CHAPTER – 1
Now a days companies are identifying the need to create a loyal customer base and acknowledges that maintaining existing customers and extending business with them in significantly less expensive than acquiring new customers. Empirical proof of the proliferation of such customer loyalty efforts in the business world is e.g. provided in the form of loyalty programs, which many companies have installed during the past years. By engaging in efforts aimed at creating customer loyalty, which in turn fosters financial success in monetary terms firms react to increasing competitive challenges. Within research, the investigation of customer loyalty gained importance when the classic marketing paradigm with its instrumental and transactional orientation proved unsuitable in the context of longer-term business relationships. Instead, the relationship marketing approach, which is specifically concerned with the study of relational ex-changes, gained importance within research, serving as a conceptual foundation for the majority of customer loyalty researchers. The question of how loyalty develops has been subject to an abundance of research, leading to an expansive body of literature on loyalty determinants. The extant literature exploring different factors and their constituent effects on loyalty, however, reveals a strong focus on consumer goods and industrial equipment settings, while industrial services have received relatively little
attention so far. In addition, the majority of articles incorporates merely a few potential determinants and thus fails to draw a comprehensive picture of the mechanisms of customer loyalty formation. Just like other businesses, logistics service providers (LSPs) are faced with increasing competitive pressure that urges them to concentrate not only on operational business processes, but also on an efficient and effective customer management. In the US alone, LSPs‟ revenues grew from US-$
3 31 billion in 1995 to US-$ 85 billion in 2004 and logistics outsourcing expenditures as a fraction of total logistics expenditures are at over 40% and expected to rise even further. One way to meet this challenge of rapid growth and expansion, according to Langley et al. is to focus on establishing, maintaining, and developing relationships with customers. An often proposed driver of logistics outsourcing is the need to develop and maintain competitive advantage, which customers of LSPs intend to achieve through concentrating on core competencies and re-engineering. Another important driver is the ongoing globalization, which several authors regard as the most important challenge that companies are facing. In this context, LSPs can play an important role as facilitators of global trade. Along with globalization, however, companies that outsource logistics activities increasingly try to consolidate the number of LSPs they use globally. Therefore, LSPs do not only have to devise sustain-able growth strategies, but also have to develop intercultural management competencies, a challenge hardly ad-dressed in LSP management literature.
While intercultural management deals with the influence of culture on management styles in different countries, it is also arguable whether a one best way management paradigm is applicable even within national confines. LSPs‟ customers are extremely diverse and similarly, relationships between LSPs and their customers can be expected to exhibit momentous differences. As such, it is a crucial management issue for LSPs to de-sign their customer loyalty efforts in a manner that accounts for both cultural context and different relationship characteristics.
As outlined in the preceding section, LSPs are confronted with diverse management challenges that result from continuous growth, globalization, and customer diversity. The aim of the present study therefore is to identify determinants of customer loyalty in relationships...