Evaluating the effectiveness of relationship marketing on customer`s
Transcription
Evaluating the effectiveness of relationship marketing on customer`s
ISSN: 2408-5480 Vol. 3 (3), pp. 201-205, March, 2015. © Global Science Research Journals http://www.globalscienceresearchjournals.org/ Global Journal of Agricultural Economics, Extension and Rural Development Full Length Research Paper Evaluating the effectiveness of relationship marketing on customer’s attitude and customer lifetime value Azade Ebrahimi Bahreini1*, Ali Mollahosseini2, Parviz Ahmadi3 *1 Department of Management, ShahidBahonar University, Kerman, Iran. 2 Department, ShahidBahonar University, Kerman, Iran 3 Department, Tarbiat Modarres University, Tehran, Iran Accepted 24 March, 2015 Abstract In recent years, Attitude is the important factor that affecting the buying behavior of consumers. These days, the survival of organizations depends on customer’s repeated purchase, so organizations must lead repeat customer’s purchase by changing the mentality and attitude of consumers. Thus, organizations need to focus their attention on the relationships with customers, theorists have suggested relationship marketing (RM).At the core of RM is the development and maintenance of longterm relationships with valuable customers. In RM, the customer lifetime value (CLV) is the discounted profit streams of a customer across the entire customer life cycle. The CLV plays a key role in customer acquisition and retention decisions. The purpose of this descriptive correlational study was to examine the effect of relationship marketing on customer lifetime value of Hacoupian brands with consideration of attitude as a mediator. The purpose of this descriptive correlational study is to examine the effect of the consumer’s attitude of the Hacoupian brands on the customer’s lifetime value by considering consumer particular value as a mediator variable. Population of survey in this research was customers of Hacoupian brand in Kerman and a sample of 384 randomly selected for this study. Datas are collected through questionnaires and Analysis by SPSS and AMOS. This research finds that there is a significant relationship between relationship-marketing and attitude toward luxury brand and also there is a significant relationship between attitude toward luxury brand and customer’s lifetime value. Keywords: Attitude, brand, customer lifetime value, relationship marketing INTRODUCTION World-wide sales volume of luxury goods increased significantly up to US$ 130 billion in 2007 (Okonkwo, 2007). In particular, the demand for luxury brands has grown rapidly in Asia. Ownership of luxury brands can reflect the owner's social status as luxury brands are universally recognized as a statement of good taste in a global economy (Nueno & Quelch, 1998). To achieve *Corresponding Author’s Email: [email protected] success in the complex and competitive market of today, researchers have maintained and practitioners agree that customer satisfaction is the key (Ndubisi and Chan, 2004). Thus, a number of key areas that needs to be considered if the customer is to be served satisfactorily have been prescribed. One of these key areas is to leverage firm-customer relationship to gain privileged information about customers’ needs and thereby serve them satisfactorily. Relationship marketing therefore, strives to get the firm close to the customers in order to enable it to accurately and adequately discern and satisfy Glob. J. Agric. Econ. Ext. Rural Deve. 202 Figure 1: Research model. ATLB: Attitude toward luxury brands their needs. Besides its ability to help understand customers, relationship marketing also helps to increase market share, profitability, and reduce cost. Research has shown that the cost of serving one loyal customer is five to six times less than the cost of attracting and serving one new customer. Although there is a long list of benefits associated with relationship marketing, little is understood about the actual influences of the underpinnings of relationship marketing on relationship quality and customer satisfaction, as vast scholarship in this area remains conceptual (Ndubisi, 2003). The present study aims at: (1) examining the effect of relationship marketing on consumer’s attitude towards luxary brands and (2) examining the effect of consumer’s attitude towards luxary brands onCustomer Lifetime Value (CLV). LITERATURE REVIEW Attitudes Attitudes are a set of inclinations, which form the individual’s thoughts, emotions and behaviors for a psychological object in an organized way. Attitudes are one of the most important determinants of human behaviors. Researches show a general consistency between behaviors and attitudes, which indicates that it is possible to make realistic predictions about the individual's behaviors based on their attitudes (bal& kutlu,2012). Jabari discusses that attitude is one of the factors that influence consumer behavior and also based features. Changes in people’s Attitude is possible through things like advertising and sales promotion, etc(Jabari, 2010). Relationship Marketing The concept of relationship marketing has emerged within the field of services marketing and industrial marketing (Berry, 1983; Gummesson, 1987; Christopher et al.,1991; Gummesson, 1991). Berry (1983) viewed relationship marketing as a strategy to attract, maintain and enhance customer relationships. Rapp and Collins (1990) argued that the goals of relationship marketing are to create and maintain lasting relationships between the firm and its customers that are rewarding for both sides. Blomqvist et al. (1993) offered the following key characteristics of relationship marketing: every customer is considered an individual person or unit, activities of the firm are predominantly directed towards existing customers, it is based on interactions and dialogues, and the firm is trying to achieve profitability through the decrease of customer turnover and the strengthening of customer relationships. Gummesson (1993) concluded that relationship marketing is a strategy where the management of interactions, relationships and networks are fundamental issues (OlyNdubisi & Kok Wah, 2005). Customer Lifetime Value (CLV) Dwyer (1989) proposed that CLV is the net value of the expected profit of the enterprise minus the related cost. Kotler (1997) pointed out that CLV is the net profit obtained from a certain customer over the lifetime of that customer, as s/he continues to purchase products from the company. Thus, CLV is the profit produced by all of the steps that an enterprise takes to maintain a relationship with the same customer(Ing Wu & Chi Li, 2011). The notion of lifetime value of a customer has been well accepted by both researchers and business practitioners. It is generally believed that lifetime customers are the most profitable to a firm. Reichheld and Teal (1996) attributed the increase in profits from loyal customers to their willingness to pay price premiums, the added profits from sales through referrals, profit from cost savings obtained by serving a long time customer, and revenue growth from a loyal customer dueto increased sales to that customer. These are the most commonly held reasons for increase in profitability from lifetime customers. Customer lifetime value (CLV) is gaining importance as a marketing metric in both academia and practice. Many big companies are routinely using CLV as a tool to manage and measure the success of their businesses (Gupta et al., 2006). Research Model and Hypotheses Research model Figure 1 shows a broad overview of the conceptual model used to discuss the relationships among Relationship marketing, attitude toward luxury brands and customer lifetime value. Bahreini et al. Research Hypotheses According to Rakstis (1996), the National Retail Merchants Association, USA, reported that businesses lose approximately 20 percent of their customers each year, most of which arise from issues relating to incompetent service delivery. Of customers who switch financial institutions in the USA, 40 percent do so because of service quality problems. Calonius (1988) emphasized that an integral element of the relationship marketing approach is the promise concept. According to Calonius the responsibilities of marketing do not only, or predominantly, include giving promises and thus persuading customers as passive counterparts in the marketplace to act in a given way, but in keeping promises, which maintains and enhances an evolving relationship. Fulfilling promises that have been given is equally important as a means of achieving customer satisfaction, retention of the customer base, and longterm profitability (Reichheld and Sasser, 1990). Blattberg and Deighton (1996) pointed out that not all customers are the same; as the competition in the market becomes more severe, keeping valuable customers becomes more important to enterprises. According to the 80/20 principle (Pareto Principle), 20% of the customers bring the enterprise 80% of the profit. Therefore, determining how to hold onto that 20% of the customers and to how to measure their CLV are very important topics(Ing Wu & Chi Li, 2011). Communication is the ability to provide timely and trustworthy information. Today there is a new view of communication as an interactive dialogue between the company and its customers that take place during the pre-selling; selling, consuming and postconsuming stages (Anderson and Narus, 1990).Wilson (1995) argued that commitment is the most common dependent variable used in buyer-seller relationship studies. In sociology, the concept of commitment is used to analyse both individual and organizational behavior. In marketing, Moorman et al (1992) defined commitment as an enduring desire to maintain a valued relationship. This implies a higher level of obligation to make a relationship succeed and to make it mutually satisfying and beneficial. Based on a review of the relevant literature, the following hypotheses are proposed: Relationship marketing will positively influence Attitude toward luxury brand. Attitude toward luxury brand will positively influence customer lifetime value. METHOD 203 ―I react favorably to luxury brands‖, ―Luxury brands are good brands‖) measure Attitude toward luxury brands (Hoonkim et al.2012); and six items (e.g., ―This Brand’s words and promises are reliable‖, ―This store's brand is consistent in providing quality services‖) measure relationship marketing (OlyNdubisi & Kok Wah,2005). And eight items (e.g. ―I am willing to purchase from this company again‖, ―The money I spend here is well-spent‖) measure Customer Lifetime Value(Ing Wu & Chi Li, 2011). For purposes of this study, Hacoupian was the brand used to calculate customer lifetime value. 4.2. Sample and data collection The sample size is very important to generalize the results to the community. There are several methods for determining sample size which among them mathematical methods are the most accurate ones for calculating the sample size. Given the focus on luxury brands, the sample (n=384) consists of People who have purchased Hacoupian brand more than twice in Kerman. In the present study, in order to more assurance a total number of 400 questionnaires were distributed among consumers in stores. Some of questionnaires were excluded due to wrong and incomplete responses and finally 384 questionnaires were analyzed for data analysis. the demographic characteristics of respondents shows that Among the respondents, 73.4% are males and 26.6% are females. Among respondents surveyed, 26.6 percent less than 30 years, 46.4% between 30 and 39 years, 17.4% between 40 to 49 years and 9.6percent were aged 50 years or older.30.7 percent of the respondents have associate degree or less, 46.1 percent have undergraduate education, 15.4 percent have graduate education and 7.8 percent have Ph.D. The income level of the respondents participating in this study, it was found that 33.9percent of respondents earning less than 3million tomans (RS), 39.3percent haveincomesbetween3 to5million RS and103 of them had an income of more than 5million RS. Data Analysis A series of confirmatory-factor analysis models were estimated using the data from samples. The two-step approach to structural equation modeling suggested by Anderson and Gerbing (1988) was used in this study. Before estimating the paths to test the relationship among constructs, a confirmatory-factor analysis was conducted to analyze validity through Amos 21. Table 1 indicates the results of the CFA for the measurement model and shows factor loadings and t-values. The CFA model is acceptable because CMIN/DF(2.78) GFI (.906) and AGFI (.879) RMSEA(0.06) values are acceptable. All Measures of the values of Cronbach's Alpha are higher than 0.6, therefore, reliability of the data was high enough for further Scales developed in past researches were used to measure the constructs on five-point rating scales (1=strongly disagree, 5=strongly agree). four items (e.g., analysis. In summary, the measurements used in this research have high enough validity and reliability for further analysis. Glob. J. Agric. Econ. Ext. Rural Deve. 204 Table 1: Confirmatory factor analysis and reliability analysis Factors Scales RM This Brand’s words and promises are reliable. This store's brand is consistent in providing quality services. Employees of this store shows respect to customer. This company provides effective sales promotions. This company offers personalized services to meet customer needs. This company shows high professionalism in its services. ATLB I react favorably to luxury brands. Luxury brands are good brands. I enjoy buying luxury goods. Considering the price of luxury brands, I'd prefer it. I am willing to purchase from this company again. The money I spend here is well-spent. I am a loyal customer of this company. I would still use the services of this company even if another company offers me a promotional or favored price. Even if the price increases, I still would like to go to this company for lodging. If someone asks me for information on a related product, I provide them with information about this company. I would like to register as a member of the company and share my opinions on its advantages. I would like to, through my introduction, let my relatives and friends become loyal customer of this company. CLV Table 2: Results of hypothesis test. Hypothetical patch relationship marketing attitude toward luxury brands attitude toward luxury brands CLV RESULTS AND DISCUSSION As shown in Table 2, we find, among Relationship marketing has a significant relationship with attitude toward luxury brand, this means that RM can improve customer's attitude toward luxury brand to the rate of 70%. Attitude toward luxury brand has a significant relationship with customer lifetime value, This means that Attitude toward luxury brand can increase customer lifetime value(CLV) to the rate of 97%. Given that the value of ATLB’s R2adj (adjusted R2) is equal to 0.49, it is concluded that the variable of RM in this model, determine 0.49 of the variance of consumer’s attitude 2 toward luxury brands and the value of CLV’s R adj 2 (adjusted R ) is equal to 0.97, it is concluded that the variable of ATLB in this model, determine 0.97 of the variance of customer lifetime value. CONCLUSIONS AND IMPLICATIONS First, the present study evaluates the effect of relationship marketing on consumers‟ attitude toward luxury brands. Using an experimental study on a total of Path estimates 0.70 0.97 Factor loadings 0.71 0.69 0.63 0.50 0.78 0.69 C.R. 0.37 0.36 0.64 0.73 0.55 0.69 0.75 0.72 Fixed 3.597 4.874 4.968 Fixed 11.081 11.650 11.554 0.66 0.67 12.361 12.820 0.63 11.986 0.66 9.814 Fixed 12.339 11.182 8.971 13.735 12.331 C.R. Result 4.622 4.751 supported supported 384 respondents of consumers in Kerman who have purchased Hacoupian brand more than twice, the current study shows that relationship marketing has a significant positive impact on consumers‟ attitude toward luxury brands. In other words, the results show that ongoing and awareness communication can improved consumer’s attitude toward brand. Second, the present study evaluates the effect of consumers‟ attitude toward luxury brands on Customer Lifetime Value. The results of this study shows that consumers‟ attitude toward luxury brands has a significant positive impact on Customer Lifetime Value. In other words, rearing consumers‟ attitude by providing information to customers is done, thus customers get more knowledge and more accurate images of the products that are going to buy it. This knowledge will lead to lower customer’s dissatisfaction after the purchase of goods and create sense of satisfaction, raise customer’s commitment and loyalty and provides the customer’s repeated purchase with more confidence. Investment in advertising and improvement of service in retailing may help to build relationship with consumers in the long term. Investment in advertising and improvement of service in retailing may help to build relationships with consumers that engender long-term loyalty (Ko et al., 2009). Loyalty program, updating Bahreini et al. customer's information in real time, acknowledging customer birthdays with gifts, customized service, and special treatments, to name few, can help to build and maintain strong customer relationships. The findings of this study can be used by managers in designing their RM strategy in the future. 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