ABSTRACT
The purpose of this study was to investigate the effect of relationship marketing on customers’ retention in Nigeria Bottlling Company, Owerri. In a bid to achieve this, the researcher made use of description survey design. With an inestimable population and 286 respondents were selected randomly for the study. The instrument for data collection was the questionnaire. Simple regression analysis was used in analyzing the data and the study found that relationship marketing aims to build stable customer(retention), and reduce customer exit. Thus, we concluded that higher level of customer retention is associated with a high level of trust, and there is a relationship between customer retention and commitment. We therefore, recommend that to cope with competition in the market, firms should endeavour to ensure that their old customers are happily maintained to ensure their trust and commitment.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
Abstract vii
CHAPTER 1: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 4
1.3 Objectives of the Study 5
1.4 Research Questions 5
1.5 Research Hypotheses 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
1.8 Limitations of the Study 8
1.9 Operational Definition of Terms 8
CHAPTER 2: REVIEW OF RELATED LITEARTURE
2.1 Conceptual Framework 9
2.1.1 Advantages of relationship marketing in a business organization 12
2.1.2 The concept of trust 14
2.1.3 The concept of reciprocity 16
2.1.4 The concept of bond 17
2.1.5 The concept of empathy 17
2.1.6 The concept of customer retention 20
2.1.7 The relationship between relationship marketing and customer retention 23
2.2 Theoretical Framework 26
2.3 Review of Empirical Studies 30
2.4 Summary of Literature Review 33
CHAPTER 3: METHODOLOGY
3.1 Research Design 34
3.2 Area of Study 34
3.3 Population of the Study 35
3.4 Sample Size 35
3.5 Sampling Techniques 36
3.6. Research Instrument 36
3.7 Validity of the instrument 37
3.8 Reliability of the Instrument 37
3.9 Administration of the Instrument 38
3.10 Method of Data Analysis 38
3.11. Test of Hypothesis 38
CHAPTER 4: RESULTS AND DISCUSSION
4.1 Data Presentation 41
4.2 Test of Hypotheses 44
CHAPTER 5: SUMMARY, CONCLUSION, AND RECOMENDATIONS
5.1 Summary of Major Findings 48
5.2 Conclusion 49
5.3 Recommendations 49
5.4 Contribution to Knowledge 50
5.5 Suggestions for Further Studies 51
References 52
Appendices
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Firms today are working in a highly competitive and rapidly changing work environment. Industrial firms on the other hand know the importance of establishing strong relationships with customers to ensure long-term profitability and sustainable core revenues. Nigerian bottling company as one of the world’s largest bottlers of drinks from the coca-cola company operating 11 plants in Nigeria since 1975, has shown a high influence in retaining customers or keeping relationships. In the face of slowing industry growth and the new increased competition, today’s firms are under tremendous pressure to grow organically. The terrifying competition from both traditional and modern operations and emerging marketing strategies (like guerrilla marketing) has made a large number of firms to have trouble meeting performance expectations due to difficulties in differentiating their business, difficulties in reaching customers likely to respond positively to new sales opportunities and difficulties in making the most of their valued workers (Hinde, 1997). Thus firms that define and implement solution to such problems as identified above are those that will successfully compete and thrive into the future. These are the firms that can be able to keep their main asset-customers in place such firms therefore needs to establish good relationships with their customers so as to create a customer loyalty image that n turn will lead to their sustenance (Huber and O’Gorman, 2019).
In this relations, the American Marketing Association (2020) noted that marketing is very vital, the association in defining what marketing is further explains marketing as an organizational function that comprises a set of processes that create, communicate and delivers value to customers and manage customer relationships in ways that are beneficial to the organization and its stakeholders (American Marketing Association, 2010).
In the same vein, relationship marketing is one of the aspects of newly developed philosophy marketing which is holistic marketing. It holds the fact that everything matters with marketing and that a broad, integrated perspective is often necessary, increasing a key goal of marketing is to develop deep, enduring relationship with all people or organization that could directly attract the success of the firms marketing activities. Relationship marketing has the aim of building mutually satisfying long term relationship with key parties, customers, suppliers, distributors and other marketing partners in order to earn and retain their business. It builds strong economic, technical and social ties among the partners (Kotler, 2019)
This view establishes marketing as a very vital factor in the success of firms. Berry (2010) opines that the intangible nature of products in the production firms (NBC) comprising this production industry makes it difficult for customers to evaluate them. Abratt and Russell (2017) explain that keeping clients through development of relationships with them is crucial to establishing and maintaining a competitive advantage in the market. According to RAO (2018), when competition increased towards the latter half of the 2th century, marketing in enhancing customer loyalty as well as attracting more new customers than competitors. This heat up led to the extensive and wide practice of marketing an arm that greatly puts customer needs into consideration as opposed to the previous strategies. RAO (2010) further notes that production firms includes being customer oriented which means that firms should strive to create new and innovative services while keeping in view the changing needs of their customers.
To further specify the target of the marketing strategy, Enner and Binks (2016) wrote that the higher relative cost of acquiring new customers had shifted the emphasis on maintaining long term customer relationships to improve profitability as part of the marketing plan.
Though, relationship marketing was highly emphasized in the early 80’s, it started being used during the earlier days of business. Gronroos (2017) confirms this from a Middle East ancient proverb among merchants. “As a merchant, you’d better have a friend in every town”. Though that is the case relationship marketing appeared in literatures in the early 80’s (Barness, 1994; Gronroos, 2017). Schnedier (2018) recounted that during the period preceding the 80’s, researchers and business people had concentrated more on how to attract consumers to products and services rather than how to retain these customers.
Berry (1995) reported that the needs of firms have shifted from attracting new customers as the main marketing tools to retaining as well. The incorporation of more customer friendly services has contributed to this great change. Laura (2005) notes that customer retention has been and is still a thorn to most firms. She notes that most production firms in Imo state lose up to 40% of their customers before the customer fist yea anniversary. These is a shocking result putting in mind that a lot of investment is put to task for the firms to be able to get the customers. She further notes that firms attracts many customers through their marketing strategies and offers but are unable to keep them as expected. With increased competition and the need to cut on cuts to enhance profitability, mangers realized the importance of dwelling more on the customers that are already within their reach than those who are not yet theirs.
This may have been brought about by the realization that dwelling more on retaining already available customers was cheaper than attracting new customers .This is agreed by Berry who considered relationship marketing as a back bone of many production firms and the core strategy that ensures that a company got the customers it required to run. He further emphasized that attraction of new customers should be viewed only as an intermediate step in the marketing process. Solidifying the relationships, transforming indifferent customers into loyal ones and serving customers as clients should also be considered as marketing (Berry, 2010).
Nigeria Bottling Company is one of the production firms in Imo State that has been provided with the environment of attracting new customers as well as maintaining those already attracted as a way of responding to the high competition experienced in the industry since its inception in 1975. To be able to enhance their customer contact, the firm increased its depot, with 11 plants in Nigeria. With production of different varieties in different sizes and prices to suit customers’ needs.
1.2 STATEMENT OF THE PROBLEM
This study examines on the effect of relationship marketing on customer retention in Nigeria Bottling company, Owerri Imo state. However, several problems and several studies on relationship marketing and customers’ retention has been fragmented or inconclusive. Moreso, most studies in the area has been on the service sector with very little research in the manufacturing sector of emerging economies. It is therefore against this background that the research attempts to investigate the effect of relationship marketing on customers’ retention in Nigeria Bottling company, Owerri, Imo state.
1.3 OBJECTIVES OF THE STUDY
The main purpose of this study was to examine the effect of customer relationship marketing on customers’ retention in Nigeria Bottling Company.
Specific objectives of the study include to;
i. examine the effect of trust on customers’ retention with Nigerian Bottling Company .
ii. determine the effect of empathy on customers’ commitment in Nigeria Bottling Company.
iii. ascertain the influence of bonding on customers’ loyalty to Nigerian Bottling company.
iv. establish the effect of reciprocity on the patronage behaviour of customers of Nigeria Bottling company
1.4 RESEARCH QUESTIONS
What is the effect of trust on consumers’ retention with Nigerian Bottling Company?
i. What is the effect of empathy on customers’ commitment in Nigeria Bottling Company?
ii. What is the influence of bonding on customers’ loyalty to Nigerian Bottling company?
iii. What is the effect of reciprocity on the patronage behaviour of customers of Nigeria Bottling company
1.5 RESEARCH HYPOTHESES
The following null hypotheses were developed to guide the study
i. There is no significant effect of customers trust on consumers’ retention on Nigerian Bottling Company.
ii. There is no significant effect of empathy on customers’ commitment in Nigeria Bottling Company.
iii. Bonding with the customers has no significant influence on customers’ loyalty to Nigerian Bottling company.
iv. There is no significant effect of reciprocity on the patronage behaviour of customers of Nigeria Bottling company.
1.6 SIGNIFICANCE OF THE STUDY
This work would be of great relevance in many ways,
To the production firms, it would serve as a guide to effective understanding and management of customers towards retaining them and not only having them as customers, thus, serving as an eye opener towards improving various business practices that will aid in retaining customers. Further, it will educate or enlighten production firms on the area of concentration and expansion.
Secondly, the customers of NBC will benefit as the study will intends to suggest measures towards effective management of customer experiences. Also, it will aid to save money on marketing; it cost significantly more to acquire a new customer than it does to retain an existing one. Save money and reduce marketing expenses by keeping your old customers who are already familiar with your products and services.
Thirdly, in relationship marketing, the most efficient advertising strategy is free word-of-mouth advertising; this is the most cost effective advertising one can have and it only comes from loyal, happy customers. Repeat customers are more likely to tell their friends and family about the business and its products. Customers are happy to tell people about excellent services they received or a product that he enjoyed.
Furthermore, previous customers pay premium prices. Long time, loyal customers are far less price conscious than new customers because they value company’s products and so they are willing to pay the price for the products or services. many customers association associate higher prices with products and retained customers trust that company that can deliver this quality over competitors. Finally, to the society at large, it will lead to positive social change.
1.7 SCOPE OF THE STUDY
The study is delimited to effect of relationship marketing on customer retention in NBC Owerri, Imo state. Contextually, the study is domiciled in product oriented strategies. Geographically, the study will be limited to three (3) local government areas in Imo state in the South East geo-political zone of Nigeria .The restriction will be for purposes of convenience and accessibility. The study will also focus on the various products of NBC such as Coca-cola, fanta, sprite, schweeps as the top choice of the customers, while the unit of analysis are the customers of Nigerian Bottling Company resident in Owerri.
1.8 LIMITATIONS OF THE STUDY
The smallness of the sample will not allow the generalization of the result. Finally, the study covered only one state of Nigeria thereby inhibiting the generalization of findings due to regional differences. The above limitations notwithstanding, the researcher is confident that the findings of the study would be reasonably valid and hence a competent basis for the recommendations to be proffered.
1.9 OPERATIONAL DEFINITION OF TERMS
Marketing: Marketing is the process of researching into and identifying the consumers’ needs for the purpose of creating exchange and transferring the exchange into the hand of consumers through a professional means of distribution, pricing and promotion.
Marketing concept: This has to do with the identification of customers needs and wants and satisfying more profitable than competitors.
Relationship marketing: According to Kotler (2019) is the process of creating, maintaining and enhancing strong value, laden relationship with customers and stakeholders.
Customer: This can be perceived as a person or company that buys goods regularly. Customer retention is the activities and actions companies and organizations take to reduce the number of customer defections.
Satisfactions: This is a function of perceived performance and expectation
Effect: This is the powerful effect that practice of relationship marketing has on the customer’s retention.
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