear about any commitment to be available to clients and colleagues and honour these commitments (Collins, 2000).
Principles direct attention to important ethical responsibilities. Each principle is described below and is followed by examples of good practice that have been developed in response to that principle. Ethical decisions that are strongly supported by one or more of these principles without any contradiction from others may be regarded as reasonably well founded. However, practitioners will encounter circumstances in which it is impossible to reconcile all the applicable principles and choosing between principles may be required (Dingwall, 2003). A decision or course of action does not necessarily become unethical merely because it is contentious or other practitioners would have reached different conclusions in similar circumstances. A practitioner’s obligation is to consider all the relevant circumstances with as much care as is reasonably possible and to be appropriately accountable for decisions made. Being trustworthy is regarded as fundamental to understanding and resolving ethical issues. Practitioners who adopt this principle: act in accordance with the trust placed in them, regard confidentiality as an obligation arising from the client’s trust; restrict any disclosure of confidential information about clients to furthering the purposes for which it was originally disclosed (Fahl and Markand, 2007). Practitioners who respect their clients’ autonomy: ensure accuracy in any advertising or information given in advance of services offered; seek freely given and adequately informed consent, engage in explicit contracting in advance of any commitment by the client, protect privacy, protect confidentiality, normally make any disclosures of confidential information conditional on the consent of the person concerned; and inform the client in advance of foreseeable conflicts of interest or as soon as possible after such conflicts become apparent. The principle of autonomy opposes the manipulation of clients against their will, even for beneficial social ends (Fisher, 2009). It directs attention to working strictly within one’s limits of competence and providing services on the basis of adequate training or experience. Ensuring that the client’s best interests are achieved requires systematic monitoring of practice and outcomes by the best available means. It is considered important that research and systematic reflection inform practice (Hall, 2006). There is an obligation to use regular and on-going supervision to enhance the quality of the services provided and to commit to updating practice by continuing professional development. An obligation to act in the best interests of a client may become paramount when working with clients whose capacity for autonomy is diminished because of immaturity, lack of understanding, extreme distress, serious disturbance or other significant personal constraints (Kirk and Reid, 2007).
The practitioner’s personal moral qualities are of the utmost importance to clients. Many of the personal qualities considered important in the provision of services have an ethical or moral component and are therefore considered as virtues or good personal qualities. It is inappropriate to prescribe that all practitioners possess these qualities, since it is fundamental that these personal qualities are deeply rooted in the person concerned and developed out of personal commitment rather than the requirement of an external authority. Personal qualities to which counsellors and psychotherapists are strongly encouraged to aspire include (Lang, 2004) (McIvor, 2005):
Empathy: The ability to communicate understanding of another person’s experience from that person’s perspective.
Sincerity:A personal commitment to consistency between what is professed and what is done.
Integrity: Commitment to being moral in dealings with others, personal straightforwardness, honesty and coherence.
Resilience: The capacity to work with the client’s concerns without being personally diminished.
Respect:Showing appropriate esteem to others and their understanding of themselves.
Humility:The ability to assess accurately and acknowledge one’s own strengths and weaknesses.
Competence: The effective deployment of the skills and knowledge needed to do what is required.
Fairness:The consistent application of appropriate criteria to inform decisions and actions.
Wisdom: Possession of sound judgement that informs practice.
Courage:The capacity to act in spite of known fears, risks and uncertainty.
The challenge of working ethically means that practitioners will inevitably encounter situations where there are competing obligations. In such situations it is tempting to retreat from all ethical analysis in order to escape a sense of what may appear to be un resolvable ethical tension. These ethics are intended to be of assistance in such circumstances by directing attention to the variety of ethical factors that may need to be taken into consideration and to alternative ways of approaching ethics that may prove more useful. No statement of ethics can totally alleviate the difficulty of making professional judgements in circumstances that may be constantly changing and full of uncertainties. By accepting this statement of ethics, members of the British Association for Counselling and Psychotherapy are committing themselves to engaging with the challenge of striving to be ethical, even when doing so involves making difficult decisions or acting courageously (Sackett et at., 1996).
It is now widely understood that professional practice must be informed by research and that students should also learn how to take this approach. This idea is not new, but the idea of evidence based practice has gained a higher profile in recent years. For example, Rosen, (2003) asserted that many of the processes and skills used in professional practice also support research work. He drew a parallel between the main tasks of the social worker and the researcher:
Others have made a philosophical argument about the inter-dependence of professional practice and research, including how the combination can be mutually enriching. This resource aims to show you how to build those bridges between research, learning and practice, so that research-mindedness becomes an every-day perspective that informs what you do and how you do it. A care manager in an elderly person’s team in a Social Services Department wanted information on local voluntary groups willing to visit elderly people to provide a friendly contact, especially in cold weather (Gibbs, 2003). A list of such groups already existed in the office, but the care manager suspected it was out of date and possibly incomplete. She wrote to each of the groups on the list to ask whether they still visited elderly people, and if so how many volunteers they had available (Institute of Medicine, 2001). She also wrote to local faith organisations and other relevant groups, as well as asking her colleagues, in an effort to identify new groups. The care manager used local knowledge and contacts to spread the net for new groups, and asked a couple of questions of each so as to establish whether they did visiting and how much they could take on. Once gathered the data was used to provide a resource for all staff in the office (McCall and Green, 2004).
A teacher is responsible for the organizing culture and values and learning the students about the respect, moral values and social norms and ethics as well, so the teacher is most respected profession in the all over the word (Dahlsrud, 2009). A teacher is a person that pass the knowledge and cultural values and norms to the students and equip them for further higher studies and polish them mentally and physically them in a position to play their role as successive person for making the society more civilized and to maintain the law and order situation and playing their role for the betterment of society (Boulstridge and Carrigan, 2005). This is most responsible profession where the teacher contribute their role in providing education to the students, because in the future the students play their role for the development of the country while playing their vital role in the economical, medical, defence and all other sectors and their roles, skills and other responsibilities depends on their schooling life and it depends on the skills and role of teacher. So the role and responsibilities of teachers is most important (Gay, 2007).
The training cycle consist of following steps and the roles and responsibilities and boundaries of a teacher are given under as well and have been discussed in details as well (Hastie et al., 2011).
In the first step the teacher find out the needs of the learners and on the behalf of the learners the teachers prepare the plan to teach them the syllabus.
In this step the teacher is responsible to plan and design the requirement and design the environment and enlist the resources and way to deliver the message to the learners.
In this step the teachers are responsible to learn the learners through their skills and behaviour and the teachers involve themselves in the multicultural environment and the teacher also provide the learners all the facilities to develop a culture in which all the learners can understand and learn (Marsden, 2010).
In this step the teacher get the feedback from the learners about the effectiveness of method, syllabus, resources and facilitations in order to provide them training or conveying the knowledge and on the behalf of the feedback the teacher make necessary amendments and changes in the whole process to achieve the main objectives of the training cycle. The main responsibilities, role and boundaries of a teacher are given in the following sub sections (Piacentini et al., 2011).
While managing students in the class and managing their all other activities and facilitating them towards learning the ethical and moral and cultural norms and values while promoting the importance of academic environment to all the students the teacher play a role as an organizer (Boulstridge and Carrigan, 2005). All the students belonged to different cultural, ethnics and regions and they have different languages, cultures, norms and values, and teachers organized them in a one group and teach them through a learning process while using his or her competencies while understanding the different cultures, norms and values (Pinney, 2009).
Teacher must play its role while in the multicultural environment to permit the students to make analysis on the negatives and positives of other cultures to find out the main stream of other cultural ideas (Gay, 2007). The teacher is responsible to create an environment and guide the students in such a way that in the multicultural environment to get positive norm and values to develop a positive culture in and out the classroom. And only the teacher can facilitate the students to acquire the positive multicultural values and norms for developing a positive culture of learning, the teacher must play its role to develop such abilities and competencies among the students so that in the multicultural environment the students always abide by the racism and never involved in discrimination in their professional lives as well (Dahlsrud, 2009).
Some scholars have been stated that the teacher must be responsible for the learning of referencing system to the students and the importance of references and they must also learn and teach the learners about socio culture and the positive impact of culture on the learning process (Hastie et al., 2011). A teacher can play its role as a police officer, as a medical officer in an emergency, a psychologist and as father or mother in order to understand the learner’s special skills and abilities and competencies to make the society more civilized.
It is clear that the teacher must have the specific skills and knowledge in order to transmit the knowledge to the learners, so the teacher must have the communication skills and competencies to provide the learners reasonable resources and facilitate them to learn them the attitude and behaviour to become civilised citizens and it is teacher’s responsibility to protect the learners psychologically and come out them from mentally and emotional problems and care them and teach them the school rules and rules and regulations as well. Teacher must watch the learner’s activities them and stop them and allow them to involve in 1activities and understand them the negatives and positive impact of activities (Marsden, 2010).
The teacher must keep himself or herself far away from the learner’s personal lives and could not involve in their personal problems because they may have their political views, religious views and race views entirely different the teacher’s point of view, so in this term the learner abilities may be affected negatively (Piacentini et al., 2011). So the teacher must play its role as friend with learners and remembered that he or she is adult and must not try to be buddies with learners. The teacher must not remain with a leaner in the teaching room or class room and with opposite sex, if the privacy is required then the teacher must use office or cafe. The teacher must know about the teaching method, teaching manners and must follow the role model being a mentor and the teacher can encourage the learners, the teacher must report the learner for sexual harassment either through physically or verbally. Teacher could not abuse any student, physically, sexually or emotionally but improving the emotional and psychologically their courage to achieve their objectives through identification their goals and objectives and learn them knowledge and skills (Pinney, 2009).
Boulstridge, E. and Carrigan, M. (2005) ‘Do consumers really care about corporate responsibility? Highlighting the attitude-behaviour gap’ Journal of Communication Management, 11(8), pp: 123-456
Hastie, T., Tibshirani, R. and Friedman, J. (2011) The Elements of Statistical Learning: Data Mining, Inference, and Prediction. 3rd ed. Oxford: Pearson Publisher
Piacentini, M., MacFadyen, L. and Eadie, D. (2011) Corporate social responsibility in food retailing, International Journal of Retail and Distribution Management, 32(15), pp: 324-534
Dahlsrud, A. (2009) How corporate social responsibility is defined: an analysis of 45 definitions: Corporate Social Responsibility and Environmental Management. March, 24(15), pp: 145-345 [online] Available at: < http://onlinelibrary.wiley.com/doi/10.1002/csr.132/abstract> [Accessed on 7th April 2013].
Gay, S. (2007) How corporate social responsibility is defined: an analysis of 37 definitions: Corporate Social Responsibility and Environmental Management. January, 13(6), pp: 145-674 [online] Available at: < http://onlinelibrary.wiley.com/doi/10.1002/csr.132/abstract> [Accessed on 30th March 2013]
Pinney, C. (2009) How corporate social responsibility is defined: an analysis of 57 definitions: Corporate Social Responsibility and Environmental Management. March, 24(9), pp: 97-345 [online] Available at: < http://onlinelibrary.wiley.com/doi/10.1002/csr.132/abstract> [Accessed on 3rd April 2013]
Either the organization is profit oriented or non profit organization, each has to achieve its goals and objectives, and to achieve these goals and objectives the organizations have their strategies and resources and the management design, plan, monitor and lead the employees to achieve their goals and objectives in effective way (Gundersen et al., 2010). So many organizations now a days are offering their products and services in the same organizational business sector and all of them are trying their best to achieve organizational objectives and trying to make customers and putting their best efforts and effective strategies for the customers attraction so that the customers buy their products and services. There are many different factors and key successive factors those can play their role for the success of an organization and organizations taken into their consideration those all factors while making their strategies and policies so that organizations can achieve organizational objectives by reducing the resource wastages and by saving cost. CRM department has the employees those have the special skills and necessary knowledge and ways to deal with the customers to convince then offer them the best solution by identifying their needs and wants and then offer them the best option to retain that client with the organization loyal (Helgesen, 2011). The CRM department also play effective role because the CRM department employees have such communication skills to convince the clients and handle the angry clients in tough situation to handle them politely and offer them the best option to cool down them and those angry customers become loyal again these tricks are always played by the CRM department (Kandampully & Suhartanto, 2012). Now a days the profit oriented organizations have the CRM department in the organizations to support the customers and to create loyalty and satisfaction among the customers to retain them and to bring more clients from the market because it is CRM department responsibility to support the clients in effective way and to solve their problems in effective way and in this way the clients are also very happy if they found that there is someone there in the organization to support them, to listen their complaints and to compensate them regarding their problems and offer them the best solution and in this way the customers become happy and they come again to buy the products and services from the organization and in this way the volume of sales become high and as the profit is directly related with the sales volume so when the sales volume is high then the profit will be high and then the organization will grow ultimately. CRM department has so many features and one main feature of this department is to create loyalty and satisfaction among the clients at maximum level through different ways which includes the complaint handling, by offering them the best option of solution as per their problem nature and one main important factor is that the CRM department can also identify and recognize the clients and customer’s requirement which we called expectations and when the CRM department come to know about the requirement of the customers (Kim, 2010). CRM now a day playing its effective role in the business organizations and the organizations are availing the opportunity of competitive advantages and making money and making the growth and sustaining the growth as well. The CRM workers are putting their efforts for the well being of organization and the organizations are doing at their best efforts to facilitate the clients regarding the low price products and services at reasonable amount and with high quality (Oliver, 2009). The main purpose of the CRM department is to facilitate the business operations in such a way that the client become happy and the resource wastage stop or reduced at a significant level and the employee’s attitude and productive level always become high and ultimately the customer become happy and the organization can increase the sales volume up to a certain level (Looy, 2010). CRM department basically play its multidimensional role for the development of business strategies just to remain happy the clients with the organizations and the CRM department bring the happiness for the stakeholders and ultimately when the customers are happy means the organization is making growth because with the increase in the sales volume will automatically increase in the profit margins (Parasuraman et al., 2010). CRM department coordinate with all other departments like with finance department, marketing and research and development department, human resource department to achieve the organizational objectives for the growth and for achieving long term and short term objectives of the organizations (Reichheld and Kenny, 2007). CRM department is responsible and this is the main objective of this department is to manage the customers for the betterment of customers while keeping in mind the main objective or the organizations and then by achieving those aims and objectives the organization play its role for the both of them, the main objective of the organization always remain to earn the profit at maximum level by reducing the risk factors and by making maximum market share from the market by advertisement and by offering the best products and services to the organization and then creating happiness and loyalty among them for long term relationships with them, so that they come again and again and buy the products from the market and the organizations can earn more and more profit.
Changes every day in the lives specially change in the client’s behaviour and in the attitude of the employees have impact on the buying decisions and these all factors have their impact on the sales of organizations. So this is the main problem for the organizations to identify the customer’s needs and wants because the identification of the client’s problems, their complaints and offering them the suitable solutions and offer them the solutions on time and on the best price as per their buying power are the main issues and by considering these factors the organizations can create the loyalty among them for achieving its goals and objectives and on the basis of these goals and objectives the organizations can increase the sales volume by increasing the frequency of the client’s buying and by retaining them and in this way the organizations can enhance the sales volume (Reichheld and Sasser, 2006). Every day new organizations are entering in the market and those are offering the same quality and cheap prices for the same products in the market and all the organizations have the same objectives and goals to become market leader by offering the best solution for the customer’s problems and caring them in all ways and supporting them (Su, 2010). There are so many factors those can increase the sales volume in an organization which includes the quality of the products, price of the products, warranty and guarantee of the products and services and some time the offers and the value added services also enhance the sales volume and one more important thing is the promises or commitments of the organizations made by the management at the time of promotion or marketing must be fulfilled by the management to retain the people and to bring loyalty among the employees and among the clients as well, similarly the contribution of employees is also have its own importance (Schlesinger & Heskett, 2007). Through effective CRM department strategies and policies in time the customers can be retained with little extra care and by keeping them inform and by providing them the best services and by keeping them aware about the changes and by keeping in touch with them, the CRM department can also play its role in the increasing sales volume and can build the long relationships with the clients by their efforts. When all the organizations in the same sector are offering the same products and services with high quality and lower prices then there is a difference of business strategies and the procedures and handling the clients and taking care of them, the organizations those have been adopted the CRM department with all of its functionalities and are fulfilling the main demands of the CRM department, those organizations are achieving their targets because when the CRM department is completely in function then the CRM department is in fully working and fully functioning then the organization can achieve the goals and objectives positively. And if the CRM department is existing in the organization but is not functioning fully then it is very hard for the organizations to achieve the expectations from the CRM department (Wang et al., 2011). The CRM department has the responsibilities of marketing, identification of client’s requirement, manufacturing of the products as per client’s needs and wants, handling the angry clients efficiently and remain in touch with the clients for asking them about the feedback and review the whole process of keeping customers always with the organization loyal and creating loyalty and happiness among them. Now a day it is not easy to find out the client’s problems and to handle them regarding their problems but only the CRM department can play it role in creating happiness and loyalty among the clients if the CRM is functioning fully and have the skilled and necessary equipments and all other technologies and they are well trained, in this way the solution is available (Yeung et al., 2011). The research and development department works very closely with the CRM department and the CRM department basically initiate the policy and design the strategy for the research and development department, the CRM department keep the records of the clients and take their views and opinions for making the products as per their needs and requirements so that they always remain happy and happiness leads to the loyalty ultimately and the organizations can achieve their goals and objectives positively. The market share has been divided among the customers because there are so many organizations in the same sectors and they all are offering their products and services in the same sector and the competition among the organizations become so high and due to this tough situation of high competition among the organizations it is not easy for the organizations to enhance their sales volume effectively (Zeithaml et al., 2010). CRM department in the ASDA superstore is doing its work very efficiently and effectively and by keeping all the necessary elements (factors) into its considerations and then designing the customer handling, treating, and offering them and facilitating them all the strategies which are related with all these outcomes effectively. CRM department can play its role in solving the problem of the organizations and can play its role in increasing the sales volume so that the business organizations can earn more money from the customers and can achieve more market share and can build long and strong relationships with the customers (Williams Fine, 2010). All the organizations knows that the to increase the sales volume it is necessary for the organizations to capture market share at high level number and then attracting the clients at maximum number and then offer them the best option of the solutions then the organizations can also earn more money. And in the era of high competition and due to advance technology and dye to latest and high technology the procedures have been reduced the cost of manufacturing and these procedures have also impact on the client’s buying process and their behaviour as well. So it is very complicated now a day to understand the actual problem of the customers and to handle them because they have already the solution offered by other organizations and to increase the market share it is very hard now a day for the business organizations (Wilson, 2010). The sales is directly proportional to the loyalty of the clients and whereas the loyalty is directly linked with the services and products quality and availability and with the satisfaction of the clients, the satisfaction come only in one way that after consuming the products and services the clients become happy then in this way the client become happy and this happiness leads them to the loyalty and they come again towards the organization to buy it again and they also told other people about their experience.
Basically the main objective of this research is to find out the influence of the customer relationship management role in increasing the sales volume in super markets. All the supermarkets have their goals and objectives to earn more profit by maximizing their sales volume and the sales volume can be enhanced only in one way if the market share from the target market can be maximized and this depends on the CRM departmental activities and their strategies to earn more money from the market.
In order to achieve the main objective of this research the researcher has been divided the main aims of the research into small objectives and in this way it will be more convenient for the research to conduct the research and to achieve the aim of the research. All the objectives are given below here.
The researcher has been divided the main aim of this research into different related small targets called them as objectives and all those have been designed by keeping in mind the main purpose of the research. Basically the researcher wants to know the role of customer relationship management in increasing the sales volume in the supermarkets in United Kingdom.
The researcher will find out the relationship between the CRM department and its effectiveness in the super markets in United Kingdom.
The importance of this department along with all other important factors with the point view of customers and the management will also be find out and the customers feedback importance and all other related factors will also be find out in this research.
Advantages and disadvantages of the customer relationship management will also be discussed and will find out to know the exact role of this department in achieving organizational objectives.
The factors those can play their important and vital role in maximizing the market share from the targeted market will also be disclosed, because eth customer relationship management will include them for achieving organizational objectives.
The importance of the customers and customer care and employees and their skills and importance of customer relationship management department will also be discussed and will find out the positive role and the expected impact of the CRM department in retaining the clients and capturing new clients from the target market will be find out.
All the challenges and main issues in the selected organizations while implementation CRM policies will be find out and for their effectiveness the recommendations will be made by the researcher.
The researcher has been designed the following research questions to find out the above stated all the objectives to find out the main aim of this research and the researcher has been used all the skills and competencies while designing these questions. The researcher has been divided the questions in two main categories, one for the management and second for the customers.
What is meant by the CRM department in the super markets and what is its role and duties?
What are the main features of customer relationship management department and what is its contribution in achieving organizational objectives?
What are the main objectives of ASDA super stores?
Why ASDA has situated the customer relationship management department and what are the expectations of management from the customer relationship management department?
What are the advantages and disadvantages of the customer relationship management in this supermarket?
How the CRM department can play its role in achieving organizational goals?
In which way the CRM department can be useful for the management and for the clients as well?
How the CRM department can play its role in bringing loyalty among the employees and the customers at ASDA?
What are the main problems with the policies and strategies of the CRM department in the selected supermarket and how to minimize them effectively?
Which factors are necessary for the management to taken into their considerations for achieving the CRM departmental objectives which is ultimately to create satisfaction for increasing the sales volume?
First of all the researcher will take the permission from the ASDA management to conduct the research in the CRM department and to conduct the interview from the CRM management and supervisors and will observe the shopping and while the CRM employee will help the customers and will also distribute the questionnaires among the customers to find out the facts and to gather primary data. Secondly the researcher will not share the primary or secondary data with any colleagues, class fellow and will not disclose the personal information of any employee or customer to anyone and will keep the strategies and policies secret as well. The researcher will not steal the data from anyone and will not include his own perception or opinion in the data, and will conduct the research as by following the ethical procedures and rules. The researcher will not use the old (10 years old) data as secondary data in this research and will not use this research for another academic achievement.
The researcher has the following limitations associated with this research.
Shortage of time
Limited resources (finance)
No past research conducting experience
Only one case study has been selected to conduct the research.
All the limitations have been discussed above the researcher has no background of conducting research and has no such skills and competencies to conduct this research, all the expenditures the researcher will pay from his personal budget.
In the supermarkets the customer relationship management department is playing its role for the success of these organizations where this department has been implemented with full functions. The organizations can also take advantage of this research and those can also increase their sales volume by using the recommendations and by establishing the customer relationship management effectively in their organizations. After this research the selected organization will also come to know its challenges and problem faced by them and in the light of the positive recommendations the organization will act upon them and will modify the strategies and policies and will also make the alignments and will also watch the recommendations for more advantages of the customer relationship management positively for increasing the sales volume. The supermarkets in the United Kingdom can also be benefited from this research because the researcher will find out all other factors those can have their influence in creating the positive and productive attitude among the employees and among the customers for creating loyalty and satisfaction for achieving organizational goals and objectives. This research will lead other researchers to find out the other hidden truth and other factors those can participate in increasing volume of sales and the profitability for the supermarkets in United Kingdom.
In this chapter the researcher has been explain the secondary data against and in the favour of the CRM that CRM can increase the sales volume in an organization, and has been discussed the different features of the CRM department those can collectively increase the sales volume in an organization. The researcher has been explained the review of literature and in the end with the help of conceptual frame of reference it has been proved that the CRM activities are helpful for an organization in the United kingdom to increase the sales volume because the CRM department has the features and if the organizations adopt this department with full fledge way then those organizations can be benefited from this opportunity in best way. The researcher has been discussed all the features in detail and all the links in detail and very clearly, the researcher has been discussed in detail all the features, relationships among different variables those support the CRM activities and play role in creating loyalty among the employees, better environment at work placement, better services and offer expected services and products to the customers as well for increasing the frequency of sales and their visits as well.
Due to poor quality of services and due to poor services and unexpected results of products and services the business organization lose about 30% of the customers which is a big lose for them and the competitors can achieve this advantage only by having CRM department in the operation (Looy, 2010). The business organizations can create loyalty and happiness among the clients to retain them loyal with the organization and to maximize the market share just by paying their attentions directly for the betterment and for the welfare of its employees and clients rather than to pay focus on the CRM department, this budget amount can be spent by these organizations on the product designing and on offering low price in the market for attaining maximum market share from the target market (Oliver, 2009). Buttle, (2011) stated that the organizations can also reduce the price and increase the quality of services and quality of products and offer the customers at reasonable price rather than to pay attention towards customer relationship management. All the organizations in a sectors have their mission and vision statement and these organizations have their objectives and strive to achieve them effectively, the main objective of all organizations is to achieve the financial objectives means to earn more money and money can be earned in a way that if the number of employees are maximum means the market share is maximum and secondly if the employees are loyal to achieve the organizational objectives and third factors is that if the clients are happy and loyal with the organizations then in such a way the client will come again to buy the products and services and the organizations can increase the sales volume and can make more profit (Gundersen et al., 2010). In the United Kingdom at the ASDA supermarkets the CRM department is in operation and doing its work effectively and this department is playing its role for the success of this organizations. According to the Antony & Antony, (2007) that CRM department is very essential for any organization because in these days it is very important to create strong and long term relationships with the clients for achieving both kind of objectives and without this department no one organization can achieve the main objectives. To build strong and profitable relationship with the clients the organizations need to establish CRM department which is the key success in an organization (Bhote, 2011). According to the Bowen and Lawler, (2010) that the organizations can only achieve organizational objectives if they have strong relationship with their clients and paying their full attention on their clients, the angry client never come again to buy and happy clients always create the opportunities for the organizations.
Source: Author
It is very clear from the above picture that the customer relationship management is responsible for the following task. It is the only department that can leads the organizations towards the success and this department can only retain and can capture more clients from the market and this department have the features to attract the clients, so obviously this department is very essential for success (Choi and Chu, 2010). Sales workflow management and sales measurement (targets achievement), and client’s database management (feedback, taking their views and opinions), product database management, keeping product knowledge, customer tracking, client’s history, call centre support 24/7. Marketing campaigns, advertisement, marketing management, event handling and leading marketing force these functions have been done by the CRM department (Kandampully & Suhartanto, 2012). It is very important for the business organizations specially in the retail sector the organizations must have to full fill the clients need and offer them the best opportunity to buy and this is only possible when these organizations have CRM department and effective CRM strategies in operations (Dimitriades, 2012). There is a strong relationship between the CRM policies and procedures and in its strategies and the organizational sales, if the strategies are effective then the organizations can lead the market and it is CRM departmental responsibilities to create loyalty among the clients as well as among the employees so that employee can understand the client’s expectations and then gave them the best option or range of solution (Everett, 2007). But some scholars are not agree with the effectiveness of customer relationship management department and its features they have stated that instead of spending a huge amount for the establishment of CRM department the organizations can pay their attention for the employees and for the client’s welfare and in this way the organizations can achieve their goals and objectives successfully (Farber and Wycoff, 2011). It is not only the customer relationship management department that can consider the key successive factors into the consideration but the other department in the organizations can also perform the same duties to oblige their clients and can create the loyalty among the employees and among all the employees and in this way the organizations can save the money as well and this money can be used to offer the clients best prices as compared to its competitors and by using the competitive advantages the client will attracted by the low price offers and the organizations can achieve the organizational objectives in easy way (Flyvbjerg, 2011). Client’s retaining is not an easy job and this job can only be done by the skilled and well trained people and except the customer relationship management representative it is not possible, because there are so many reasons, first of all the CRM department first of all develop and design the customer oriented policies and other departments cannot do this job then as per the requirement and opportunity available in the market the CRM department make analysis on the gather data and pass to the other departments and after approval budget the organizations redesign, or manufacture new products for sale and make it sure that the products and services are easily available to the potential clients (Getty & Thompson, 2011). So this is not an easy job to attract new or to retain the old clients this is not a psychological process there are so many factors involve in this theory to retain the old clients (Gonzalez et al., 2009). According to the Williams, (2010) that the 80% of the clients do not bother to register their complaints against the poor services and the remaining 20% of the customers take care about the complaints and they only go through the long procedures and only 5% among them become satisfy because it is not easy for the organizations to pay attention on the complaints because the employees do not have skills and competencies and effective communication system to handle client’s complaints so instead of handling their complaints the organizations must offer them the price discounts and value added services for creating loyalty among them.
Customer relationship management is the responsible for creating the effective and best relation among the organization and the clients, because it is very clear and CRM managers have believe in that only loyal customers and the loyal employees can lead the organizations to achieve their goals and objectives and there are so many other responsibilities of CRM department which is the handling of angry clients in proper way and to compensate them as per their requirement and creating happiness among angry clients and providing them quick services and also creating loyalty among the skill people and providing them the latest skills and technologies and equipping them with the latest tools so that they can perform their duties in attracting new clients from the market and retaining old clients by knowing their priorities in effective way for achieving organizational objectives (Helgesen, 2011). Whereas Kim, (2010) has been stated that the spinal cord of any business is the customer relationship management department and now a day without CRM departmental support the organizations could not meet the client’s requirements and when there is no clients then there is no any business. According to the Zeithaml et al., (2010) that the functionality of the CRM department is not an easy task and the organizations while allocating the proper trainings, equipping customers with latest technology and with competitor’s product knowledge are not easy tasks so the organizations can achieve the targets of the organizations just by putting their efforts on the employee’s welfare and in this way the employees will devote their attention in achieving organizational objectives. But some other scholars Wang et al., (2011) have been stated that CRM can play its role positively for achieving organizational objectives by paying its attention on the product designing, its packing and on the quality of services and quality of product as well.
There is a deep and direct link between the activities of skilled and professional employees and the satisfaction, loyalty of the clients and similarly there is direct and deep link between the loyal and satisfied clients and organizational sales volume and there is a direct relationship between sales volume and the growth of an organization and sustain growth of an organization. According to the Wang et al., (2011) that it is very important for the organizations specially in the retail sector to create loyalty among the customers for achieving organizational objectives and the loyalty can only be created if the organizations can successfully create the satisfaction among the clients and this satisfaction only can be created when the loyal employee from customer services management handle the clients and provide him the necessary information and suitable product that can be according to his or her expectations.
Source: Author
In the above figure it has been shown that how the customer relationship management can play its effective role in increasing the profitability in the organizations by creating the loyalty among the customers with the important role of customer relationship management. According to the Reichheld and Sasser, (2006) that there are so many factors which involve the value added services and features like guarantee, competitor’s advantages like low price, better quality of products and services, prompt response, after sales free services, money back guarantee, size and volume can play their important role in creating satisfaction among the clients and the loyalty has direct impact in increasing the profitability of the organization. Similarly the Flyvbjerg, (2011) has been stated that Loyal customers always bring new business for the organizations by telling and sharing their bad and good past experiences with their friends and family members so in this case the organizations can also attract the market share by creating loyalty among the clients and this is only possible when the customer relationship management has the skilled and highly trained officers equip with the necessary authority and other resources. According to the Gundersen et al., (2010) that the customer relationship management department can play its role in creating the loyalty among the clients by its skilled workers, the CRM department has the competencies and necessary resources to create the loyalty among its supervisors and those skilled supervisors can create among the clients by using their productive attitude, good and suitable behaviour with patience and by offering quick services and suitable products to them. But according to the Choi and Chu, (2010) that the loyalty and the satisfaction among the clients can be created through marketing force, without having the customer relationship management department in the organizations the satisfaction and loyalty can be created and the cost can be saved as well and that cost can be used to create more happiness among the employees and clients for their benefits and welfare. According to the Oliver, (2009) that it is the main responsibility and duty of the employees of customer relationship management department in an organization to provide and treat the clients in such a way that the clients become happy and they feel proud of them by serving the client and by helping them with smiles whereas Parasuraman et al., (2010) supported this statement by saying that positive and good attitude, and this loyalty has a direct relationship with the company success, because the satisfaction always come after utilizing the services or products and if the product has full fill the client’s needs that means there was no any difference between their expectations then the client will become so happy and when they will become happy then they will again and again come to buy the product from the same organizations, and if the organizations treat them as a loyal customers and offer them discounts, gifts and free of cost services and always welcome them and remain in touch with them and provide them money back guarantees and other discounts like buy one get one as free then the customers will come again and again to buy from the same organization and in this way the sales volume of the organization will be raised and the organizations will be able to earn more profits (Looy, 2010). According to the Antony & Antony, (2007) that price and quality are both key successive factors for the success of an organization and without the SRM department, this statement was supported by the Bhote, (2011) by saying that through research and development department price and quality can be set as according to the target market needs and according to the Bowen and Lawler, (2010) that supported the above statement by saying that the business organizations must focus on the welfare of employees and on the quality and price of the products and services rather than to create loyalty among the clients the organizations must focus on the quality and price. According to the Looy, (2010) that the main issue with the business organizations is to find out the exact way to understand the needs and wants of the clients in the target market to offer them the best alternatives as solution, and the Oliver, (2009) has been stated that there is only one department that can reduced this tough situation and take all the responsibility of understanding client’s expectations in cheap and effective way, and Reichheld and Kenny, (2007) have been stated that this department can also create happiness among them as well that ultimately will increase the number of clients in market.
Source: Author
As the Reichheld and Sasser, (2006) have been stated that the organizations can create satisfaction and loyalty among the employees by considering their welfare, attractive salaries, bonuses, increments and promotions and intrinsic and extrinsic rewards as per their performance for creating loyalty and satisfaction among the clients through their attitude and high level of quality of services to them and the Schlesinger & Heskett, (2007) have been stated that it is very necessary for the CRM department to create the loyalty and satisfaction among the clients for achieving organizational objectives and through many factors the department can play its role in creating and enhancing the satisfaction and happiness among them because the Wang et al., (2011) have been stated that as a result of all this effort the loyalty will be created among all of them similarly through the lowest price but high quality can also bring new clients and angry clients can also be attracted by this way, but the Yeung et al., (2011) have been stated that maximizing the market share effectively can be possible in one way that is customer care.
According to the Kandampully & Suhartanto, (2012) when the client buy the product then on the behalf of the experience after utilizing that one the clients either become so happy or become so angry, whereas the Kim, (2010) has been stated that he or she become angry if they did not get the value against their money which they have been paid to the company for buying that product or services and they become sad and become angry and tell the people around them about their bad experience and the other people will also not come to buy and in this way when no client then no business, but on the other hand Looy, (2010) has been stated that if the client become happy after using that product and product features proved the values for which the client paid the money then in this way the client will become so happy and the client will let other people about the successful experience and in this way more people will be attracted and will become cause in increment of sales and profitability for the organization (Oliver, 2009). One major portion of angry clients about 90% can become happy and they can be loyal with the company if the appropriate person deal them and compensate them and bear their attitude just for good future and these people become strong loyal if the person handle them with positive and lovely attitude (Oliver, 2009). In order to create the loyalty and happiness for increasing market share and for achieving financial objectives it is necessary to remove the problems and complaints of clients and the CRM supervisors and other staff can handle them in positive way by using their communication skills and their attitude and they compensate them as well just to make them happy (Looy, 2010). With the help of the CRM department skilled and competent workers those can play their important role for the betterment and for the growth of organization at their best level the business organizations can increase the sales volume by just paying their attention and with lovely attitude and behaviour they can handle the angry clients and with special authorities they can convert the angriness in the happiness and in this way the organizations can be benefited and this on only can be done by the attention of customer relationship management department successfully (Kandampully & Suhartanto, 2012). According to the Kim, (2010) that the angry clients can be handled by the only skilled and well communication skills person and the only customer relationship management department has the same skilled worker which main aim is to increase the market share at any cost and which this department strive. According to the Parasuraman et al., (2010) that the organizations can handle the client’s complaints and in this way the satisfaction and the loyalty of the clients can be increased and this would become the cause of achieving organizational objectives in efficient and effective way the Reichheld and Sasser, (2006) have been stated that there are so many benefits are linked with the customer’s satisfaction as well the first one is that the happy customers always brings new clients into the market for buying products and they share their participation in achieving organizational objectives in positive way secondly the satisfied clients always increase the business and it affect the brand image as well. According to the Reichheld and Kenny, (2007) that the customer relationship management is the most effective department that can handle the angry clients and can perform its obligations in achieving organization’s objectives by increasing market share and by bringing new clients as well, whereas this statement has been supported by the Zeithaml et al., (2010) by saying that it is the customer relationship management duty to handle the clients and their problems to create loyalty and satisfaction among them similarly the Kandampully & Suhartanto, (2012) have been stated that customer relationship management is the responsible to give training to its employees about the customer handling and provide them the knowledge about the products and the services and all information about the competitors knowledge so that they can easily solve the client’s problems by making comparisons and the CRM can play it role positively for the betterment. Kim, (2010) has been stated that to handle the complaint the employees need authorities and special skills to understand the client’s requirement and CRM department cannot afford such amount to spend on one employee and this is not been possible for the higher management to delegate maximum authorities to the employees because some time to create happiness among clients the employees may need to pay them the amount and give them free of cost the services that’s why the higher management always afraid to delegate the authorities to the employees and for such kind of decisions the employees need to take permissions and first they need to brought the matter into higher management and it take to much longer and the customers become unhappy (Looy, 2010). Handling angry customers are not an easy task for the customer relationship management department because it is not easy to read out client’ face (Oliver, 2009). But some scholars have been stated that with the suitable skills and latest technology usage and help and with the effective systems now a day the employees at the CRM department can also solve the client’s problems in efficient way (Parasuraman et al., 2010).
Low price and high quality are the very common sense that these both are the competitive advantages and as well as these both factors are the main key successive factors for making sales and for making market share at maximum level (Bhote, 2011). According to the Antony & Antony, (2007) that there are so many features of the products and the departments are common those can trigger the sales of the organization at the peak and quality of the product and services is one of them. According to the Gonzalez et al., (2009) have been stated that quality always refers to the quick response that means the efficiency of the staff members and quickness of the staff members to response a job or to accomplish a task quickly is called the quality and quality also means the accuracy and the honour of the promises made by the management during the campaign period or made at the time of selling the products or services, here the Bowen and Lawler, (2010) have been supported this statement by saying that the only customer relationship management department has the capacity and policies to first of all find out the expectations of the clients this statement was supported by the Antony & Antony, (2007) by saying that the customer relationship officers in the organizations do their effective jobs as accord to their perception offer them the best quality of the services and offer them the good quality of both services and products and some of the customers always asking about the good quality, because Bowen and Lawler, (2010) have been stated that these people are called quality conscious and they do not care about the money and if the money is taken as competitive advantages in the market then the more customer will come to buy the products from the organization. People do not bother the quality due to world economic recession now a day people are striving for hand to mouth and they do not take care about the quality and they just want to overcome their problems and looking for the cheap price items for themselves and they prefer to choose the products available in the market at cheap price (Bowen and Lawler, 2010). Quality of the products and the services basically depends on the training, skills and knowledge of the employees those are dealing with the customers and those are providing solutions to the customers those can also provide the better quality of services whereas the research and development department can play effectively in bringing the quality among the products and services the Buttle, (2010) has been stated that department is responsible for making research in the target market to find out the potential clients and ask them about their needs and wants and then this department pass this information after making necessary analysis to produce or to design and develop the product in that particular shape and after designing and manufacturing the other departments sale that one in the market, the Choi and Chu, (2010) have been stated that after using that one people come to know that if there is not any difference between the offered values and quality of the product and services then the people rely on the organization otherwise people do not come to buy again and will not make trust on the organization, so it is recommended that quality always bring trust among the clients (Bitran and Hoech, 2005). According to the Antony & Antony, (2007) that the quality can be created by the CRM department because the CRM department has the employees those have the better attitude, verbal and non verbal and good gestures and communication skills and these skills and competencies are very necessary for identifying and for problem solving techniques for the clients when they are not happy and to bring happiness among them and they become the success at testimonials for the organizations (Bhote, 2011). But according to the Bowen and Lawler, (2010) that it is true that the clients can be attracted through the quality of products and services and can be retained through lower price offering but the marketing and sales force department can achieve these tasks and the organizations can identify the client’s requirements in better way by creating loyalty among the workers rather than in the clients, but Bitran and Hoech, (2005) are not satisfied with this statement and they have stated that the clients can leave the organizations at a minimal mistake whereas the employees need the job security so the organizations must play their role for the betterment of their employees and provide them the facilities and take care of them in all ways in this way the loyalty among the employees will be increases and the employees will achieve the objectives at every cost. Whereas Choi and Chu, (2010) have been stated that the product or services quality can be created and can be delivered to the clients in better way by the customer relationship officer and other staff could not treat the client as the customer relationship officer can treat them, because Dimitriades, (2012) have been stated that the customer relationship management is responsible to create the skills and competencies among the workers to handle the clients and it started from the identification of their expectations and their priorities and then offer them products and services as per their needs. According to the Farber and Wycoff, (2011) that customer relationship department has the ability to deliver the quality of services and products to the clients as per the values of the products because values are such kind of characteristics of the unique product those can attract the clients to buy them. Getty & Thompson, (2011) both have been stated that the quality and the price are the such factors those can play their role for retaining the clients and for attracting new clients form the target markets so as Gonzalez et al., (2009) have been stated that the organizations must keep in their mind that quality and the lower prices can play important role in increasing sales volume.
According to the Helgesen, (2011) that to achieve the organizational objectives the customer relationship management is responsible to design the policy in a systematic way that is start from the identifying of customer’s problems and in order to find out their main issues and best solution of their problems and issues. This statement has been supports by the Looy, (2010) he stated that it is customer relationship management responsibility to equip the workers in such a way that they can identify the client’s needs and provide them necessary solutions. Oliver, (2009) has been stated that the skilled workers have the necessary abilities and knowledge to handle clients and can create the loyalty among them, and this only can be done by the customer relationship management team because this department has the necessary requirements and update knowledge to train the people and equip them with necessary tools and authorities for creating loyalty and satisfaction among the clients (Parasuraman et al., 2010). Some scholars are not in the favour of customers relationship management and they believe in that CR department is not useful for the business organizations and the organizations can be benefited from the employees loyalty and that loyalty can be created by the business organizations if the organizations reward them with handsome payments and other facilities for which they strive and in this way the goals will be achieved by their efforts and they will create the loyalty among people and sales volume can be raised (Reichheld and Kenny, 2007). This statement was supported by the Reichheld and Sasser, (2006) by saying that the CRM departmental workers can create satisfaction among the clients and the workers can perform in better way if the organizations consider for their welfare and offer them handsome and attractive salary packages and consider their efforts and recognize them as well (Schlesinger & Heskett, 2007). According to the Su, (2010) that it is the manager’s duty to understand the requirement of the workers and then provide them necessary feedback, resources and trainings as per requirement of the market by keeping the all other factors and current situation of the market, then in this way the employees can perform in better situation, similarly the Wang et al., (2011) have been stated that now a day with the change in the environment and in the culture and in trends the people requirement is also changing day by day with speed and this is not been possible for the worker or marketing or sales department to modify the products or to handle the clients for creating loyalty and satisfaction among them this statement was supported by the Su, (2010) by saying that this is only the CRM department responsibility to watch and keep an eye on more than one angles.
ASDA Long term and Short term financial objectives (Based on the Sales Volume and growth)
Skilled workers identification needs and wants of clients, offering them quality of products and Services, communication with clients to solve their problems and taking their feedback and opinion, to identify their priorities and review the design, product, placement and promotion as per needs and wants.
Source: Author
In the above frame of reference the researcher came to know that the customer relationship management is more concerned about the client’s satisfaction and creating the long term relationship between the clients and the organization, this department is responsible for creating the happiness by identifying their needs and communicating their desires with the manufacturing department and then offering them the expected items of high quality and after that conducting the surveys to get the client’s opinion and feedback for more improvements in the quality and in the products features and attracting new clients from the targeted market and increasing the sales volume and in this way achieving organizational objectives.
The researcher has been explained the research methods that has been used by him to conduct this research and all other tools and procedures that were adopted by the researcher to conduct this research in details, more the researcher has been explained the sample size and their ages and their ganders as well and also describe the questions and the respondents have been also described. All the methods and techniques which have been adopted by the researcher have been discussed here in this section.
Main objectives of this research was to identify the role of CRM department in increasing the sales in retail sector in United Kingdom and the researcher has chose the ASDA supermarket as case study due to some causes which have been discussed in detail in the below in the sub section, the researcher has been divided the objectives into small chunks to carried out the research. Main objectives are given below for which the researcher has conducted this research.
To find out the importance and characteristics or attributes of the customer relationship management department and its benefits to the selected organization and its role in increasing the sales volume in the selected superstore in United Kingdom
To know exactly the policies and procedures and believes of the organizational management in the policies and practices `of customer relationship management at the selected organization and its expected benefits to the organization and flow of work (procedure)
To disclose the believe of customers about the customer relationship management while dealing with the clients and while handling their complaints and while giving them feedback and recording and maintaining their personal records to understand their priorities and keep in touch with them for future purpose and keep them in inform about promotions or sales to attract them or to retain them with the supermarket
To know about the issues and problems or challenges to this department while setting its objectives and while implementing those practices in exercise at the selected organization for achieving organizational objective
To know about the key successive factors those can be considered while designing the customer relationship management strategies those are very helpful in creating the loyalty, satisfaction and happiness among the clients because these factors must be known to the researcher for making positive suggestions and recommendations for the organization.
In order to understand the relationships between different factors with the customer relationship management department and its practices and collectively their link with the organizational growth and increase in the sales volume and market share.
According to the Reichheld and Sasser, (2006) that organizational expansion, increase in sales volume, increase in market share always are the result of the CRM departmental strategies.
In order to conduct the research in a fruitful way while as according to the research limitations and for valid and reliable outcomes of the research, the researcher always adopt or use effective and efficient research method that composed of different steps in sequence and leads them towards success (Bhote, 2011). According to the Getty & Thompson, (2011) that there are so qualitative and quantitative research methods and it depends on the research nature and the objectives of the research and limitations of the research that which one is most appropriate and useful for the researcher to adopt to conduct the research and to find out the objectives of the research. A research method is basically the set of rules and step wise systematically way to lead to conduct the research adopted by the researcher to find out the research objectives and goals by remaining in limits and by following code of conduct as well (Antony & Antony, 2007). The researcher will use both of the methods to find out the research objectives.
Qualitative research methods are adopted by the researchers to find out the causes and to find out the motivation similarly in order to look deeply inside the quantitative research the qualitative methods are most important because in this method the researcher first of all set the objectives as per the concerned problem and then design the hypothesis and then conduct the quantitative research to find out the reality (Helgesen, 2011). The researcher in this way select few cases and different questions are asked by the group of people and structured or semi structured interviews is also arranged by the researchers (Kandampully & Suhartanto, 2012). No any statistical data is involved in this research method the problem and the reasons and motivations are investigated and in the end the outcomes are called as understandings those can be used while making some kind of decisions because in this way conclusion could not be made by the researchers (Kim, 2010).
In this way of research the researchers play with data and measure the data and gather the data from the range of samples, first of all the researcher select the population and then select the sample size on the basis of the different characteristics of the individuals (Looy, 2010). Different techniques are used by the researchers to find out the views and opinions of the samples and then the gathered data is always used by the researchers to make statistical analysis and in different forms the statistical data is presented by the researchers to make some kind of conclusions and recommendations (Oliver, 2009). The researcher used the secondary data as backbone and as reference to support their conclusions and then made recommendations. Te outcome of the quantitative data is used by the companies and businessmen to take advantages. Surveys, questionnaires and interviews are used called structured methods to find out the primary data (Parasuraman et al., 2010).
In order to achieve rich data from the research and valid data the researcher must chose case study tool to conduct the research (Bowen and Lawler, 2010). In order to save the time and the other resources the best method to conduct the valid and reliable research is the selection of a case study and the researcher when they have limitations with reference to the time and financial then the best way is to conduct the research by using case study (Antony & Antony, 2007). In order to achieve the valid results from the research especially when the researcher has no research conducting experience and in order to save the time and money the researchers must use case study as tool to conduct the research which is effective and efficient way (Bhote, 2011). In this way the data gathered is of high validity because a large number of participants take part in research and different people gave their views and opinions that make it sure the validity and reliability of the data (Farber and Wycoff, 2011). The researcher has been selected the ASDA supermarket as case study tool to conduct this research and to find out the facts and figures and the main reason is that the customer relationship management at the selected organization is working effectively and the organization has established this department as a spinal cord of the organization.
The researcher will collect the secondary and primary data by valid and reliable means, and in this way the researcher will use secondary data as a background to support the theories and to find out the conclusions. The researcher will collect primary and secondary data in this way that the validity and reliability of data remains good, the organizations rely on validity of data. The researcher will collect the data by using following sources.
In this research the researcher will choose the samples by using a random technique and will chose the key person in the selected superstore and will conduct interviews and then questionnaires will be distributed among the samples to find out the real facts and figures. The researcher will design the questionnaire by using special skills and techniques and by considering the main aims and objectives of this research and will include close ended, open ended, bipolar and rating questions in the questionnaires and simple questions will be asked from the management to find out the importance and the duties and responsibilities of the customer relationship management department in the selected organization.
3.5.1.1 Questionnaires
To gather the primary data from the samples or respondents the researcher will distribute the questionnaires among the selected clients and will select the people on random basis. According to the Antony & Antony, (2007) that according to the nature and the main objectives of the research the researcher must use the close ended and rating questions in the questionnaires and the questionnaires must be designed as per the research objectives and the researcher must keep in mind the 7 c’s of communication because the questions must be easy and understandable for the respondents. Similarly the Bowen and Lawler, (2010) has been stated that questionnaires is a valid and reliable technique to get valid and to the point information from the respondents and in this way the researchers can obtained their main aims and objectives in easy and systematic way. According to the Gonzalez et al., (2009) that the questionnaires are the best techniques to gather primary valid and reliable data from the samples and in this way the researchers can get maximum advantage of validity and reliability of the data because large number of people respond to the questionnaires and their biasness chances are low and opinions and views make the data validity and reliability. Gundersen et al., (2010) have been stated that the researchers must include 20 questions of different kinds like close ended and open ended questions rating questions and other questions to get the appropriate results. In order to achieve valid results and to conduct the research in well manners and to save the cost and other resources the researchers must use the questionnaires to conduct the research (Helgesen, 2011).
3.5.1.2 Interviews
The researchers must conduct the structured and unstructured interviews with the key person like managers, other staff members and supervisors to find out the actual nature of the problem and to get the primary data (Kandampully & Suhartanto, 2012). It is very important for the researchers to conduct the interviews to gather the primary data with the staff members because in this way the researchers will gather valid data (Kim, 2010). According to the Looy, (2010) that the effective interviews are not easy because it is very difficult to collect primary data from the interviews because everyone has its own views and opinions and the researchers needs more professional skills and competencies to design the interviews and to design the questions to find out the real fact and figures from the respondents. For conducting an interview the researchers have to follow the rules to get valid and appropriate results, according to the Reichheld and Sasser, (2006) that the researchers must start the interviews by taking permission from the organizational management and then inform the key person and then negotiate the purpose of the interview and set the time of interview, before conducting the interview the researchers must have the questionnaires and note the answers on the paper in written form (Oliver, 2009). First of all the researchers must designed the questions and then after recording the answers they must make analysis and for making conclusions the researcher must use those answers answers by using statistical techniques and procedures. Some scholars are not in the favour of interviews like Parasuraman et al., (2010) have been stated that it is not an easy task to gather information from the interview because it is also very hard to assess the responsible person in an organization to conduct interview from that particular person and to get proper answers. But some scholars are in the favour of interview techniques like Reichheld and Kenny, (2007) they have been stated that interviews are the best technique to gather valid primary data from the management and the researchers must include more than five members because in this way a variety of answers will be collected and the researcher can select the most appropriate and they have chance to get real facts and figures. There are less chances of gathering wrong information from the team members of customer relationship management because these people have all kind of information related with their roles and responsibilities (Schlesinger & Heskett, 2007).
The researcher can gather the secondary data and valid and reliable secondary data by using electronic sources because there are some advantages of using electronic sources first of all easily available and secondly the cheaper as compared to other sources (Gundersen et al., 2010). The researchers must collect the secondary data maximum 10 years old because in this way they can gather fresh researches and valid data can be obtained in this way (Helgesen, 2011). The researcher has used the ASDA website, electronic source like books, journals and articles and magazines and also read out the books, journals and magazines related with the importance of customer relationship management and on the sales volume and on the topic of role of CRM department in enhancing the sales and growth of an organization.
It is very important for the researchers to identify the samples before to start the research for gathering primary data (Kandampully & Suhartanto, 2012). While choosing the sample size and the respondents the researchers must use both techniques like qualitative and quantitative and similarly for valid and reliable results they must include males and females as respondents because both come to supermarkets for shopping and both are social responsible (Kim, 2010). Some researchers Reichheld and Kenny, (2007) have been stated that the maximum age should not be more than 60 years and minimum must not be less than 19 years old to gat valid and reliable primary data from the respondents. According to the Parasuraman et al., (2010) that there are three main different methods to select the sample size firs of all is the random technique, because in this way all the population members have the same chance to include in the sample and secondly there are so many ways to get the random numbers and this is easy and simple way to select the samples. There is no bias in the result when the researchers use this technique and this is most favourite technique when there is large number of population. So the researcher has decided to select the samples by using random method. The researcher will select 100 clients as sample and will distribute the questionnaires among them.
Sr. #
Male
Female
Total
1
50
–
50
2
–
50
50
Total
50
50
100
Some scholars like Gundersen et al., (2010) have been stated that the researchers must distribute the questionnaires among the respondents and their age must be in between 19 to 60 and both men and women must be included in order to get valid primary data.
ASDA is the basically British supermarket chain in United Kingdom, which is owned by the American people. ASDA supermarket is the chain that is providing and offering its services in retail food, merchandising of cloths, stationary, kitchen stuff, backer stuff, toys, and toiletry stuff, in mobile network and in the financial sector as well. ASDA has the basically subsidiary of the Wal-Mart company, and the Wall-Mart is the largest organization in the World. Customer relationship management department is working from the very first day at the ASDA and this department is playing its effective role in the success of organization. At the ASDA the customer relationship management department is responsible for creating loyalty and happiness among the clients at its best level and all the CRM departmental employees are highly qualifies and they have devoted themselves for the ASDA team and they have agreed to achieve organizational aims and objectives in efficient way and the departmental management has been delegated necessary authorities to them to solve client’s problem at their first priority, this department has the client’s data base as well and through internet the CRM department team remains always in contact with the clients and get their feedback and their opinion through different and time to time online surveys and by asking them trough telephone calls and through postages as well. The researcher has been selected the samples by using random technique and all their attributes and age range and number of respondents are given below in the following table.
As the researcher has been designed the questions for the management of the selected superstore to disclose the real facts and figures and the researcher has designed all the questions by keeping the aims and objectives of the research and semi structure interviews were conducted by the researcher and all those questions with their answers are given below.
Q1: What are the main responsibilities of customer relationship management at ASDA?
Answer:
The customer relationship management is responsible for the following tasks.
Attract new clients from the target market
Building strong and profitable relations with the potential clients
Offering them the best solution of their problems in efficient way
To retain the old client by creating happiness, satisfaction and loyalty among them and by offering the values in the products and offering them high quality of products and services
To equip the skilled workers with latest technology and procedures
To develop the effective strategies and policies for the business operations effectively implementing them in the business operations
To recognize the client’s priorities and requirements and then to pass that information to the manufacturing department for delivering them to the clients and then taking feedback from them to review and amending them for good feedback and for creating loyalty among clients.
Customer relationship management department is responsible for finding out the challenges to this department and finding out their best solution.
Q2: What are the main problems and challenges to the customer relationship management department?
Answer:
The respondents have been responded that following are the problems faced by the CRM department at ASDA supermarket.
As due to rapid change in the technology and advancement in the procedures and technologies that change the client’s needs and requirement, it is a big problem for the CRM representative to understand the client’s needs and wants.
As there is high competition in the market so it needs more intelligence to find out competitor’s strategies and policies to compete with them.
In order t increase the sales volume/ revenue generation is not easy
To communicate with the other department while remaining in the allocated resources it is not easy to get their requirement and to respond them in time.
To create the satisfaction and loyalty among the workers and to assess their requirements is not an easy task.
Allocation of the resources to the workers at the right time and to create effective strategies linked with the strategies is not an easy task for the CRM department and due to ineffective strategies of online purchasing and handling client’s complaints it is not possible to reduce the time to make compensations and to offer them best solution.
Q3: Is there any relationship exist between sales volume and the customer relationship management strategies and policies?
Answer:
Yes there is a deep and direct and indirect relationship between the sales volume and the customer relationship management policies and its practices because the customers are always deal by the CRM representatives and the customer relationship management interact with them just to find out their expectations and their expectations can be judged by having the very good and effective skills and competencies and after that if the products are available then delivering them and taking their feedback for more improvements and after that if the required items are not available then passing those information to the concerned department for review and amending those products. In this way when the client’s will receive the products and services as per their expectations then it will create happiness among them, in this way there are two benefits, first of all the happy clients or satisfied clients will tell the others that they are happy and then after that it will increase the frequency of the visits of the clients and in this way the sales volume will be increased. So it is very clear that the customer relationship management department has impact on the sales volume due to its efforts and its responsibilities and in this way the organization will be benefited. The customer relationship management is playing its effective and efficient role in managing contacts the clients, and updating their feedback and maintaining their contacts and their views and opinion. There is a close relationship between the sales and the customer relationship management department. The customer relationship management find out the competitive advantages for the organization and set the strategies and policies as per their circumstances to achieve the competitive advantages for increasing the sales and for earning maximum profitability.
Q4: What is flow work of Customer relationship management department at ASDA
Answer:
The respondents have been responded and the researcher have been discussed the work flow of CRM department at the ASDA and the researcher has been represent that work flow in the pictorial form which is given below.
Source: Author
In the above diagram the researcher has been tried to show the flow of the work as showed in the above diagram that at the ASDA the main responsibility of the customer relationship management is research and development and then as per gathered data pass that specific information to the relevant department and then after that it is the manufacturing and design department to manufacture that product and services as per client’s requirements. In order to assess their requirement the customer relationship management department needs high skills and competencies to find out their requirements and in order to create loyalty to increase the volume of sales and to build the strong relationship with clients for earning more profit that is the main and final objectives of the organization. The customer relationship management department also remained the responsible for the happiness of the clients by offering them the suitable services and product with the expected quality and price, and the customer relationship management must gather and record the client’s information and create data base for them and with the passage of time assess their priorities and design the effective marketing strategies and policies to achieve organizational objectives.
Q5: Do you believe in the effective and important role of customer relationship management for the growth and in achieving organizational objectives?
Answer:
All the respondents have been replied that they have believe in the customer relationship management department’s strategies and policies because they have believe in the operations and effectiveness of customer relationship management department’s role for achieving organizational objectives in efficiently and effectively. There are so many reasons that the customer relationship management is the most effective department and is playing its role for the growth of the organization and those reasons are as follows.
The customer relationship management department supervisors are responsible for creating and making interactions with the clients directly and when the client’s needs their attention or they need their help they need their attention to solve their problem and help them the clients can contact with them directly without any hesitation and as the customer relationship management employees have skills and competencies to understand the client’s problems and their requirements they help them and respond them quickly just to create loyalty, happiness and satisfaction among them. The customer relationship management is responsible for the handling of problems and complaints efficiently by offering them the best solution at priority because if the clients are happy then they will bring new clients from the target market. The customer relationship management is also responsible to create loyalty among the employees because the CRM manager and higher management has the believe in that the loyal employees can also play their effective role in achieving organization’s objectives because the loyal employees can play their role effectively because the employees dedicate themselves for organizational objectives positively by taking into consideration their welfare and rewards and incentive programs. Customer relationship management is responsible for assessing the resources and allocating those resources to the concerned and right people and control the resource wastage. Customer relationship management first of all assess the required job descriptions and roles and required skills and competencies for achieving agreed objectives and then design the development plans for the employees and provide them the necessary and required skills and competencies and set the standards to measure their performance and time to time measure their performance for efficiency and gave them proper feedback as well. Then the customer relationship management review the skills and trainings and with the change in technology update the skilled workers information, knowledge and improve their competencies for achieving organizational agreed objectives. The customer relationship management department also make necessary and important decisions and involve all other relevant workers in the process of decision making for creating loyalty among them. Before designing and developing policies and strategies for the business organization the customer relationship department assess those factors those contribute their role in creating happiness, loyalty and satisfaction among the clients and then by considering those factors into their minds they design the effective and efficient strategies and policies for achieving organizational objectives.
The researcher has designed the following question to gather the primary data from the respondents and as in the previous chapter the researcher has been described in details about the samples and their attributes in detail. The researcher has been designed all the questions by keeping in mind all the factors and the main aims and objectives of the research and also by keeping the principles of communications and 7 c’s of the marketing communication and according to the available resources for achieving organizational objectives. Each question has its own purpose and reason that describe the validity and reliability and the researcher has been linked the theories with the questions. The researcher has been used the pie and bar charts to show the relevant relationships among the different variables and factors and their connection in creating loyalty and increasing sales volume and in building relationship with the clients by the customer relationship management. All the questions those were included in the questionnaire are given as follows.
Q: What is the main purpose of your visit at ASDA?
Response:
Reasons
For Shopping
Visits
Some other reasons
Total
Yes
90
10
0
100
No
0
00
Total
90
10
00
100
The researcher has made this question to know exactly the purpose of the respondents at ASDA. And the researcher came to know about the main purpose of the visit of client is the shopping and some of people come to ASDA for visit might be with their friends or family members and no anybody come for the some other reasons. According to the scholars Antony & Antony, (2007) that when there are clients there is business and if there is no client means there is no business.
As in the above both charts in has been shown that the maximum number of people about 90% come to ASDA for shopping purpose whereas 0% of the people come for other reasons. So from this response the researcher come to know that 90% of the people just come for the shopping which is a huge number of people and the visitors may just come with their family members or with their friends, whereas the 0% of the people come for other reasons which includes to check the price, for killing their time and for jobs or may be for looking the offers. 90% is large amount of people and if the customer relationship management can create the loyalty among these people then in this way the organizational sales volume can be boost up. And the remaining 10% those come their family members and friends are also come for the shopping purpose, so one thing is clear here that majority come for shopping and this is an opportunity for the ASDA CRM department to provide them necessary requirements at their best level.
Q: Are you regular customer at ASDA or this is your first visit?
Answer:
Answer
Yes
No
Total
Female
45
5
50
Male
44
6
50
Total
89
11
100
The researcher has designed this question to understand that the loyalty or satisfaction of the clients and want to understand the people that either they are first time here or they are regular clients, because there are so many factors those can play their role in bringing people here like their residences, the opening or closing time of ASDA and the most appropriate for them those come in evening time or in weekend only so it is very important to ask them about their reasons to visit ASDA and the result shows in the following pie and bar charts. People buy from the superstore for buying their general purpose items and they also buy the services so it is important that the products and services must be in their ease of access (Bhote, 2011).
The chart shows that the 89% of the people come to ASDA for shopping on regular basis and only 11% people are here for their first time. 89% means that these people are loyal or there may be some other factors that are why these people are here and rest of them may be moved in this area and ASDA is more convenient for them, in the next question the researcher has asked them about the motivational factors.
Q: What are the motivational factors that you come at ASDA for shopping?
Please tick the appropriate factor
Answer:
Motivational Factors
Female
Male
Total
Happy and satisfaction
13
15
28
Due to reference
Loyal
18
14
32
Convenient
Products quality
15
19
34
Near their residents
4
2
6
Total
50
50
100
The researcher has made that above question in order to understand the motivational factors and main reasons of their shopping from the ASDA supermarket. Some scholars have been stated that customer relationship management can create loyalty by offering low price but high quality of products and services to the clients and in this way they can increase the market share (Buttle, 2010). Because this is very important for the researcher to identify those factors and reasons that attract the clients towards the ASDA supermarket and to find out the other factors those are motivational factors so that ASDA must consider them while designing the policies and strategies for the clients. People always go again to buy the products and services to overcome their problems and if they become happy they tell others and if the products did not satisfy them they become angry and next time they will find out the substitute (Bowen and Lawler, 2010). Whereas Bitran and Hoech, (2005) have been stated that people buy from the superstore due to quality of product and lower prices, some people are price and some are quality conscious, the quality conscious never think about the price but the price conscious always concerned about the price and they have the saving habit and they do not care about the quality because they know that the high quality products and services always cost them at high prices.
From the above chart is has been cleared that the maximum people buy from the ASDA due to the loyalty and their ratio is the 32%, this percentage shows that the people among the 90% those come for shopping at ASDA and among them only 32% are loyal with the ASDA it means that customer relationship management at ASDA need more hard work because the 32% not a good percentage. And to maximize this ratio the customer relationship management need more improvements in its policies and strategies. 34% of the people buy from the superstore due to its high quality and these people are quality conscious and they do not bother the prices and they just buy due to quality of the products and quality always come because of the values and honouring the promises with the clients. There are only 6% people those come for shopping because they are living near the ASDA and they do not have much time to go other departments and ASDA location is convenient to them.
Q: Are you happy with the policies and strategies of the ASDA superstore?
Answer:
Answers
Females
Males
Total
Yes
38
30
68
No
12
20
32
Total
50
50
100
According to the Farber and Wycoff, (2011) that the effective strategies and policies always bring happiness among the clients and the employees and this happiness always leads them towards loyalty and loyalty is the key of success for the organizations for both clients and employees. As the tables shows that majority of the people have been respond that they are happy and the minority of the respondents replied that they are not happy, here one thing is very important that the minority of the people are not negligible and their views and opinions must be strictly consider by the customer relationship management for positive response.
From the above diagrams (bar chart and pie chart) the researcher came to know that the 68% of the people like the CRM policies and strategies because they are happy and those strategies and policies are in their favour, whereas the rest of the people are not happy and they do not like the CRM recent strategies and policies and 32% of the respondents in not negligible and the management must consider them and must review the policies for creating strong and trusty relationship with them.
Q: What do you think about the CRM role in organizational success?
Answer:
Answer
Female
Male
Total
Yes
44
47
91
No
06
03
09
Total
50
50
100
As the above table shows that the majority of the people have believe in the role of customer relationship management for the success of organization. The people have the awareness of customer relationship management department and its effectiveness and they know that this department is for the mutual benefits of organization and customers (Gonzalez et al., 2009).
69% of the respondents have responded that the CRM department can play its role effectively in obtaining organizational objectives, whereas the remaining 31% respondents have not believed in the CRM efforts. This response showed that the 31% of the people did not have knowledge about the CRM department and its effectiveness in the super stores. The main purpose of this question was to know about the importance and effectiveness of this department in the superstores. The customer relationship management department is responsible for tackling customer’s problems and providing them necessary solution as per demands and create the loyalty among the customers for obtaining organizational objectives, and it is also CRM department to convey their importance message to the customers for its effectiveness (Gundersen et al., 2008).
Q: Did customer relationship management representative ever have asked you about your expectations regarding quality and price?
Respondents
Yes
No
Total
Male
46
4
50
Female
48
2
50
Total
94
6
100
Answer:
Most of the respondents responded that yes the CRM representative asked them about their expectations regarding quality of products and quality of services and prices. Some customers are price conscious and some quality conscious, this question was designed by the researcher to know about the interest of customers towards the quality of products and services and the result showed that a significant percentage 92% of the customers are quality conscious and remaining may be price conscious. According to Bowen and Lawler, (2009) most of the customers prefer the quality and then price. Here is the same situation that people first check the quality and then price and make their decision on the basis of quality and price.
The charts showed that the 94% of the people have believe in the effectiveness and positive role of customer relationship management department and only 6% do not have believe in its effectiveness. It is good that majority of the people have believes in the CRM departmental effectiveness and in this way the CRM department can achieve its objectives.
Q: Are you registered at ASDA website and did you ever receive the pamphlets and email for promotions and advertisement?
Answer:
Answer
Female
Male
Total
Yes
42
48
90
No
8
2
10
Total
50
50
100
The above table shows that the majority of the people are registered with the website and they have received the advertisement and promotional emails from the customer relationship management department as well. The organizations must use effective media channels for products and offer’s promotions (Bhote, 2011). From this question the researcher came to know that most of the people use internet and they are receiving promotional emails and the CRM department can also use maximum advantage of this opportunity. By using the latest and advance technology the organization can reduce the cost effectively and the quality of the products and services and in this way the organizations can achieve the competitive advantages (Bowen and Lawler, 2010).
It has been cleared that 90% of the people are receiving the promotional emails and they are registered with the ASDA online as well and in this way the CRM department can take maximum advantage of this opportunity the remaining 10% of the respondents must be taken into consideration and the organization must register them with the online services in this way they both can be benefited.
Q: Which one the most suitable media for marketing?
Answer:
Answer
Internet
Radio
Door to door campaign
Television
Local Newspapers
Total
Female
27
3
5
8
7
50
Male
25
2
3
11
9
50
Total
52
5
8
19
16
100
The researcher wants to know the effective media channel to start the marketing campaigns for creating awareness among the clients. It is very necessary for the organizations to deliver the marketing message to the potential customers through effective media channels (Bitran and Hoech, 2005).
As in the above pie chart and in the bar chart it is clear that the majority of the people 52% like the internet whereas 19% of the respondents respond that television is the best and effective media channel to advertise the marketing messages, whereas 16% of the respondents have been responded that news papers are effective way for advertisement, 8% responded that door to door campaign is the best way and only 5% have been responded that radio is the effective way to advertise the marketing campaign.
Q: Do you believe in customer relationship management representative’s efforts for dealing with you while solving your problems?
Answer:
Answer
Yes
No
Total
Female
39
11
50
Male
41
9
50
Total
80
20
100
The CRM department representatives can create long term and strong relationship among the clients through their skills and competencies (Choi and Chu, 2010). The researcher came to know that majority of the respondents responded that they believe in the CRM efforts only 20 people do not believe in CRM efforts.
The above charts shows that the 80% of the people are in the favour of the CRM departmental efforts and this is because of their past experience and only 20% of the people do not have believe in the CRM departmental efforts. The 80% is the majority and very clear majority that have past experience with the attitude and dealing of CRM department and that’s why they have responded that CRM representative are effective and their efforts are positive, the 20% is not negligible and their experience is not good.
Q: Do you believe that lower price and high quality will bring satisfaction and CRM department can offer?
Answer:
Answers
Female
Male
Total
Yes
50
0
50
No
50
0
50
Total
100
0
100
As the scholars have been stated that CRM department can also consider the lower prices and higher quality to create loyalty and satisfaction among the clients for achieving organizational objectives (Everett, 2007). The table and charts have been shown that 100% of the respondents have been stated that low price and high quality always bring satisfaction among them and no one has responded against the question. It means that customer relationship management can create loyalty satisfaction among clients by offering them low price products with high quality of products. And while making strategies and policies must include these factors.
Q: Do you believe that CRM employees are playing their role in identifying your expectations and their attitude and behaviour is good?
Answer:
Answer
Female
Male
Total
Yes
35
15
50
No
42
8
50
Total
77
23
100
The researcher found out that the majority of the people responded that CRM department at ASDA is playing its role effectively in identifying their expectations and workers attitude and behaviour are good and they are satisfied.
The 23% respondents have been responded that they are not happy with the CRM departmental worker’s attitude and they do not believe that CRM department is not playing its role in identifying their expectations. The majority like 77% have been responded that the CRM department is successfully identifying their expectations and worker’s attitude and behaviour is so nice and they are happy.
Q: Do you believe that workers are continuously updated your database for identifying your priorities and remain in touch with you and collect your feedback and your suggestions and opinions to redesign the products and improving the products and services and this create your satisfaction and loyalty?
Answer
Female
Male
Total
Yes
42
47
89
No
8
3
11
Total
50
50
100
The researcher found that 89% of the respondents have believe in the CRM workers are updating their data base and identifying their priorities and taking properly their feedback and their views and opinions and passing this information to the manufacturing department to improve the weaknesses and redesigning the products as per their requirements for creating loyalty and satisfaction among them. Only 11% of the people do not have believe in the CRM workers abilities and their this efforts and they responded that they do not believe in that they are not putting their efforts for identifying their needs and wants and do not taken their opinion and feedback to redesign products as per their needs and wants. 11% is not negligible ratio.
Q: Tick the appropriate factors those can play their role in creating satisfaction and loyalty for increasing market share and sales volume?
Answer:
Factors
Female
Male
Total
Quality of Products
35
48
83
Response
45
47
92
Lower Prices
50
50
100
Best solution
46
48
94
Product range
48
48
96
Ingredients and Promises
49
49
98
Customer relationship management must consider the factors that can create loyalty and satisfaction and happiness among their clients to increase the sales volume those can be include quality, lower price, best solution, product full range under one roof, promises and ingredients (Gonzalez et al., 2009). The 83% respondents have been responded that quality is count as a key successive factor in creating happiness and loyalty among the clients, 92% are agree that quick response can be used as key successive factor in creating loyalty and satisfaction among them, similarly 100% respondents responded that lower price can create happiness and satisfaction and loyalty among them and 94% best solution, 96% vote to the product full range and 98% have responded that promises and ingredients also those factors those can create happiness, loyalty and satisfaction among them and in this way the organizations can increase the sales volume.
Q: Do you believe that ASDA is offering lower prices, better quality, best solutions, range of products, honouring promises and quick response in creating loyalty and satisfaction?
Answer:
Answer
Female
Male
Total
Yes
46
45
91
No
4
5
9
Total
50
50
100
91% of the respondents have been responded that the organization is offering them all the necessary requirements to create loyalty and satisfaction among them only 9% which is a minor ratio these people are not satisfied with the above given statement and they do not believe in that organization is not offering them the quality of products, quick response, best solution, is not fulfilling its promises and range of products to create loyalty and happiness and satisfaction among them.
Q: Do you believe that happy and angry clients both make references for the organizations?
Answer:
Answer
Female
Male
Total
Yes
48
44
92
No
2
6
8
50
50
100
It is human being nature that they share their experiences and clients also share their satisfaction and good and bad experience with family members, colleagues and friends, in this way happy clients always recommend to buy products and angry people also share their bad experiences with others (Gundersen et al., 2010). So the 92% of the respondents have responded that yes they share their experiences with others, only 8% have responded that they do not share their experiences because these people do not like to mix with others and they do not like to share their personals with others and they want to live alone.
Q: Have you made quality and price comparisons among the same products from different superstores?
Answer:
Answer
Female
Males
Total
Yes
45
5
50
No
48
2
50
Total
93
7
100
Some people are price and some are quality conscious and they make comparisons before buying products (Helgesen, 2011). In this research the 93% responded that they made comparisons and off curse they will prefer to buy lower prices products and only 7% do not care about price and quality comparisons.
Q: Have you ever registered complaint to customer relationship management about product and did they solve your problem?
Answer:
Answer
Female
Male
Total
Yes
43
7
50
No
41
9
50
Total
84
16
80
The customer relationship management has the skilled workers and competent employees those can handle their problems and offer them best solutions for creating loyalty and satisfaction among them (Kandampully & Suhartanto, 2012). The charts showed that 84% of the people responded that they have registered the complaints about faulty or inappropriate products and CRM department has responded them and solve their problems. Remaining 16% responded that they never registered the complaints it means that they might be never receive the faulty or inappropriate products or they do not know the procedure to register the complaints or they do not have time to register. But they also come to buy from the ASDA supermarket because they are happy.
Q: Do you believe that following factors should be considered by the CM department in creating loyalty and happiness for increasing sales volume and did the ASDA CRM team is also considering them for increasing sales volume?
Answer:
Variables
Answer
Behaviour
90
Low cost
100
Size of Product
95
Client’s feedback
90
High quality
100
Feedback
90
Solution
90
Availability
100
Attitude
95
Quickness
100
Promises
100
Ease of access
90
Characteristics
100
Expectation’s identification
100
Compensation
90
Offers
90
Guarantees and warrantees
90
The respondents have been responded that all the above stated factors or variables are very important for them and majority of the people like 100% have been responded that quickness, promises, lower cost and high quality are the factors those can be used by the customer relationship management to create loyalty and satisfaction among the clients. Whereas 95% of the respondents have been responded that size and attitude must be considered by the customer relationship management to create loyalty and satisfaction among the clients for increasing sales volume and achieving organizational objectives, 90% of the respondents have been replied that customer relationship management employee’s behaviour, client’s feedback, best solution, compensations, offers, warranty and guarantees and ease of access also play their role in creating loyalty and satisfaction among the clients for increasing sales volume.
The researcher has been discussed in details the conclusions and the positive recommendations for the selected organization in detail and the researcher has been discussed the associated constraints and limitations and has been clearly defined the ways to reduce them, all the details are given as under.
The researcher has the time and budget shortage and the researcher has spent the money from own sources and other resources were provided by the ASDA management and by selecting the one case study and by choosing the questionnaires and interviews techniques times was saved and for more validity and reliability the researcher has followed the ethical considerations. The researcher has made these conclusions as per the respondents responses and the researcher has been used the secondary data as a support. First of all the management at the superstore have been disclosed so many facts and realities for the customer relationship management and they have been told that customer relationship management has the positive impact on all the objectives positively, this department can play its role and is playing its role very positively in increasing organizational sales and in sustaining growth, but the speed is slow just because of the strategies and policies. They have responded that the customer relationship management department is facing a lot of issues and problems while designing and implementing its strategies in the organizations and main cause is the resource allocation which means that the allocated budget is low. For more improvements in the efficiency of the customer relationship management the higher management must allocate them the resources as per their needs and wants because allocation of resources at the right time has importance (Choi and Chu, 2010). It has been clear from the very first question that the 90% which shows that the maximum number of people come for shopping purpose and remaining 10% people come with family members and with friends. It means that the majority of the people come for buying products which also shows their interest and there will be some reasons, whereas the 10% showed that they come with family member’s means that they also come for shopping. The researcher came to know that the maximum clients are regular customers and few of them are new clients. the researcher has made the conclusion that the 32% of the people are loyal with the superstore and 28% of the people are satisfied and 34% are the client those buy the products and services due to high quality, these are the people those do not care about the prices but the people those are satisfied they are conscious about the price as well. So the opportunity is there and the customer relationship management has the opportunity in this way. The organizations can consider the quality and low price as key successive factors in creating loyalty among the clients and in this way loyalty will lead the clients towards more buying and hence the sales volume will be increased (Dimitriades, 2012). Majority of the people are happy with the recent policies and strategies but the other people those are not happy and their percentage is 32% which is a great percentage and the CRM department could not neglect them. Some scholars have been stated that the strategies and policies are the set of rules and regulations followed by the organizations to handle and behave and interact with the clients (Flyvbjerg, 2011). Majority of the people have believes in the CRM department only 6% do not have believe in CRM departmental effectiveness. The CRM department must consider the promotion of CRM departmental effectiveness among the clients because in this way people will contact with CRM department to solve their problems and to register their complaints. Most of the clients have been responded that internet is the effective way to advertise the messages regarding promotions and offers.
Majority of the respondents have been responded that they have believe in CRM positive efforts and CM can play role in creating loyalty and happiness among them only 20% of the people are not agree with the CRM department efforts positively. The researcher has been concluded that majority 100% of the clients wants products and services at lower prices but at high quality.
Majority of the people are happy with CRM department worker’s attitude and behaviours and they are satisfied with by the CRM role in identifying in their expectations positively. CRM first identify client’s expectations and then can offer them expected products to create loyalty that will leads them towards more sales (Flyvbjerg, 2011). Most of the respondents have believe that CRM is taking feedback and their opinions for improving and redesigning the products to create loyalty and satisfaction for increasing sales volume. All the clients wants best quality, lower price, best solution of their problems, full range of products under one roof, promises and ingredients are those factors those can create happiness, loyalty and satisfaction among them. Majority of the people made comparisons of same products from the different providers about price and quality and prefer to buy lower price and high quality of products.
1. The customer relationship management at ASDA must review its policies and strategies and must increase the target market and must reduce the risk factor by producing and offering products range and must offer the products at lower price as compared to its competitors.
2. Customer relationship management can also attract the visitors towards buying products but organizational management must review the budget policy and must allocate more budgets to the customer relationship management.
3. The customer relationship management need more resources and they need advance technology and procedures to make their strategies and policies more effective in attaining organizational objectives. Proper and timely allocated resources are necessary for expected outcomes (Gonzalez et al., 2009).
4. CRM department need strategies and policies to attract the visitors and must handle them and can advertise and marketing for those people in effective way, there must be price comparisons for them, by handing over them the pamphlets and by taking their details and creating their database and sending them the offers and value added offers as well to grab such people in this way the market share can be increased. These are the basically effective policies of an organization to attract customer and to create happiness among them (Getty & Thompson, 2011).
5. Customer relationship management department should also pay its full attention towards the quality and the price as well because if the department pay its attention on the low price as compared to the competitors then maximum share can be increased that will automatically increase the sales volume and the organization will be in position to earn more money.
6. The customer relationship management needs to adopt latest technology and follow the latest procedures to increase the quality of products and to reduce the cost.
The higher management must review the customer relationship management strategies and policies and must amend them as per the client’s views and opinions and the organization can get the client’s views and their opinions by conducting online or offline surveys and by taking their feedback for achieving organizational objectives.
7. It is very important that people have the awareness about the CRM department and in this way they can create happiness and loyalty among the customers (Antony & Antony, 2007). So the CRM department must pay its attention on creating awareness among the clients because it is first step towards the success.
8. The CRM department must adopt internet and website and must adopt the online media channel for marketing and other media channels as well to promote the products and offers and discounts and sales for attracting new clients from the market. Due to effective media channels the organizations can attract new markets and can retain the old clients as well and in both ways the sales volume will be increased (Buttle, 2010).
9. The CRM department must pay the attention on the skills and training and must review the resources and authorities and behaviour of the representatives to create loyalty, happiness’s by providing them the suitable solutions of their problems and CRM department must measure the worker’s performance and must review their personal development plans and update their knowledge and equip them with latest skills and competencies. It is necessary for the business organizations to measure employee’s performance and gave them feedback and provides them trainings and updates their knowledge for positive output (Dimitriades, 2012). The customer relationship management must consider low price and high quality while designing and offering the products and services as compared to its competitors because 100% clients need low price bust high quality of products and services. Farber and Wycoff, (2011) have been stated that organizations can increase sales volume by offering low price and at high quality products in the market.
10. The CRM department must review the strategy and policy and must pay attention on taking client’s feedback and updating their data base that will be helpful for identifying their expectation and offering them suitable products to create loyalty and satisfaction to increase market share and sales volume. Identification of client’s priorities and their feedback can be useful in creating loyalty and satisfaction among them and for increasing sales volume (Getty & Thompson, 2011).
The researcher has disclosed so many areas those need to be taken by the other researchers into their considerations and they must conduct research on them for the better outcomes and in this way the business organizations can gain maximum benefits from them which involves the carbon emission impact on CRM activities.
The concept of Customer Loyalty has received much consideration and attention from both academics and practitioners in different industries. It is always costly to attract new customers, so the managers always try to find ways to retain their current customers and concentrate on different factors which enhances the customer loyalty among the customers of the organizations. In increasingly competitive markets, being able to build consumer loyalty is seen as the key factor in winning market share and developing a sustainable competitive advantage. And banking industry is no exception as it has high interaction with the customers, so managers must understand the factors which influence the loyalty of the customers towards their respective banks.
So this research attempts to find the factors of customer loyalty and their relationships with banking industry in one of the developing countries i.e. Pakistan. Then analyzing the relationship among different factors a model for the customer loyalty is proposed at the end of the research.
In order to do this, a questionnaire is designed and validated, then based on the data which were gained from the 316 respondents’ answers to the designed questionnaire, the analysis is done and the results and the relations among the factors are explained.
Tangible Perceived Quality, Intangible Perceived Quality, Satisfaction, Trust, Switching Cost, Habit and Choosing are the factors which influence the Loyalty of the customers. Theses factors also influence each other as well. The relationships of different factors with each other are also studied and the SPSS software is used to analyze the data gathered from the respondents.
Introduction
This chapter of the thesis will provide the reader with an insight to the research area. First, a brief discussion of the background will be presented that will be followed by the problem discussion. The problem discussion ends with the overall purpose of the study and specific research questions. The background of this research starts with customer loyalty and the factors which influences the customer loyalty, such as satisfaction, perceived quality, switching cost, trust, choosing, commitment and habit. Afterward, Impact of these factors on customer loyalty in Pakistani banks and a model will be proposed. The respondents will be the customers of Allied Bank Limited, Habib Bank Limited and National Bank of Pakistan.
1.1 Background
Customer loyalty is a topic of grave interest for both academia and practice and a base of loyal customers is found to be very beneficial and advantageous for the firms. Loyal customers are those who stick with their bank over the long term, even if they’re not getting the best price. They tend to trans-act and invest more over time as their income grows, or as they devote an increasingly larger “share of wallet” to a bank they feel good about. They are also those customers who will tell their family, friends and business associates about their bank.( Forrester, June 2004). Customer disloyalty or the ending of relationship has also gained much importance in the last decade. During the past thirty years the economic conditions have been changing due to economic stagnation, higher inflation and increased unemployment. Many markets have settled into maturity. It could be said that the actor who nowadays dominates the market is the customer because focus has moved from the seller to the customer. The trend from transaction marketing towards relationship marketing has been significant in recent years (Kotler et al, 1996). The main point of transaction marketing has been to focus continually on single sale, short time-scale, to limit the customer commitment and to put little emphasis on customer service.
Every company tries to maintain a loyal customer base and they continually strive for customer loyalty through different loyalty programs. As the competition in most sectors grows tighter, both the importance of, and the challenge in, keeping customers loyal increases. Long term relationship is imperative for more profits and success of the firm.
The most important reasons according to (Reis, Pena, & Lopes,2005) are:
“Loyal customers are often willing to pay premium prices for a supplier they know and trust”.
“The cost of acquiring new customers can be substantial. A higher customer retention rate implies that fewer customers need to be acquired and these can be acquired more cheaply”. “Loyal customers place frequent, consistent orders and, therefore, usually cost less to serve”.
“Loyal customers often refer new customers to the supplier at virtually no cost”.
“Established customers tend to buy more”.
“Loyal customers place frequent, consistent orders and, therefore, usually cost less to serve”.
Today, a customer loss is a customer gain for a competitor.According to Kotler et al (1996) it takes five times as much effort, time and money to attract a new customer than it does keeping an existing customer. In today’s highly competitive world companies need to spend as much energy and efforts in retaining customers as they do on acquiring them.Loyalty is seen to be difficult to define and measure. The problem lies in identifying whether loyalty is an attitudinal or behavioral measure. McGoldrick and Andre (1997) argues that the term loyalty is been used loosely and includes affection, fidelity or commitment. For this reason, customer satisfaction is been used as a measure of loyalty because it has been assumed that satisfaction affects buying intentions in a positive way. Reichheld (1994) finds that despite being satisfied or very satisfied many customers still defect. Such behaviour may be explained by the impact of other variables such as choice, convenience, price, and habit.
The subject of customer retention, loyalty, and churn is receiving much-needed attention in many industries (Matt Hasan, 2001). This is evident from the number of “customer intimacy” initiatives that are either under way or being considered in a variety of companies. Businesses need to consider customer market among different markets that are taken into account. Businesses traditionally employed transaction marketing, i.e. marketing through 4Ps: transactions of product, price, promotion, and place. However, over the past two decades, businesses across all sectors have increasingly moved towards relationships, networks and interactions.
The complete change and shift in customer’s behaviour and business thinking is due to the commoditization of offerings and the intensification of competition in many industries, rendering ownership of the customer relationship, the most critical business success factor. Examples of these types of market dynamics are in long distance telecommunications as well as the credit card, retail banking, insurance, food and beverage industries, cellular phone service, cable TV, information services, and health care, banking service.
The realization on the part of key decision makers to shift the paradigm from transaction oriented marketing to customer-centric marketing is obvious now. Studies reveal the importance that business decision makers now place on customer retention, loyalty and churn in several industries. Back and Aperia (2004) states suppliers who form close working relationships with their customers tend to have “better” customers. These close relationships make the customer more loyal to the suppliers and the customers often give the suppliers a greater share of their business.
In the highly dynamic and complex banking industry, the very slight differences which exist in financial services and products together with an increasingly demanding customer have led to a great transformation in the industry. The industry is becoming more customer-oriented, which states that the main goal of any relationship marketing would always be to build customer loyalty. In this sense, Gilmore (2001) considers that constant customer-oriented behaviour is a requisite for improving the implementation of quality in services marketing.
Building customer loyalty through loyalty marketing is a business strategy not just a marketing program, all businesses should seek to increase and maximize the share of customers. The pursuit of customer loyalty is continuous and it is more of a journey than a destination. (Duffy, 1998). Fullerton (2003) states that focus on loyalty segmentation provide strategic and tactical insights that will assist in building strong brands. The market is divided into several different segments that consist of groups of people with similar preferences within the groups rather than between the groups (Stewart, 1998). If a company practice loyalty marketing, they must first know who their loyal customers are, which a lot is easier for many business-to-business marketers than for most consumer goods marketers (Fox and Poje, 2002).
The CRM approach to marketing has gained much currency in recent years, seeking to establish closer relationships and interactions between a business and its most important customers. CRM-oriented businesses market their products and services through relationships and interactions with multiple markets, most notably the customer market, often taking advantage of IT-based interactivity. This is why relationship marketing is termed “customer relationship management” when it emphasizes the customer market in particular.
It is, of course, possible to acquire and retain unprofitable customers. Some companies make this mistake by constantly acquiring new customers with price promotions and then wondering why these same customers flit to the next deal offered by a competitor. The resulting high-churn, low-margin customer base is unlikely to ever be profitable. Keeping the right customers is crucial to effective CRM. To be close to the customer and manage successful investments to create customer loyalty is not only important, it is the key factor to success for many companies. The established companies’ closeness to the customers becomes a high entrance barrier for new companies on the market. This because the new companies do not only have to meet the already established companies high standards, but also break into a system of strong personal relationships, trust and respect. (Butscher, 2000)
Many researchers consider CRM as a new paradigm in marketing. The concept of “paradigm” has been defined as “a set of assumptions about the social world, and about what constitute proper techniques and topics for inquiry”. Much of the marketing literature has regarded CRM as representing a paradigm shift in marketing thought. CRM is reshaping the marketing landscape. Customer Relationship Management has overtaken the market and it is revolutionizing marketing and reshaping entire business models.
Butscher (2000) states that on a market, which is distinguished by increasing competition, unpredictable and well informed customers, efforts to increase brand loyalty will get a greater significance. To create loyalty will become one of the most important strategic factors to succeed, neglecting these factors could lead to failure for the companies.
According to Zineldin (2005), it would seem that the discussion is much similar to the one in the 1990s on whether relationship marketing constituted a new paradigm or not. In this respect, relationship marketing is defined as being about “establishing, developing, and maintaining successful relational exchanges”. Exchanges would take place between the business and important markets, including the customer market (Christopher et al., 1991).
The main objective of this paper is to identify the key factors that influence the extent to which customers are loyal towards their banks. The customers of National Bank Pakistan, Allied Bank Limited and Habib Bank in retail banking will form the subject of our research. To this end, we have carried out empirical analyses of the complex interdependence relationships that exist among the different variables, or factors, which explain customer loyalty in the retail banking market.
1.2 Who Is a Customer?
Customer can be defined in different ways, for example Sara Gustafson and Erica Lundgren (2005) described “a customer” as below:
A Customer is the most important person ever in this office . . . in person or by mail.
A Customer is not dependent on us . . . we are dependent on him.
A Customer is not an interruption of our work . . . he is the purpose of it. We are not doing a favor by serving him . . . he is doing us a favor by giving us the opportunity to do so.
A Customer is not someone to argue or match wits with. Nobody ever won an argument with a customer.
A Customer is a person who brings us his wants. It is our job to handle them profitably to him and to ourselves.
1.3 Customer churn
Customer churn is the tendency for customer to move from one competitive provider to another (Michael Fox and Missy Poje, 2002). Reichheld (1996) cited research indicating that 65 to 85 percent of defecting customers do so despite being “satisfied” or “highly satisfied.” Thus, high satisfaction levels do not guarantee that customers will not defect. And dissatisfaction does not necessarily lead to defection-customers may continue to purchase from a vendor that has been a source of dissatisfaction (Hennig-Thurau and Klee, 1998).
It’s not easy for a business to predict churn. “Only a small percentage of customers will complain,” writes Griffin in Customer Loyalty. “A typical business hears from only four percent of its dissatisfied customers. The remaining 96 percent go away, and on average, 91 percent never go back.” Yet, you can track customers’ actions.
After four years of research on the best practices of about 200 companies for Customer Loyalty, Griffin was able to put together the following list of six indicators that a customer was ready to walk out the door for good:
Customer approval of your proposals comes slower.
Access to upper-level management decreases.
The flow of customer data slows down.
Plans for future work become progressively shorter-term.
One or more of your products or services are discontinued.
The volume of business the customer is doing with you is reduced.
Some indicators, such as customer approval of proposals and access to upper-level management, are related more to the business-to-business market than the business-to-consumer market. However, even consumer businesses can note if the level of business is reduced. Certain industries, where companies keep activity logs-such as telecommunications, pay television and Internet service-are in a good position to note when activity drops off and take action before a defection occurs.
1.4 Loyalty
Loyalty has to be defined as an internal intensity of customers towards sticking with or switching from their current supplier-an inherent value. Customer loyalty is when a customer remains as a client of original supplier even if a competitor proposes more advantageous conditions.
In a December 2004 CRMGuru survey, 64 percent defined loyalty as repeat buying behavior; 58 percent as a customer who makes referrals to friends and colleagues and 54 percent as a customer’s emotional commitment to the relationship. Only 32 percent of the respondents defined loyalty as a customer spending more over time. According to Jacoby and Kyner (1973), loyalty is the biased (i.e. non-random) behavioral response (i.e. purchase), expressed over time, by some decision-making unit, either on the part of an individual, family or organization.
Oliver (1999) defines loyalty as:
“A deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior.”
Therefore, loyalty is a concept that goes beyond simple purchase repetition behaviour since it is a variable which basically consists of one dimension related to behaviour and another related to attitude, where commitment is the essential feature (Day, 1999; Jacoby and Kyner, 1973; Berne´, 1997).
1.5 Retention
Retention is the outcome or the event that customers are retained with their current provider. Retaining customers is the most important strategic issue for the managers in the business. As is said that it’s very easy to make a friend but very difficult to keep him or her, similarly in businesses customers are your friends, so it’s very easy to attract them for the first time but quite complex and difficult to keep them motivated for the repeat purchases of your firm’s products and services.
Customer retention is a well-known and heavily researched topic in the field of marketing. Throughout the years, the main stream of retention and loyalty research has focused on the willingness of customers to enter and to stay in a relationship with the provider of a product or service based on their satisfaction (Hirschman, 1970, Oliver, 1980, Swan, Trawick, & Carroll, 1982, Garfein, 1987, Oliver & Swan, 1989, Anderson & Sullivan, 1993, Bloemer & Kasper, 1995, Enew & Brinks, 1996, Oliver, 1997, Anderson, 1998, Bolton, 1998, Day, 1999, Jones, Mothersbaugh, & Beatty, 2000, Anderson & Mittal, 2000, Bowman & Narayandas, 2001, Dver, 2001, Homburg & Giering, 2001).
Retention rather than satisfaction is becoming the number one strategic goal in today’s competitive business environment (Oliver, 1999). With a renewed interest in loyalty, the concept of brand commitment has received increasing attention among consumer behavior researchers (e.g. Dick and Basu, 1994, Fournier, 1998, Ahluwalia et al., 2001). The customer retention will be increased since customers stay longer; spend more for the service and products.
1.6 Customer relationship
Relationship management, however, emphasizes the organization of marketing activities around cross-functional processes as opposed to organizational functions or departments. The crux of customer relationship is that the company or the business gives value to the customer and customer has a say in the firm. This results in a stronger link between the internal processes and the needs of customers, and results in higher levels of customer satisfaction.
CRM evolved from business concepts and processes such as relationship marketing and the increased emphasis on improved customer retention through the effective management of customer relationships. Both RM and CRM emphasize that customer retention affects company profitability in that it is more efficient to maintain an existing relationship with a customer than create a new one (Zineldin, 2000, 2005) sited by (Payne et al., 1999; Reichheld, 1996).
According to Bob Thompson (2005) if a firm’s objective is to improve genuine customer loyalty, remember that the value the customer perceives is all important. CRM systems can have an impact on customer loyalty by helping you:
Improve service delivery with a single view of the customer. CRM systems that give you an integrated view of each customer across all channels and touch-points enable your organization to provide the flawless service that customers demand today. And remember, poor customer service is the leading cause of defection.
Optimize marketing with customer analysis. Instead of “spray and pray” campaigns, use CRM analytical tools to dig deep into customer data to uncover purchase patterns and buying indicators. Then you’re prepared to make offers that are welcomed.
Identify potential defectors and be proactive. Analysis is critical, but the real secret is acting before it’s too late. CRM systems, especially when tied to other operational systems, enable you to proactively contact “at risk” customers and resolve their issues before they leave for good. Chances are you won’t get a second chance.
Tie customer-centric behavior to employee rewards. If you know the factors that drive customer loyalty, then you can use CRM systems to track employee behavior. But don’t stop there. Real change will only occur when employees and management are rewarded for doing the right things.
Several studies have examined the importance for a business of retaining its customers in great depth, with evidence suggesting that retention leads to increase market share and eventually greater profits. Marketing tools that businesses can employ for retaining customers may, therefore, provide for a competitive advantage. For example, tools may contribute to product and service differentiation, as well as to create barriers for customers switching to other products and services.
During the 1990s, many organizations and consumers experienced great movements and actions. Some key environmental factors provided the setting whereby companies changed their attention and orientation toward marketing and the consumer.
Companies have recognized the fact that they must change and restructure their way of establishing and maintaining business relationships. For example, many manufacturers discovered, or more adequately, re-discovered that close relationship with customers is not valuable with constantly changing technology and increasing global competition.
Today’s businesses are facing fierce and aggressive competition while operating in both domestic and global markets. Most managers and marketers would of course agree that establishing long-term business relationships is about development and survival. According to Lewis (1991), the world has never been so interdependent. All trends point to cooperation as a fundamental, growing force in business.
Marketing is also about how to integrate the customer into the design of the products/services and how to design a systematic process for the interaction that will create substance in relationships. In a competitive world, companies have to work hard to gain any added value. They have to work with their customers to discover the new ways for running the business more efficiently for themselves and more effectively for the customers.
1.7 Banking and Loyalty
Loyalty to a bank can be thought of as continuing patronage over time. The degree of loyalty can be gauged by tracking customer accounts, over defined time periods and noting the degree of continuity in patronage (Yi and Jeon, 2003).
During the past decade, the financial service sector has undergone drastic changes, resulting in a market place which is characterized by intense competition, little growth in primary demand and increased deregulation. (Bloemer, Ruyter,Peeters ,1998) In the new market place, the occurrence of committed and often inherited relationships between a customer and his or her bank is becoming increasingly scarce (Levesque and McDougall, 1996). Several strategies have been attempted to retain customers. In order to increase customer loyalty, many banks have introduced innovative products and services (Alam and Khokhar, 2006). Marketing success requires understanding and frequently monitoring the product and service attributes which increase loyalty and share of wallet.
However, as such innovations are frequently followed by similar charges; it has been argued that a more viable approach for banks is to focus on less tangible and less easy-to-imitate determinants of customer loyalty such as customer evaluative judgments like service quality and satisfaction (Worcester, 1997; Yavas and Shemwell, 1996).
Banking has traditionally operated in a relatively stable environment for decades. However, today the industry is facing a dramatically aggressive competition in a new deregulated environment. Government of Pakistan has privatized quite a number of banks which further increases the competition and complexity among the banks. The net result of the recent competition and legislation is that traditional banks have lost a substantial proportion of their domestic business to essentially non-bank competition. Competition will undoubtedly continue to be a more significant factor.
Thus it is imperative for banks to get useful feedback on their actual response time and customer service quality aspects of retail banking, which in turn will help them take positive steps to maintain a competitive edge. Finding a place in this heating sun becomes vital to the long-range profitability and ultimate survival of the bank. Those banks that are not considering the new atmosphere to build and protect their competitive position will likely become victims of that heating sun. (Zineldin, 2006).
With the phenomenal increase in the country’s population and the increased demand for banking services; commitment, service quality and customer satisfaction are going to be key differentiators for each bank’s future success. Banks begin to realize that no bank can offer all products and be the best/leading bank for all customers. They are forced to find a new basis for competition and they have to improve the quality of their own products/services (Zineldin, 1996; Olsen, 1992). A bank has to create the customer relationship that delivers value beyond the provided by the core product. This involves added tangible and intangible elements to the core products, thus creating and enhancing the “product surrounding”.
Positioning is an attempt to distinguish the bank from its competitors along real dimensions in order to be the most preferred bank for a certain market segment or in other words, if a bank can position itself favorably within a particular marketplace, relative to competitors, that bank is a competitive one. Competitiveness means that a bank, in terms of its competitive position, its management and marketing strategies, its use of information technology, the quality of its products/services and its ability of managing long term customer relationship must be increasingly responsive to the market consideration and customer orientation.
With better understanding of customers’ perceptions, companies can determine the actions required to meet the customers’ needs. They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement. Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company.
The increasing importance of relational marketing in recent years, particularly in the servicing and manufacturing industries, such as banks, has been accompanied by a bundle of works on customer loyalty. Several authors emphasize the positive relationship existing between customer loyalty and business performance (Beerli et al., 2004; Reichheld and Sasser, 1996). Loyal customers not only increase the value of the business, but also enable it to maintain the costs lower than those associated with attracting new customers (Beerli et al., 2004).
Many definitions in the literature suffer from the problem that they record what the consumer does and none taps into the psychological meaning of loyalty (Oliver, 1999). By the above introduction to customer relationship, loyalty and bank, now it is time to have a brief look at what is going to be in this research.
1.8 Retail Banking in Pakistan
Retail banking industry refers to the banking industry that provides personal financial services to the mass market – individuals or retail banking customers, henceforth also referred to as customers. Retail banking products refer to traditional financial products used by individuals such as cash accessibility, remittances, loans, deposits, investment, and related advices. These products have become commodities and the market has been opened to near-banks and non-banks providers of financial services. Branch network remains the main channel for delivering retail banking services in the Pakistan but self service technologies such as ATM Machines, Online Transactions are increasingly being used partly to meet consumer needs and partly to minimise operating costs.
Pakistani banking industry is made of different banks which are in three main categories:
Central Bank
Commercial government-owned banks
Private banks
According to State Bank of Pakistan and Finance Division every country has a central bank. The name of central bank in Pakistan is State Bank of Pakistan. The aim of this bank is not to earn profit but to regard the supreme interest of the country. It is responsible for regulating the volume of money and credit in the country. All the notes are issued by this bank. It is financial adviser to the government.
In the second category, the banks are owned by government and they do the commercial tasks which are described in the Pakistani banking rules. The Government of Pakistan owns the following banks:
1.8.1Government Owned Banks
First Women Bank Ltd
Industrial development Bank Of Pakistan
Khushhali Bank
National Bank Of Pakistan
SME Bank Limited
The Bank Of Khyber
The Bank Of Punjab
The Punjab Provincial Co-operative Bank Limited
Zarai Taraqiati Bank Limited
The third category includes the banks which obey the Pakistani banking rules but they are not owned by the government. These banks are established by a person or a group of people under the control and supervision of the central bank of Pakistan. These banks do the banking tasks which are described in the banking rules of Pakistan.
Their main aim is to earn profit. The banks accept deposits from the people and advance short, medium and long term loans to the businessmen. The commercial bank also provides a number of agency and utility services to the public.
1.8.2 Privatized Banks
The following four banks were owned by the Government of Pakistan but now they have been privatized.
Allied Bank Limited
Habib Bank Limited
MCB Bank Limited
United Bank Limited
1.8.3 Private Banks:
The following banks are the private banks of Pakistan:
Askari Commercial Bank Limited
Bank Al-Falah Limited
Bank Al Habib Limited
Bolan Bank Limited
Faysal Bank Limited
Metropolitan Bank Limited
Platinum Commercial Bank Ltd
Prime Commercial Bank Limited
Saudi Pak Commercial Bank Ltd
PICIC Commercial Bank Limited
Soneri Bank Limited
Union Bank Limited
ABN Amro Bank
Al Baraka Islamic Bank
American Express
The Bank of Tokyo Mitsubishi
CITI Bank
Credit Agricole Indo Suez
Deutsche Bank
Doha Bank
Emirates Bank
Habib Bank A. G. Zurich
Hong Kong Shangai Banking Corporation
IFIC
Mashreq Bank PJSC
Oman Bank
Rupali Bank
Standard Chartered Bank
In this research only the main commercial banks of Pakistan are considered. The customers of National Bank of Pakistan, Allied Bank Limited and Habib Bank Limited in Abbottabad region will be considered. All of these banks have some main tasks like credit activities, monetary activities such as opening different accounts, payment activities…
The National Bank of Pakistan has its headquarters in Karachi, Pakistan. It has over 1,200 branches throughout Pakistan. The bank provides both commercial and public sector banking services. It has assets worth USD 12.293 billion in 2007.
Allied Bank is located in Lahore, Punjab, Pakistan.It was established in 1942 before independence, and Allied Bank Limited is one of the largest banks in Pakistan with 735 branches connected to an online network. In August 2004 the Bank was restructured and the ownership was transferred to Ibrahim Group.
Habib Bank Limited (commonly referred to as “HBL”) , headquartered in Habib Bank Plaza, Karachi, Sindh, is the largest bank in Pakistan. The bank has a network of 1425 branches in Pakistan and 55 branches worldwide. It has a domestic market share of over 40%. It continues to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers.
1.9 Research Area and Problem
In this competitive environment each company or bank wants to absorb the customers. This can be done both by maintenance or having new ones. So main and clever ones understand that they should work on the customer loyalty. In this research I tried to find the main determinants of the customer loyalty in banking industry of Pakistan in order to help this key industry to have a wider look for supporting their customers and finally having more loyal ones. I will consider the customers of three major banks of Pakistan (National Bank, Allied Bank and Habib Bank) due to shortage of time and money resources. In this environment naturally there are some customers who are using the banking services, and because of the similarity of the offered services by different banks, I consider the customers similar to each other.
1.10 Research Questions
The answer to the following questions will together provide us the possibility to reach the objective of this research.
Can a model for customer loyalty in banking industry of Pakistan be specified?
What factors influence the customer loyalty in banking industry in Pakistan?
What are the relationships between the factors?
In order to answer to the research questions I defined some more detailed questions such as:
Does customer satisfaction influence the loyalty of the customer in the banking industry of Pakistan?
Does customer habit influence the loyalty of the customer in the banking industry of Pakistan?
Does switching cost influence the loyalty of the customer in the banking industry of Pakistan?
Does perceived quality influence the loyalty of the customer in the banking industry of Pakistan?
Does choosing influence the loyalty of the customer in the banking industry of Pakistan?
Does trust influence the loyalty of the customer in the banking industry of Pakistan?
Does commitment influence the loyalty of the customer in the banking industry of Pakistan?
1.11 Research Hypotheses
This research attempts to determine the factors which affect customer loyalty in banking in order to make a loyalty model for Pakistani banking customers.
Therefore the following hypotheses are formulated:
Choosing influences the loyalty
Tangible Perceived Quality influences the loyalty
Intangible Perceived Quality influences the loyalty
Trust influences the loyalty
Satisfaction influences the loyalty
Switching cost influences the loyalty
Habit influences the loyalty
Commitment influences the loyalty
Structure of the Thesis
The structure of the report is outlined here. Chapter 1 introduced the background of the study and the definitions of important concepts related to customer loyalty, as well as the retail banking context. Chapter 2 presents the literature review and conceptual foundation. Chapter 3 presents the methodology and methods of the study, and Chapter 4 reports the analysis of data and findings of the study. Chapter 5 discusses the recommendations of the study and suggestions for future research are made.
Chapter 2
Literature Review
This chapter provides the reader with sufficient theory to assimilate the continuing part of this study. It will begin briefly by the concepts associated with the customer loyalty, all the factors or determinants associated with customer loyalty will be explained, then discusses why loyalty is important and finally proposes a model for determining customer loyalty in the banking sector of Pakistan, which is going to be evaluated in following chapters.
2.1 Literature Review
Why do all the decision makers talk about the customer loyalty and why it is so crucial for all business in general and banking in particular? In 2001, Bain & Company worked on a comparative analysis of different businesses on the basis of profitability vs. loyalty. The finding suggested that a business can achieve outstanding financial result by cultivating customer loyalty. Their analysis showed that a five to ten percent increase in customer retention increases profits by almost thirty to eighty five percent.
Acquiring a new customer is always expensive because it costs higher in the acquisition of a customer then in retention customers as falls it happens only with customers has they repeatedly purchase the products and services and the volume of purchases increases. The firms and do not invest much in attracting the loyal customers towards their products and services. These findings prompted business decision makers and executive to search for new innovative strategies to keep their existing customers loyal towards their products and services, and also to further increase the base of loyal customers (Darrell K. Rigby, Frederick Reichheld and Chris Dawson, 2003)
According to Ellie Trubik and Malcolm Smith, there are four major factors and attributes which identify defected customers in the banking industry. The first attribute is that the customer had a very minimal range of products out of which to choose. Usually those customers leave the bank which offer only one product or one service. Customer needs a variety of services in the banks and they prefer banks with more advance services for which can address a range of customers needs.
The second factor is that the major channel of the distribution of the services is the branch bank with fewer branches is likely to suffer customer satisfaction. Today customer needs services at his or her door step. The third factor is the service charges. If banks do not exempt fee on their services, they will surely lose a customer base. The forth attribute is quite interesting which showed that most of the customers defected on their third month with their respective banks.
2.2 Customer’s Relationship
The attachment or relationship of customer with a business has three levels. According to Berry, the first level is the financial bond, which refers to the sensitivity of price in establishing a long term relationship. The second level is the social bond, which refers to the close-ties between a customer and service staff. This friendship also makes the relationship stronger and longer in nature. The third level is the structural bond in which the seller in consent with buyer invests jointly.
The price is above all consideration. The relationship or bond is strengthened on the basis of fewer prices and more value. The customers also consider their friendships with employees or service staff as a very important factor in their decision to remain loyal with the current firm or service provider. On the basis of this decision, they keep on repurchasing the same service or to purchase additional services.
Applying this bond in the banking industry, Berry’s analysis implies that the customers bond with the bank takes place under three conditions:
Fewer prices and more value to the customer.
Friendship between customer and the bank staff
Both parties (customer and bank) decide to make joint investments and benefit from it. The customers become the shareholders of the bank by buying it shares.
However, every customer is different from one another because his needs and wants are different. A customer who has the money but lacks time tends to value low price less then convenience, freedom, friendships with banking staff and privacy. Additionally, the introduction of ATM machines and online services has made the social relationship between customer and the banks les important or insignificant.
Such customers have minimal interaction with the banks because they do not go in the banks for cash withdrawals. The interactions between a customer and his or her bank can be grouped into three types: The first type is the interaction of customer with the service provider’s technologies such as ATM machines, self –service machines and online services.
The second type of interaction occurs when the customer goes to the bank and asks for personal services and personal advices. The customer interacts with the staff of the bank and builds relationship. The third type of interaction s the combination of first two type’s .it occurs when both the customer as well as the banks representatives works in collaboration to produce, deliver and consume a bank service with use of banking technologies and physical infrastructure.
The example is when banks service representative solves a problem of the customer through the use of technologies related to information technology. Meuter et al (2000) found that almost 90 percent of complaints resulted from the failure of online technologies and self service technologies. So to resolve these complaints the hybrid interaction is used.
Ahmad (2005) also explains the existence of relationship between customers and their banks. He categorized the relationship into three bonds. The primary bond may be measured in terms of overall value of the particular basic product. It is concerned with the quality of product or service. Is quality is based on the functional characteristics of the product or service. Which refers to the minimum condition on the basis of which a customer’s decides to choose a bank and connects with his or her bank for a definite time period?
The second category is the secondary bond which is concerned with the personal relationship of the customer with his/her bank. It is least related h the quality of the service infrastructure package which means the ease with which a service is utilized by the bank. Secondary bond establishes the commitment of a customer towards his/her bank. It strengthens the primary bond. It further cements the relationship initiated in the primary bond and help in the prolongation and protection of customer- bank relationship.
Secondary bond reinforces the primary bond and it is irrelevant without the establishing of the primary bond. The dimension of the secondary bond includes the helpfulness of the service representatives, how courteous are they in providing customs with the service and solving their problems instantly. The reliability of the banking infrastructure means the banks and all of their branches should ensure error- prompt in usage and user friendly. Interface. The banks must insure trustworthiness of their services. The aims should be error free which will increase the trust of the customers. There should be no underlying meanings or features in any service. The bank representatives should explain he complete features or attributes of their services.
The banking infrastructure should be convenient to the customers. If there is more number of branches, the more convenient it will be for the customers.
The last category is the superlative bond. after the establishment of first two banks between the customer and the employees, the superlative bond creates the ultimate satisfaction which make a customer loyal towards his/her bank .it in calculates behavior due to which a customer remain committed towards the service of the bank. Even if the service are not up to the mark. These bond barriers which stops customers from switching to other banks. These barriers get so strong that the customer does not even think of switching to other banks. This bond also establishes strong affiliation with the bank and the customers also convince other people to come and join their bank. They become a part of the marketing campaign and advertise the services of the bank to their relatives and friends etc.
Secondary bond may be measured in term of friendly-typed behaviors such as politeness, trustworthiness, friendliness and understanding of service staff. The already published researches (Bitner et al., 1990; Ostrom and Iacobucci, 1999; Hurley, 2000; Keaveney, 2001) also emphasized that the friendly relation between the customers and the banks representatitives improve the outcome of the service.
The quality of banking service infrastructure and the relationship of customer with his/her bank is important for two reasons. Firstly, it would enable customers to have problem –free interaction with the advanced online technologies. The customers would be able to use the services with a lot of ease and the online services would be fast and error-free. Secondly the level of relationship between the customer and his/her bank will improve tremendously. Social interactions always will inculcate higher level of relationship. The speed of online services and efficiency of a banks computer based information system make the level of relationship more qualitative. If a customer wants any information from the banks representatives that information is retrieved through computer based system. The fast the information is retrieved, the more responsive and helpful is the impression of the representatives that is created. So the relationship is improved due to instant accessibility of the information. The delivery of the online services goes in tandem with the behavior of the banks representatives.
Moreover, an efficient, fast, reliable, error-free and easy to use information system would also facilitate and encourage a faster rate of customer adaptability to the bank which will encourage the repeated use of all the services especially the self-services IT based technologies.
So secondary bond is measured in terms of the level of user friendliness as to what level the customer is attached with the service of the bank and the convenience of the banks service infrastructure to the user as to how easily the customer can utilize the service of the bank. Satisfied and loyal customers have very strong secondary bond with their bank and they find their relationship quite enjoyable. In today’s fast faced world people love to use the online services. So most of the customers prefer to withdraw their money through ATM machines and transfer money through.
2.3 Loyalty
Loyalty is the decision of the customer to purchase from the products and services of the same brand repeatedly for longer period of time. Loyalty demands commitment and trust of the customers over the services and products of their particular companies. Loyalty in banking sector comes gradually and is of great importance. It is usually a life time decision. Once the customer become loyal to a bank, he/she will continue to purchase its services through out its life that is why it is pivotal to make customers loyal in the banking industry. The loyalty of a customer has a strong link with the satisfaction. The satisfied customers usually become loyal with the passage of time, and once they become loyal they don’t switch despite the fact that the quality of the product may not satisfy them. Even if they are dissatisfied from the quality of products and services, they remain loyal and committed.
The knowledge of the customers about the products and services leads to the satisfaction and it is explained by the posy purchase behaviors, such as repurchase intention, usage of the product, word of mouth and complaints about the quality of the product as well as services (Oliver, 1999). Past researches also reinforce this point that satisfaction is always a reliable predictor of re-purchase intentions (Lin and Wang, 2006).
Anderson and Srinivasan suggested that if a loyal customer is dissatisfied on a rare occasion he/she may not think of switching, but if the quality of the product/ service continuously comes up with complaints, he/she is likely to search for information on alternatives and will switch to a competitor wit the better level of products and services.
Feurst (1999) divides loyalty into four different types. He tries to categorize the concept of loyalty on the basis of force that opens the door towards loyal behavior. These categories show the strength of loyalty and bond between customer and his/her brand. Customers are harder to get by competitor if the grade of the loyalty is high and relationship is strong. The grades go from enforcement from the outside through different techniques to the inner commitment. The first two grades are easier to create if they are set in a tandem with the other two. The customers who are in either of the grades are quite easy for competitors to steal and churn.
The first grade is:
Forced Loyalty. The first grade is categorized by different obstacles. The obstacles can be: lack of alternatives, lack of time to search the market for the company offering bet services, monopoly the brand over its competitor, or if the change from one supplier to another proves expensive.
An example could be that you choose a bank just because it is close to your home or office geographically, even if there are other banks with superior services.
Bought Loyalty. This loyalty is bought consciously. In bought loyalty, customers receive some sort of bonus in the form of money or discount in reward of their loyalty and repeated purchase. The loyalty of customer can be because when he/she buys three of something then he/she gets fourth for free.
Sometimes banks give monetary bonuses to their loyal customers. Every bank employs different loyalty program to buy loyalty of the customers.
Practical Loyalty. This is unconscious loyalty. Customer is aware of his loyalty and chooses on routine basis without searching the market and competitors. He always uses one supplier and continues to do so without researching the market and competitors, he always uses one supplier and continue to do so without prior analysis of the market.
An example could be when customer goes to same hair dresser without thinking much.
Engaged Loyalty. This type of loyalty is subject to status, symbolic value, inner awards and social values. The customer becomes committed to the supplier on the basis pf the quality it provides. The customer thinks the supplier is providing him/her the best possible set of pleasures and quality among all the competitors.
Sodurland (2001) says that these are two main categories of loyal customers. The first category is of loyal customers. With in the loyal category there are satisfied and un-satisfied customers. The satisfaction is not an essential requirement for loyalty, so satisfied customers do not have to be loyal but there is a correlation between the satisfied customers and loyal customers.
Sometimes unsatisfied customers are also loyal due to attachment and commitment with the supplier. And satisfied customers, if lack the trust commitment and attachment with the suppliers products and services will always deflect once they find a competitor with better quality of products and services. This type of loyalty is sometimes called False Loyalty in whish unsatisfied customers remain loyal to their suppliers. The reason for this false loyalty is the factors due to which the customer feels hurdles and obstacles in his/her way, which stops him her from switching or choosing another supplier. These hurdles are called switching costs.
2.3.1 Loyalty and Retention
In today’s technologically advanced world and due to arrival of internet, it’s much more difficult to retain a customer. They have far more choices, the level of competition is high, and each supplier tries to attract customers through different packages. Within second a customer can surf the internet and can check out for better deal. The defection rates are ever on increase. A company with a seemingly impressive 80% retention rate will lose more than 60% of its customers in the next five to ten years (Kim, 2004). By retaining more and more customers, the profits increase phenomenally and costs are reduced considerably.
In a recent survey of business executives, these terms i.e., loyalty and retention are used synonymously. But if the switching behavior of customers is taken into account, then the distinction between these two terms is essential. As it was mentioned in chapter no 1, loyalty is essential intensity of customers towards sticking with or switching from their supplier and deciding to buy repeatedly from the same supplier. Loyalty can never be bought on the other hand, retention is the decision of the customer to stay with his/her current supplier. Retention is usually bought with the appropriate incentives or packages. The retention is subject to the product attributes, pecuniary switching costs, prices and internal loyalty is through customer care. The retention is also subject to advertisement strategies and the company has to of offer some sort of external incentives. When the loyalty is increased, It actually means that the retention of the customer is increasing and on a rise.
Loyalty is somewhat internal to the customer it can only be changed through a shift in the value system and thinking pattern of the customer. Retention on the other hand can be increased by the firm through the application of incentives as well as rewards. Retention can never be ensured. Satisfied customers are usually retained and they maintain their relationship with the supplier. However, whenever the level of satisfaction decreases from the expectations, the customers start churning and look for better suppliers. The concept of providing complete satisfaction to the customer incurs heavy costs and is usually not investment friendly.
Instead, a mutually beneficial relationship between the supplier and the customer has to be achieved and worked upon. This mutual “win-win” relationship considers traditional revenue and cost measures as well. It also takes into account the different cost of acquiring and retaining each customer on the basis of their internal loyalty intensity. In terms of marketing, it is always costly to attract and then acquire new customers. The cost of advertisement and developing of attractive marketing promotional campaigns incurs additional burden on economics of a company. Hence, currently it is becoming an industry-wide belief among all the business decision makers that the best marketing is to try to retain existing customers by increasing customer loyalty (Kim, 2004). Although the task of retaining a customer is also difficult but it yields more profits and ensures long term revenue generation.
To acquire new customers is always costly and as difficult in marketing terms. Hence, currently the best marketing strategy is to retain existing customers by increasing customer loyalty and customer value (Peppers and Rogers, 1995 and Reichheld, 2003). Long term business relationships result in considerable savings in costs. In banking industry, just like other businesses, the costs of attracting new customers is quite high, e.g. costs of setting new accounts for customers; costs of attracting potential customers through advertisements and aggressive marketing campaign; costs of personal selling and advertisement; costs of explaining the banking rules and procedures to the new customers; costs of orientation of the customers costs of charging minimal fee for selling up accounts etc (Berry 1995; Bendapudi and Berry 1997; Chaudhuri and Holbrook 2001). So, there is no doubt in acknowledging the importance of customer retention. It has a two-way advantage for banks. Firstly, the revenues increase through repeat purchase of the banks services throughout the life and secondly all the above mentioned costs decline to a minimal value. Thus customer retention has become a major tool for long-term success (Rust and Zahorik, 1993).
If the customers start leaving, the revenues start declining .the business decision makers must understand and know that customer defection is really important to tackle. The more the customer defection, the greater is the loss in profits. In todays globalise world, it is quite demanding to retain a customer. The customers have so many banks to choose from and each bank allures the customer with some differentiating features. The customers can defect at anytime. so, encouraging customers to stay stuff but the managers have to try hard because they know that keeping an existing customer is go more beneficial, cost effective and profitable than acquiring a new one.
2.3.2 Internal Loyalty
Loyalty indicates residences because of conveyance problems. Where as this conveyance is not an important issue in developed countries. Similarly, sometimes customers may be loyal to banks simply because they are lazy and lethargic to switch which mean there comfort – related switching cost is high. Others may decide not to switch because of the high risks or uncertainties associated with the market as well as unknown entity. Others may not switch because they do not have time to search for a better alternative. Each customer has a unique way of behaving and buying. The inherent orientation toward switching from current situation for each customer makes him/her loyal or switcher from the provider. The attitude of the individuals varies from each other as ell as it varies from commodity to commodity. The attitude does not apply uniformly over all aspects of life. An individual may have loyalist approach and intensity for a bank but defection approach for electronic appliances. It may depend on his / her attachment toward a product or service. He/she may b vary choosy and sensitive about one thing and lazy about another thing.
Kim (2004) states that internal intensity may also change gradually over time due to the life experiences and market experiences. An individual may decide to leave the provider after he/she came to know about the fraud in product or the sub standard quality of the products and services. Therefore, the companies divide the market into different segments on the basis of varying attitudes of the consumers. The product mix for each segment is according to the chunks demands and needs, but the segments are supported only if they are economically justifiable. The action of customers can also be influence through external stimuli such as product attributes, price and other pecuniary costs of communications, customer care, switching and choosing. The companies try to attract customers through such incentives or external stimuli. These incentives do help companies to achieve the desired results.
2.3.3 Customer Loyalty Objectives
The development of customer loyalty is one of the most important and current issues that are being encountered by the organizations. Businesses are attempting to create long term sustained relationship with their customers. The businesses have to satisfy the customers. Nowadays, the markets are highly concentrated and competition is increasing phenomenally, so companies need to attract the customers for long term (Gremler and Brown, 1996).Many organizations know that it is critical for their success to increase the pool of satisfied and loyal customers.
It is a widely acknowledged fact that loyalty changes over time. Garland (2002) states that loyalty gradually grows from indifference to commitment. There is a continuum that customers at the lowest level always intend to switch; they are not loyal to the provider and always look for better alternatives. The customers who are at the highest level are highly loyal and they become enthusiastic advocates of the company (Ayden and Ozer, 1995). And shaped in to conative sense and at the end the loyalty is turned into behavior and customers exhibit loyalty through actions. Organizations achieve a lot of goals by creating loyal customers’ pool. The main goal is to increase the profits of the organization. They help the organization to predict the sales and profit streams with an increased certainty level. The organizations make strategies that are long term and certain in such predictable level. The loyal customers purchase repeatedly which help to increase the production of goods and services (Gremler and Brown, 1999).
The customer loyalty does not only help in generating revenues and profits but it also helps achieve other benefits like advocating the process in which loyal customers become the advocates of the providers’ goods and services. They more likely talk about the providers’ quality of products and services.
They even recommend it to their near and dear ones like family and friends. This will help in generating new businesses and further expand the market range of the provider. Many researchers (Rust,Zahorik and Keiningham 19995;Trafimow 2000) emphasized that the share of wallet come from studies attempting to tickle down the effect from service quality programs upon the satisfaction, loyalty and profitability of the customers. This chain is termed as service-profit chain by Burnham and Mahajan in 2003.These results suggest that quality improvements help both customer acquisition and customer retention. New customers are attracted and endorsed from existing customers about quality products. Existing customers are encouraged by their banks to remain committed which will result in the higher retention and automatically lower churn rates. Such customers devote a greater share of wallet to their banks.Reichland(1996) has shown in his research that minimal increase in retention rates result in considerable effects on profitability.
In a Scandinavian banking context, Chumpitaz, Paparoidamis and Nicholas, (2004) demonstrated direct relationships between customer longevity with their main bank and share of wallet given to that bank. In New Zealand, Colgate (1999) in his study of customer satisfaction with New Zealand banks wrote that the depth of relationship with customers (the “quality” of the relationship rather than the number of relationships) was particularly important. Gummesson (1999) echoed these sentiments in the context of long-term customer relationships in general, supported by earlier work by Fomell (1992), Anderson, Fomell and Lehman (1994).
Maximization of customer loyalty is a priority for most industries. It is often stated that industries like banks need to operate on a long-term “cradle-to-grave” customer management strategy where youthful customers are recognized as being unprofitable in their earlier years but becoming profitable as they move on through the family lifecycle (Ron Garland, 2002). Concomitantly, customers can become “entangled” with their main bank to such an extent that the perceived cost of defection outweighs the benefits of shifting banking business to a new provider.Coyles and Gokey (2005), has identified that there is a relationship between customer loyalty and profitability and suggests that some customers can never be satisfied while it is unprofitable to try to satisfy others.
2.3.4 Loyalty Programs and Its Benefits
Banks employ different loyalty programs to retain the customers. Customer Loyalty Programs have developed remarkably in the era of customer retention in recent years. This is due to recent advances in information technology. They have been considered by many organizations and many of them have adapted customer loyalty programs. According to Yi and Jeon (2003) loyalty programs are introduced to build customer loyalty. Dowling and Hammond (2003) stated that customer loyalty programs offer rewards to customers in form of relationships and financial rewards. Customer loyalty programs have also been willingly embraced by customers; this is due to the benefits associated with it (O’Malley, 1998).
The importance of benefits for enticing customers into these loyalty programs and according to YI and Jeon (2003) the goal of customer loyalty programs is to create a high level of customer retention. Gilbert referred to O’Malley (1998) states that the basic idea of a loyalty scheme is to reward customers’ repeat purchasing and encourage loyalty by providing targets at which various benefits can be achieved. The longer a customer stays with an organization the more profit the customer generates (Reichheld and Sasser, 1990).This result in increasing the number of purchases by the customers.
.It was recognized by Colgate et al. (1996) and by Storbacka et al. (1994) that once the rate of defection is reduced it contributes to the sudden increase in profits whereas the impact on profit shares is not as high and considerable. The profits of organizations can increase by 100 percent through retaining 5 percent more of their customers (Reichheld and Sasser, 1990; O’Malley, 1998).
Moreover, seen from a customer perspective, loyalty scheme can be a way to decrease price sensitivity, increase brand loyalty, reduce the willingness to consider alternative brands, encourage word-of-mouth support and endorsement, attract a larger group of customers and increase the amount product bought (Daniel Jacobsen 2004).
Customer loyalty programs are assumed to create value for the customer and it is due to this value that customer loyalty programs promote loyalty. On the other hand, the degree to which customer loyalty programs offer value to customers is uncertain, mostly because customers are not equal and value will represent different things to different people and will also be different in different context (O’Malley, 1998). In order to make the value of customer loyalty programs work properly and succeed, an organization needs to understand the needs and desires of their customers. The value an organization delivers to its customers needs to be competitive in five dimensions. Seen from a customer perspective, the dimensions are: cash value (as a percentage of the proportion spends), aspiration value (how much this reward motivates a customer), relevance (the extent to which the reward is achieved), and convenience (ease of participation of the scheme), choice (the variety of rewards offered) (O’Brien and Jones, 1995).
Even though a small number of schemes today offer all dimensions of value, it is obvious that companies which want to play the rewards game should be sure that their value measures up to customers’ alternatives (O’Brien and Jones, 1995). This is most significant when customer loyalty programs are mainly used as a differentiation.
Due to the popularity and benefits derived from customer loyalty programs many corporations have adapted these schemes. Customer loyalty programs can and do build customer loyalty and corporations now realize how important loyalty is for their profitability. One of the main reasons of creating loyalty programs is to increase revenues, which can be done by either increasing purchase and usage levels and also by increasing the range of products bought. However, there are other reasons for creating loyalty programs including: to generate information, to reward loyal customers, to manipulate consumer behavior and as a defensive measure toward competitors (O’Malley, 1998).
Apart from the benefits that longevity of customers brings, research findings also suggest that the costs of customer retention activities are less than the costs of acquiring new customers. Rust and Zahorik (1993) identify the financial implications of customer retention, citing US Office of Consumer Affairs research that estimates that attracting new customers may be five times as costly as keeping existing customers.
We believe that banks use loyalty programs (Blomqvist et al, 1993; Feurst, 1999).Loyalty programs are used by the managers and decision makers of the banks to retain and put different emotional as well as economic hurdles in the ways of the customers which prevent them from switching to other banks (Feurst,1999).banks in today’s highly vulnerable and competitive industry can not even think of surviving in the long term without employing such strategies which help them in retaining customers. The programs can be on the basis of the culture, economy, and political situation, social and technological aspects of a country. The decision makers have to decide as which strategy to pursue. In western countries, the banks provide their customers with free memberships of different types such as hotel, golf club, beach resorts etc. They also allow some of their customers to go on free tours to different countries. So companies manage these loyalty programs through different measures and in this way they retain the customers and make profits through repeat purchases.
2.3.5 Involvement of the Customer
In order to implement the loyalty programs, we have to focus on the involvement of the customer. The interaction between customers and service providers is an important determinant of perceptions of service quality (DeLone and McLean. 2003). In some instances, this interaction will be largely of a transactional nature but more commonly interaction occurs within the context of an ongoing service relationship. Indeed, services marketing places considerable emphasis on the development and management of relationships with customers as a means of enhancing the quality of service delivery (Berry, 1983; Christopher et al., 1991; Anew and Binks, 1996).
Those relationships are seen as being of particular importance in situations in which the service is long term in nature, when customers are heavily dependent on credence qualities in service evaluation and where perceived risk in high (Farquahar, 2004). Furthermore, building effective and successful relationships can contribute significantly to customer satisfaction, loyalty, retention and thus to improved performance (Reichheld and Sasser, 1993; Rust and Zahorik, 1993). These all reduce the churn process.
A handsome amount of customers in a survey by CRMGuru in 2006 said that defection occurs due to lack of importance the compnies give to their customers. The customers think that in today’s competitive market, the ultimate authority lies with the customer who is always the boss of the provider’s specifications. In banking industry every customer is to be taken care of. When they come in the banks, they should be thought as a part of the bank. Their complaints must be handled with minimum of delays and maximum of ease. There should be an effective way of dealing with the queries of the customers. The grievances are to be curtained. In such environment, the customers would feel themselves important which will increase the level of loyalty. The acknowledgement of their thoughts and innovative ideas has to be considered. This will decrease defection phenomenally (Anderson, 1999).The greater the level of participation, the lesser are the defection rates.
2.3.6 Offensive and Defensive Strategies
Companies’ relationship to their customers can be divided into two separate business strategies, offensive and defensive. The offensive strategy is also termed as proactive strategy in which companies try to capture new markets and concentrate on the acquisition of new potential customers whose defection chances are higher than others. The defensive strategy is a reactive strategy in which businesses try to retain their current pool of customers because of intense completion and limited capital. Traditionally companies devoted more resources to acquire new customers but today most companies apply a combination of both offensive and defensive strategies. Defensive strategies are pursued when the brand is to be protected from highly competitive market and it increases the barriers for the customers which force them not to switch because of the high concentration up on a single segment of the market (Caruana, 2002).
2.4 Quality
A concept which is very closely related with satisfaction and loyalty is perceived quality, and the differences between these have not always been very clearly defined. They have been used on occasion in an indistinguishable manner. In an attempt to clarify the distinction between satisfaction and perceived quality, Anderson et al. (1994) consider that satisfaction requires previous consumption experience and depends on price, whereas quality can be perceived without previous consumption experience and does not normally depend on price. However in circumstances where there is little available information or where quality evaluation is difficult, price can be an indicator of quality. In this sense, Spreng and Mackoy (1996), starting from Oliver’s (1997, 1999) conceptual model of service quality and service satisfaction, concluded that these constructs are distinct and have different determinants. Service quality has been found to have a profound input on customer satisfaction and loyalty as a whole and is defined as the result of the comparison that customers makebetween their expectations about a service and their perception of the way the service has been performed (Parasuraman et al., referred to in Caruana, 2002).
According to Caruana (2002), the concept of service quality has several dimensions. Out of these dimensions there are two dimensions which are of great concern to the companies and their decision makers. The first one is the technical aspects of the quality which refers to the details of delivery process of the quality. How easily is the customer gain access to the qualitative aspects of the product or service of the concerned providers? The other aspect is the end result of the deliverance process. These aspects invoke psychological as well as behavioral aspects of the customers. The behaviors of the customers are shaped on the basis of the tasks performance of the service providers, the easy accessibility of the providers and the way these services are performed.
The service industry should focus more and more on the quality of their services. In banking industry it is indeed very difficulty to access the qualitative aspects of the services because of the intangibility of the services. The banks provide their customers with error free services and also handle the complaints of the customers with minimum of difficulties and maximum of ease (Grönroos, 2002). The more time will it take to resolve a problem or complaint of the customer, the poorer will be the level of the services which will result in the dissatisfaction and ultimately the customer churns from the current service provider. The banks have reanalyzed that they can not survive without the proper imposition of excellent quality of their services. A customer feels satisfied when he uses the services with no error and instant response (Carman, 1990).
A major factor which defines quality is the instant action of the complaint handling and other queries handling. If a customer starts feeling himself a part of the bank, that is the point where the actual quality is delivered. The employees of the bank have to be courteous and should pay special attention to their customers whenever they interact with each other. Similarly the tangible part of the quality can be the interest rate being bestowed to the customers (Zeithaml, 1988). The better is the interest rate the better is the level of quality which leads to better retention of customers and a highly involved and loyal customer. The banks should also facilitate their customers with modern looking equipment and easy to interact services. The online services should be used with easy to use interfaces and minimum of clicks. If a customer requires utilizing any services, those services are to be accessed with minimum of clicks and time on the internet (Gustavsson, Lundgren, 2005).
These are the attributes which differentiate one service provider from another. The attributes of quality are considered by every provider. Without this qualitative aspect, the companies start liquidating and suffer losses. The companies have to get the instant access to all the information from different sources to improve the level of quality (Hansemark & Albinsson, 2004; Dodds, 1991). Some banks take feedback from the customers about the areas where better quality can be provided to the customers. Such feedbacks help the companies and their decision maker to understand the deficiencies and upgrade the system with better level of quality and better retention strategies (Jacob, 2005).
The quality should be traded off with price and cost. It is to be decided by the decision makers as to what aspect to be included. If extra feature is added to enhance the quality, that feature must correspond with the price and required profit margins (Hallowel, 1996). Those features are added which require minimum of resources and efforts while generate maximum of satisfaction and loyalty among customers (Aydin&Ozer, 2005).
2.5 Customer Satisfaction
The satisfaction is yet another important trait which must be taken in to account when shaping the overall loyalty of the customers towards their service providers. In banks, the customers ask themselves about the level of the services and decide about the lack of importance given to them and decides about repurchase behavior after using the services. The level of satisfaction is always high when the customer gives minimum price and gets maximum of usage and profit (Jamal and Kamal, 2004). If a customer buys some product and the post purchase scenario forces him to quit the current provider then it means the customer was highly dissatisfied from the level of quality and service provided to him. A satisfied customer is the one whose needs are taken in to consideration. In today’s world, the business managers not only have to think about satisfying customers in terms of products and their basic features but they have to give extra features as well which can differentiate their products and services from the other providers and which can give some extra pleasures to the customers (Egan, 2004).
Dissatisfaction usually occurs when the pricing issues are not suiting the needs of the customers. In banking industry also, the interest rates on loans and charges on the usage of online services such as ATM machines and the processing fee is a major bone of contention between the bank and its customers. If the customer thinks that the charges are more than the needs he churns. Satisfaction only results when the banks take regular feedback from the customers and whatever practical is told to them by the customers should also be implemented with in the banks. In case if the suggestions of customers are not taken into account, it will gradually start the process of defection (Lin, 2003).
Kotler (2000) says:
“Satisfaction is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations “.
Yi (1990) believes that:
“Customer satisfaction is a collective outcome of perception, evaluation and psychological reactions to the consumption experience with a product/service”.
The customer initially tries to compromise with the bank but at a certain point he decides to defect. Nowadays, it has become too easy to open an account in any other bank so the switching cost is also minimal. These all factors help customers to switch from the current bank. The response of customer plays a pivot role in the overall satisfaction graph of the provider. If a customer is satisfied, the loyalty injects automatically and the customer remains with the current providers for a longer and longer period of time (Giese and Cote; 2000).
2.6 Switching Cost
As defined by Jones et al (2000), a switching barrier is any factor that makes it difficult or costly for customers to change providers.
Another brand loyalty determinant is known as switching costs, which can be defined as the technical, financial or psychological factors which make it difficult or expensive for a customer to change brand (Selnes, 1993).
Whenever a customer decides to switch from one brand to another, the cost involved in this shifting process is known as switching cost. This cost involves the level of uncertainty involved in new provider’s products and services (Porter, 1998). In case of banking industry, the consumer decides to switch when the level of services is not up to expectations and the desired needs are not fulfilled. The consumer has to decide whether the new bank to which he is going has the minimum level of uncertainty. The customers usually churn when they realize that the banks do not take care of their needs and wants. Switching from one bank to another requires a lot of effort and customers have to gain complete knowledge about the new service providers as to what services are they providing; whether the services are reliable or not; whether the online services are error free (Jones, Beatty, Mothersbaugh, 2002).
The decision to switch causes major behavioral transformations because every brand has a different positioning concept in the market. Some companies are known for their superior quality, others for their cheap prices and so on. So when a customer switches from a company with high quality product and service to cheap product, he switches to a different concept (Aydin and Ozer, 2005). Every bank tries its level best to break the customers of its competitors. For this reason, the banks are trying to introduce customer friendly environment and nowadays the opening of new account has become too easy and user friendly. The banks almost charge very minimal fee for the opening of account and gives access to online services charge less (Selnes, 1993).
The world is moving at a very fast pace. Consumers have limited time to analyze the market and switch from their current providers. The firms keep on adopting new and innovative strategies to attract new customers (Kon, 2004). In telecommunication services, the companies charge nothing for a new potential customer and sometimes give them bonuses on starting new connection. There are some customers who never switch despite the fact that they are not satisfied with the products and services and the overall quality dimensions (Wernerfelt, 1991; Selnes, 1993; Klemperer, 1995; Ruyter et al., 1996; Anto´n Martı´n et al., 1998).
On the other hand there is another category of customers who switch the moment they see a lack of quality and other traits’ deficiencies. Most of the customers initially try to compromise on some of the loop holes in the standards and switch when they decide that enough is enough and the required level of quality is not there (Jackson, 1985). The firms do not concentrate on the first type of customers. They will never switch so the firms do not employ any strategy to gain access of such customers. It is the third category on which the firms concentrate the most. This group is called the potential churners and the firms have to devise different strategies to attract these customers (Lauren and Lin, 2003).
The customers usually switch when they are persistently not getting the desired level of performance and standard from their providers. The consumers will always think of switching when the pricing strategies do not match their demands. If the company is charging more and giving low quality the customer switches (Aydin and Ozer, 2005; Sharma and Patterson, 2000). If the customer does not switch even then he is a potential defector and the competitors start working on such customers. It is very difficult to retain customers. For retention, the firms keep on employing different programs and make customers a part of their organizations (Aydin and Ozer, 2005; Sharma et al., 1997).
It is indeed a tough work to for the banks to attract such customers who will likely switch. Every bank tries to attract such customers towards its services. At this time the overall image of the brand matters the most (Klemperer, 1995). If the bank is renowned for its services and quality that bank will always be chosen because satisfaction yields from quality and trust. The trust is never developed over night. It takes blood of the firms and especially banks to build their good will and positive image. Once the require level of image is created, that is the time when the banks start attracting new customers who switch from other banks due to poor quality of services (A. Jones, L. Mothersbaugh et al. 2000).
The banks try to put barriers for their potential defectors. The barriers can be non refundable processing fee and block of services and incurring extra charges when the money is withdrawn from the bank on permanent basis. The banks will employ a combination of defensive and offensive strategies to gain access of all the customers which include the potential customers and the churners who are fed up from the services and their qualities. The firms who take in to account such factors are always successful not only in the short run but also in the longer term (Lee and Feick, 2001).
The banks are facing fierce competition nowadays. In developed countries, each bank comes up with attractive packages for its customers. The chances of defection are minimal in today’s highly competitive industry. So it is imperative to maintain a handsome base of customers who can prove to be a permanent source of revenue generation and who can help the firms in handling pressures. These customers become very important in the moment of crisis. The customers repeatedly purchase the services which help the firms to carry on their day to day operations. In this way it is really important for the banks to retain customers. These traits are presented by every bank but very few know the actual trick of retaining customers. In highly vulnerable industry it is not only about retaining customers but also about attracting new pools of customers by employing different marketing campaigns and strategies(Aydin and Ozer, 2005; Shy, 2002).
The last resort for today’s banks in view of Kon (2004) is to put maximum barriers in the way of those customers who might switch or think of switching in future due to drop in the standard or due to a better alternative with excellent level of services and products. The decision makers then employ only those strategies which help them to reinforce their current customers and help to give a deep understanding of the needs and wants of their current customers.
Switching barriers make customer defection difficult or costly and include interpersonal relationships, perceived switching costs, and the attractiveness of alternatives(A. Jones, L. Mothersbaugh et al. 2000).Barriers to customer defection, such as development of strong interpersonal relationships or imposition of switching costs, represent additional retention strategies. Such barriers are important because they may generally foster greater retention and because they may help companies weather short-term fluctuations in service quality that might otherwise result in defection (A. Jones, L. Mothersbaugh et al. 2000). Another stream suggests that simply having less knowledge can influence evaluation. Consumers commonly make decisions with incomplete knowledge about alternatives (Kivetz and Simonson 2000).
2.7 Choosing
In the relationship existing between the different factors and loyalty, the degree of elaboration which is followed in the decision-making process can have a moderating influence. Elaboration is a construct based on the information processing theory (Petty and Cacioppo, 1997) and is determined by the motivation and the ability of a consumer to elaborate on the brand choice (Bloemer and Ruyter, 1998). Motivation can be operationalised by bank choice involvement and ability can be operationalised by bank choice deliberation. (Beerli, Quintana, Martin, 2004)
Despite the fact that motivation and the ability of a consumer to elaborate on the choice can be high if the consumer does not perceive differences among brands, the degree of elaboration in the decision-making process may be low. Therefore the perceived distinction between different brands is important.
Dissatisfaction usually occurs when the pricing issues are not suiting the needs of the customers. In banking industry also, the interest rates on loans and charges on the usage of online services such as ATM machines and the processing fee is a major bone of contention between the bank and its customers. If the customer thinks that the charges are more than the needs he churns. Satisfaction only results when the banks take regular feedback from the customers and whatever practical is told to them by the customers should also be implemented with in the banks. In case if the suggestions of customers are not taken into account, it will gradually start the process of defection (Lin, 2003).
The customer initially tries to compromise with the bank but at a certain point he decides to defect. Nowadays, it has become too easy to open an account in any other bank so the switching cost is also minimal. These all factors help customers to switch from the current bank. The response of customer plays a pivot role in the overall satisfaction graph of the provider. If a customer is satisfied, the loyalty injects automatically and the customer remains with the current providers for a longer and longer period of time (Giese and Cote; 2000).
2.8Habit
The satisfaction is yet another important trait which must be taken in to account when shaping the overall loyalty of the customers towards their service providers. In banks, the customers ask themselves about the level of the services and decide about the lack of importance given to them and decides about repurchase behavior after using the services. The level of satisfaction is always high when the customer gives minimum price and gets maximum of usage and profit (Jamal and Kamal, 2004). If a customer buys some product and the post purchase scenario forces him to quit the current provider then it means the customer was highly dissatisfied from the level of quality and service provided to him. A satisfied customer is the one whose needs are taken in to consideration. In today’s world, the business managers not only have to think about satisfying customers in terms of products and their basic features but they have to give extra features as well which can differentiate their products and services from the other providers and which can give some extra pleasures to the customers (Egan, 2004). The banks try to put barriers for their potential defectors. The barriers can be non refundable processing fee and block of services and incurring extra charges when the money is withdrawn from the bank on permanent basis. The banks will employ a combination of defensive and offensive strategies to gain access of all the customers which include the potential customers and the churners who are fed up from the services and their qualities. The firms who take in to account such factors are always successful not only in the short run but also in the longer term (Lee and Feick, 2001).
As a result, there are numerous works in marketing which have attempted to explain the relationships between loyalty and the various variables regarded as determinants, the most significant of which are customer satisfaction, and, to a lesser degree, switching costs (Bearden and Teel, 1983; LaBarbera and Mazursky, 1983; Kasper, 1988; Bloemer and Lemmink, 1992; Cronin and Taylor, 1992; Fornell, 1992; Oliva et al., 1992; Anderson and Sullivan, 1993; Bloemer and Kasper, 1993, 1995; Boulding et al., 1993; Oliver, 1999).
2.9 Trust
Trust has been defined as the willingness to rely on an exchange partner in whom one has confidence (Moorman et al. 1992) or confidence in an exchange partner’s reliability and integrity (Morgan and Hunt 1994). Chaudhuri and Holbrook (2001:82) define brand trust as the customer’s willingness to rely on the ability of the brand to perform its stated function. Trust causes dedication because it reduces the costs of negotiating agreements (Williamson 1981; Bendapudi and Berry 1997) and lessens customers’ fear of opportunistic behaviour by the service provider (Bendapudi and Berry 1997). In social psychology trust is considered to consist of two elements: trust in the partner’s honesty, and trust in the partner’s benevolence (Wetzels et al. 1998). Honesty is the belief that a partner stands by his word, while benevolence is the belief that the partner is interested in the customer’s welfare, and will not take actions with negative impact on the customer.
Whenever a customer decides to switch from one brand to another, the cost involved in this shifting process is known as switching cost. This cost involves the level of uncertainty involved in new provider’s products and services (Porter, 1998). In case of banking industry, the consumer decides to switch when the level of services is not up to expectations and the desired needs are not fulfilled. The consumer has to decide whether the new bank to which he is going has the minimum level of uncertainty. The customers usually churn when they realize that the banks do not take care of their needs and wants. Switching from one bank to another requires a lot of effort and customers have to gain complete knowledge about the new service providers as to what services are they providing; whether the services are reliable or not; whether the online services are error free (Jones, Beatty, Mothersbaugh, 2002).
The decision to switch causes major behavioral transformations because every brand has a different positioning concept in the market. Some companies are known for their superior quality, others for their cheap prices and so on. So when a customer switches from a company with high quality product and service to cheap product, he switches to a different concept (Aydin and Ozer, 2005). Every bank tries its level best to break the customers of its competitors. For this reason, the banks are trying to introduce customer friendly environment and nowadays the opening of new account has become too easy and user friendly. The banks almost charge very minimal fee for the opening of account and gives access to online services charge less (Selnes, 1993).
The world is moving at a very fast pace. Consumers have limited time to analyze the market and switch from their current providers. The firms keep on adopting new and innovative strategies to attract new customers (Kon, 2004). In telecommunication services, the companies charge nothing for a new potential customer and sometimes give them bonuses on starting new connection. There are some customers who never switch despite the fact that they are not satisfied with the products and services and the overall quality dimensions (Wernerfelt, 1991; Selnes, 1993; Klemperer, 1995; Ruyter et al., 1996; Anto´n Martı´n et al., 1998).
2.10 Commitment
The customers usually switch when they are persistently not getting the desired level of performance and standard from their providers. The consumers will always think of switching when the pricing strategies do not match their demands. If the company is charging more and giving low quality the customer switches (Aydin and Ozer, 2005; Sharma and Patterson, 2000). If the customer does not switch even then he is a potential defector and the competitors start working on such customers. It is very difficult to retain customers. For retention, the firms keep on employing different programs and make customers a part of their organizations (Aydin and Ozer, 2005; Sharma et al., 1997).
It is indeed a tough work to for the banks to attract such customers who will likely switch. Every bank tries to attract such customers towards its services. At this time the overall image of the brand matters the most (Klemperer, 1995). If the bank is renowned for its services and quality that bank will always be chosen because satisfaction yields from quality and trust. The trust is never developed over night. It takes blood of the firms and especially banks to build their good will and positive image. Once the require level of image is created, that is the time when the banks start attracting new customers who switch from other banks due to poor quality of services (A. Jones, L. Mothersbaugh et al. 2000).
The banks try to put barriers for their potential defectors. The barriers can be non refundable processing fee and block of services and incurring extra charges when the money is withdrawn from the bank on permanent basis. The banks will employ a combination of defensive and offensive strategies to gain access of all the customers which include the potential customers and the churners who are fed up from the services and their qualities. The firms who take in to account such factors are always successful not only in the short run but also in the longer term (Lee and Feick, 2001).
The banks are facing fierce competition nowadays. In developed countries, each bank comes up with attractive packages for its customers. The chances of defection are minimal in today’s highly competitive industry. So it is imperative to maintain a handsome base of customers who can prove to be a permanent source of revenue generation and who can help the firms in handling pressures. These customers become very important in the moment of crisis. The customers repeatedly purchase the services which help the firms to carry on their day to day operations. In this way it is really important for the banks to retain customers. These traits are presented by every bank but very few know the actual trick of retaining customers. In highly vulnerable industry it is not only about retaining customers but also about attracting new pools of customers by employing different marketing campaigns and strategies(Aydin and Ozer, 2005; Shy, 2002).
The last resort for today’s banks in view of Kon (2004) is to put maximum barriers in the way of those customers who might switch or think of switching in future due to drop in the standard or due to a better alternative with excellent level of services and products. The decision makers then employ only those strategies which help them to reinforce their current customers and help to give a deep understanding of the needs and wants of their current customers.
2.11Model
As it is mentioned in the introduction chapter, the goal of this research is finding the factors of customer loyalty for banking industry of Pakistan. In order to do this, the previous studies were reviewed.
According to (Beerli, Martin and Quintana, 2004) the factors which have influenced the customer loyalty in banking industry have been selected which are perceived quality, satisfaction and switching cost and choosing. Also more models in this category were reviewed to see whether there are more factors that can be considered in banking industry or not (Lin and Wang, 2006; Lauren and Lin, 2003, etc). So the loyalty model for other industries was considered in the reviewing of the literature. And finally according to (Lin and Wang, 2006) another factor which was mentioned in that loyalty model and could be considered in banking industry, which is habit is selected and added to the list. Also in the main model the authors didn’t mention the choosing factor in the model, but I also try to consider this item and find its relation.
Tangible Perceived Quality, Intangible Perceived Quality, Satisfaction, Trust, Switching Cost, Habit and Choosing are the factors which I have selected for my research after analyzing the cultural and socio economic situation of Pakistan. My proposed model has seven factors which is different from the already published works of (Beerli, Martin and Quintana, 2004) and (Lin and Wang, 2006; Lauren and Lin, 2003).
The original model of banking industry is mentioned in figure 1.
Figure 1: Loyalty Model (Beerli, Martin and Quintana, 2004)
Chapter 3
Methodology
In this chapter, the outline of the methodology that is used in the research and the theoretical basis behind the approach and their definitions will be explained. The choices of methodology approaches that were adapted in order to answer the research questions posed will be explained and justified.
The data collection methods will also be discussed in this chapter. After mentioning the research purpose, according to (Saunders et al., 2000)’s research process onion, the first layer raises the question of the research philosophy. The second layer considers the subject of the research approach that flows from our research philosophy. Thirdly, the research strategy will be examined and the fourth layer is about time horizons which are applied to the research. In the fifth layer data collection method will be identified, and then the validity and reliability of the research will be explained.
3.1 Research Purpose
The purpose of research is a statement of what is to be accomplished by conducting research and how the results of the research can be used (Weidersheim et. al., 2000).
According to (Saunders et al., 2000) enquiries can be classified in terms of their purposes as well as the research strategy which is used (Robson, 1993).
There are three categories; one of them is often used:
Exploratory study: This category is trying to find out “what is happening; to seek new insights; to ask questions and to assess phenomena in a new light” (Robson, 1993).It is particularly a useful approach if you wish to clarify your understanding of a problem and it is suitable when the researcher is uncertain which theories are relevant and when important characteristics and relations are difficult to determine.
Descriptive study: A descriptive research approach is appropriate when the
problem is well structured, when the researcher knows what knowledge it aims to collect, and where there is no intend to look for the cause and effect relationships (Weidersheim et. al., 2000).
The object of descriptive studies is “to portray an accurate profile of persons, events or situations” (Robson, 1993). The objective with this kind of research is to describe something, such as a population or a phenomenon. It seeks to answer who, what, where, and how questions. Consequently, it doesn’t give the answer to why questions, in other words, it doesn’t give the explanation of the cause of findings.
Explanatory study: It is a study that establishes causal relationships between variables. The emphasis here is on studying a situation or a problem in order to explain the
relationships between variables (Saunders, et. al., 2003). Explanatory studies are designed to test whether one event causes another (Hair, Babin, Money & Samouel 2003). According to Yin (2003), the objective with this kind of research is to analyze cause-effect relationship, explaining what cause produces what effects.
It establishes causal relationships between variables. In these studies the emphasis is on studying a situation or a problem in order to explain the relationships between variables.
The purpose of this thesis is to find out the main determinants of customer loyalty and then evaluate and validate the proposed model in the Pakistan’s Banking Industry. Five of the determinants of in the studied model which are satisfaction, perceived quality, switching cost, choosing and habit have been considered in literature and previous theories and the influencers of loyalty, and two of them, commitment and trust, are going to be added to the studied model.
Based on this description and the mentioned types of research purpose this can be figured out that the purpose of this research is descriptive. As we know what we want to investigate but we are not sure about the answers, we have chosen descriptive research. Also because the relationship between the variables is going to be discovered, it is also explanatory.
3.2 Research Philosophy
According to (Saunders et al., 2000), there are two research processes which dominate the literature:
Positivism
Phenomenology
Positivism approach was influenced by the scientific discoveries made during the 18th and 19th centuries. It seemed clear at that time that the body of knowledge existed independently of whether people knew it or not, and the scientific task was to discover this knowledge. It was assumed that there are laws that manage the operation of the social world and these can be discovered. Social behavior is seen as a result of external pressure acting on relatively passive people. It was assumed that there was such a thing as absolute truth and that it could be used (once obtained) to create a better society. This research tradition leads to the development of methods that concentrate on producing supposedly objective data, usually in the form of statistics.
The assumption is that “the researcher is independent of and neither affects nor is affected by the subject of the research”.
Phenomenologists deny what positivists assert, that humans can be studied using the same philosophical base as used in studying physical objects or other animals. Phenomenologists assert that there is a difference between the subject matter of sociology and natural science. Humans are active, conscious beings and they can make choices.
It is important to consider that there is no research approach “better” than another, they are “better” at doing different things. Lots of researches are a mixture of two philosophies (Saunders et al.,2000).In this research, in order to find the factors of the customer loyalty model in banking industry in Pakistan, positivism is the philosophy .
3.3 Research Approach
Research approach includes both a theoretical and methodological approach. The theoretical approach can be either inductive or deductive, and methodological approach is qualitative or quantitative (Zikmund, 2000). The deductive approach implies that a conclusion is derived from a known premise or something known to be true. In this kind of research the researcher starts from a general rule and explains a specific case (Zikmund, 2000).
The research approach is deductive when a theory and the hypothesis (or hypotheses) are developed and a research strategy is designed to test the hypothesis. When applying a deductive approach already established theories and literature are used as a foundation for the research in, 1994). Several hypotheses are constituted from existing theory and are then tested in reality (Weidersheim et. al., 2000).
On the other hand, induction means generalization from conclusions derived from a specific case or when the data is collected and the theory is developed as a result of the data analysis. The deductive approach owes more to positivism and inductive approach more to phenomenology, although it is believed that such labeling is potentially misleading and of no practical value (Saunders et al., 2000).
This research is deductive since the research starts with a literature overview which later is compared with the empirical findings and the main idea is drawn form already existing theories within the research area and then the hypotheses are developed and then the research strategy is designed.
Quantitative research implies hard data, like information on profits gained and order size, and is often presented as numbers that will determine the quantity or extent of some phenomena. The purpose of this kind is to gather, analyze and measure statistical data.
The researchers have in advance constructed questions, which give the researchers a high degree of control (Yin, 1994).A wide sample selection is normally used and the questions asked are generally not of a complex nature and close-ended. In most of exploratory researches the data collected is qualitative and on the other hand in descriptive ones the data is quantitative.
In this study, a lot of data has been collected by distributing questionnaires. All of this data was numerical and as a result the methodological research approach in his thesis is quantitative.
3.4 Research Strategy
Research strategy is a general plan of how to answer the research questions that have been set. It deals with the strategy that is appropriate for the research question(s) and objectives be chosen (Saunders et al., 2000).Saunders et al. (2000) explained that the research strategy is employed as follow:
Experiment: The purpose with the experiment study is to help formulate the problem and clarify concepts, rather than develop conclusive evidence (Zikmund, 2000).It involves the definition of theoretical hypothesis, selection of samples and allocation of them to different experimental conditions, introduction of planned changes, measurement on some variables and control of other variables.
Survey: Survey method is a popular and common strategy in business research. Surveys allow the collection of a large amount of data from a sizeable population in a highly economical way. Based mostly on the questionnaires, the data are standardized and allow easy comparison. It is also easily understood.
There can be limited number of questions. Another threat is that the questionnaires might be answered not completely by the respondents. There are also other data collection devices that belong to the survey category such as structure observations and structured interviews where standardized questions are asked from all interviewees. Questions “what” and “how” tend to be more the concern of the survey method.
Case study: Saunders et al. (2000) define case study as the development of detailed, intensive knowledge about a single case, or a small number of related cases. This strategy is of particular interest when the purpose is to gain a rich understanding of the context of the research and the processes being enacted. This is beneficial when the researcher wishes to gain a deeper understanding of the concept of research (Robson, 1993).The information collection methods might differ between case studies. Case study can be a very worthwhile way of exploring a theory. The case study approach has considerable ability to generate answers to the questions “why” as well as “what” and “how”.
Grounded theory: Grounded theory is often thought of the best example of the inductive approach. It is better to think of it as a combination of induction and deduction. In grounded theory data collection starts without the formation of an initial theoretical framework. Theory is developed from the data generated by series of observations. These data lead to the generation of predictions that are then tested in further observations.
Action Research: Action research is the part of the organization within which the research and the changing process are taking place. So action research differs from other forms of applied research because of its explicit focus on action, in particular promoting change within the organization.
In this research, survey method is employed to have an analysis on the model of customer loyalty in banking industry of Pakistan. The research approach is deductive and quantitative; survey would be a good choice. In order to find the factors and also the relationship between these factors, a questionnaire is designed. For doing so the factors of models which were mentioned in the literature review are used. Because one of those models is for e-commerce industry, I had to check the factors to see whether they are appropriate for banking in Pakistan or not.
So I had a discussion with some experts in banking industry to show them the factors which were going to be used in the new model. After the discussion all of the considered factors were accepted. after finalizing the factors the questionnaire of those researches were combined together, then among those questions some had little changes, some were eliminated, some were added and the rest were not changed. Then a complete translated questionnaire was ready.
3.5 Time Horizon
(Saunders et al., 2000) believes that most research projects undertaken for academic courses are necessarily time constrained. When planning for the research there are two options in the time perspective:
Cross -sectional: a study in which a group(s) of individuals are composed into one large sample and studied at only a single point of time.
Longitudinal: a study in which an individual or a group of individuals is observed over a period of time.
In this research cross -sectional study is performed.
3.6 Data Collection Method
The gathering of data may range from a simple observation at one location to an extravagant survey of multinational corporations at sites in different parts of the world. The method of research can determine how the data are collected. Questionnaires, standardized tests, observational forms, laboratory notes, and instrument calibration logs are among the devices used to recover raw data (cooper and Schindler, 2003).Saunders, etc. al. (2000) explains that when gathering data and information to meet the objectives of the research questions, there are two options to face, primary and secondary data.
Kotler &Armstrong (1994) declare that secondary data is information collected from former existing studies and literatures, gathered for another purpose. They continue to explain that the main advantage of this data compared to primary data is that it is fairly inexpensive. In this study the information can be obtained from books, articles and research reports. Because no previous data and documents were available for this thesis, and the data is gathered only for the problem at hand, the type of data which is going to be used here is primary. Also for collecting data there are different ways. Yin (1994) calls them source of evidence. A few examples are: interviews, observations, literature study, etc.
After validating the model, in order to apply it in the Pakistani Banking Industry, a questionnaire was designed and distributed among the studied sample. So the method employed to gather primary data was through questionnaires. The sampling frame for any probability sample is a complete list of all cases in the population from which your sample will be drawn (Saunders et al., 2000).As the research questions in this study concern bank customers, so the sampling frame is a complete list of all banking customers in Pakistan.
While employing all probability samples, it is very important to consider the response rate. According to (Saunders et al.,2000), response rates in business surveys are usually as low as 15-20 percent for postal surveys and also response rate of between 50 to 92 percent for questionnaire surveys and of 73 to 99 percent for telephone interviews.
Therefore I asked the customer in my sample population to fill the questionnaires. Those who didn’t want to participate mentioned the lack of time was the reason. The response rate in this research performing the above method of data gathering was calculated as 93 percent and this is because the questionnaires were given one by one and face to face.
3.7 Sample Selection
There are two major alternatives on how to select an appropriate sample: random (probability) and non-random (non-probability) sampling. The random sampling gives every part of population an equal probability of selection. The non-probability sampling includes a selection of a sample on other basis than the random sampling, such as convenience and personal judgment (Zikmund, 2000).The random sampling technique was used in this thesis when all the members of the population had same chance to be selected and no specific characteristic more than being a customer of the bank, was considered while selecting them.
3.8 Collecting Primary data using questionnaire
Primary data is collected for a specific purpose by the researcher and the information is gathered for instance through interviews, questionnaires and observations (Weidersheim et. al., 1997). (Saunders et al., 2000) note that the greatest use of questionnaires is made by the survey strategy. Questionnaires can therefore be used for descriptive research, such as that undertaken using attitude and opinion questionnaires and questionnaires of organizational practices will enable you to identify and describe the variability in different phenomena.
3.9 Questionnaire Design
Because of the reasons mentioned above I used a self-administered questionnaire method for collecting the primary data. More importantly replicated a study that had been done in Taiwan by (Lin and Wang, 2006) and in Spain by (Beerli, Martin, Quintana, 2004)’s questionnaire and in Iran by (Golrou Abdollahi, 2007).
Hence in this research I combine those three questionnaires and added some more to them.
First the duplicated questions were omitted. Then because of the different environment between the banking industry of Pakistan and other countries, questions had to be checked to see whether they needed localization changes or not. Some of the questions were edited for this reason. And a few questions were added to some of the factors.
(Salant and Dillman, 1994) argue that, to achieve a response rate as high as possible, you need to explain clearly and concisely why you want the respondent to complete the survey on the first page. Regarding this issue a covering letter was provided for the first page. The questions in the questionnaire tried to find the factors of customer loyalty in Pakistan. The above opinions were measured by requesting respondents to indicate, on a five-point Likert-type scales, anchored on “1 = to a very little extent” through “5 = to a very great extent”, their agreement or disagreement with a series of statements that characterize the factors for loyalty model of the customers in banking industry in Pakistan.
Likert scales were developed in 1932 as the familiar five-point bipolar response format most people are familiar with today. These scales always ask people to what extent they agree or disagree with something, approve or disapprove something and believe something to be true or false. There’s really no wrong way to do a Likert scale, the most important thing is to at least have five response categories (Likert, 1932).The questionnaire also contained some personal questions to reach to some contextual sense of the answers collected such as name, age, position, etc.
A total of 350 questionnaires were distributed among the respondents out of which I got 316 filled questionnaires. The response rate was 93% which was quite high.
3.10 Research Credibility
When researchers research they must take the two concepts of validity and reliability into consideration. A research must have high validity, meaning that a research must measure what it is suppose to measure. The reliability must also be high, meaning that a research has to be done in a reliable way. There is a relation between these two concepts, and therefore researchers must take both concepts into consideration and they cannot focus only on one of them (Saunders et al, 2003).
According to (Saunders et al., 2000) reducing the possibility of getting the wrong answer means that attention has to be paid to two particular points in the research design:
Reliability
Validity
3.10.1 Reliability
Reliability means that the research is performed in a reliable way. This is how well the measuring method resists different influences. If the reliability is high, different researchers will be able to come to the same conclusions with the same measuring methods, if the research would be repeated. (Denscombe, 1998).This is about the results of each investigation, which have to be reliable. If nothing changes in a population between two investigations for the same purpose, it is reliable.
As we dispensed the questionnaires during the exhibitions we really did not face the subject error. For reducing the subject bias, we tried to make the respondents certain that their answers would be considered confidential. Since the questionnaire was designed as a survey format, we did not face the observer error or the observer bias.
A minimum (Cronbach, 1951)’s Alpha value of 0.7 indicates reliability of the questionnaire. In my research all the factors and their individual questions have very high reliability.
3.10.2 Validity
According to Denscombe (1998) “validity is about to what extent researched data and the methods to receive this data are exact, real and accurate.” (p. 238). Widersheim-Paul and Eriksson (2001) claims that validity is the most important requirement of a measuring tool since this will show the accuracy of the found data.
Validity is concerned with whether the findings are really about what they appear to be about (Saunders et al., 2000).
If a question can be misunderstood, the information is said to be of low validity. In order to avoid low validity, I myself administered most of the questionnaires and explained each question thoroughly to the respondent. In addition, questionnaires were given to the respondents face-to-face, so that if they faced any difficulties while filling out the questionnaire, the ambiguity could be explained.
Chapter 4
Analysis
In this chapter I will present the result of the statistical analysis. I have used SPSS software to analyze the data. Then after analyzing the data, some suggestions will also be given according to the results.
4.1 General Information
At the start of the questionnaire. I asked for some general information from the respondents (Table 2).According to the results, the most active bank customers are the ones between 35 to 50 and most of the respondents are having the bachelor’s degree. The results also show that most of the respondents have official occupation. An interesting information that the results show is that a large number of customers are male. This could be because of male dominant society of Pakistan, in general and Abbottabad, in particular and also due to the fact that males usually are the caretakers of the family’s financial matters.
Table 1: General Information about the respondents
Gender Female
86%
Male
14%
Age Under 20
4%
20-35
32%
35-50
48%
50-60
9%
Over 60
7%
Education Under SSC
11%
Under HSSC
14%
Bachelor
51%
Master and higher
24%
Occupation Employee
60%
Businessman
27%
Unemployed
8%
Student
5%
The general information also shows that the majority of the customers have their accounts in the banks for a period of more than three years and less than five years. So, it is very important to make these customers loyal to the bank for longer periods.
4.2 Analysis of the factors
Quality
Customer loyalty is mainly shaped by the quality of the service or products, thus quality plays a pivotal role in determining the loyalty of the customers. The customers can think of giving up the loyalty on serious grounds if they perceive quality in negative terms. The quality of the services can further be divided into two categories.
a) Tangible Perceived Quality
The tangible perceived quality is the quality which can be seen by the customers. The customers perceive the tangibility of the services provided by the bank such as the appearance and outlook of bank employees, equipment and the interest rates. The tangible perceived quality questions are as follows:
Table 2: Tangible Perceived Questions
Do you agree that the received interest from the bank is effective to continue my work with this bank?Do you agree that the bank has modern-looking equipment?Do you agree this bank’s facilities are attractive and modern? (Such as ATM Machines, telephone banking, internet…)Do you agree this bank’s employees are tidy in appearance?Do you agree materials associated with the services are visually clean, tidy, intact, and enough? (Such as pen, chair…)Do you agree the opening hours of the bank are convenient to you?Do you agree your needs and interests are considered in the bank’s services?Do you use this bank because all of its services are available in the branch?Was my problem resolved on the first contact to customer representative or was additional customer representative contacts required?Are customer representatives knowledgeable?
The Cronbach’s alpha, which was gained from these questions after running the questionnaire in the SPSS, were 0.818 which was a high one. This means that the reliability of the questions was high and also the validity as well. Variable’s validity determines the extent to which a scale measures a variable of interest.
The table 3 shows the mean and the standard deviations of the questions answered by the customer. The mean column shows the average answers given to the questions. As I have used five point liker methods and by considering that “1” responds to very little extent and “5” to a very large extent. I have asked the customers for their agreement to each question. The following table shows the mean and standard deviation results.
Table 3: Tangible Perceived Quality Mean and Standard Deviation Result
Mean
Std. Deviation
TPQ1
3.22
.75
TPQ2
3.45
.80
TPQ3
3.30
.71
TPQ4
3.49
.88
TPQ5
3.11
.77
TPQ6
3.70
.73
TPQ7
3.27
.80
TPQ8
3.76
.71
TPQ9TPQ10
3.12 3.50
.64 .85
In tangible perceived quality, the customers felt particularly strong about the eighth question. There are ten questions in tangible perceived quality category. The customers agree to a great extent that they use bank because all of it’s services are available in the branch. The customers felt weak about the fifth as well as ninth question with mean of 3.11 and 3.12 respectively.
Variance and standard deviation show the spread ness of the answers. If we have a high average mean number and also high variance, it doesn’t mean that the questions have been answered properly. There was some problem in the questions, and we have to find the reason of the problem. On the other hand, a low variance is a good symptom.
Table 4: Tangible Perceived Quality average result
Tangible Quality Category
Mean
Item Means
3.395
Item Variances
.596
The inter-item correlation between these questions is as follows:
Intangible quality is the unseen perceived quality of the product or service. The product is equal to the service in the service sector, so in banking industry, the quality of the services is analyzed by the customers. The customers are asked different questions about the intangibility of the services.
The intangible perceived quality category has eight questions in total. The table shows the questions for the customers.
Table 6: Intangible Perceived Quality Questions
Do you agree this bank insists on providing the services error free?Do you agree this bank provides its services at the time it promises to do so?Do you agree the bank employees are fast enough in providing the services?Do you agree employees of this bank are always willing to help you to overcome the problems?Do you agree the behavior of employees of this bank instills confidence in customers?Do you agree employees of this bank are constantly courteous to you?Do you agree employees of the bank pay special attention to you?Do banks value people and relationships ahead of short-term goals?
The Cronbach’s alpha which is used to check the reliability and validity of the questions, was gained from these right questions. The Cronbach’s alpha for intangible perceived quality category were 0.816 which was a very high one. This means that the questions about intangible perceived quality were reliable and also valid.
The following table shows the average of means and also variances of the questions. The average item means was 3.612 which shows that the customers agreed to almost great extent with the fact that the banks are providing them with the desired level of intangible quality in their services. The overall unseen quality of services of the bank is on the stronger side. The item variances of the intangible perceived quality category was 0.615 and a low variance is always a good symptom. This low variance shows that the questions were designed in such a way that most of the customers understand it in the same way.
Table 7: Intangible Perceived Quality Average Result
Intangible Quality Category
Mean
Item Means
3.612
Item Variances
.615
The following table shows the standard deviations and means of the questions which were answered by the customers.
Table 8: Intangible Perceived Quality Mean and Std. Deviation Result
Mean
Std. Deviation
IPQ1
3.55
.83
IPQ2
3.57
.75
IPQ3
3.46
.94
IPQ4
3.65
.77
IPQ5
3.61
.74
IPQ6
3.66
.78
IPQ7
3.17
1.17
IPQ8
3.63
.87
In intangible perceived quality category the customers felt particularly strong about the sixth and fourth questions with an average of 3.66 and 3.65 respectively. The customers do not feel strong enough about the employees of the bank as they do not pay special attention to them whenever they are stuck with any problem.
The inter-item correlation between these questions is as follows:
As it was mentioned in chapter 2, and as every person, at least has felt this feeling once, all can agree that trust has a major role in being loyal to a brand or company.
Trust plays a pivotal role in making a customer loyal especially in Pakistani environment; trust on the services of the bank is always a major priority of the customers. The customers want error free and transparent services such as ATM services, leasing services, credit card services etc. ‘Loyalty’ and ‘trust’ are related concepts: while banks want loyal customers, the consumers want trustworthy banks. If consumers feel that their bank is trustworthy, they respond with trust and perhaps loyalty. If trust is threatened, e.g. by unreasonable bank conditions, loyalty could disappear. Some would claim, though, that true loyalty is to continue buying a product even after disappointing incidents.
The trust on the services of the bank in this research is measured by nine questions.
Table 10: Trust Questions
Do you agree this bank informed me of its side services from the beginning?Do you agree the bank insists on error-free records?Do you agree employees of this bank solve your problems when they promise to do so?Do you trust the bank and its ATM Services?Based on my experience with the bank in the past, I know it is not opportunistic.Based on my experience with the bank in the past, I know it cares about customers.Based on my experience with the bank in the past, I know it delivers what it promises in its advertisements and it is honest.I feel secure when I use products and services of the bank because I know that the bank will never let me down and will never cheat me.The bank provides me with reliable and worthwhile (value formoney) product and services?
The test for reliability of thes3e questions was done and the result of Cronbach’s alpha is 0.947 which is high one and shows that the questions were chosen properly and they are reliable. Then the mean and variances of the items in the trust category is calculated. The following table shows the mean and the standard deviations of the questions which are answered by the customers.
Table 11: Trust Mean and Std. Deviation Result
Mean
Std. Deviation
T1
3.57
.75
T2
3.55
.73
T3
3.45
.71
T4
3.64
.73
T5
3.86
.82
T6
3.67
.79
T7
3.60
.73
T8
3.65
.75
T9
3.58
.74
It seems that most of the customers agreed to a great extent to the fact that their experiences reveal that the banks are not opportunistic at all and the banks do really care for them. However a little concern of the customers is that the employees do not necessarily solve their problems when they promise to do so and when they make commitment.
The following table is about the average of the mean and variances.
Table 12: Trust Average Result
Trust Category
Mean
Item Means
3.628
Item Variances
.562
The variances of the questions in the trust category is 0.562 which is a good symptom because low variance shows that the customers have understood the questions in the same way. The average answers of the question is 3.628 which shows that the customers agree to above average extent with the fact that the banks in which they have the accounts, are trustworthy in providing them with error free and transparent services.
The inter-item correlation between these questions is as follows:
Table 13: Trust Inter-Item Correlation Matrix
T1
T2
T3
T4
T5
T6
T7
T8
T9
T1
1.000
.490
.482
.475
.202
.377
.457
.456
.466
T2
.490
1.000
.909
.931
.406
.842
.955
.907
.973
T3
.482
.909
1.000
.846
.351
.767
.867
.825
.885
T4
.475
.931
.846
1.000
.388
.782
.902
.872
.909
T5
.202
.406
.351
.388
1.000
.326
.433
.350
.381
T6
.377
.842
.767
.782
.326
1.000
.842
.783
.806
T7
.457
.955
.867
.902
.433
.842
1.000
.902
.911
T8
.456
.907
.825
.872
.350
.783
.902
1.000
.870
T9
.466
.973
.885
.909
.381
.806
.911
.870
1.000
Switching Cost
Switching cost means the price paid by the customers for moving from one company or brand and choosing another. The price includes both the internal and external price. The previous researchers show that there are always some barriers for the customers in defection time, so they don’t feel that it is simple to switch from one company to another. When the costs of switching brand are high for the customer, there is a greater probability that the customer will remain loyal in terms of repeat purchase behaviour, because of the risk or expense involved in switching and because of the accompanying decrease in the appeal of other alternatives.
The customers find it difficult to switch from one bank to another due to different reasons or barriers. Barriers to customer defection, such as development of strong interpersonal relationships or imposition of switching costs, represent additional retention strategies. Such barriers are important because they may generally foster greater retention and because they may help companies weather short-term fluctuations in service quality that might otherwise result in defection.
This factor is analyzed using five questions. The following table shows the questions through which the customers switching cost is analyzed.
Table 14: Switching Cost Questions
Change to another bank involves investing time in searching for information about other banksChange to another bank involves much effort in deciding which other bank to use.Change to another bank involves a risk and uncertainty in choosing which might turn Out not to satisfy me.It would cost me a lot of money to switch from my bank to another bank.It would cost me a lot of time to switch from my bank to another bank.
The reliability of these questions was calculated by SPSS software and the Cronbach’s alpha was found to be 0.841 which is good to conclude that the questions are reliable as well as valid in the switching cost category.
Then the mean and standard deviation of each question is shown.
Table 15: Switching Cost Mean and Std. Deviation
Mean
Std. Deviation
SC1
3.42
.77
SC2
3.12
1.15
SC3
3.00
1.10
SC4
3.02
.99
SC5
3.40
.85
The table shows that the first question has the maximum mean. The customers agree to a great extent that it requires investing a lot of time in order to switch from one bank to another. The customers would require time to find out the information about the other alternative banks and their services.
Switching does not require a lot of money investment initially and the customers do not consider it a major barrier in churning. The respondents think that even switching may turn out not to satisfy them at the end and this uncertain situation will further complicate the problems as well as their satisfaction status.
Then the average of the variance and the mean of all the questions in the switching cost category are shown in the following table.
Table 16: Switching Cost Average Result
Switching Cost Category
Mean
Item Means
3.486
Item Variances
.666
The switching cost category’s item means is 3.486 which shows that the customers agree to an average extent that the switching cost of the bank is considerably high enough. So, most of the customers do not switch from one bank to another because they consider the barriers too high and effective.
The switching cost item variances are .666 which is quite low and shows that the customers have understood the questions in a common way.
The inter-item correlation between these questions is as follows:
Satisfaction in banking industry means that the product or service which is offered to the customer makes him/her satisfied and meets his/her expectations. Customer satisfaction is another determinant of customer loyalty. In the highly competitive business world of today, customer satisfaction can be seen as the substantial of success, as customer satisfaction can lead to customer retention and therefore to profitability for an organization.
The customers would love to buy the services from the same bank again and again. In the competitive environment which the competitors are trying to have the other’s customers, this determinant can be vital. By this, the company can gain more profit. The direct monetary profit and the indirect one which can be for example advertising by word-of-mouth process or etc can be the means of profit gaining.
This factor in this research is measured by eight questions given in table 19, and the test for reliability of these questions was done. The Cronbach’s alpha is 0.883 which is a good one and shows that the questions were chosen properly and they are reliable.
Table 18: Satisfaction Questions
Do you agree this bank meets my needs? Do you agree the bank I deal with is far from my expectations of an ideal bank? According to my experiences, am I satisfied with this bank? In comparison to other banks, do I consider this bank and its services successful?Do your banks take your feedback regularly? Are you satisfied with the way complaints are handled?Are you satisfied with the online services and their promptness?Are you satisfied with the pricing issues (Margins on loans, charges on ATM and other online services)?
To check whether these eight questions are showing one common thing, which is the satisfaction, factor analysis was done. The extraction communalities are estimates of the variance in each variable accounted for by the components. The communalities for satisfaction factor are all high, which indicates that the extracted components represent the variables well. If any communalities are very low in a principal components extraction, you may need to extract another component.
The table below shows the mean and the variance of the questions which are answered by the customer.
Table 19: Satisfaction Mean and Std. Deviation Result
Mean
Std. Deviation
S1
3.84
.85
S2
3.02
1.05
S3
3.95
.83
S4
3.85
.86
S5
2.64
1.04
S6
3.59
.69
S7
3.94
.87
S8
2.99
1.04
The customers felt particularly strong about the third and seventh question with the mean of 3.95 and 3.94 respectively. This means, most of the customers are satisfied with the services of the banks and their needs are being taken care of by the banks. The fifth question has the least mean of 2.64 which highlights an important issue that the feedback about the services of the bank is not taken regularly by the customers.
The average of the means and variances is as below:
Table 20: Satisfaction Average Result
Satisfaction
Mean
Item Means Item Variances
3.517 .837
The item means of 3.517 shows that the customers agreed to a great extent to the point that the banks are fulfilling their needs and they are satisfied from the services of the banks.
The inter-item correlation between these questions is as follows:
Choosing has an important role to play in the loyalty of a customer. This variable will find out what role does choosing power plays in making a customer loyal or churn. If the customer chooses a bank after a careful analysis of different banks and considering some of the crucial factors then obviously his or her loyalty towards that particular bank will be quite strong because of his/her efforts in choosing the right bank. When a customer decides to choose a company for getting some sort of services, for example a bank to have the financial services, if the selection of that target company is done by considering some factors, then being loyal to that company in the future is more possible and probable.
The questionnaire has four questions which represent this category. The table 23 enlists the questions related to the choosing category.
Table 22: Choosing Questions
Before choosing a bank do I consider its advantages and disadvantages?The decision which I make for choosing a bank for the first time is very important?Before choosing a bank, do I compare it with other banks?Before choosing a bank, have you taken input from others (Parents, Relatives and Friends)?
The reliability of this factor was calculated through SPSS which was 0.897 showing that the questions were reliable as well as valid.
The means and standard deviations of these four questions of choosing category are shown in the following table.
Table 23: Choosing Mean and Std. Deviation Result
Mean
Std. Deviation
CH1
3.67
.91
CH2
3.29
.88
CH3
3.50
.865
CH4
3.40
.93
The results show that the customers consider the advantages and disadvantages of a bank while choosing. The customers analyze the merits of the services of the banks and compare it other banks and finally select or chooses a bank. The lowest mean is of question number 2 which shows the decision of choosing bank is not as important in the first instance.
The average of the means and the variance of the questions of the choosing factor are given in table 24.
Table 24: Choosing Average Result
Choosing
Mean
Item Means
3.466
Item Variances
.808
The inter-item correlation between these questions is as follows:
Table 25: Choosing Inter-Item Correlation Matrix
CH1
CH2
CH3
CH4
CH1
1.000
.499
.768
.678
CH2
.499
1.000
.665
.615
CH3
.768
.665
1.000
.892
CH4
.678
.615
.892
1.000
4.2.6 Habit
Habit is an important factor in repeat purchases and becoming loyal. I visit some of the websites out of habit. Gradually habits turn in to permanent behaviors. Once a behavior has become a habit, or a well-practiced behavior, it becomes automatic and is carried out without conscious decision. The researchers have found that habit can directly affect behavioral intentions more than attitude and social norms. It is a fact of life that the force of habit still dictates many behavioral intentions, when people have gained experience.
Six questions in my research has described this all important factor. These are:
Table 26: Habit Questions
Do I use this bank because my family also uses it? Do I use this bank because I am admitted as a member of this bank by my office or family?Do I use this bank because it is near my office or home?Do I use this bank because it has many branches?Do I use this bank because this is the first bank which I used its services?Am I used to using of the services of this bank?
The Cronbach’s alpha which was gained from the respondents’ answer was 0.769.Although this was the lowest of all the other factors but even then it is above 0.70 which is the standard. So the questions are reliable and valid.
The table 27 shows the results of mean and Std. Deviation of the questions which are related to the habit.
Table 27: Habit Mean and Std. Deviation
Mean
Std. Deviation
H1
3.07
.965
H2
3.20
.913
H3
3.26
.963
H4
3.32
.985
H5
2.96
.739
H6
3.32
.944
The fourth and sixth question has the highest mean. The fifth question has the lowest mean and standard deviation which states, the customers do not agree to a considerable extent that they became habitual after initially using the services. The average of means and variance is as follows:
Table 28: Habit Average Result
Habit
Mean
Item Means
3.186
Item Variances
0.850
The inter-item correlation between these questions is as follows:
Commitment is a desire to maintain a relationship as well as a pledge of continuity with the bank. This factor is explained with the help of six questions. Firstly, the factor analysis was done to check the relation of the questions with the factor. The communalities for commitment factor are all high, which indicates that the extracted components represent the variables well. If any communalities are very low in a principal components extraction, you may need to extract another component. The table 31 presents the six questions of commitment.
Table 30: Commitment Questions
1. My preference for this bank would not willingly change. 2. It would be difficult to change my beliefs about this bank. 3. Even if close friends recommended another bank, I would not change my preference for this bank 4. To change my preference from this bank would require major rethinking? 5. My intention to use the services of this bank would not be changed. 6. Would I always use this bank’s services?
The reliability of the commitment was 0.937 which is quite high. So the questions are reliable and valid. The means and standard deviations of each question was also calculated and the result is shown in table 32.These means show the average response of all the respondents for a given question.
Table 31: Commitment Mean and Std. Deviation
Mean
Std. Deviation
CMT1
3.72
.881
CMT2
3.80
.904
CMT3
3.55
.930
CMT4
3.66
.935
CMT5
3.56
.956
CMT6
3.67
.967
The result shows that the highest mean is 3.80 of question 1 and the lowest mean is 3.55 of question 3.The highest standard deviation is of question 6 and the lowest standard deviation is of question 1.The customers felt strongly about almost all the questions of commitment. They agree to recommend their respective banks to others and are determined that no one can change their commitment and preference towards their own banks. Even if the banks fail to meet some of their demands, they will continue their relationship with the banks.
The average of the means and variances for the commitment category questions is as follows:
Table 32: Commitment Average Result
Commitment
Mean
Item Means
3.662
Item Variances
0.863
The item means of 3.662 shows the customers are committed to continue their relationship with their own banks even if minor problems exist in the services of the banks. To change their commitment from a bank will require a major flaw in the service.
The inter-item correlation between these questions is as follows:
All of the factors which are mentioned above are designed to identify the customer’s loyalty in banking industry in order to create a model in the Pakistani industry. To do so, in addition to the elements which were designed and discussed above, some questions are trying to show the loyalty factor directly. There are four questions in this category which are showing one common factor i.e. loyalty. The following table enlists these four questions representing the Loyalty category.
Table 34: Loyalty Questions
Would I always recommend my bank to the others?Am I a loyal customer to this bank?I intend to keep purchasing products/services from this bank.Will you continue relationship with this bank even if it is unable to meet some Of your needs?
The Cronbach’s alpha was 0.873 which gives evidence of the reliability and the validity of the data. This is the dependent variable of my research and all other factors are trying to find and identify the customer’s loyalty in the banking sector of Pakistan. Through these four questions, the direct response of customers about the loyalty is measured.
The means and standard deviations are as follows:
Table 35: Loyalty Mean and Std. Deviation Result
Mean
Std. Deviation
LOY1
3.58
.967
LOY2
3.46
.996
LOY3
3.62
.909
LOY4
3.28
.972
The third question has the highest mean and the customers have shown their strong willingness to continue buying the products and service of their respective banks. The fourth question has the least mean which states that the customers may think to switch the bank if it is unable to meet some of their basic demands and needs.
The average of means and variances is then given in the table 36.
Table 36: Loyalty Average Result
Commitment
Mean
Item Means
3.486
Item Variances
0.925
The inter-item correlation between these questions is as follows:
Table 37: Loyalty Inter-Item Correlation Matrix
LOY1
LOY2
LOY3
LOY4
LOY1
1.000
.829
.967
.408
LOY2
.829
1.000
.812
.376
LOY3
.967
.812
1.000
.421
LOY4
.408
.376
.421
1.000
4.3 Discriminate Validity of the factors
The validity determines the extent to which a scale measures a variable of interest. In this research, I have conducted a principal components factor analysis with varimax rotation to investigate the distinctions among Tangible Perceived Quality, Intangible Perceived Quality, Trust, Satisfaction, Habit, Switching Cost, Choosing, Commitment and Loyalty. As shown in Table 39, the nine factors emerged with no cross-factor loadings above 0.5, indicating good discriminant validity. These results confirm that each of the nine factors is unidimensional and factorially distinct and that all items used to operationalize a particular determinant is loaded onto a single factor. The research has nine factors in total with one dependent factor and eight independent factors which are determining their effect on the dependent factor i.e. Loyalty. The table 38 shows the result of Principal Component Extraction.
Table 38. Factor Analysis Results: Principal Component Extraction
Items
Extraction
TPQ1
.941
TPQ2
.591
TPQ3
.833
TPQ4
.624
TPQ5
.799
TPQ6
.944
TPQ7
.876
TPQ8
.936
TPQ9
.695
TPQ10
.589
IPQ1
.600
IPQ2
.898
IPQ3
.660
IPQ4
.717
IPQ5
.727
IPQ6
.865
IPQ7
.802
IPQ8
.535
T1
.898
T2
.970
T3
.884
T4
.890
T5
.521
T6
.825
T7
.928
T8
.862
T9
.924
SC1
.918
SC2
.836
SC3
.591
SC4
.582
SC5
.807
S1
.949
S2
.965
S3
.805
S4
.924
S5
.897
S6
.733
S7
.842
S8
.956
CH1
.716
CH2
.649
CH3
.893
CH4
.864
HB1
.581
HB2
.951
HB3
.922
HB4
.833
HB5
.786
HB6
.787
CMT1
.849
CMT2
.791
CMT3
.615
CMT4
.829
CMT5
.579
CMT6
.813
LOY1
.807
LOY2
.665
LOY3
.819
LOY4
.695
4.4 Correlation between factors
I have discussed each factor and the questions which identified these factors in detail, the relationship between questions in each factor through inter-item correlation matrices, the reliability of each factor, the validity of each factor, now it’s time to analyze the correlation and relationship between the elements of the model. The Correlations procedure computes the pair wise associations for a set of variables and displays the results in a matrix. It is useful for determining the strength and direction of the association between two variables.
The correlation matrix between different factors is shown in table 39.
Table 39: Correlation Result
LOY
TPQ
IPQ
T
SC
S
CH
HB
CMT
LOY
1
.516
.474
.254
.376
.741
.315
.127
.563
TPQ
.516
1
.673
.303
.291
.608
.285
.152
.200
IPQ
.474
.673
1
.207
.258
.400
.283
.166
.550
T
.254
.303
.207
1
.171
.125
.081
.091
.405
SC
.376
.291
.258
.171
1
.035
.142(*)
.364
.162
S
.741
.608
.405
.125
.035
1
.223
.205
.127
CH
.315
.285
.283
.081
.142(*)
.223
1
.143
.197
HB
.127
.152
.166
.091
.364
.205
.143
1
.110
CMT
.563
.200
.550
.405
.162
.127
.197
.110
1
Correlation is significant at the 0.05 level (2-tailed).
By looking at the correlation matrix between the factors we can understand that satisfaction is the most correlated element with loyalty. The correlation of 0.741 between these two factors shows that a little change in the satisfaction has a major influence on the loyalty of the customer towards his/her bank. the managers must meet the basic needs of the customers to make them satisfied such as the prompt and error free services and pricing issues(margins on loans, charges on usage of ATM services).once the customer is satisfied, the chances of his/her becoming loyal to the bank increases considerably.
The next factor which is more important is the commitment. The correlation between commitment and loyalty is 0.563 which shows that the highly committed customers are always loyal to the bank. The next factor which is more important is the tangible perceived quality with a correlation of 0.516 which shows a strong relationship with loyalty.
The managers should emphasize on the quality factors such as the availability of modern looking equipment and services and ensure that all the services of the bank are present in every branch. By giving the seen aspects of quality to the customer, the loyalty can be increased.
The next factor is intangible perceived quality. The managers should focus on the provision of error free services and train their employees to pay special attention to each customer and treat them courteously. By treating the customer well, the managers can make them loyal to their banks.
These are the most important factors which show strong correlation with the loyalty. The rest of the factors are also correlated but not as much as the satisfaction, commitment, tangible perceived quality and intangible perceived quality.
Then we analyze the correlation of each factor with other factors. The tangible perceived quality is most correlated with the satisfaction factor and least correlated with trust factor. So for having more satisfied customers, tangible perceived quality factors are more important to be considered by the banks. If the banks are successful in increasing the tangible quality of the services, they also become successful in increasing the number of satisfied customers. Intangible perceived quality has a good correlation with commitment and satisfaction. This means by providing error free services and paying special attention to the queries of the customers, the commitment of the customers can be increased. The highly committed customers are those who received high standard of intangible quality of services provided by the banks. The rest are also correlated with intangible quality but the effect is not as much as the effect of these two factors.
In trust column, the commitment factor is more correlated than the others. This means that when a customer is committed to a bank, his/her trust on the bank is increased more and more. Trust on the services of the banks is also increased depending on the standard of the tangibility provided by banks in their services. So changes in commitment or tangibility cause changes in the trust of the customer on the bank. The switching cost factor is most correlated with the habit factor. This means that when the customers are habitual in using the services of the bank, they do not switch easily from their bank. The more habitual the customers are, the higher the number of the barriers in switching from one bank to another bank. So habitual customers are usually not churners.
The choosing factor shows that loyalty, tangible perceived quality, intangible perceived quality and satisfaction are more correlated with this factor. This means that for choosing a bank as the service provider, quality factors and satisfaction can have a main role.
The habit factor has strong correlation with the switching cost and satisfaction as well. The commitment factor has strong correlation with intangible perceived quality and trust factor. This means that the highly committed customers trust the services of the bank more than the customers who are not committed to the bank. The correlation of all the factor with each other has been discussed which is given in the table 40.
4.5 Factors’ Relationship
The factors which influence the loyalty factor in this model are:
Tangible quality
Intangible quality
Satisfaction
Choosing
Trust
Switching Cost
Habit
Commitment.
Some of the factors also influence the others. The relations were explained completely in previous parts.
So the primary hypotheses are shown in figure 2.
Figure 2: Primary Hypotheses
The final hypotheses which were considered in the research are as below:
Choosing influences the loyalty
Tangible Perceived Quality influences the loyalty
Intangible Perceived Quality influences the loyalty
Trust influences the loyalty
Satisfaction influences the loyalty
Switching cost influences the loyalty
Habit influences the loyalty
Commitment influences the loyalty
According to the above explanation, the hypotheses of the research are all approved (explained in previous parts). Also some more hypotheses were found in the analysis and explained in the previous part. They are as below:
H20: Satisfaction will positively affect commitment.
H21: Choosing will positively affect satisfaction.
H22: Tangible perceived quality influences trust
The complete relationships among different factors of customer loyalty in the banking industry of Pakistan are presented in the figure 3.
Figure 3: Factors’ Relations
The hypothesized relationships were tested using the multiple regression analysis of SPSS. The average scores of the items representing each of the nine factors were used in the data analysis. The R2 was used to assess the model’s overall predictive fit. Properties of the causal paths, including standardized path coefficients, t-values, and variance explained for each equation in the hypothesized model are presented in Figure 5. In hypotheses H1, H2, H3, H4, H5, H6, H7 and H8 we investigate the influence of choosing, tangible perceived quality, intangible perceived quality, trust, satisfaction, switching cost, habit and commitment on loyalty.
As expected, choosing (β=0.196, t-value=3.033, p<0.01), tangible perceived quality (β =0.263, t-value=3.078, p<0.001) and intangible perceived quality (β =0.487, t-value=8.891, p<0.001) had a strong positive influence on the loyalty. Similarly, trust (β=0.293, t- value=3.367, p<0.001) and satisfaction (β=0.418, t-value=5.948, p<0.001) had a significant positive effect on the loyalty. The results of switching cost (β =0.114, t-value=2.592, p<0.001), habit (β =0.186, t-value=2.925, p<0.001) and commitment (β =0.215, t-value=3.011, p<0.001) also show that these factors have a positive strong influence on loyalty. Therefore, hypotheses H1, H2, H3, H4, H5, H6, H7 and H8 were supported. We found that the proposed model explained a significant percentage of variance in loyalty (R2=79.9%, F-value=84.571, p<0.001).It means that about 80 percent of the variance in loyalty was accounted for by trust, satisfaction, tangible perceived quality, intangible perceived quality, choosing, habit, switching cost and commitment. According to the path coefficients, intangible perceived quality and satisfaction exhibited the strongest direct effect on loyalty.
Hypotheses H9, H10, and H11 examine the paths from trust to commitment, tangible perceived quality to satisfaction and intangible perceived quality to satisfaction. Trust (β =0.325, t-value=4.370, p<0.001) had a significant positive effect on commitment. The tangible perceived quality (β =0.181, t-value=2.393, p<0.001) as well as intangible perceived quality (β =0.165, t-value=2.179, p<0.001) also had a significant positive effect on the satisfaction thus supporting the hypotheses. The tangible perceived quality had no significant influence on the habit (β=0.071, t-value=1.579, p=0.068) at the 0.05 level. Similarly, intangible quality also had no substantial influence on the habit (β =0.097, t-value=1.823, p=0.073). Thus, hypotheses H12 and hypothesis H13 were rejected whereas hypotheses H9, H10 and H11 were supported by the results.H14 and H15 examine the paths from intangible quality to choosing and tangible quality to choosing respectively. The intangible perceived quality (β =0.273, t-value=3.913, p<0.001) and tangible perceived quality (β =0.251, t-value=3.801, p<0.001) show a positive significant influence on choosing. So the hypotheses H14 and H15 were supported by the path coefficients and t-values. The influence of intangible and tangible quality on switching cost was (β =0.110, t-value=2.02, p<0.001) and (β =0.142, t-value=2.152, p<0.001) respectively which showed the support of the hypotheses H16 and H17.The hypotheses H18 and H19 are about the influence of these two factors on commitment. The intangible quality (β =0.401, t-value=5.720, p<0.001) and tangible quality (β =0.343, t-value=4.171, p<0.001) effect on commitment is strong and positive. Hence, H18 and H19 are also supported.
The results showed an interesting fact according to which the satisfaction (β =0.213, t-value=2.617, p<0.001) had a significant and substantial influence on commitment. On the other hand, choosing(β =0.195, t-value=2.321, p<0.001) had a positive influence on satisfaction thus supporting H21.The influence of tangible perceived quality on trust was not strong as t value was 1.034 and p value was 0.065 which is not significant, so hypothesis H22 was rejected.
The analysis shows that satisfaction has a link with loyalty. This link is very strong, and it shows that if the bank managers want to make the customers loyal, they should have some special strategies to satisfy the customer. A satisfied customer never takes the risk of changing or moving to other competitors.
So, managers should always consider the needs of the customers. The loyalty comes in the customers once their stated as well as unstated needs are fulfilled by the managers of the banks. It can be the current needs or the ones which could be desired in the future. The unstated needs can be the future needs of the customers. The point is, the managers should not only think of few basic needs of the customers. They should focus on providing extra pleasures to their customers.
This means that the managers should have a team which can estimate the future requirements by having the fast movement in the world and technology, specially in the developing countries like Pakistan, this movement could be a little faster, so the research team of the banks should consider the environment and by having the focus on the culture requirements estimate the future needs of the customer. The next link which is going to be explained is habit. Habit also has a relationship with loyalty. The t-value of the analysis for this relationship is more than 2, and this shows that this relation ship exists.
When a customer stays with a bank to have some sort of services, it can have two reasons. First this customer is really satisfied with the current services and the next reason could be the habitual behavior. It means that some sort of reasons is related to the factor Habit. Some of the most important habitual reasons are measured in this research like the family influence, or the distance which can make a customer find the habit of using a special bank services. In finding the loyal customer, this category also can be considered. But it is not as serious as the satisfied customers.
The customer managers should find this category and to minimize the risk of defecting of these customers, they can find a way to change this group of customers to satisfied ones. By doing this, the number of loyal customers is not changed at the moment but the number of satisfied ones and also the number of future loyal customers is changed.
The next link which is valid, and its t-value is greater than 2 is the link between switching cost and loyalty. By analyzing the answers of the three questions of this part, the relationship between the loyalty of the customer and the switching cost can be explained as below:
When a customer is not sure about the new bank which might be chosen, it makes him/her not move simply and suddenly. He or she thinks that should spend more time in order to be able to make a good decision. This process makes the customer stay more with the current bank, because he/she considers the risk of not being satisfied with the new bank and tries to think more about switching. By doing so, staying with the bank for a longer time is more possible than choosing a new one carelessly.
The next factor that has a valid relationship with loyalty is choosing. In this factor when a customer tries to find a new bank for having financial transactions, he or she tries to compare the different banks with each other. And at last the best one will be found (almost it is in his/her point of view), so because of the effort that the customer puts for selecting the bank, he/she would be more satisfied with the services of the new bank. In long time, this can make a long-term relationship, and the customer who tries to compare the banks and select the proper one would be more satisfied and loyal. By this explanation, the link between choosing and satisfaction becomes clear.
So the managers of the banks can give this permission to the banking industry’s customers to have some sort of clear information about the services and also about the bank itself. Choosing can have a big role in making a new customer a loyal one.
The next factors which are going to be discussed are the quality factors. As I mentioned in the previous parts, in the main model, the researchers analyze the quality as one factor. But by having a deeper look at this element, I found that it could be separated into two factors, and I decided to measure them separately and find each one’s relation with loyalty. The first category is about tangible qualities. This means the feasible perceived quality in the branches or wherever the customer has the services, fore example, the beauty or the neatness of the materials, has influence on the loyalty of the customer. It is important for the customer to have the financial services in a tidy way. Also the other element that affects this factor is the advertisements and the interest for the customers’ investments.
Intangible factor is about the infeasible quality .It also can be named as behavioral quality, like the respectfulness of the bank’s staffs. This factor has also an important relationship with the loyalty of the customer. Both of these factors got the valid t-value in the analysis, but in comparison the tangible quality has a greater coefficient with loyalty. This shows that the viable perceived quality has a greater role in making a customer loyal or defector.
The bank managers should focus their strategies on offering the financial services with considering these two factors. Also these two factors have influence on the satisfaction of the customer. It means that by providing a better service, banks can make their customers more satisfied. At the next step, they can make them loyal. As the analysis shows, these two factors have influence on loyalty and satisfaction.
Quality factors have also influence on switching cost. It means that when a customer receives a good quality (tangible or intangible),his/her expectations of the banking services increase, so at the switching time, he wants to get more in the other new banks, and this makes the movement not simple.
Quality factors have relationship with choosing. When a bank is offering the financial services in a qualified way, and the customer perceived quality (tangible or intangible) is high, at choosing time, he/she wants to compare the new bank’s services with perceived one. This can also influence the new customers’ choosing decisions. Also managers can advertise on the customer perceived quality by having some researches on it and representing the results to the public. Quality factors have relationship with habit. This is because when a customer gets a good service quality, this remains in his mind and when needed he is likely to go to the same place.
Chapter 5
Conclusion
This chapter will provide an overall conclusion to my research findings. In the first chapter we developed some hypotheses as well as research questions, now is the time to get answers of theses research questions. After giving answers to the research questions, the conclusion will be presented and the final model for the customer loyalty in the banking industry of Pakistan will be revealed. Then the limitations of the research along with the areas for further research will be mentioned.
5.1 Research Questions and their Answers
As it was mentioned in the previous part, the analysis of the data shows the different links which have been explained previously. The hypothesized relationships were tested using the multiple regression analysis of SPSS. In the introduction chapter some research questions were mentioned and I bring them again here:
Can a model for customer loyalty in banking industry of Pakistan be specified?
What factors influence the customer loyalty in banking industry in Pakistan?
What are the relationships between the factors?
In order to answer to the research questions I, defined some more detailed questions which are as below:
Does customer satisfaction influence the loyalty of the customer in the banking industry of Pakistan?
Does customer habit influence the loyalty of the customer in the banking industry of Pakistan?
Does switching cost influence the loyalty of the customer in the banking industry of Pakistan?
Does perceived quality influence the loyalty of the customer in the banking industry of Pakistan?
Does choosing influence the loyalty of the customer in the banking industry of Pakistan?
Does trust influence the loyalty of the customer in the banking industry of Pakistan?
Does commitment influence the loyalty of the customer in the banking industry of Pakistan?
According to the result of the analysis of the model, all of the research questions can be answered. A model for banking industry in Pakistan is made. And the factors which influence the loyalty factor in this model are Tangible quality and Intangible quality, Satisfaction, Choosing, Trust, Switching Cost, Habit and Commitment. Some of the factors also influence the others. The relations were explained completely in previous parts.
5.2 Conclusion
Previous chapters tried to find the factors and their links with customer loyalty in banking industry in the Pakistani environment. As a conclusion this research found Habit, Choosing, Trust, Switching cost, Tangible Quality, Intangible Quality, Commitment and Satisfaction, as the factors which have influence on loyalty .Also these factors have relationships with each other which were explained in detail in the previous chapter. And also the factors which are added to the main model (Beerli, 2004) improve the fitness of the model. I hope that this model will surely help the managers of Pakistani Banks to further increase their pool of loyal customers.
5.3 Final Model
The final model of the customer loyalty in the banking industry of Pakistan can be presented in figure 4.
Figure 4: The Loyalty Model
As we can see, among the factors that have links with loyalty, satisfaction coefficient is the highest of all. This means that satisfaction is more important for the managers to be considered in order to make their customers loyal.
In comparison, (Beerli, Martin and Quintana, 2004) the coefficient of the satisfaction in the perceived model (0.67) in Pakistan is less than the one which is chosen as the resource model (0.83). This means that the satisfaction factor in Pakistan has less influence on loyalty than Spain. This could be because of the differences in the environment and also culture. It could be also because of the influence of the added factors on the model.
But the switching cost in Pakistan (0.28) has more influence than what is mentioned in the original model (0.18). This could be because of the reasons mentioned above.
Trust also has an important role to play in the loyalty of the customers in Pakistani banks because Beerli did not consider this factor in his model for the Spanish banking industry. Choosing has influence on loyalty in Pakistan (0.20). In the main model, (Beerli et al., 2004) this factor wasn’t mention in the final model and the authors rejected the hypothesis of the relationship of choosing with other factors in their model, but in this model this relations are exist. Habits also play a pivotal role in Pakistani environment as people prefer banks if they are nearer to their offices or homes. The reason can be most of the customers come to banks on foot as the number of car owners are still not as high as in European countries like Spain and also due to the high prices of traveling.
According to (Lin and Wang, 2006), the habit in the perceived loyalty model has less influence (0.17) than the model of loyalty in m-commerce industry in Taiwan (0.35). This could be because of the difference in the industries.
5.4Contribution
This research has been done to find the customer loyalty factors and their relations in order to present a model for customer loyalty in banking industry. And it has been done in Pakistani environment.
This research tries to present the factors which influence in this environment for banking industry. And different factors and also different relations were found in this study.
As it was mentioned previously in this research, loyal customers have different benefits for the industries. Having more profit is the simplest one to mention. This model will help managers to better shape their strategies to make more and more loyal customers. Loyalty is a big challenge for every manager in today’s competitive world. In Pakistan, there are so many banks with different alluring services who can snatch a customer from your customer base at any time, so the managers have to be vigilant and they can only make customers loyal through the application of these factors in their respective banks. According to the main strategy of the bank, they can choose some factors of the presented model and by considering the relations between them they can make their sub-strategies. Also it might differ from one bank to another and it could be because of each bank’s goal.
5.5Limitations
This research has some limitations, which are time and money. Although it is a valid sample size, but if the time allowed this research could be done in a bigger sample size which needs time and money. The research could be carried out in all the major cities of Pakistan but again that needs a lot of time and money.
But all of the attempts were used not to allow the limitations to have influence on the results.
5.6Further research
These days the loyalty concept has great importance and its different aspects can be studied in different situations.
This research tries to investigate more factors which have links with the customer loyalty in banking industry in comparison to the previous researches. Also different relations were found during this study.
It is hoped that the findings could stimulate further research in other parts of the world; especially in the other developing countries .If this happens, the model can be presented in a wider area not only in Pakistan.
The other people who are interested in modeling could analyze, find and test more factors according to their environment, or also the same factors in other industries.
Also a research which is about the factors that influence the “loyalty model” can also be done in order to find the external points which could differ from one environment to another, in case of existence. In this way, a general model for the banking industry’s customer loyalty can be presented after the analysis of the factors in all the countries.
In 2012, the luxury branded products’ market faced a substantial growth of 10% in revenue worldwide, and it is expected to continue to grow on an average of 5-6 percent throughout 2015 with the expectation of continual rapid growth amongst leather goods and accessories compared to other categories such as apparel (Bain, 2013). The total number of luxury products’ consumers has become more than three times as much in less than 20 years, despite the mature state of luxury markets in some Western European countries it was reported that the great majority of the new consumers to this market are from the emerging countries such as China (The Economist, 2014).
1.2 Rationale
After thorough reviewing of the research literature related to the cultural impact and female consumers’ behavior towards the luxury fashion products, it was found that there was a lack of reliable and vigor contributions in terms of the quality of the publisher/journal and the ABS article ratings on the population of interest (Middle East, Arab countries, GCC countries, Kuwait). Therefore, this research proposes the need of analyzing and understanding the consumer behavior’s mentality in this geographical area and aims to present outcomes of value to assist practitioners in the luxury products industry.
1.3 Aim and Objectives
1.3.1 Aim
The main aim of this research is to explore the female consumer’s buying behaviour in fashion industry and study the impact of culture on luxury fashion branded product in Kuwait.
The main aim of this research is to study the impact of culture on luxury fashion branded products and to explore the female consumer’s buying behaviour in fashion industry a case study of ….. in Kuwait market.
The overall aim of this research is to explore the purchase motives and the role of culture on the consumption of luxury fashion branded products, in order to present a beneficial understanding of the Kuwaiti female consumer’s luxury buying behaviors.
1.3.2 Objectives
There are following objectives of this research
To find out the importance of marketing department and its role in maximizing sales volume and in achieving organizational objectives
To analyze the importance of consumer behaviour and buying decision process in marketing strategies
To discuss the consumer behaviour models to analyze the consumer buying decision process
To find out the cultural factors and their impacts on consumer buying decision process
How Marketing department can play its effective role in bringing loyalty, satisfaction among the female consumers at…………. Fashion retail store?
To find out the relationship between cultural factors, fashion branded products, buying decision, demographics factors and their impact on buying decision process
To find out the necessary changes in consumer buying decision models to achieve organizational objectives
Which factors should marketing department must consider while making marketing strategies to maximize sales volume in luxury fashion industry at ……. Retail store in Kuwait?
To make recommendations
To analyse the theoretical context of branding of luxury goods
To investigate luxury product branding and buying behaviour
To discuss the relationship between the demographics of age, gender, culture, social class and income
To discuss and analyse brand loyalty
To discuss motivations for the purchase of luxury fashion brands; personal values, price, product, quality, exclusivity and social status
To analyse the impact of emotional behaviour and purchasing of the of luxury brand product: necessity versus desire for luxury products.
1.4 Key questions
Does the manager believe in consumer behavioral impact on the sales of luxury fashion branded products in Kuwait in fashion retail industry?
What are Kuwaiti female consumers’ motivations for the purchase of luxury fashion branded products?
Are the cultural characteristic of the studied area of Kuwait an influence on the resulted behaviour towards the purchase of luxury branded products?
What are the business implications of understanding the buying behavioural, perceptions, expectations, and preferences of female consumers in Kuwaiti and GCC countries?
1.5 Outline Methodology of the research
The dissertation will be carried out through a thorough literature review covering the aim and objectives. There will be primary research in the way of a survey in Kuwait.
1.6 Dissertation Contents/Structure
The dissertation consists of six sections. The first section is the Introduction which contains the background overview, the aim, objectives, questions and outline methodology. The second section is the literature review. This is followed by a methodology section. The next section is section four and contains the presentation of dat from the primary research. The fifth section is the discussion and analysis and the final section the conclusion which includes recommendations
2. Literature Review
2.1 Introduction
2.2 Definition of Branding
2.2.1 The concept of branding
Ever since the history of business came about, the concept of branding has been adopted amongst producers, in order to differentiate their goods from one another (Keller et al., 2008). According to the American Marketing Association (AMA, 2014), “a brand is a “Name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”. Another definition for brand is “a distinctive product offering created by the use of a name, symbol, design, packaging, or some combination of these, intended to differentiate it from its competitors” (Jobber and Ellis-Chadwick, 2013, p 308). Despite the wide academic and practitioner contributions in branding literature, a commonly accepted or a standard definition of the term “brand” continues to be unclear (Tynan et al. 2010). In consequence of the multidimensional form of the concept, varied range of definitions and understandings are available (Gabbott and Jevons, 2009). For that reason, Chernatony and Riley (1998) developed a theory for the “brand construct” through analyzing the definitions of the brand in literature and accordingly came up with twelve main themes that are divided between brand’s tangible elements such as name and logo and brand’s intangible elements such as personality and symbols. Despite some of the downfalls in their framework such as the overlapping of some elements in the themes, Chernatony and Riley (1998) undertook twenty focused interviews with prominent brand consultants on their interpretations of the brand term and were able to categorize the experts’ responses under the twelve themes and eventually proposed the following comprehensive concept of the brand , “as a multidimensional construct, matching a firm’s functional and emotional values with the performance and psychosocial needs of consumers.” However, recent researchers such as Stern (2006) attempted to conceptualize the brand through developing a quadripartite classification scheme using historical analysis technique to the various definitions of the term “brand”, the four main parts of the construct were presented according to:-
nature,
function
locus
valence
Gabbott and Jevons (2014) observed that the way the term ‘brand’ is currently defined is influenced by the brand researchers and practitioners’ common cultural understanding which is both contextual and dynamic. They concluded that a standard definition of the term does not and will never exist; instead there will always be a continual progression of frameworks towards a better understanding, and that this diversity of interpretations should be valued.
2.2.2 Definition of the luxury brand
The definition of the word “Luxury” in English language dictionary is presented as a hardly gained pleasure, a condition of excessive comfort or sophistication, and as an unnecessary yet expensive desirable item (Oxford Dictionaries, 2014). The current perception of “luxury” originates from the Latin “Luxuria”, which stands for “excess” the “extras of life” or (Danziger, 2005). In modern marketing practice, “Luxury” indicates to a particular level of offer that can be available in most types of products or services (Dubois et. al, 2005). However, in the academic literature, the term “luxury” is usually used to label high-end prestigious brands (Vigneron & Johnson, 2004), or those brands with low practical utility comparing to their price, and have high intangible and circumstantial value comparing to their price too (Nueno and Quelch, 1998).
Dubois and Czellar (2002) state that, “luxury” and “prestige” are the most commonly used terms to signify brands that have significant intangible value; their research has shown that consumers have different perceptions and expectations for each term which disagrees with the synonymous use of the terms by (1996). Others described luxury brands in somewhat unclear theoretical terms such as “dream value” (Dubois and Paternault, 1995). As per the economists’ perspective, luxury brands are viewed as those products for which demand elevates either in relation with income or in more preponderant proportion than income (Dubois and Duquesne, 1993).
Corresponding to the multiple definitions of ‘luxury brands’ found in the literature, many contributions were dedicated to create frameworks to identify the dimensions of ‘luxury brands’, for instance, Keller (2009) claims that luxury brands have ten characteristics such as the maintaining of premium image, premium pricing, intangible brand associations, and quality.
While other researchers base their study on the following key elements of ‘luxury brands’, (high quality, high price and non-necessary products and services that are considered as rare, exclusive, prestigious, and authentic and that are associated with high tiers of symbolic and emotional value (Tynan et al. , 2010). On the other hand, Fionda and Moore (2009) claim that the management of ‘luxury fashion brands’ is considered to be complicated and that it demands a constant and comprehensible practice. For that reason, Fionda and Moore (2009) proposed nine main correlated features for luxury fashion brand that are claimed to be essential in the building and sustaining a luxury brand’s offer and will contribute in successful management, some of these features are: brand identity, communications approach, prestige price, and exclusivity.
Furthermore, Miller and Mills (2012) argue that the lack of conformity in the diverse amount of frameworks and approaches of ‘luxury fashion brands’’ dimensions found in literature is not a consequence of the development of the concept, instead it is considered as a sign of persisting confusion in understanding the fundamental construct and associations determining the term. In order to achieve better clarity of the previous term, authors suggested a thorough examining of the related studies to find convergence points within the dimensions of the luxury brand, as well as analyzing their correlations in regards of antecedent and consequences, their research resulted in a precise yet comprehensive measurement model of the luxury brand that consists of the following five main key points (Miller and Mills, 2012):-
brand leadership
brand innovativeness
brand user-fit
brand value
willingness to pay a premium price
2.3 Luxury product branding and buying behavior
2.4 The relationship between the demographics of age, gender, culture, social class and income; Demographics, culture, and luxury consumption
2.4.1 Overview
The four most frequently used demographic factors in local and international consumer segmentation are age, gender, income, and education level (Cleveland et al., 2011) where each of the factors has direct relation to buying decision (Blythe, 2013).
2.4.2 Age
In regards to the age variable, a study showed that young consumers in six of the eight countries where the research was conducted had greater tendency to purchase global apparel (Cleveland et al., 2011), and that youth generation is considered the major market for publicly consumed luxury items (Eastman and Liu, 2012). Hauck and Stanforth,(2007) claim that there are significant differences among age groups in terms of their perception of luxury, frequency of buying luxury goods, and the reasons of their luxury purchases. For instance, researchers found that the oldest age groups of customers have a propensity to view more goods and services as luxuries than the youngest group do, and they have the greatest tendency opposing younger groups to purchase traditional luxury items and services such as gold jewelry and first class airline tickets. (Hauck and Stanforth, 2007). Moreover, in Hauck and Stanforth’s (2007) research, the reasons for purchasing luxuries items varied significantly between youngest and oldest groups of customers, the youngest group of customer were more likely than the oldest group to purchase luxuries for the following reasons: pleasure, status, emotional satisfaction, self-gift, and impulse buying.
2.4.3 Income
Since luxury products are known to have superior prices comparing to other products, it would be more likely to view income as an influential variable in segmentation (Dubois and Duquesne, 1993). In addition, consumers’ income has strong connection with their product choice, as their income increases they are more able to buy high price luxury goods (De Mooij, 2004), yet a study found that only three of eight countries where the research was conducted exhibited a positive relationship between household income and luxury products consumption (Cleveland et al., 2011).
2.4.4 Gender
In terms of gender, Cleveland et al. (2011) assert that there are clear differences between genders regarding their luxury shopping behavior, the findings of their study showed that the larger purchase frequency of luxury items was by females, and this result was consistent in seven out of eight countries where the research was conducted. According to Wiedmann et al. (2009), luxury brands’ companies should take into consideration the different attitudes amongst genders, since female consumers asses multiple elements when buying luxury brands as they tend to be more interested in quality, uniqueness and social value of luxury items than men. Stokburger-Sauer and Teichmann (2013) also agree that women tend to show different response from men regarding luxury brands; their research showed that female consumers have a more positive attitude towards luxury brands than males.
2.4.5 Education
In terms of education, Keillor et al. (2001) state that educated consumers irrespective of their background seem to be more open to different cultures which makes them less drawn by the local norms and more interested in the global trends when choosing products. In addition to this, Nwankwo, et al. (2014) found that higher educated consumers seem to be more rational and less impulsive when purchasing luxury products.
2.4.6 Social Class/ socio-cultural factors
Apparently the purchase of luxury branded products does not depend on economic influences only; instead, it is equally influenced by the socio-cultural factors (Dubois and Duquesne 1993). According to Hofstede, culture is considered as “the collective mental programming of the people in an environment. Culture is not a characteristic of individuals; in encompasses a number of people who were conditioned by the same education and life experience” (as cited in De Mooij, 2004). Hennigs, N. et al. (2012) state that differences in cultures frequently result in differences in consumer behavior in countries around the world. Several previous researches were conducted towards the understanding of cross-cultural segments (e.g., Hofstede, Steenkamp, & Wedel, 1999) though each research had different highlights (Hennigs, N. et al. (2012). Nevertheless, there seems to be an absence of a standard theoretical or empirical approach on the definition of cultural aspects and the overall impact of cultural factors on consumer behavior and its effects for marketing segmentation tactics (Dubois & Duquesne, 1993). On the other hand, in a recent study on ten different countries, Hennigs, N. et al. (2012) found that the motivational influences of luxury branded products consumption are generalizable across the countries and that only the individual perceptions of luxury products vary. In contrast, Bian and Forsythe (2012) believe that the driving forces of luxury brand consumption in western societies differ than eastern ones. In addition, their research results revealed within-country similarities and differences when comparing to other countries (Hennigs, N. et al., 2012). Furthermore, Dubois and Duquesne (1993) state that the greater positive consumer attitudes towards cultural change and following global trends, the higher the tendency to purchase luxury branded products.
2.5 Brand loyalty
2.6 Motivations for the purchase of luxury fashion brands; personal values, price, product, quality, exclusivity and social status
2.6.1 Personal Values,
2.6.2 Price, Product, Quality,
2.6.3 Exclusivity
2.6.4 Social Status
2.7 The impact of emotional behaviour and purchasing of the of luxury brand product: necessity versus desire for luxury products.
2.8 Conceptual Model
Figure 2.1 conceptual model (adapted from reference date)
Please answer Yes or No to the following questions. If you answer Yes to any question, ethical approval will be required either from the Faculty of Business, Economics and Law (FBEL) OR the University Ethics’ Committee (UEC). Does the study, or may the study, involve undergraduate students either in FBEL or across the University?
YES
TBA
NO
Does, or may the study, involve access of records of personal or sensitive confidential information?
YES
Seek approval from FBEL Ethics’ committee
NO
Does, or may, the study, involve Faculty of Business, Economics and Law staff as subjects, investigating their working or professional practices?
YES
Seek approval from FBEL Ethics’ committee
NO
Does, or may, the study involve staff across The University of Surrey, investigating their working or professional practices?
YES
Seek approval from University Ethics’ Committee
NO
Does the study involve vulnerable groups (e.g. children under 16 years, over 16’s who are unable to give informed consent, prisoners or young offenders)?
YES
Seek approval from FBEL Ethics’ committee
NO
Will the respondents receive payment (including in kind or involvement in prize draws)?
YES
Seek approval from FBEL Ethics’ committee
NO
Could questioning – in questionnaire or in interview – or other methods used, cause offence, be distressing or be deeply personal for the target group?
YES
Seek approval from FBEL Ethics’ committee
NO
Does the study involve any risk to a participant’s health (e.g.? invasive physiological or psychological procedures )?
YES
Seek approval from University Ethics’ Committee
NO
Does the research involve donation of bodily materials, organs and the recently deceased?
YES
Seek approval from University Ethics’ Committee
NO
Does the research require participants to take part in the study without their knowledge and consent at the time (e.g. covert observations)?
YES
Seek approval from FBEL Ethics’ committee
NO
Does the research involve activities where the safety of the researcher may be in question?
YES
Seek approval from FBEL Ethics’ committee
NO
Does your research study involve staff or patients from the NHS or a Health Service overseas?
YES
Seek approval from Health Service Research Ethics’ Committee AND University Ethics’ Committee
This research was conducted by the Mr. Khurram Abbas the director of ABDI Consultancy Limited with the following aims and objectives.
To identify the potential of Marketing Consultancy business
To identify the real need/ importance of Marketing Consultancy in small and medium business companies
To disclose the Marketing Consultancy essential services
The researcher used the qualitative research method because through this method the values, behaviour, experiences can be found out by designing questionnaires and distributing among samples. The researcher used random sampling technique to select the samples and after gathering data the results were recorded in the table forms and after that pie, bar charts and ratios were calculated to present and understand the results. And it was concluded that all the services offered by the ABDI Consultancy Limited are of importance and companies are waiting for the company that will offer these services under single roof.
Marketing consultancy is a growing business in which marketing consultants work closely with the client companies to create and implement marketing strategies. These marketing strategies are based on the nature of client’s business and their offered products and services. The marketing consultant create marketing plan, determine the marketing message for targeted customers and identify the effective marketing mix (product, price, placement and promotion, people), to achieve the organizational objectives. Marketing consultants follow the plan throughout and execute the plan by implementing the designed strategy. Marketing Consultant monitors the results and ensures that the client’s company is achieving the expected outcomes. ABDI Consultancy Limited is offering marketing consultancy services in London United Kingdom. Mr. Khurram Abbas is the director and owner of the company. Mr. Khurram Abbas will also play his role as Marketing Consultant and will perform the following tasks.
Identify the client’s requirements
Conduct the market research
Design the research objectives and select the best research methodology
Discuss the aims and objectives with clients and design the surveys and questionnaires to conduct the research
Will record the outcomes in appropriate method and will present the results to clients
After that will execute the strategy and monitor the whole process and will make necessary changes as per circumstances until the expected outcomes and client’s satisfaction.
Qualitative research method was selected to conduct this research to achieve above said aims and objectives. Qualitative research method is used by the researchers to find out the understanding of human behaviours, their experiences, ideas, beliefs, values and reasons. This research method is used to investigate the why and how of any decision making. Smaller and focused samples are required to conduct the research rather than to involve a large number of samples.
Small and medium businesses have been struggling in UK in recent past due to recession but now SME’s are thriving once again. There are about 2462 SMEs registered with London Stock exchange and most of these companies are earning profit. There are about 200 colleges, 40 universities, 5500 restaurants and 100 private clinics/ hospitals conducting their business in the London. Similarly, there are more than 500 food supplier companies, those manufacture and supply food items in and around London. BBC reports that call centres are the factories for UK in 21st Century. There are about 1800 call centres in UK, from which 400 are in London. All the small and medium size business companies are the targets for the ABDI Consultancy Limited.
The above statistics clearly show that there is a huge market for consultants especially for management and marketing services. ABDI Consultancy Limited has planned to get its share from this market and become a successful marketing consultancy within the span of 2-3 years.
The small and medium business companies are the population, and the researcher has selected total sample of 50, the researcher selected about 5 companies from the each sector (educational institutes, IT and security companies, food suppliers, retailers, law firms, private doctors firms, pharmacies, restaurants, hotels, tourism companies etc.). The researcher used random sampling technique to select the samples.
The researcher has designed the questionnaire by keeping in mind the aims and objectives of this research and by using the appropriate skills. Following questions were designed
Do you believe that marketing activities have positive impact in creating satisfaction among the customers?
Do you believe that through effective marketing strategies/ plans market share can be increased?
Do you believe in marketing activities positive impact on sales and profitability?
Have you ever hires the Marketing Consultancy Services?
Have you ever used any of the following services?
Do you believe that marketing consultancy firms can play their role in increasing market leads and profitability?
Do you believe that the all the following services were provided by the single Company?
Would you prefer to hire Marketing Consultancy that provides all following Services?
Why do you prefer that one company offer all above services?
After recording the results in table format the researcher has used
Pie charts
Bar charts
Ratios
To make analysis and interpret the results, all the charts are given below.
Do you believe that marketing activities have positive impact in creating satisfaction among the customers?
Sr. #
Yes
No
Total
43
7
As the pie chart shows that 86% respondents have responded that marketing activities play their role in creating satisfaction among the customers. Whereas only 7% have been stated that they do not believe in marketing activities have positive impact in creating satisfaction among the customers. So the majority have believe that there is a relationship between customer’s satisfaction and marketing activities.
Do you believe that through effective marketing strategies/ plans market share can be increased?
Sr. #
Yes
No
1
44
6
As the result showed that 88% of the respondents have responded that through marketing plans and strategies market share can be increased. Only 6% have been responded that marketing share could not be increased through effective marketing plans and strategies.
Do you believe in marketing activities positive impact on sales and profitability?
Sr. #
Yes
No
1
42
8
As the chart shows that 84% respondents have believe in that sales and profitability have a link with marketing activities, it means that there is a link between marketing activities and company profitability. Whereas only 16% have responded that there is no marketing activities impact on sales and profitability.
Have you ever hire the Marketing Consultancy Services?
Sr. #
Yes
No
1
44
6
Through this question the researcher came to know that 80% of the companies are using the marketing consultancy services and are benefited by them. This shows the importance of marketing consultancy services in the business organizations. 20% of the respondents have been responded that they are not using marketing consultancies.
Have you ever used any of the following services?
(Please tick the services those you used)
Sr. #
Services
Yes
No
1
On site Audits
45
5
2
Service benchmarking
47
3
3
KPI measurement
46
4
4
Industry benchmarking
44
6
5
Mystery shopping
46
4
6
Call centre review
45
5
7
Social media research
44
6
8
Customer studies
48
2
9
Life time value analysis
46
4
10
Competitor benchmarking
45
5
The researcher has designed the above question to understand the importance of services being used by the companies, and after gathering results it is found that majority of the respondents are using all the above stated services significantly. More than 90% are using the above stated services and nominal respondents are not using these services it is due to their business nature or lack of information. For example life time value analysis service is used by the 92% and only 8% are not using this service, similarly mystery shopping service is used by the 92% of the business companies and only 8% are not using this service and customer studies service is used by the 96% of the business companies and only 4% are not using this services.
Do you believe that the all the following services were provided by the single Company?
On site Audits, Service benchmarking
KPI measurement
Industry benchmarking
Mystery shopping
Call centre review
Social media research
Life time value analysis
Competitors benchmarking
Sr. #
Yes
No
1
8
42
84% of the respondents have been responded that no, there is still no marketing consultancy company that is offering all these services under single roof. Only 16% have responded that there are some companies those are offering above stated services under single roof. It means that the opportunity is available for the company that can provide all the above stated services under single roof. And its growth chances are high of they pay attention on the quality and price.
Do you believe that marketing consultancy firm (those offer all these services) can play their role in increasing market leads and profitability?
On site Audits
Service benchmarking
KPI measurement
Industry benchmarking
Mystery shopping
Call centre review
Social media research
Life time value analysis
Competitors benchmarking
Respondents
Yes
No
Total
45
5
All the respondents responded that if a company can offer all the above stated services they can be benefited, they can be benefited by increasing their market share and profitability. 90% respondents are agreed. 10% respondents are not agreed with the statement. It means that any new company that is going to offer these services under one roof have the opportunity to start this business.
Why do you prefer that one company offer all above services?
(Please tick the appropriate reason/ reasons)
Save time
Save money
To avoid hassle
Other………..
Sr. #
Reason
Yes
No
1
Save time
45
5
2
Save money
45
5
3
To avoid Hassle
50
0
4
Other…NO……..
50
0
As the chart showed that the majority of the respondents want to save time, money and avoid the hassle, and there is no another reason. In order to save time, money and to avoid hassle people are looking for the marketing consultancy company that offer all the services under single roof.
Are you ready to hire Marketing Consultancy that provides all following high quality of Services at reasonable price?
On site Audits
Service benchmarking
KPI measurement
Industry benchmarking
Mystery shopping
Call centre review
Social media research
Life time value analysis
Competitors benchmarking
Sr. #
Yes
No
1
41
9
82% respondents have been responded that they are ready to hire the company that offer all the services at high quality but at reasonable price. Only 18% have been responded that, they are not willing to hire marketing consultancy that offers all the services at reasonable price.
Every organization has aims and objectives, and the main objective of business organization is to generate more and more revenue in order to get more profit and to make business growth. So for earning more money it is important to identify the customer’s needs and then after providing them products and services as per their needs, satisfaction and loyalty can be created. And in this way organizations can retain old clients and can attract new clients from the market.
It has been proved that the majority of the respondents have belief in that through marketing activities, satisfaction can be created among the clients. Majority of the respondents have been responded that there is a link between marketing strategies and market share. If the marketing strategies are appropriate then the company can increase the market share through implementing the marketing plan. Majority of the respondents have believe that sales and profitability have the link with marketing activities, if the marketing plans and strategies are appropriate the companies can earn more money. It is concluded that majority of the business firms are using the marketing consultancy services to overcome their marketing problems. This shows also the interest of business firms in marketing consultancy business operation and its demand now days.
Most of the companies are using these services (On site Audits, Service benchmarking, KPI measurement, Industry benchmarking, Mystery shopping, Call centre review, Social media research, Life time value analysis and Competitors benchmarking) offered by the ABDI Consultancy Limited, and one interesting thing is that no one company is offering these all services under one roof, ABDI Consultancy Limited is the first one company going to offer all these services under one roof at reasonable price to its client companies. All respondents have been responded that they will hire the company that will provide all the services (stated above) because the respondents want to save their time, money and avoid to hassle.
All the respondents have their interest in the marketing consultancy firm that provide all the services (On site Audits, Service benchmarking, KPI measurement, Industry benchmarking, Mystery shopping, Call centre review, Social media research, Life time value analysis and Competitors benchmarking) because they have believe in that through these services their market share and profitability will be increased as they have already the experience. And still no company is offering these all services under one roof and business owners want to save their time and money and avoid the hassle that’s why they want a company that offer them all these services at reasonable price. It means that ABDI Consultancy Limited has the opportunity to attract new clients from the market and can start its business positively.
In 2012, the luxury branded products’ market faced a substantial growth of 10% in revenue worldwide, and it is expected to continue to grow on an average of 5-6 percent throughout 2015 with the expectation of continual rapid growth amongst leather goods and accessories compared to other categories such as apparel (Bain, 2013). The total number of luxury products’ consumers has become more than three times as much in less than 20 years, despite the mature state of luxury markets in some Western European countries it was reported that the great majority of the new consumers to this market are from the emerging countries such as China (The Economist, 2014).
1.2 Rationale
After thorough reviewing of the research literature related to the cultural impact and female consumers’ behavior towards the luxury fashion products, it was found that there was a lack of reliable and vigor contributions in terms of the quality of the publisher/journal and the ABS article ratings on the population of interest (Middle East, Arab countries, GCC countries, Kuwait). Therefore, this research proposes the need of analyzing and understanding the consumer behavior’s mentality in this geographical area and aims to present outcomes of value to assist practitioners in the luxury products industry.
1.3 Aim and Objectives
1.3.1 Aim
The main aim of this research is to explore the female consumer’s buying behaviour in fashion industry and study the impact of culture on luxury fashion branded product in Kuwait.
The main aim of this research is to study the impact of culture on luxury fashion branded products and to explore the female consumer’s buying behaviour in fashion industry a case study of ….. in Kuwait market.
The overall aim of this research is to explore the purchase motives and the role of culture on the consumption of luxury fashion branded products, in order to present a beneficial understanding of the Kuwaiti female consumer’s luxury buying behaviors.
1.3.2 Objectives
There are following objectives of this research
To find out the importance of marketing department and its role in maximizing sales volume and in achieving organizational objectives
To analyze the importance of consumer behaviour and buying decision process in marketing strategies
To discuss the consumer behaviour models to analyze the consumer buying decision process
To find out the cultural factors and their impacts on consumer buying decision process
How Marketing department can play its effective role in bringing loyalty, satisfaction among the female consumers at…………. Fashion retail store?
To find out the relationship between cultural factors, fashion branded products, buying decision, demographics factors and their impact on buying decision process
To find out the necessary changes in consumer buying decision models to achieve organizational objectives
Which factors should marketing department must consider while making marketing strategies to maximize sales volume in luxury fashion industry at ……. Retail store in Kuwait?
To make recommendations
To analyse the theoretical context of branding of luxury goods
To investigate luxury product branding and buying behaviour
To discuss the relationship between the demographics of age, gender, culture, social class and income
To discuss and analyse brand loyalty
To discuss motivations for the purchase of luxury fashion brands; personal values, price, product, quality, exclusivity and social status
To analyse the impact of emotional behaviour and purchasing of the of luxury brand product: necessity versus desire for luxury products.
1.4 Key questions
Does the manager believe in consumer behavioral impact on the sales of luxury fashion branded products in Kuwait in fashion retail industry?
What are Kuwaiti female consumers’ motivations for the purchase of luxury fashion branded products?
Are the cultural characteristic of the studied area of Kuwait an influence on the resulted behaviour towards the purchase of luxury branded products?
What are the business implications of understanding the buying behavioural, perceptions, expectations, and preferences of female consumers in Kuwaiti and GCC countries?
1.5 Outline Methodology of the research
The dissertation will be carried out through a thorough literature review covering the aim and objectives. There will be primary research in the way of a survey in Kuwait.
1.6 Dissertation Contents/Structure
The dissertation consists of six sections. The first section is the Introduction which contains the background overview, the aim, objectives, questions and outline methodology. The second section is the literature review. This is followed by a methodology section. The next section is section four and contains the presentation of dat from the primary research. The fifth section is the discussion and analysis and the final section the conclusion which includes recommendations
2. Literature Review
2.1 Introduction
2.2 Definition of Branding
2.2.1 The concept of branding
Ever since the history of business came about, the concept of branding has been adopted amongst producers, in order to differentiate their goods from one another (Keller et al., 2008). According to the American Marketing Association (AMA, 2014), “a brand is a “Name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers.”. Another definition for brand is “a distinctive product offering created by the use of a name, symbol, design, packaging, or some combination of these, intended to differentiate it from its competitors” (Jobber and Ellis-Chadwick, 2013, p 308). Despite the wide academic and practitioner contributions in branding literature, a commonly accepted or a standard definition of the term “brand” continues to be unclear (Tynan et al. 2010). In consequence of the multidimensional form of the concept, varied range of definitions and understandings are available (Gabbott and Jevons, 2009). For that reason, Chernatony and Riley (1998) developed a theory for the “brand construct” through analyzing the definitions of the brand in literature and accordingly came up with twelve main themes that are divided between brand’s tangible elements such as name and logo and brand’s intangible elements such as personality and symbols. Despite some of the downfalls in their framework such as the overlapping of some elements in the themes, Chernatony and Riley (1998) undertook twenty focused interviews with prominent brand consultants on their interpretations of the brand term and were able to categorize the experts’ responses under the twelve themes and eventually proposed the following comprehensive concept of the brand , “as a multidimensional construct, matching a firm’s functional and emotional values with the performance and psychosocial needs of consumers.” However, recent researchers such as Stern (2006) attempted to conceptualize the brand through developing a quadripartite classification scheme using historical analysis technique to the various definitions of the term “brand”, the four main parts of the construct were presented according to:-
nature,
function
locus
valence
Gabbott and Jevons (2014) observed that the way the term ‘brand’ is currently defined is influenced by the brand researchers and practitioners’ common cultural understanding which is both contextual and dynamic. They concluded that a standard definition of the term does not and will never exist; instead there will always be a continual progression of frameworks towards a better understanding, and that this diversity of interpretations should be valued.
2.2.2 Definition of the luxury brand
The definition of the word “Luxury” in English language dictionary is presented as a hardly gained pleasure, a condition of excessive comfort or sophistication, and as an unnecessary yet expensive desirable item (Oxford Dictionaries, 2014). The current perception of “luxury” originates from the Latin “Luxuria”, which stands for “excess” the “extras of life” or (Danziger, 2005). In modern marketing practice, “Luxury” indicates to a particular level of offer that can be available in most types of products or services (Dubois et. al, 2005). However, in the academic literature, the term “luxury” is usually used to label high-end prestigious brands (Vigneron & Johnson, 2004), or those brands with low practical utility comparing to their price, and have high intangible and circumstantial value comparing to their price too (Nueno and Quelch, 1998).
Dubois and Czellar (2002) state that, “luxury” and “prestige” are the most commonly used terms to signify brands that have significant intangible value; their research has shown that consumers have different perceptions and expectations for each term which disagrees with the synonymous use of the terms by (1996). Others described luxury brands in somewhat unclear theoretical terms such as “dream value” (Dubois and Paternault, 1995). As per the economists’ perspective, luxury brands are viewed as those products for which demand elevates either in relation with income or in more preponderant proportion than income (Dubois and Duquesne, 1993).
Corresponding to the multiple definitions of ‘luxury brands’ found in the literature, many contributions were dedicated to create frameworks to identify the dimensions of ‘luxury brands’, for instance, Keller (2009) claims that luxury brands have ten characteristics such as the maintaining of premium image, premium pricing, intangible brand associations, and quality.
While other researchers base their study on the following key elements of ‘luxury brands’, (high quality, high price and non-necessary products and services that are considered as rare, exclusive, prestigious, and authentic and that are associated with high tiers of symbolic and emotional value (Tynan et al. , 2010). On the other hand, Fionda and Moore (2009) claim that the management of ‘luxury fashion brands’ is considered to be complicated and that it demands a constant and comprehensible practice. For that reason, Fionda and Moore (2009) proposed nine main correlated features for luxury fashion brand that are claimed to be essential in the building and sustaining a luxury brand’s offer and will contribute in successful management, some of these features are: brand identity, communications approach, prestige price, and exclusivity.
Furthermore, Miller and Mills (2012) argue that the lack of conformity in the diverse amount of frameworks and approaches of ‘luxury fashion brands’’ dimensions found in literature is not a consequence of the development of the concept, instead it is considered as a sign of persisting confusion in understanding the fundamental construct and associations determining the term. In order to achieve better clarity of the previous term, authors suggested a thorough examining of the related studies to find convergence points within the dimensions of the luxury brand, as well as analyzing their correlations in regards of antecedent and consequences, their research resulted in a precise yet comprehensive measurement model of the luxury brand that consists of the following five main key points (Miller and Mills, 2012):-
brand leadership
brand innovativeness
brand user-fit
brand value
willingness to pay a premium price
2.3 Luxury product branding and buying behavior
2.4 The relationship between the demographics of age, gender, culture, social class and income; Demographics, culture, and luxury consumption
2.4.1 Overview
The four most frequently used demographic factors in local and international consumer segmentation are age, gender, income, and education level (Cleveland et al., 2011) where each of the factors has direct relation to buying decision (Blythe, 2013).
2.4.2 Age
In regards to the age variable, a study showed that young consumers in six of the eight countries where the research was conducted had greater tendency to purchase global apparel (Cleveland et al., 2011), and that youth generation is considered the major market for publicly consumed luxury items (Eastman and Liu, 2012). Hauck and Stanforth,(2007) claim that there are significant differences among age groups in terms of their perception of luxury, frequency of buying luxury goods, and the reasons of their luxury purchases. For instance, researchers found that the oldest age groups of customers have a propensity to view more goods and services as luxuries than the youngest group do, and they have the greatest tendency opposing younger groups to purchase traditional luxury items and services such as gold jewelry and first class airline tickets. (Hauck and Stanforth, 2007). Moreover, in Hauck and Stanforth’s (2007) research, the reasons for purchasing luxuries items varied significantly between youngest and oldest groups of customers, the youngest group of customer were more likely than the oldest group to purchase luxuries for the following reasons: pleasure, status, emotional satisfaction, self-gift, and impulse buying.
2.4.3 Income
Since luxury products are known to have superior prices comparing to other products, it would be more likely to view income as an influential variable in segmentation (Dubois and Duquesne, 1993). In addition, consumers’ income has strong connection with their product choice, as their income increases they are more able to buy high price luxury goods (De Mooij, 2004), yet a study found that only three of eight countries where the research was conducted exhibited a positive relationship between household income and luxury products consumption (Cleveland et al., 2011).
2.4.4 Gender
In terms of gender, Cleveland et al. (2011) assert that there are clear differences between genders regarding their luxury shopping behavior, the findings of their study showed that the larger purchase frequency of luxury items was by females, and this result was consistent in seven out of eight countries where the research was conducted. According to Wiedmann et al. (2009), luxury brands’ companies should take into consideration the different attitudes amongst genders, since female consumers asses multiple elements when buying luxury brands as they tend to be more interested in quality, uniqueness and social value of luxury items than men. Stokburger-Sauer and Teichmann (2013) also agree that women tend to show different response from men regarding luxury brands; their research showed that female consumers have a more positive attitude towards luxury brands than males.
2.4.5 Education
In terms of education, Keillor et al. (2001) state that educated consumers irrespective of their background seem to be more open to different cultures which makes them less drawn by the local norms and more interested in the global trends when choosing products. In addition to this, Nwankwo, et al. (2014) found that higher educated consumers seem to be more rational and less impulsive when purchasing luxury products.
2.4.6 Social Class/ socio-cultural factors
Apparently the purchase of luxury branded products does not depend on economic influences only; instead, it is equally influenced by the socio-cultural factors (Dubois and Duquesne 1993). According to Hofstede, culture is considered as “the collective mental programming of the people in an environment. Culture is not a characteristic of individuals; in encompasses a number of people who were conditioned by the same education and life experience” (as cited in De Mooij, 2004). Hennigs, N. et al. (2012) state that differences in cultures frequently result in differences in consumer behavior in countries around the world. Several previous researches were conducted towards the understanding of cross-cultural segments (e.g., Hofstede, Steenkamp, & Wedel, 1999) though each research had different highlights (Hennigs, N. et al. (2012). Nevertheless, there seems to be an absence of a standard theoretical or empirical approach on the definition of cultural aspects and the overall impact of cultural factors on consumer behavior and its effects for marketing segmentation tactics (Dubois & Duquesne, 1993). On the other hand, in a recent study on ten different countries, Hennigs, N. et al. (2012) found that the motivational influences of luxury branded products consumption are generalizable across the countries and that only the individual perceptions of luxury products vary. In contrast, Bian and Forsythe (2012) believe that the driving forces of luxury brand consumption in western societies differ than eastern ones. In addition, their research results revealed within-country similarities and differences when comparing to other countries (Hennigs, N. et al., 2012). Furthermore, Dubois and Duquesne (1993) state that the greater positive consumer attitudes towards cultural change and following global trends, the higher the tendency to purchase luxury branded products.
2.5 Brand loyalty
2.6 Motivations for the purchase of luxury fashion brands; personal values, price, product, quality, exclusivity and social status
2.6.1 Personal Values,
2.6.2 Price, Product, Quality,
2.6.3 Exclusivity
2.6.4 Social Status
2.7 The impact of emotional behaviour and purchasing of the of luxury brand product: necessity versus desire for luxury products.
2.8 Conceptual Model
Figure 2.1 conceptual model (adapted from reference date)
Please answer Yes or No to the following questions. If you answer Yes to any question, ethical approval will be required either from the Faculty of Business, Economics and Law (FBEL) OR the University Ethics’ Committee (UEC). Does the study, or may the study, involve undergraduate students either in FBEL or across the University?
YES
TBA
NO
Does, or may the study, involve access of records of personal or sensitive confidential information?
YES
Seek approval from FBEL Ethics’ committee
NO
Does, or may, the study, involve Faculty of Business, Economics and Law staff as subjects, investigating their working or professional practices?
YES
Seek approval from FBEL Ethics’ committee
NO
Does, or may, the study involve staff across The University of Surrey, investigating their working or professional practices?
YES
Seek approval from University Ethics’ Committee
NO
Does the study involve vulnerable groups (e.g. children under 16 years, over 16’s who are unable to give informed consent, prisoners or young offenders)?
YES
Seek approval from FBEL Ethics’ committee
NO
Will the respondents receive payment (including in kind or involvement in prize draws)?
YES
Seek approval from FBEL Ethics’ committee
NO
Could questioning – in questionnaire or in interview – or other methods used, cause offence, be distressing or be deeply personal for the target group?
YES
Seek approval from FBEL Ethics’ committee
NO
Does the study involve any risk to a participant’s health (e.g.? invasive physiological or psychological procedures )?
YES
Seek approval from University Ethics’ Committee
NO
Does the research involve donation of bodily materials, organs and the recently deceased?
YES
Seek approval from University Ethics’ Committee
NO
Does the research require participants to take part in the study without their knowledge and consent at the time (e.g. covert observations)?
YES
Seek approval from FBEL Ethics’ committee
NO
Does the research involve activities where the safety of the researcher may be in question?
YES
Seek approval from FBEL Ethics’ committee
NO
Does your research study involve staff or patients from the NHS or a Health Service overseas?
YES
Seek approval from Health Service Research Ethics’ Committee AND University Ethics’ Committee
This is the era of technology, and technology is changing with very speed, with the passage of time there is rapid change in technology. The main purpose and advantages of technology also affecting the attitudes of customers because technology is also effecting the mode of purchasing as well as companies are also have the opportunities to capture more clients from the market. Large and small companies and nonprofit companies like fund raising and other NGO’s are also using the modern technology and procedure to take maximum advantages, by offering their product and doing marketing and also looking for raw material supplier and labor from all over the world. This affects financially and quality wise, and in this way companies have chance to improve their internal and external weaknesses and try to get some kind of advantages, benefits and features in their services and goods over their competitors.
Similarly internet has its impact on the companies; many companies are using this technology to designing the website for marketing purpose and offering their products and services all over the world in achieving their goals and objectives.
1.1 History and problem
Creating website and through internet companies now have the opportunities to communicate with clients and capturing more clients in an effective way. Similarly there are many benefits for companies and customer in using these technologies. Customers from all over the world have the choice to buy best products and companies have the choice to communicate with clients and customers from far away and in this way customers and companies have good control and interaction directly with each other’s by saving each other’s time and money.
(Introduction of the company about 200 words)
Now in this era we are living in twenty first century and this is called science century, everywhere in all sectors everywhere is science technology. Customers are in all over the world, due to internet now days world has become global village, people are more conscious about time value and financial and quality conscious, their main priority is to save their time and money in every prospect of their life, either they are going for shopping goods for home, for offices or hiring services for any kind of purpose, they have very limited time for shopping. So they want to save their time and in short time they want to do many activities because now day people are more social and they want to spend most of the time with their families and friend or even then with their family friend and in different parties, friend parties or family friend parties.
They want to save their time actually and internet is providing the main facility to save their time in a way that they can buy and do their shopping through internet. Internet is providing the facility to search for good products or services and by sitting in their offices homes or even then on the way they can look, choose the product or services and just pay the money online for a product or service. Similarly if a company is looking to hire best services of a professional or for skilled or unskilled person, or looking for raw material supplier or looking for distributors or manufactures as well as they have the opportunities of internet and can save their time and money and hire the appropriate person or purchase the best one product by having a large number of alternatives and selecting suitable among all, and in this way the company will save its time and money, because the company have the opportunity to choose best one from all over the world.
The researcher main focus is on the impact of website on customer loyalty, so as internet is the main source of communication between customer and business organization, now companies are using the facility in productive way to communicate their massages to the public by creating their own websites and providing the opportunity of shopping from very far away. Now by using internet marketing is more suitable for sellers, manufacturers and suppliers and even then for vendors.
1.2 Website Developing
There are many advantages of website due to its different characteristics like the fast way of communication with most reliability and validity, data can be traced with no passage of time, no wastage of time, as data can be accessed very quickly then the data can be retrieved very quickly, and in couple of moments the feedback is given in proper way, customer’s complaints are very easy to handle and due to central data base it is also very fast and quickly that important decision are easy to make by making it sure that service provided was so quality level. And one more interesting and amazing feature of website is that during journey, in and out of home, in meetings and even then on job it is very to remain always in contact with clients, with distributors and suppliers. So managing the business is very easy through internet and same with customers they can buy any product any time, from anywhere with no wastage of time. The customers have to only spend few minutes on website and after selecting the product or service, just pay the amount and get the delivery well in time. Now look in this way both parties can save their time and money in an efficient way.
There are some other advantages of website to create loyalty and retaining clients like it is very easy for any client and customer to access the website any time means twenty four hours and seven days in a week, websites have access to open and do trade from all over the world, marketing and communication is very easy and it provides a chance to increase the number of clients very easily from all over the world, time saving, reliability, validity, data protection and cheaper are the main advantages of websites and hence collectively these benefits leads to increase the loyalty of customers.
There are following objectives the researcher has to conduct this research, the main objective of the researcher is to find out the main characteristics of a website then the next objective is to know about the impact of that website on the customer’s loyalty in enhancing the loyalty in customers and the last main objective is to know about the characteristics that will attract the customers to create the loyalty at maximum level.
Literature Review
In this section the researcher will describe the review literature about the website development and internet marketing and it’s contributing in creating customer loyalty by website features and impact on customer loyalty and overall impact on organizational objectives in achieving. The researcher will also review the literature about the specific features of a website that are useful to creating loyalty and customer loyalty link in creating satisfaction and resultantly in achieving organizational objectives. The researcher will also review the literature about the internet marketing and its impact on the trade now a day.
Link between Website development and customer’s loyalty
Quality of services is a major issue that is described by the features of a service while designing the electronic service, and business organizations are now designing the websites of their companies according to the perceptions of the clients (Dube et al. 1999).
During website designing, or electronic service providing designing there are always different and opposite opinions and non formal suggestions (Siegel, (1997); Greenspun, (1999); Hanson, (1999) and Nielsen, (2000)).
The researcher has found out that there are some problems while constructing the web pages for any company and as it is clear already that by creating the websites with some characteristics, to create client’s loyalty to retain them and for repurchasing, similarly when there are some problems with the creating web pages then this is not possible to achieve organizational aims and objectives in well manner.
There are many problems related with web page designing and especially these problems affect in negative sense in attaining the basic objectives of an organization (Hoffman et al. (1995); Spiller and Lohse, (1998); Heim et al. (2000) and Heim and Sinha, (2002)).
There is a strong relationship between the quality of service and website characteristics (Heim et al. 2000).
Now a days the shopping trend has been completely changed, it is true that some big stores have a portion of customers from the market but internet has been changed the way of shopping, and a large number of clients are now choosing internet for shopping, the different website have been visited by the eighty percent of the clients from years 1997 to till 2000 and it is the large proportion that showed the trend of change towards electronic shopping due to customer’s satisfaction and loyalty (Fortune, 2000).
Actually customer loyalty can be created through offering very low costs products and internet marketing has this characteristic and this loyalty due to such characteristics that provides the basic level of client’s satisfaction, and the client who is loyal with the company is actually in a relationship with the company’s long term relationship for profit earning, and this is also called the equity. Internet has cleared one thing that the actual valuable thing is consumer who is focusing on the product and some other prospects like financial and quality and easy way of receiving delivery and through customization, the consumer enable to customize the product by visiting the website of a company easily. And can get other benefits like membership and earn more benefits like discounts. These consumers actually create the value for organizations.
As there are two main strategies adopted by each organization to achieve its organizational objectives, number one is the corporate strategy and second is the operational strategies, operational strategies always have the policies and action plans that are used to achieve the corporate level objective of an organization, and organizations should focus their clients in operational strategies and these should be implemented in such a way that it supports to the corporate level strategies to achieve organizational objectives.
Link Between Website development and Quality of Service
Service quality is the main important aspect of website because customers have in their mind the expectations about the quality of the services, and this quality is the result of a website that offers such kind of quality. Website must have the efficiency that is why many organizations design the websites according to the perception of clients regarding delivering the services to customers. But there is a problem, when resources are too limited then it is not possible for companies to design the website that has the potential of creating long term relationship with customers by offering loyalty and capturing new clients from market, and when there are limited resources then it is impossible to design such a website that can deliver those quality services as per client’s perception, but some features can satisfy the customers to retain them by creating loyalty, and this decision will be more complex (Heim, and Sinha, 2002).
Now customers are using the internet and their main focus is to buy the products or services through visiting websites and on the same time, the companies are implementing the electronic marketing for research and development and marketing their services and products to capture more clients from the market by considering all the main issues that can create loyalty by offering quality services and quality products by giving financial benefits to the customers and some other features as those features are discussed above. So the main consideration and actually success for business companies is to make sure that the customer are perceiving best quality of services through website and website has all the features those are helpful in creating loyalty through providing quality so that customers again and again come back to repurchase the services and goods.
Website actually provides a large number of products or alternatives and provides a chance to select the best one according to price and quality as per customer’s requirements. Customers save their time in travelling and selecting and then comparing the product, but through website online shopping, customer’s have a chance to select lowest price items or services, and easy mode of payments and delivery mode, through website customer can have facility to customize the service or product that can affect their budget and need.
To develop the website, companies must have some resources to design, develop and launch the website on the internet with the features to capture the clients because other competitors are also in the market, and while studying marketing research, it was proved that loyalty of customer, means client’s loyalty is based on the client’s satisfaction (Zeithaml et al. (1990); Rust, (1995); Anderson et al. (1997) and Fornell, (2000)).
There is a large factor of cost which is associated to the customer while visiting the website is that the cost. And second one is the time. The main quality of website is that, the customer visit again the website to repurchase the product, and due to low cost the client has no time and much cost to spend for travelling and then spent a large time in selection and then making comparison among products and then buy, so the client now day prefer to go online on the website of company and select the best one product and pay the amount and get the delivery at door step, and in this way he or she saves the time, money and satisfaction.
Marketing through Internet channel
Today is the era of computer science, because computer science is facilitating customers and organizations. These days this computer science technology has changed the throughout procedures and flow of work in the organizations and now all the countries of world become as village, computer science has reduced the distances and there are many other features as well like through the websites (having some features) are creating loyalty among customers and organizations. The researcher is gathering secondary data regarding website impact on customer loyalty.
Smith and Chaffy (2005) has been described that internet marketing is used to achieve the goals and objectives of an organization by using internet facility. This means that companies having their own websites can achieve their goals and objectives through internet marketing by using the new technology of internet from all over the world and can achieve their objectives by capturing more and new and retaining the old client from all over the world because today due to internet whole world is connected and it is possible now a day to buy any good or service from anywhere now and quality product can be buy from internet because this is possible to make comparisons easily regarding price and quality of goods or services.
Business organizations can obtain their all goals and objectives by using internet and using the electronic marketing and all other activities related with marketing on internet like product designing, product pricing and placement through internet and in this way these organizations can create loyalty as well through providing quality products and satisfying their clientage (Strauss and Frost, 2005).
Characteristics of Effective Website
The literature review shows that in the business organizations the website design create customer loyalty. Researcher means that the website of company if has some characteristics then it is possible that the website can create customer loyalty by providing the customers the satisfaction as if it should the main purpose of website designing and launching, then the customer loyalty can be achieved. If organizations think that the website developing is as the producing unit then it is possible and while development phases all the prospective of a website and customer’s satisfaction should be consider as a main output of the website and sales as well to earn more revenue so in this way the company. There are many customers and all have different levels of satisfaction, the satisfaction depends on the expectations of the clients. The quality of services is actually the difference among the expectations in the customers mind and customer’s perceived service (Zeithaml et al. 1990).
There is a relationship between customer satisfaction and the website because due to the characteristics of good and well designed characteristics of website designed that triggers the customers to buy the products. Clients always count the length of information that is given in the website about the product and its features, comparatively the advantages of products over competitive product and other advantages of product or services. So the first characteristics of a website must be the information of product qualities mentioned in the catalog, and this catalog must be according to the preference of the client, and the website must be user friendly, the language used in the website must be easy to understand for every client. There must be the search engine within the website about the products. Business organizations are considering the electronic commerce issues (Teo et al. 2003).
Organization can be successfully achieved their goals of quality services and attempt the client’s satisfaction and their expectations about quality of services, when the organizations consider about the delivery media in their mind while designing the electronic services, and this service media creates the client’s value (Zeithaml et al. 1990, Heskett et al. 1997).
There are some characteristics of website that are contributing in building customer loyalty and ultimately or finally customers loyalty is contributing in company performance, in which includes the pictures of products or services, search facility in the website, location map, shopping cart, scientific calculator that enable clients to calculate the exact amount, delivery way, different options and through website delivery order tracking mechanism and information about the availability of product in the store, and information about usage and handling the product and expiry date and all information in detail about the product, ingredients, discount option like membership option, clients number and login facility, mode of payment and offerings, these all characteristics play their role in creating customer’s loyalty because these characteristics create quality.
Link between Objectives of Organization and Customer’s loyalty
The main objective of this research is to find out the impact of websites on the customer’s loyalty contributing in achieving organizational objectives.
Internet is playing its role very effectively in the business industry in achieving organizational objectives by internet marketing and online shopping (Teo et al. 2002).
Organizational objectives is never achieved without achieving and retaining customers, customers can be captured through good marketing activities and using effective media channel and delivering effective and clear message to the population and after the marketing successfully then the next step is to have the loyalty among the clients regarding the company that will bring back these clients to again buy those products or services.
Porter, (2001) has been described that now a day many customers are using online shopping, and in this way through computer science there is a big support towards business transactions.
Companies can have many advantages by creating relationships with clients on long term or short term to earn profits and other advantages like good image of company and good will of company by creating loyalty. Through internet it is possible for companies to create loyalty through stepwise marketing of company agenda and offerings variety available at different costs and very good quality and other marketing strategies and as compared to competitors adopted technologies. Through internet marketing is easy and there are more chances to capture large market share throughout the world.
According to Buttle, (2004) that described about the benefits of relationship with customer to a company, many customers have the desire to remain in a relationship with the company, because if the company recognized them, it is beneficial for them regarding customization.
In some case the customers want to create a long term relations with the organizations they know that they can get many kind of advantages if they have good long term relationships with the company like for some kind of rewards and upgrade offers after a long term past experience and buying services or items.
Similarly organization also can get many benefits by having some relationships with clients.
Main objective of each business organization is to earn profit by offering services or goods and through quality, by creating loyalty (Reicheld and Sasser, 1990).
Loyalty is always after the proper satisfaction of customer’s needs and wants, but it is the loyalty that brings back again the customer to again buy the product to overcome its needs and wants up to a certain level of satisfaction (Jones and Sasser, 1995).
Business organizations should focus on the expectations of their clients and know about their needs and demands to satisfy them in better way to achieve organization’s main goals and objectives, because without satisfying their customers it is not possible to earn money, which is ultimately the organizational objective to achieve and main purpose of investing money (Schlesinger and Heskett, 1991).
Customer’s loyalty and the buying behaviour of the client are two main factors on the behalf of them any organization can measure the satisfaction of client, because when ever client will come again back to buy again the item or service, its mean that he or she is satisfied by consuming the goods or services before (Getty and Thompson, 1994).
The main difference in the quality of delivery or experienced after consuming the product and needs and wants then the loyalty can be created in the client, because loyalty is related with satisfaction (Kandampully and Suhartanto, 2000).
Through website while designing customer loyalty remain always focus on the top of the priority list and this consideration never forget by the developer and other all factors are also included in the features and characteristics of website.
There is a strong relationship is there always between loyalty and satisfaction, satisfaction depends on loyalty, and profit depends on loyalty (Helgesen, 2006).
Repurchasing of any product or service depend on the past results obtained by consuming the goods or services by the customers (Kim, 2005). It is possible to measure the satisfaction of a client, but it is necessary to satisfy a customer first then on the behalf of loyalty (Gundersen et al. 1996). The relationship of a company with its clients affects the objectives like good will and profit for which the organization is striving and investing the money into business operations and activities (Anderson et al. (1994); Yeung et al. (2002); Luo and Homburg (2007)).
The above discussions and literature review showed that it is necessary for any organization to achieve its goals and objective to create first of all the loyalty by providing quality of goods and services and create such kind of website that has the characteristics to create the loyalty among its customers so that customers again come again purchase those products and contribute in achieving organizational objectives like growth of company and profit. And now day people want to buy the products and want to do shopping from their homes and using internet, but they need some characteristics, that triggers them to buy and those characteristics can generate loyalty by showing quality of products through the provided information about that product and some other benefits, comparisons, advantages over competitors and features. There are some kinds of people like some are quality conscious and some are quality conscious, now day the quality and price conscious are more active, because due to large competition almost clients have same needs and demands and on the basis of research and development, companies are offering good quality of services and on the expectations of customers companies the offering the services and products.
Effective website and expected results
Websites are designed and launched to achieve organizational objectives like to earn more revenue and then profit, and good will. And it depends on the volume of products offered in the website and the frequency of visitors on that website to purchase the items or services. The number of visits depends on the level of satisfaction of customers affect the buying of products. Website designs with characteristics also affect the visitor’s frequency of their visits on the specific website. And the marketing strategies and satisfaction level always brings more new customers to visit the website and to retain old client by creating more loyalty among customers and companies. Website performance and effectiveness can be measured through some factors; the main and important factors that contribute in the efficiency of a website are the volume of information about any product or service on the website and necessary updates are also recommended with the passage of time, secondly the environment of website that how much the website id user friendly, and some other ethical considerations are also contribute towards the performance of website (Fortune, 2000).
The user friendly environment of a website depends on the tools and information about product used during the development phase of a website. And the mode of payment is also affect on the loyalty and satisfaction level of customer and overall affect on the productivity of website and contribution towards achieving organizational objectives.
The different characteristics of a website create a strong link between the booking of product and delivery (Meuter et al. 2000).
Actually shopping through internet itself is a main source of satisfaction due to some features like information, comparisons and other features of products and information about company and more is that many satisfaction considerations and issues are always remain in the mind of
Web developer and company also focus on them in order to create loyalty and finally achieving the customer’s satisfaction (Swan and Combs, (1976) and Lilien et al. (1992)).
In this way when website developer and organization is already have in their mind about the expectations and other features to bring loyalty and satisfaction among customers while in designing stage then the website will deliver the quality of services to the customers according to the expectations find out through research and marketing departments.
One more interesting feature of a website to its customers is that membership and reward system based on previous shopping because a very small gift can become cause of pleasure to a client and will enhance the loyalty and trust (Fortune, 2000).
Conceptual Framework
The researcher has designed the conceptual framework for the review literature about the research project, that how the review literature is linked with each other. First of all the internet marketing which is adopted by the most of the companies as a tool to implement their marketing strategies into market to capture targeted clients, so as per the needs of these clients, companies design the website and consider all those issues which are related with the customer’s needs and wants. In order to fulfil the needs of their client’s expectations, companies and web developers design the wed pages including considering all those features and characteristics to bring satisfaction to their customers. These characteristics shows the quality of products that triggers the client to buy the products and in this way by using the products and on the behalf of the results of products consuming, and delivered quality and by satisfying the client’s needs and wants, customers again come to buy the products again and ultimately it generates the revenue for the organization which is the main objective of each company.
Research Methodology
In this section the researcher will discuss about the research methods that how the researcher has conducted the research, which kind of tools the researcher has been used, how the researcher collected the primary and secondary data, and why the researcher has choose the case study method to prove that there is significant impact of website impact on customer loyalty, which is the main objective of this research.
The researcher will discuss about the number of sample that were selected during the research conduction by the researcher.
The research methodology defines the way, that how the researcher has conducted this research, the research methodology defines the pathway to conduct the research in a suitable and meaningful way to achieve the aims and objectives of research conducting, and it also describes the methods of gathering data to reach up to a result (Aaker et al. 2003).
Aims and Objectives
The researcher has selected the case study of pharmaceutical company to conduct her research with some objectives.
The researcher has following aims and objectives to conduct this research project.
First of all the researcher will find out the characteristics of a website that can create the loyalty among customers, and then the impact of effective websites on the customer loyalty regarding the satisfaction and quality, and third one main objective of the researcher is to know about the impact of those characteristics on the customer’s loyalty and in achieving organizational objects.
Because without objectives it is not possible to conduct a research and these objectives as discussed above will force the researcher to conduct this research in a meaningful way, the data will be interpreted by the researcher as discussed in second chapter for some results to achieve the research’s objectives. As through secondary research conducted by the researcher proved that now a day people’s trend of shopping has been changed, they now prefer to buy products and services online by using internet facility at their homes, in their offices by visiting the websites of companies. And one thing here is cleared that there is a trend now to do shopping online because people are more busy and they want quality and low prices and need more information and need easy way to pay the payment, and due to shortage of time or to save their time they prefer this way to buy products online. Now it is depend on the website that how much the website has the characteristics to capture more and more clients and retain old clients by creating loyalty and satisfaction in customers. When the website has all the features like the maximum amount of data available on the website about a product or service which includes the manufacturer name, brand name, capacity, volume, ingredients, expiry date of the product, ingredients, instruction of use, guarantee and warranty, money back guarantee, availability, its price and very important information is about the advantages, benefits and features of product as compared to its competitors, precautions are included. Similarly there are some other characteristics like during the designing of web page which kind of graphics to attract and reasonable combination of colour scheme was used, its means that outlook of the website is also important. The mission and vision about company must be given on the website in the company introduction and information about the raw material quality that shows the quality of product and reflect the social responsibility of the company towards its customers that they feel that the company is here for their betterment. The comparison of the price, according to quality and drawbacks of competitors is most important thing. Testimonial views about the results after consuming and opinion and suggestion part must be included in the website so that the customer if feel some kind of improvements can write its views and it must be appreciated via email or on telephone so that the customer feel happiness that company has gave him or her the importance to his or her views and information about the membership free of cost and benefits of membership and all other offers in seasons or related to free delivery, special discounts, free of cost contact numbers and feedback in order to retain the customers and create loyalty, because loyalty is always comes through these kind of features. The shopping carts should be there and calculator must be added here to calculate the money and different mode of payment must be there like some customers feel easy and happy to pay through credit cards, and some of them want to make payments through debit card and through direct debits and in instalments and some of them on monthly basis. These all characteristics influence the customers to create loyalty among the clients. And loyalty creates the satisfaction after consuming the products. The researcher has found out that there is a link between quality of product and satisfaction. And there is a link between effective website and customer’s loyalty, if the website has all above characteristics. The researcher come to know through review literature that people wants to buy products and effective website can bring loyalty and it is an opportunity for the companies to retain their old clients by effective website and through retaining in which loyalty and satisfaction by delivering them quality products it is possible to achieve organizational objectives.
To achieve research objectives, research design is very helpful for researcher to gather both secondary and primary data, and store the data gathered during research conducting, and after gathering data, it also defines the way that how data analysis can be analyzed by the researcher. There are different kinds of methods to conduct the research like descriptive research, causal research and exploratory research, basically research methods provides path way to researcher with many options to choose best among all as per the resources and according to aims and objectives of the research conducted by a researcher (Reinartz and Kumar, 2003).
Research methodology
Exploratory methods will be used by the researcher to conduct the research to achieve its objectives of research. The researcher has proposed the Pharmaceutical industry because by using exploratory methods interviews will be conducted by the researcher to gather the primary data and websites visits will be done by the researcher to gather primary data. The focus groups and meetings with the employees of the pharmaceutical company selected by the researcher are also includes as a part of this research, open ended and closed ended questions will be included by the researcher and questionnaires will be designed by the researcher to collect primary data and then data will be analyzed to find out the results, different graphs will be used to show that proportion of respondents and their responses will be recorded by the researcher in tables to make conclusions. Company website, annual sales and profit and balance sheets and statistical reports about the specific company will be analyzed by the researcher for gathering primary data. In order to find out the characteristics of effective website to create loyalty the researcher will conduct the interviews of more than 100 customers that usually and frequently visit the National Health Centres, Hospital and visit the chemist stores to buy medicines and check up and after medical check up they went to purchase medicines from chemist shops.
To satisfy customers and the goals and objectives of an organization can be obtained by offering the goods and services, by managing distribution channels, setting product prices, and executing and implementing plans and strategies by using electronic data (Strauss and Frost, 2001).
Sources: (EI-Gohary, 2011)
Selection of Case Study
The researcher has selected the case study as the research method because according to the aims and objectives of the research the best one method will be the case study. Actually the case study method which will be used by the researcher will provide qualitative research, because the researcher has limited resources like time and money to spend, as this research is academic to fulfil the requirement of academic purpose. Instead a large amount of people to select the sample size and further continue the research, so when the resources are limited then at that moment the best way is to select the case study method which is very convenient and suitable for reliable and valid results.
Case studies are the best and suitable way to conduct the research when resources are limited to gain results (Flyvbjerg, 2006).
In this way the researcher has all the chances and possibilities to conduct the research like staff meetings in details, on spot observations and directly meetings with customers and focus groups, whereas to meet with large amount of people require a lot of time and other resources to conduct the research. Case study method is also suitable for the researcher because it require less time and other resources because data gathering, data analysis and interpretations on small amount of data requires less time as compared to other research methods.
Case study is the best option selected by the researcher and it is the best way to conduct a research for better results (Feagin et al. 1991).
The researcher has selected the case study in pharmaceutical industry because this company is using the website successfully and all the characteristics to satisfy the customer’s expectations and needs by giving all the features in the website. And this company is running its business all over the world and capturing rapidly a huge amount of targeted people from all over the world and generating huge amount of profit.
Now day with the usage of internet, organizations can get many opportunities to run their business and customer’s expectations are very important in supporting the organizational activities by using internet to achieve its goals (Porter, 2001).
Similarly the design phase of website has an importance while including all the features to develop the characteristics that can create loyalty and satisfaction at a specific level, and case study is the only way to get good results that provide a chance to observe work at running situation and while analysing the data gathered during data gathering (Zonabend, 1992).
The researcher actually has interest in the qualitative research because the researcher will discuss the characteristics of a website to create the loyalty and finally the satisfaction level among its customers to achieve organizational objectives. That’s why the researcher had interest in qualitative research conduction, the researcher will conduct some interviews from the customer of the pharmaceutical shop as well by contacting them on phone and meeting with the pharmaceutical’s company staff and researcher and marketing department and web development team in order to gather primary data and to make suggestions and opinion to create loyalty and satisfaction level at high level. In this way the gathered data will be of high quality and high reliability and validity which is most important considerations for the researcher to analyse the data and make suggestions. As the researcher has no previous experience about the research conducting so in the situation the most suitable method for the researcher to conduct the research is qualitative research as the researcher come to know through secondary data that in this way there is no much time consuming and quick response will be there from respondents and there are also many advantages of qualitative research to the researcher.
The instrumental research is referred the research conducted by researcher through observing the situation and collective research is referred the research which is conducted by the researcher through case study and when the researcher conduct the research by selecting one case (Stake, 1995).
Aims and objectives
Here the researcher will use quantitative as qualitative research by the researcher, because in this research the main aim of the researcher is to find out the answers of some questions during interviews of customers and staff members of the company.
How much amount of contents is given in the website about the products available for sale?
How much the website is user friendly like searching and other pages link, complaints handling and membership form?
How many people are happy to buy the products online?
Is the people think that they are secure while paying the amount through online system?
How much people relay on the web contents?
Has the website equipped with navigation tools?
Does the website offering calculator and different payment methods to the customers?
Does the website outlook/graphics attract the customers to visit again?
What is the speed of web pages to download the web contents?
Does the website offer the comments pages and comparison facility and price comparison?
How much quality of products and quality of services the people perceive from the website?
Is there any drawback of using website, and if there is or are drawbacks then how to eliminate them?
Does the contents of product given in a website are sufficient to create loyalty among the customers?
How many people are satisfied by the quality of website and actual quality of product they perceive after consuming the product?
Each website must have some characteristics to create successfully loyalty among customers to satisfy them which are given below in the table.
Serial #
Characteristics
Descriptions and Advantages
1
Website contents
Customers first of all search the products information, which includes the features of products and advantages and benefits over its competitors. These contents provide comfort and initially establish the relationship with customers if the information about a product are sufficient including price, brand name and all other information about the product, people actually relay on the contents and on the quality of product when they search for product and feel themselves that they know deeply the product and it creates confidence among themselves.
2
Website design outlook and graphics
The websites must be more simple and easy to understand the language should be used and the design must be according to the web contents. Basically different moving object actually distract the attention of customers. Always good design and colour scheme and graphical representation help the customers to perceive the message. Colours must be soft and light.
3
Website navigation
This feature allow the customers to go on other pages from home page directly, it gives them an opportunity to move from one page to other or from top to down, it gives them the facility to go directly on the interesting portion.
4
Updating
The clients actually encouraged by this feature of website, customer’s comments and suggestions have very importance, so by adding them in the website at particular place attract the customers and play their role in creating loyalty and satisfaction.
5
Newsletter, articles, press releases, focus topics, research outcomes, programs, CEO statement, Registration number, photo library, media contact, collaborations, responsibilities, investors, careers, mission and strategy, quick links.
Fresh and newly articles about the quality and performance of company or about the products and news in newsletters also attract the customers and help the companies to capture more clients, because by reading news and articles customers feel satisfaction and they move positively to buy products. in links like financial calendar, product pipelines, annual reports, research and developments, site map, advance research option and terms and conditions, and commitments and promises regarding data protection.
6
Search engine optimization
Search engine optimization actually referred to the marketing tools which are used to enhance the ranking of website on the world wide web through key words. Maximum number of key words enhances the chances of visitors to attract when they search through search engines available on world wide web.
So the researcher is mainly interested in the case study to find out the effectiveness of effective website in creating customer’s loyalty. Because the first step to build the customer relationship is creating loyalty, and customer’s satisfaction always plays it’s role in retaining them and capturing new clients from targeted market.
Data source for Primary and secondary data
Primary Data
First of all the researcher will design the effective and simple questions to gather primary data for research and after analyzing and interpreting it the researcher will find out the conclusions and will make suggestions.
After designing the questions the researcher will review them and remove all the errors and after getting feedback from respondents, the researcher will move forwards towards next stage of research. It is very important to design effective and right questions because the conclusion will depend on the responses and these will depend on the nature of research.
Here in this research after designing appropriate questions the researcher will move towards the next step of conducting research after selecting the sample size. The researcher will select the customers and focus groups and will arrange some meetings with the different department’s staff in order to collect the data from them.
Analysis and finding out the results, these activities are always done by the researcher, that is why data should be keep in well arranged form by the researcher itself, and procedures must be in the researcher mind before doing analysis (Crowther and Lancaster, 2009).
After collecting these data the researcher will record them in suitable form like first of all on the papers and then in computerized form. The researcher will use computer applications like Microsoft excel and spread sheets to avoid the duplication of data and minimizing the errors chances and will try to enhance the reliability and validity of data by critically analysis on it.
The researcher will conduct interviews because interview techniques provide the chance to get response to the point and it is faster way to gather primary data rather than other methods and in this way the chances of researcher opinion will be minimized up to a certain and significant level. And the focus of the researcher will remain on the aims and objectives of the research and in this way more reliable and valid data will be gathered by the researcher.
Secondary Data
The researcher has used many books with the tile of internet marketing, electronic marketing and electronic commerce, customers satisfaction and how to create customer loyalty and many more books, the researcher has been read out some journals and electronic journals to gather secondary data about this research topic and the researcher has read out company website, vision and mission statement and different websites to collect secondary data. The researcher read out articles from different sources which include blogs and lectures, and mainly it was on the research topic like characteristics of effective website and its design and link with quality and customer’s satisfaction etc.
Collection of reliable and consistent data is not an easy task, so the researcher must use reliable source and way to gather secondary data for more consistency according to objectives of research (Cooper and Schindler, 2006).
The researcher has the information about the limitations and benefits of secondary data. In by keeping these limitations and benefits the researcher gathered the secondary data to achieve the aims and objectives of the research, and every step the researcher was sure that the data gathered during the research is of quality and free of errors and mistake and is exactly according to the aims and objectives of the research.
Secondary data is always the combination of quantitative and qualitative data which is always collected by the researcher in descriptive and exploratory research methods used by the researcher during a research (Saunders et al. 2009).
Advantages and Disadvantages of Secondary Data
First of all the data may be so old and may be of no use because due to advancement in the technology and due to new procedures and change in the needs and trends of people, it might be possible that old data is of no more use, and the researcher may be detracted from the aims and objectives of the research topic. Old data may be expired and the available data is not of up to standard and of poor quality.
First of all the main benefits is the availability of large amount of data free of cost. It is the major and important factor of using secondary data. The researcher knows that it is time consuming to gather effective and consistent data from a large number of books and other sources. But one more important benefit of this type of data has maximum reliability and validity because the research was conducting on a large scale and large number of sampling was used in the conducting of research.
Interviews
There are some advantages like to the point response, fast reaction/response as per the objective of the research and questions, the researcher used close ended questions, and in this way there is no time wasting (Saunders et al, 2009).
The researcher has designed the questions of open ended and close ended in order to get reliability and consistency and validity, during the interviews of customers and staff members of the pharmaceuticals company through questionnaires by asking the answers of different questions of open and closed ended, the researcher is interested in getting as well as the opinion of the customers and staff members of the pharmaceutical company due to get more and more data to interpret the data and find out the suggestions and recommendations. The researcher will ask some questions about their trends of buying the products from online by using internet and by visiting the websites of the companies. The researcher will ask some questions about the reliability of information given on the website and difference in the quality of product as given in the contents and after consuming, and will ask the benefits and their considerations of the websites.
The researcher will ask some questions about the loyalty and satisfaction near them and will ask some questions about the features and factors about the effective website role in creating loyalty and satisfaction level.
Statistical tools must be applied by the researcher in order to find out the results and the results must be of quantifiable means to make comparison in order to get clear and significant results (Easterby-Smith et al. 2001).
The researcher will ask to the customers about the designing of the websites and more facility that should the companies must include in the website that can play the role in creating more loyalty in the customers. The researcher will ask some more questions about the satisfaction level about the quality of the websites and how much effective are the website and some new features in their mind that during design of websites what are the main issues that customers must be consider while generating web pages.
The researcher will use very simple and easy to understand able language while designing the questions. The questions will be easier to understand and short.
The research aims and objectives plays an important role in gathering data about the research, there are many ways and methods to conduct a research, but it depends on the researcher to choose the best one methods to conduct the research and collect the data (Goddard and Melville, 2004).
There are some advantages and disadvantage of structured, semi-structured and un-structured interview, and the researcher will discuss them one by in detail.
In the semi-structured kind of interview the researcher has the opportunity to access the results of more reliability and consistency without any problem and bias of respondents. The information gathered through semi-structured has validity and reliability. The information gathered by the researcher using this type on interview is near to the nature of actual problem because the researcher has selected the real respondents to conduct the interview. In this type of interview the respondent is allowed to give its suggestions openly as per his experience.
The researcher need some special skills and techniques to design such type of questions for conducting interviews from different respondents to reduce the limitations which are associated with this type of interview and to get good results as per to fulfill the research objectives.
By keeping all the disadvantages of semi-structured interview the researcher has designed all the questions.
To get the response from respondents while conducting semi-structured interviews, the researcher is able to get very good results through this type of interview (Aaker et al. 2003).
Population and sample size
The researcher will include both of the gender males and females in research conducting because both gander used to go for shopping.
The age range is different the following table will describe the sample size selected on the basis of literature review that both male and female use internet for doing shopping.
Serial number
Number of Males
Number of Females
Total
1
50
50
2
30
30
Total
50
30
80
Age Range:
Male: 19 to 55
Female: 19 to 55
Actually sampling is the way to choose the people or respondents in a research conduction for response and on the basis of their responses the researcher find out the results (http://www.socialresearchmethods.net/kb/sampling.php).
The researcher will use simple random sampling methods to select the samples from the population. If all the customer come at the chemist shop will be the total population then the researcher will select every fifth person. This method is most ideal and there are some disadvantages of this method like it is not easy task, it is very tough to make the population list (http://www.coventry.ac.uk/ec/~nhunt/meths/random.html).
There are three types of simple random sampling, first of all there is cluster sampling in which the groups are involved in the research and the researcher is interested in groups of people for example, whereas in stratified sampling the sub population is decided and from them and then groups are selected by the researcher, and finally in simple random, randomly samples are selected by the researcher (Wikipedia, 2011).
4. Research Findings
As in the last chapter it was discussed that the researcher has selected the qualitative methods to conduct the research in which the researcher will conduct the interviews and will ask some questions from the staff members of the pharmaceutical company. And the researcher will use the focus group discussion methods as well as to get respond for more reliability and validity of the data. The researcher come to know through secondary data that some characteristics of effective web site can create the customer loyalty and customer loyalty leads the customers towards satisfaction through quality of services and hence the organization will become able to achieve its objectives in well manner.
The wed development team and research and development department are the responsible for the development of such effective website that has all the discussed characteristics and offer a quality of service by web pages that can create the customer loyalty.
The researcher has designed such questions to find out the interest of the people and their willingness to buy online shopping to save their time and about their satisfaction level.
Questionnaire
The researcher has decided to conduct interviews from the customers and meetings with the staff members of the pharmaceutical company and then conduct research on focus groups to get response.
For this purpose the researcher has designed the following questions to ask from the respondents.
No.1 Do you have internet connection at your home?
Yes No
Answers in Tabular Form (Question No. 1)
Internet Connection at Home
Male out of 50
Female out of 30
Total
Yes
47
25
72
No
3
5
8
The purpose of this question was to know about the using of internet, if no one is using the internet then he is not the sample size as the researcher has discussed that in random selection the main problem is to find out the actual population, and in this research the researcher has no found any irrelevant sample and all the samples have internet connections at their home.
The researcher has used chart in order to find the results with more reliability and validity with the help of percentage as this is most appropriate for understandings.
No.2 How much time did you spend on internet daily at home?
<1 hour 1<2 hours 2<3 hours …………hours
Answers in Tabular Form (Question No. 2)
Time to spend on Internet daily
Male
Female
Total
Less than one hour
2
5
7
Less than two hours
13
11
24
Less than three hours
25
21
45
How much if more than three hours
3
3
Total
40
40
80
The purpose of the researcher to design this question was to know about that how much respondents spend on internet, this question was only asked by the researcher to know about the validity and confirming about the use of internet so that error chances must be minimized, when person going online for shopping and buy online he or she must spent about one hour because by reading the contents and making comparisons it take some time, so that is why this question was asked by the researcher.
No.3 What are the main purposes of surfing internet?
Check emails, Shopping, Playing games, Watching movies, Business purpose, Education, Billing and Payments
Answers in Tabular Form (Question No. 3)
Main Purpose of Internet using
Female respondents out of 40 in each selection
Male respondents out of 40 in each case
Total out of 80
Check email/Chatting
30
35
35
Shopping
35
38
73
Playing Games
5
8
13
Watching movies
2
1
3
Business Purpose
11
10
11
Education
15
25
40
Billing and Payments
28
36
64
The researcher has designed this question to know about the main reason that why people use the internet, either they are interested in getting their education because many people from abroad they have difficulties in going campuses due to many reasons and they get admissions in online education system may be the people have internet connection and just for education purpose, and may be the people are using the internet for paying their utility bills and to keep an eye on their banking and credit banks accounts, the people now day use the internet for some other purposes like watching movies online because online movies are some time free of cost or by downloading movies are easy and cheaper, and some time people prefer to watch movies on their homes with their families and they avoid to go cinemas and sometimes the movies are not available on the shops so this may be a reason to use internet, similarly there are many reasons to go online to satisfy their needs, similarly for playing latest games online may be the mode of interest to go online, and for doing and controlling business transactions most of the people use online services, may be some people are on holidays from their businesses but they want to keep their eyes on the business updates, that is why they may use internet, because having internet connection does not mean that people have the internet connection at their home just for doing shopping online. It may be possible that people have their offices in other countries and they are living in United Kingdom and to keep in touch with their business transactions and to know about the business operations and to remain in contact with suppliers and distributors, people may have internet connections. And it is the possibility that people have the internet connections for the purpose of shopping because bow a day the trend of shopping has been changed because on the web site (effective website, the website with some characteristics is called effective web site) the information regarding products and services is sufficient with more benefits, advantages and features, like comparisons, price comparisons, discounts, sales, offers, memberships to get shopping rewards and careers and calendars, gifts, mission and vision statement, information about raw material suppliers and procedures, using instructions and many other kinds of information is available now a day, and one thing more interesting is that people want to save time and money so that is why they prefer to go online for shopping. There is no doubt people are connected with each other if they are employees or employer or business man, they have their email addresses and they are in contacts with other people so that is another reason to have internet connection.
Here the researcher has the responses of some customers and now the graphical representation of the primary data is there in the below graph to understand easily.
No.4 What are the main benefits of online shopping?
Save Time, Save Money
Better Service Quality, Satisfaction
Answers in Tabular Form (Question No. 4)
Mian Benefits of going Online for Shopping
Males
Females
Total out of 80
Time saving
38
35
73
Financial Savings
35
36
71
Quality
39
39
78
Satisfaction
40
40
80
The researcher has designed this question in order to know about the benefits of customer they receive while doing shopping online, because there are many benefits of going online for shopping. And the Researcher is interested in to find the web site affects in creating customers loyalty. And the main thing is that the interest if the web site is offering some benefits to the customers that are in the interest of customers then it will automatically create the loyalty due to these interests and benefits. These days customers have their own interests in competition era, when the company is offering more and more benefits specially financial benefits and quality wise benefits then automatically the customers will attracted by those companies, and if the companies offered services and products quality meet the expectations of the customers then it more convenient for them to capture more clients from the market, and being online companies have more chance to capture new clients from all over the world.
Now due to World Wide Web (www) whole world become as global village.
So main purpose of this question is to know about know the main advantage of customers to go online, and one thing more interesting is that people are quality conscious and they are also interesting in saving their time, and money, if a customer is living in other country then it is possible for him or her to make contact online directly with the company and can buy the product and in this way he or she will save time and money, and comparison he or she can make at the spot.
Now the graphical representation about the interests of people is given in the below chart, which is easy to understand for the people and examiner, and it will also helpful in making decisions and interpreting and in conclusions and suggestions.
No.5 What do you think that the contents of the website are easy to understand and give complete information about product?
Yes No
Answers in Tabular Form (Question No. 5)
Response regarding product information
Males
Females
Total Number of respondents
Yes
39
35
74
No
1
5
6
Total
40
40
80
The researcher has designed this question to fulfil the requirement about the characteristics of effective website and this is the first and important factors that create the loyalty in the customers when no drawback of product is hidden from the customer. And customer thinks that the company has provided the relevant information regarding a product and in this way the customer after reading all the information about the product, he or she feels proud and confidence in himself or herself. And this is the first step towards the loyalty and after making comparisons with other competitors products and after making price and other comparisons it will create the loyalty among the customers, and when there is the loyalty and after consuming the products the customer will come to know about the quality and when he or she will find that there is no difference between contents and offered quality of product and his or her expectations, the customer will satisfy himself or herself and he or she will come again to visit the web site and will repurchase the product and tell the other friends and family and family friends members to buy the products and in this way the company will generate more and more revenue and will make more profit. But other factors the researcher will discuss in next questions. Now the researcher has made graphical representation of the primary data after storing it into tabular form as mentioned above, to understand in easy way.
No.6 What do you think that websites are most secure regarding money transferring?
Yes No
Answers in Tabular Form (Question No. 6)
Security regarding data
Females
Male
Total
Yes
35
39
74
No
5
1
6
Total
40
40
80
These days many hackers and ant viruses are also there on the web site to attack and for capturing data for their purpose. So these threats are also there.
Now day people are afraid to make payments online, because people often use credit cards and debit cards or pay pall accounts to make payments or now some banks has offered to transfer money online which is most secure way, but while shopping if the company offer multiple mode of payment and make it sure that the data will remain protect and there is no chance of data stolen then the customers are more reliable to make payments online through debit cards or credit cards.
That is why the secure way and multiple mode of payments offered in the web site is another character of effective web site that will create loyalty in customers, because due to this feature the customer will feel more comfort and secure himself or herself and it will create loyalty, and this is the main objective of this research that how much effective website in creating loyalty.
Now after gathering the relevant data about this question from respondents, the researcher has recorded all of them first on paper sheet and then transferred them in computerized format and now for the examiner and for other purposes like analysis and making conclusion the graphical form will remain most suitable.
No.7 Does the website load quickly?
Yes No
Answers in Tabular Form (Question No. 7)
Website Speed
Males
Females
Total
Yes
33
37
70
No
7
3
10
Total
40
40
80
This question is about the efficiency of the website because some people become irritate when the web site takes lot of time and some time the session expired due to late response from company main server. To avoid these kinds of problems that people avoid to use those web sites that load later and they prefer to use those website that gave quick response. In this regard the researcher has designed this question that it is the also the main feature of effective website, now it is confirmed that effective website must gave response to the customers at high speed, in this regard the company should use latest technology and latest computer as servers to gave quick response for capturing customers. And when the customer will visit the website and he or she will receive quick response then it will possible for organization to retain and capture more clients otherwise if the website will gave late response then the customer will avoid to open the link of that website and resultantly the company will lose many customer per hours by a little mistake.
The selected pharmaceuticals company has latest servers and their system is so good means updating of information regarding any query is so fast that know about all the features.
No.8 Is the website properly designed and optimized?
Yes No
Answers in Tabular Form (Question No. 8)
Optimization of Website
Females Respondents
Males Respondents
Total respondents
Yes
30
33
63
No
10
7
17
Total
40
40
80
Optimization is the feature of the website, to search the website it is very important for the company to optimize the website so that when someone search through search engine, then the company’s website must be on the top ranking because people used to click on the links which are on the top regarding doing shopping on the top of the search engine and secondly the search engine in the website is the most important part of the effective web site and in this way the it become the characteristic of the effective website. People sometime want to search for specific results then through key words this facility must be there to find out the exactly information by remaining in the website to search the information. And the website must be designed according to all the features like while choosing colour scheme and other stuff.
The graphical chart has been designed by the researcher to identify the result about this question significantly.
No.9 Does each page of the website has contains the relevant information about the products?
Yes No
Answers in Tabular Form (Question No. 9)
Contents of the Website Pages regarding each product
No. Of females
No. Of males
Total Number of Respondents
Yes
35
35
70
No
5
5
10
Total Number
40
40
80
As the selected company (Pharmaceutical Company) website all the features are included in the website and the website is effective and each page of the website has all the relevant data about the product but according to the title of the page, and this is another feature of the effective website. Sometimes the researcher has found that in some company’s website home page will full with the information but inside the website on other pages the information is missing, it creates bad and wrong impression on the clients and in the result the people did not go to click on those web pages and one thing is more interesting that the website should avoid to equipped with moving objects like birds and other moving object because customers did not like those moving objects on the websites because in this case their attention may be disturbed by moving objects and they may feel bad. Some time the clients is busy in reading specific information about a product and due to moving object repeatedly he or she may feel disturbance and stop working and closed the website.
No.10 Is the Web maps available at the website home page and is it beneficial for you?
Yes No
Answers in Tabular Form (Question No. 10)
Map Information about website
Males respondents
Female Respondents
Total
Yes
40
40
80
No
0
0
00
Total
40
40
80
This question has two parts designed by the researcher, in the first part the researcher is interested to know about the importance of web map and in the other part of the question the researcher is interested to know about the loyalty of customer and its effects on the customer’s loyalty of web map feature. The researcher know that every feature has its impact to create and increase the loyalty of customers, but some features have more impact like directly that increase the loyalty as well as satisfaction level also increased in the customers like when offered quality meets the requirements of customers or expectations, similarly each feature of the web site (effective) has its own affect on the loyalty and satisfaction.
Web map means that some social aspects and the web site can display on the mobile devices and on I Pods and on some other devices. These maps include information about weather condition, currency converter, monitoring systems for vehicles, traffic maps, timetables etc.
If yes, is this helpful for you regarding in creating loyalty?
Yes No
Answers in Tabular Form (Question No. 10-2)
Creating Loyalty
Males
Females
Total
Yes
40
40
80
No
00
00
00
Total
40
40
80
As this portion was the second part of the question. As the researcher come to know through secondary research and through the meeting and questioning to the staff members of the company and come to know that web maps create loyalty in customers, because this feature provides such kind of information to the customers under one umbrella so that they use these kind of information free of cost, and they think that the company is caring about them at high level and offering them these kind of services free of cost. So to check this feature importance the researcher has designed this second question in order to know about the web maps facility and its impact on the customer’s loyalty.
No.11 Are you interested in more products online shopping in future?
Yes No
Answers in Tabular Form (Question No. 11)
Interest in Online as compared to Traditional way
Females
Males
Total
Yes
35
39
74
No
5
1
6
Total
40
20
80
This question was asked to the customers that either they have interest in online shopping or not. So many of the people respond in yes, and majority of the people are interested in the online shopping, actually the researcher want to know about the main reasons and factors that why people are motivating towards the online shopping rather than traditional way. These customers already buying the products from the websites visiting but in the future they are ready to buy more products from the company’s website visiting to get more benefits and advantages.
If Yes, what is the reason behind?
Satisfaction, Loyalty, Quality, Discounts, Rewards, Time saving, Money saving, Security and Privacy
Answers in Tabular Form (Question No. 11-2)
Reason of repurchasing
Males respondents / 40
Females respondents /40
Total out of eighty
Satisfaction meets
40
40
80
Loyalty Building
40
40
80
Quality satisfaction
39
37
76
Discounts
33
35
68
Rewards
24
36
60
Time savings
40
40
80
Money savings
40
40
80
Data Security
39
39
78
Privacy
40
40
80
Web Maps
36
39
75
Easy to use
35
40
75
Time saving and low price (offers)
37
39
76
Convenient way of shopping
35
32
67
More reliable and Suitable
38
37
75
More variety, more alternative with comparisons
40
40
80
As in the response of first part of this question, when the respondents said yes that they are ready to do more shopping from the websites visiting due to the features they have the experience of them now the researcher has more interest in looking deeply that what are the main factors and motivators are there that customers are moving from traditional way to online way for shopping. That is why the researcher has designed this question. And after taking the response from the respondents the researcher has drawn the chart to understand the result in significantly so that data analysis is remaining and then the researcher will do more work on it like interpretation and make conclusion, now the data is only in the table form.
No.12 What factors company must consider while designing website to create more loyalty and satisfaction level?
More variety, Drawbacks of Competitors Products, Price Comparisons, Quality Comparisons, Volumes
Best Prices, Advantages, Benefits and Features of the product over the competitors products.
Comparisons of Prices and products
Answers in Tabular Form (Question No. 12)
Characteristics of web design
Male /40
Females/40
Total/80
More variety
35
39
74
Best price
39
38
77
Price Comparison
40
40
80
Quality Comparisons
39
38
77
Drawbacks of Competitors Products
40
37
77
Features, Advantages and Benefits of all Products
37
36
73
More alternatives regarding Packaging, volume
34
37
71
This question was designed to know about the products and comparisons of competitors because the customer wants to know about the competitor’s products price and offered quality, in this way the customers may feel more comfortable himself and loyalty will more increase at is maximum level and satisfaction regarding quality and price. So that is why the researcher has designed this above question.
The researcher wanted that no any corner should left in order to find out all the factors that affect on the loyalty and satisfaction of the customers and the company can capture maximum market share from the market to earn more revenue and earn more profit by capturing and retaining the clients. The selected pharmaceutical company has about all the features but not comparisons features regarding price and quality comparisons and now day the customers focus on the quality and price factors very much as this has been shown in the below chart.
No.14 Is there any difference between offered quality and perceived quality of product?
Yes No
Answers in Tabular Form (Question No. 14)
Regarding Services Offered and Perceived
Difference in Offered Quality of Service and Products and Perceived
Males
Females
Total Respondents
Yes
2
1
3
No
38
39
77
Total
40
40
80
This question was designed by the researcher to get the information about the customer’s satisfaction, that the customer’s who are using to buy online shopping from the selected pharmaceutical company are satisfied or not.
Regarding Quality Offered and Perceived (Question No. 14-2)
Difference in Offered Quality of Service and Products and Perceived
Males
Females
Total Respondents
Regarding Quality Offered and Perceived (Question No. 14-2)
Difference in Offered Quality of Service and Products and Perceived
Males
Females
Total Respondents
Yes
3
2
5
No
37
38
75
Total
40
40
80
No.15 Which factors the companies should consider while developing websites?
Contents, Navigators, Comments Page, Products information, Calculators, Different mode of payment, Membership Form, Discounts, Colour scheme, Testimonials Information and their comments, Suggestions page, Price and quality comparisons of competitors, Career Page, User friendly, Competitors products comparisons all necessary.
Answers in Tabular Form (Question No. 15)
Factors and considerations while developing the websites
Males
Females
Total out of 80
Contents
39
39
78
Navigators
35
38
73
Comments
33
35
68
Products Information
40
40
80
Calculators
32
35
67
Different mode of Payments
37
38
75
Goods Colour scheme and attractive and easy design
33
39
72
Discounts
35
38
73
Membership Form
33
34
67
Testimonial’s Information and their comments about the products results after consuming
37
38
75
Suggestions
35
37
72
Price and Quality comparisons
37
33
70
User Friendly
32
31
63
Careers page that shows the social responsibility
33
31
64
All the necessary Comparisons w.r.t Competitor’s Products
40
40
80
Research and development
35
37
72
CEO statement
31
33
64
This question was designed to know that if any company want to launch its website and offer the facility to buy online and do the marketing online then what factors the company must be consider while website designing.
No.16 Is there any drawback of online purchasing?
Yes No
Answers in Tabular Form (Question No. 16)
Drawback of Online shopping
Males
Females
Total
Yes
12
11
23
No
28
29
57
Total
40
40
80
This last question was designed by the researcher to get the information about the drawbacks of online purchasing. This was very important. Actually the researcher want to know about the drawbacks of inline shopping in order to know about the factors that are affecting and improvements to remove those weaknesses.
Interview with Employees
The researcher has arranged a meeting with the staff members of the selected pharmaceutical company to gather primary data and asked some questions to them and collect the data.
What do you think about the importance of website?
The staff members including managers and web developers and other staff that handling complaints and daily business transactions and delivering department’s supervisors. In responding to the questions they told the researcher that today the world has become the village and the distances has been reduced due to new technology, people are living thousands miles away from each other but due to internet now it is possible for them to get information and buy products and they can book the order with no wasting of time and they can buy quality products and we are offering the best quality of products. Due to the website and internet yearly we are capturing 30% round about new customers every year and we are retaining the old client as well by providing them the quality services from order booking to delivering them the order. We focus on the quality of services and try our best to maintain the quality of services and we are trying to improve out services and we are trying to satisfy our customer at every cost. It is very important for us to create loyalty first of all among the customers and we are about successful in this way. Main important thing is the quality of services and products to overcome the problems of customers and understanding the expectations of the customers. By keeping all the characteristics of effective web site we updated and are updating on daily basis the company website and give the feedback and replied the customer’s queries well in time in order to satisfy them. Marketing strategies has been changed due to the era of computer science, and now the company research and development department is working on the needs and wants of the customers, the company main aim is to improve the quality of life, which is most important for us. Due to computer science era, now the communication has become so fast. We are also saving the cost of marketing strategies and marketing activities because we have no suppliers online from all over the world and the company has hired the best professionals from all over the world, in this way to provide best services and products the company has hired the research and development staff from all over the world and this way the employees are working in all over the world and we have warehouse all over the world and with the help of feedback, suggestions and opinions the company is giving more importance to the customer’s queries and opinions and suggestions to create loyalty and satisfaction.
Is there any change in the trend of buying online rather than traditional way?
Yes first of all before the online shopping and before the website development it was impossible to capture 10% new customers from all over the world but now a day the company is capturing more than thirty percent of new clients every year.
Now more than 60% orders the company is booking online, this means that now the trend has been completely changed and it will more change because in some rural areas of poor countries there is shortage of electricity and computer science and people are illiterate. But with the passage of time and more developments in the science and technology there will be more change in the trends. Because it give many benefits to the customers as well as benefits to the manufacturers. The customers has the direct relation with the company and in this way he or she has a chance to describes his or her expectations and level of satisfactions and his or her needs in a good way directly to the company, and by considering all those qualities and levels the company tried at best level to offer those products to meet the expectations of customers, and in this way the company is delivering best quality products and services to its customers.
Do you feel that what kind of problems customer’s face while purchasing online?
People are afraid while payments they done online. Because they are afraid that it might be possible that there is some kind of dough with them, and some time the customers are in need of a medicine on urgent bases but due to shortage of stock some time the company deliver the product sometime late. Secondly it is not an easy task to understand the expectations of the customers so that is why some time it is impossible for us to deliver the services and products as per customer’s expectations. And there are many issues with the website like the customers want calculators on the website, web maps and many other features on the website, like tracking systems and online transaction record and copy of receipt, but the main problem with them is to search the exact products, sometime the customers did not know about the exact product that meet their requirements and in such a way if the customer make contact with us then we suggest them the exact solution of their problem. There is no products and services comparisons available on the company website and customer are looking for it, they want to make first comparisons in price, quality and volume then they want to make a decision to buy or not, some other issues are also considerable like most of the new customer are afraid to make payments online. But when the customer buys one time our product or services then he or she become the loyal with us.
Is there any issue regarding website development and customer handling online?
We do not think so that but there are some major issues which are directly related with the website and customers, first of all the researcher came to know that computer science is every day changing, there are lot of changes in this field and it become the demand of time to make necessary updates in whole system. For example the antivirus system, complete backup storage and retrieving, coding, programming, integrating all the queries into one system is not an easy task, but any way it is demand of today business. On daily basis we received many complaints and suggestions and opinion to improve the systems and services, and 3000 employee are working in research department and in handling the customer’s complaints and some time they do not like to respond us well in time and ignored to reply. But it is the company’s duty to make a contact with clients and customers to solve their problem as soon as possible. The main problem these days is the comparison with competitor’s prices, volume of products and the quality. Customer’s need that there must be a wide range of products and alternative which is not possible. On daily basis updating the website in necessary but are some other issues are also related with development.
5 Analysis
In this chapter the researcher has described the data analysis on the primary data in detail.
In the first questions the researcher come to know that the majority of the customers are using internet in their homes, the primary data showed that 90% of the population has internet connections and 10% are not using internet connection at their homes, which shows that majority of the people has internet connection for different purposes.
In the second question the researcher found that most of the people spent time in surfing internet at their homes. The pie chart shows that57% of the people spent more than two but less than three hours daily on internet for different purposes, and 30% of the people spent less than two hours but more than one hour on internet. These two significant figures shows that people are using internet for some purposeful work.
In the third question the main objective of this question was to know about the reason that why people use the internet.
The above pie graph showed that 27 % people use the internet for online shopping and 24% people use the internet to pay their bills and payments and 15% people use the internet for education purpose, 24% people use internet for checking emails. And the 24% of the people are also doing shopping online and thus total become as 24% + 27%= 51% which is majority of the population.
In the next fourth question the researcher tried to get information about the benefits of online shopping the people do.
This above graph showed that people are about equally interested in main four benefits, they go for online shopping, 26% are benefited as satisfaction, 26% for quality, 24% financial and 24% for Time saving, means that all are getting same benefits.
In the fifth question the researcher has find out that web contents a feature of effective website has a significant impact on customers or not?
The result shows that 92% of the population has the impact of web contents, if there is detailed information is available about the product, then 92% customers are attracted by the website and it create loyalty among them.
In the sixth question the researcher has found that customers feel themselves secure, when they made payments through online, they do not have any problem regarding data stolen. They feel secure themselves when they are doing transactions online.
In this question the researcher main aim was to make it sure that, either people feel themselves secure, while paying through website. Because if people know that yes there is no any chance of fraud and misuse of their data, then they will make payments through online system either through debit card or credit card or through pay pall. And the respondents showed that 92% of the people have no complaints and they feel that money transferring through online system is secure. This is another character of effective website and these results showed that customer have loyalty and satisfaction on the company website and their policies and procedures. When people feel security it means that company is more responsible for their personal data securing. Remaining 8% do not feel security because either they may have any past experience of mistake or misuse of their personal data by any company or their data may be hacked by the hackers.
According to researcher analysis 92% is such figure that showed the reliability and validity about the response that money transfer through website is secure way. And customers have satisfaction and loyalty and believe on the company.
The researcher has responses regarding the speed of website loading time, because if the website take more time to load, then some time the customer become angry and prefer to open the website that respond him or her quickly.
This question was designed to know about the efficiency of the website regarding the speed that which kind of computer system and server the company has to run business. 87% of the respondents replied that the website of the pharmaceutical company has good speed, there is no problem they ever faced during the downloading of contents, but only 13% respondents have faced the website loading speed problem, and this problem is may be due to internet provider company systems and speed of internet. And the result showed that customers are happy with the high speed of website loading. And this is another feature of effective website that creates loyalty and satisfaction among its customers that do shopping online.
In the next question number eight the respondents replied that the website of the selected company has been designed effectively regarding its outlook, design, colour scheme and with proper key words for searching. Majority of the respondents replied that the website has contained all the necessary elements that are necessary to create loyalty and satisfaction among the customers.
The above pie diagram showed that 79% people are satisfied with the optimization of website, whereas 21% are not satisfied with the optimization of website because it is not easy task to design the website and optimized according to all people, but with the passage of time and as per opinions and suggestions the wed developer will improve it. Anyway 79% is successive rate. But this feature may need some improvements.
In the above figure, the 87% of the respondents showed their interest that individual page contents/product information is sufficient. But only 13% of the people are not satisfied with the information given on the individual page. The researcher found that the suggestions and opinion page has been designed to get the opinion of customer to make improvements in this way to make more effective website by updating the website design according to their need and requirements.
The above both pie diagrams showed that the website home page has contained sufficient information and very helpful information and 100% respondent are agreed with the design and with the contents given in the homepage are sufficient and they all were agreed that homepage contents are sufficient to create loyalty, because customers have to look into the website through homepage, that guide all the visitors, that what is inside the website. This page contains all necessary features about the website.
The researcher has found that 92% of the customer showed their interest in doing shopping online in the future and 8% did no showed their interest may due to lack of resources or they are not more satisfied due to some other reasons, now the researcher was interested to know about the reasons of more online shopping of more products online.
It is proved through the above chart that majority of the customers is interested in doing online shopping due to certain reasons like satisfaction, Rewards, Time save, Security at 100%, whereas some other reasons like they are loyal with the company and satisfied with the quality offered them in past, and all other reasons.
Here the researcher has found out that customer needs more information on the website in order to know about the competitors products that should be available on the website in order to create more loyalty and to improve the satisfaction level.
This above diagram showed that there was only 3% customers who have a difference in their expectations and offered quality of products, and 97% were satisfied at high level of satisfaction.
In the last question the researcher found out about the features of website home page that must be included in the home page to create more loyalty and satisfaction among the customers. They all are given below in the chart.
The researcher has found out the effective website features to create loyalty and enhancing satisfaction level among customers.
After meeting with the staff members of the company the researcher has found out that customer can be retained by offering quality of services and quality products and there are some certain features if the website contained all those features then it is possible to satisfy them at high level, through online shopping has an importance for the business organizations because due to internet technology it is now possible to capture more clients from all over the world but through efficient electronic marketing. Now people want to save their time and money that is why they are doing online shopping and it also depend on the website features to create the loyalty and satisfaction. Most of the people do not have such an issue while doing shopping online but there are some problems while handling them because they want more comparisons about the competitors products and some other features in the website. They are satisfied, but there is another problem with the knowledge of using website because marketing properly and online marketing effectively, and website features are the main factors that can enable them to create more loyalty and satisfaction level. Payments online is an issue with the customers because the customer are afraid of hackers, who steel the data online and can misuse the details and banking details and can take money from their bank societies. In this ways we need to improve our services. Customers mostly asked us about the comparisons of quality, volume and price with respect to competitor’s products and these moments we are in need of these improvements. One more compliant is that customers need very fast feedback regarding website updates and it is not possible at that moments, it takes time, while customer have any problem, our team look into the matter and tried at their best level to solve the problem. There are some other issues with the website like web maps, calculators, price comparisons, more variety, membership forms, discounts, and rewards, more information at product page needs improvement where these are necessary and some of them are important to include them in the website.
As per the response of focus groups the researcher noted that and analysed their discussions that there is no doubt that website has an important role in the capturing of new clients and retaining old client by offering quality of services and in time delivery. And one main thing is that the search engine optimization has its own impact. There company can create more loyalty and satisfaction level by adding all those features in the website as per needs and requirements of customers.
6. Conclusion
Limitations of the research and conclusion
The researcher is a student and the researcher has conducted the research for academic purpose, and there were two main limitations, time and money. Being student, the researcher has afford all the arrangement by herself, all the expenses like refreshment to all respondents, travelling and all others like sitting arrangements and documentations. The other one main limitation was time, as she is a student and has conducted the research to fulfil the university requirement for completing the masters in marketing and innovation. Due to this limited time availability the researcher has chosen the specific number of respondents to collect primary data. The researcher has very short time to collect primary data from large number of population but the researcher has selected limited number of respondents to collect primary data. In order to know about the website characteristics that have influence on the customer loyalty, this was very short time, but by selecting the case study and conducting interviews of customers and staff members of pharmaceutical company and found that yes characteristics of website play an important role in creating the customer loyalty, and there is a significantly impact on the customer’s loyalty due to discussed characteristics. And due to these characteristics the website is called effective website. As per data analysis the researcher has concluded that through effective website customer loyalty can be created and as well as customer satisfaction also can be created. The aim of this research was to know about those factors/elements that become the characteristics of website secondly the researcher aim was to know about the effect of these elements/factors in creating customer loyalty and third one to know about the major element among all of them. So after analysis of the primary data and by keeping all the secondary data in the mind the researcher concluded that now day people are interested in the online shopping to save their time and for financial benefits, and to get good quality products to meet their needs and requirements. As per primary data gathered by the primary research the researcher come to conclude that there are many factors that together become a website effective and the efficient website can create loyalty and satisfaction among the customers and there are some other factors that can contribute towards more loyalty creation among the customers, so first of all the researcher will mentioned the factors that create the loyalty among the customers.
Serial No.
Factor
Description
1
Web Design
Colour scheme, attractive colours
2
Navigation
Movements, link of pages, up down, left right movements of pages
3
Optimization
Search engine optimization
4
Membership form
To become the member to earn points
5
Discounts
Offers on buying online like (one buy one get free)
6
Web Maps
Currency convertors, Weather condition, traffic maps, railway time tables etc
7
Quality
Quality of the products means expected output of the products, brand name, expiry date, volume, price, advantages, benefits and features of the products
8
Rewards
On the basis of frequency of shopping in the past, and earning point free shopping or gifts
9
Data Security
Personal data must be secured, no misuse of personal data, data must be secured like phone number, address, age, gender etc
10
Privacy
No one can trace the order and nature of the product if someone is interested in any specific products or service.
11
Career page
Career page shows that how much the company is social responsible
12
CEO Statement
CEO statement tells the customer that why the company is in the market, what is the mission statement with slogan and objectives and offerings.
13
Different mode of Payment
There should be different mode of payments, rather than one payment option like through pay pall account, debit card or credit card option or may be through telephone payments or through cheque payments.
14
Security
The website must be secured from data hackers because peoples are afraid of personal data hacking and misuse of financial data. So the website must offer data security.
15
Speed
Website and contents and web pages load speed effect the loyalty and satisfaction and retaining the customers.
16
Feedback/opinion/ suggestion page
Customers are interested in giving their opinions and suggestions about the improvements, so they feel proud of it, if their comments are appreciated by the web development team and the web developer make improvements in the website development for the ease of customers
17
User friendly
The website language the links, and information regarding each product must be easy to understand, and the product information must be in detail, because people are interested in it, as they want to know more and more about the product.
The researcher come to know that some people are afraid of the hackers that hacked the data and misuse the data like fraud from bank, and some people do not have computers and internet at their home. These above factors make a website effective and through effective website it is easy for company to create loyalty among customers by offering quality products. The primary research data showed that majority of the people consider the above factors as features of the website and they do online shopping and remain loyal with the company an feel comfort if the all above factors are included in the website.
Suggestions and recommendations
Some factors were missing in the website and thus some people avoid to do shopping online, like now a day people want to know more and more about the product in detail and they want to know about the comparison of competitors, they want to look at comparisons available on the website so that they can be recognize to make appropriate comparisons and feel more satisfaction among themselves and it will create more loyalty among them and they will again come to buy the product or services. Similarly there was lack of individual product detail on individual product web page, customers are interested in the more detailed information about each product, so the company must include the contents regarding each product in detail, and comparison like on prices, wide range of variety, quality of products, volume of the products must be given on the website. It will create more loyalty and enhance the customer satisfaction level. People will more move to make shopping online if different mode of payments online introduce in website for the ease of customers with appropriate data security mechanism and them through marketing activities the message deliver to the customers then it will more helpful, because some people avoid to do online shopping due to unsecure and only one mode of payment. Customers want that web development should appreciate them on their views and comments about the efficiency of website and features of the website so the company must understand the desire of the customers and provide them appreciation as per their comments and take in account their suggestions and opinions to improve the website in order to create more loyalty in the customers. The pharmaceutical company must try to handle customer’s complaints regarding delivery of the products well in time it will create more loyalty and improve the satisfaction level and quality of the services as well.
Further Research
There are many areas in which there is need of research to improve the efficiency of the websites and to create more loyalty. Through supply chain mechanism and customization of products can be more effectively area of research in this regard. The customer relationship department can improve the services in creating satisfaction. And there are some other areas like effective data security and other issues which are directly related to the customers, so in these areas more research can be conducted for more appropriate results.
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