Course No. & Title: Marketing Research
Programme of Study: Postgraduate
Assignment due date:
Title of the Assignment:
Research Proposal. Affecting Customers Loyalty.
Student’s Name :
Affecting Customers Loyalty. Background and Justification for Selection of the Topic. In today’s competitive markets services and service companies within the same industry are becoming increasingly similar. Differentiation through the delivery channel (i.e. delivery of services against payment) is difficult. A growing number of service companies have embarked on a journey of positioning through the communication channel (i.e. advertising and personal selling) (Andreassen, T. 1995), with the objective of building strong corporate images in order to create relative attractiveness. This development is in line with Lovelock (1984) who claims that «(images).. . are likely to play only a secondary role in customer choice decisions unless competing services are perceived as virtually identical on performance, price, and availability». Recent years have shown a growing interest in customer loyalty. The globalisation of competition, saturation of markets, and development of information technology have changed customer behavior and perception and created a situation where success is no longer achieved through product price and qualities. Instead, companies build their success on a long-term customer relationship. According to former studies, it can cost as much as 6 times more to win a new customer than it does to keep an existing one. (Rosenberg L. et al. 1984: 45) Depending on the particular industry, it is possible to increase profit by up to 60% after reducing potential migration by 5%. (Reichheld F. 1993) It follows then, that the increase and holding of loyal customers has become a key factor for long-term success of the companies. The main emphasis in marketing has changed from winning new customers to the keeping of existing ones. Traditionally there are two approaches to treat customer loyalty. Some researchers have investigated the nature of different levels of loyalty, others have explored the influence of individual factors on loyalty. In this article both treatments are combined. The starting point of the paper is to test whether the list of most important factors affecting customer loyalty is dependant on the levels of loyalty of costumers. The potential for establishing loyalty depends on the object (i.e. product or vendor), on the subject (customer) or on the environment (market, other suppliers etc.). This work might be rather helpful for both students, interested in developing this field of research and people, who are working in the sphere of marketing, because it may provide with interesting information worth dwelling upon. This topic interests me personally, because to my mind, customers are the turning point of the market. They decide whether to buy a product or to use a service or not, changing the whole picture of market. That is why, I suppose it is rather necessary for industries to pay much attention to the topic of customers loyalty and satisfaction in order to be a success.
Statement of Objectives and Hypothesis to be Examined.
This paper aims to test if the importance of each factor affecting loyalty varies in different loyalty segments described in Figure 1, presenting segmentation of customers loyalty. One possibility to investigate it is to compare the customers of different loyalty levels and examine what kind of factors influence the probability of the customers to remain on that level or to move to another loyalty level. Customer loyalty expresses an intended behavior related to the service or the company. This includes the likelihood of future renewal of service contracts, how likely it is that the customer changes his preferences, how likely the customer is to...