Relationship Marketing

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Chapter 1: Introduction

1. Introduction:
This chapter introduces the concept of relationship marketing in relation to hospitality industry in India. It goes on to explore the aims and objectives of the research which was conducted and concludes by summarizing the contents of the subsequent chapters.

1. Research Background:
World tourism industry is a 2nd largest after oil in gas industry in terms of turnover rate and employment. With a predicted growth rate of 4% every year for next 10 years the world tourism industry indirectly enables popular tourist places to gather substantial financial profits (WTTC, 2008). The hospitality industry is expected to grow drastically with lots of FDIs coming into India (hospitalityindia.com). Such rapid growth has helped the industry to produce strong competition in the market place which has provided customers with increased choice, greater value for money and increased levels of service. However, there is now a very little to differentiate one hotel’s products and services from another and it is therefore critical for hotel to gain a competitive advantage in order to distinguish themselves from their opponents.

The growth of hotel industry in India has been significantly influenced by the growth of the global tourism industry. India has become an important tourist destination in the sub-continent region and had a constant growth in terms of number of tourists flowing into the country. In the year 2011 over 19.4 million foreign tourists visited the country according to the Government of India’s statistics (tourism.gov.in). As tourism is one of the important industry to generate revenue and employement for the country hence improving the quality of services provided and establishing valuable long term relationships with customers is more crucial than ever to success of the Indian hotel industry. Such developments are particular and urgent given the current world economic crisis.

The theory of relationship marketing and the importance of developing long-term relationships between buyers and sellers has been examined extensively in marketing theory and practice and has replaced the previous focus on individual transactions (Berry 1981; Morgan & Hunt 1994; Grönroos 2007; Gummesson 2008).The concept of relationship marketing became famous during 1990s (Gummesson, 2002). According to personal experiences, Gummesson explains that it’s not just from the profession knowledge about the business but also network of relationships would help any business to grow. Relationship marketing was initially used for business to business (B2B) markets but slowly invaded business to customer (B2C) markets. Many articles and journals related to this theory agree to the fact that the retention of existing customers is more profitable than seeking new ones (Reichheld & Sasser 1990; Berry & Parasuraman 1991; Buttle 1996; Gilbert et al. 1999) and within the hotel industry in particular, customer loyalty and its related concepts play a crucial role in the success of relationships which is generally based on service-related factors such as the personality of front-line employees. When customers’ expectations are met by the quality of service offered by staff, their satisfaction increases and this leads to a simultaneous increase in the possibility of repeat purchase and the level of trust and commitment of customers.

According to Morgan and Hunt (1994), “Relationship marketing refers to all marketing activities directed towards establishing, developing and maintaining successful relational exchanges”.

Gummesson also claims that to gain the loyalty and build a good relationship with the customer, there are certain quality dimensions that the customer would look at when making a relation (Gummesson, 2002, pp290). They are ● Reliability, delivering good service as promised to the customer. ● Responsiveness, willingness to serve the customer. ● Assurance,...
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