ABSTRACT
This study examined the effect of
relationship marketing on organizational performance using the AIICO Insurance
Plc as a study. The survival, success and continuity
of service organizations depend on effective relationship marketing. The
effectiveness of relationship marketing in service organizations determine to a
great extent the performance of the organization as well as the satisfaction customers
can derived from services rendered by the organization. A descriptive survey research design
was adopted for this study. The sample for this study consisted of 128selected
employees and customers in the organization in Lagos State, Nigeria. The main
research instrument used was questionnaire. Data collected were analyzed using
descriptive statistic, Chi-Square statistical technique were used to test the
hypotheses. Results from the study revealed that relationship marketing enhances the
performance of marketing organization, Ineffective relationship marketing
affects customers' loyalty, there is a relationship
between relationship marketing and organizational survival and there is a direct connection between
customer satisfaction and relationship marketing. Thus, it was recommended that AIICO
Nig. Plc. should be concerned to meets individual and stakeholder needs,
Organization should provide their customers with quality services that meet
their expectations in order to reap from relational benefit, The
management of AIICO Nig. Plc. should as a matter of necessity recognize that many firms have been
successful in the market place by implementing a marketing relationship
strategy, Organization should develop and maintain satisfactory customer
relationships which will help them to reduce transaction costs and perceived
risk and AIICO Nig. Plc. should tackle challenges and problems
associated with relationship marketing strategy.
TABLE OF CONTENTS
Title
Page
Certification ii
Dedication iii
Acknowledgments iv
Abstract v
Table of Contents vi
CHAPTER
ONE: INTRODUCTION 1
1.1 Introduction 1
1.2 Statement of the Problem 3
1.3 Objectives
of the Study 4
1.4 Background and Significance of the Study
1.5
Research Questions
1.6 Research Hypotheses 5
1.7 Scope of the Study 6
1.8 Definition of Terms 8
References 9
CHAPTER
TWO: LITERATURE REVIEW 11
2.1 Preamble 11
2.2 Theoretical Framework of the Study 11
2.3 Empirical Review of Previous work in the
area of studies 13
2.4 Conceptual Framework 15
References 35
CHAPTER
THREE: METHODOLOGY 38
3.1 Preamble 38
3.2 Research
Design 38
3.3 Population
of the study 38
3.4 Sampling,
Procedure and Sample size 39
3.5 Data
Collection Instrument and Validation 39
3.6 Method
of Data Analysis 39
3.7
Validity and Reliability of Instrument 40
3.8 Limitation of the methodology 40
References 41
CHAPTER
FOUR: DATA PRESENTATION AND ANALYSIS 42
4.1 Introduction 42
4.2 Presentation and Analysis of Data 42
4.3 Analysis of Questionnaire According to Research Questions 46
4.4 Test of Hypotheses 47
CHAPTER
FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS 61
5.1 Introduction 61
5.2 Summary of Findings 61
5.3 Discussion of the Findings 62
5.4 Conclusion 62
5.3 Recommendations 63
BIBLIOGRAPHY 65
APPENDIX 69
CHAPTER ONE
INTRODUCTION
1.1 Background to the
Study
The
survival, success and continuity of service organizations depend on effective relationship
marketing. The effectiveness of relationship marketing in service organizations
determine to a great extent the performance of the organization as well as the
satisfaction customers can derived from services rendered by the organization
(Kotler, 2006).
Relationship
marketing (RM) is meriting an increasing amount of attention in marketing
research, and has already become a key enterprise marketing activity in recent
decades. The term ‘relationship marketing’ was coined more than twenty years
ago and since then it has been receiving considerable attention from both
researchers and practitioners (Yang and Wu, 2007; Sharker, 2009). Mulki and
Stock (2003) discuss several environmental factors that have facilitate the
rise for this concept such as the trends for firms to be service and
information-oriented, be niche-oriented, global in nature and of course, to
adopt information technologies.
The
concept of "relationship marketing" is at the very heart of the study
of marketing management and work organization. The issue of relationship
marketing is a current topical issue in marketing management that is presently
attracting the concern and attention of marketing organization and company's
services (Achumba, 2002).
For
any organization to survive the on slough of competition, it must define
clearly its relationship marketing which is a strategy adopted to create a
cordial relationship between the marketing company and its customers. This will
ensure the achievement of the company objectives and set goals that will
invariable yield positive results (Weitz and Sandy, 1995).
In
spite of its importance, not everyone appreciates its in-depth meaning,
perhaps, the reason for this is because it is difficult to define and apply in
organizations. Relationship marketing therefore, is concerned with the creating
and maintaining mutually beneficial exchanges and relationship between the
marketing organization and the target markets to achieve organizational
objectives (Berry, 1995)). This can only be possible by providing quality
services, ensuring the availability and provision of after sales services.
The
role of Relationship Marketing in Competitive Marketing Strategy includes:
guide moments of truth, improve profitability, build partnering, address
'Customer Better', buy in of customer attention,
protect emotional well-being, understand consumer psyche, build trust with
customer (Morgan and Shelby, 1994). Relationship marketing serves as a
moderator for the sustenance of positional advantages and influences the impact
of competitive and market conditions on the formulation of the marketing mix.
In service industries, there is always some form of direct (social) contact
between the customer and the service firm. This direct (social) contact or
'service encounter' is so important a part of service delivery that it is
frequently called 'the moment of truth' (Johns, 1999).
One of the major objectives of competitive
marketing strategy is to improve the long-term financial performance.
Relationship marketing by working towards improving profitability based on
exploiting its relationships serves this financial performance objective of
marketing strategy.
In fact,
relationship marketing pays off handsomely when products or services have high
switching costs e.g. office automation system. Relationship Marketing is
profitable when customers are willing to stay with suppliers for a long period
of time. Transaction marketing on other hand pays when there are low switching
costs. According to Egan (2001), relationship marketing fosters external
partnerships that cater to the mega-marketing needs of a business. It fosters
external partnerships through networks (individual relations); collaborations
(organizational relations) including alliances. These sets of external
relations bring together market elements synergistically. Importantly, for relationship marketing to be effective it must
take customer behaviour into consideration.
Moreover
in the present business world, marketing is no longer just about developing,
selling and delivery of products and services (Gilbert and Choi, 2003) rather
it concerns attracting, developing, maintaining, and enhancing customer relationship.
By implication, organizations need to treat their customer base as individual
assets in themselves bearing in mind that the costs of acquiring customers are
generally higher than the costs of retaining them and this difference is
particularly in evidence in the service sector (Ennew and Bink, 1996).
In
order to serve customers better, the company must give consumer real
satisfaction. Consumer should be able to derive utility, which is the
satisfaction derived from the consumption of a given service (Berthon, Leyland,
Michael and Gunnar, 2003). This research study would throw more light on the
effect of relationship marketing on organizational performance in service
organizations.
1.2 Statement
of the Problem
The study unveiled the numerous problems
an organization could face if relationship marketing is not effectively carried
out and its impacts on customers' loyalty. What is the implication of this
effect on the organizational products/ services and profitability? The problems
of lack of patronage, unfavorable attitude, no repeat purchase, absence of
customer royalty, lack of quality service and low profitability level is' as a
result of not putting in place effective relationship marketing. For firm to implement
this strategy, the challenges include complex array of technologies, shortages
of skills and resources, couple with huge amount of time and effort, rapidly
changing markets as well as more demanding customers’ present service
organization. With these unprecedented set of problems, many marketing scholars
and practitioners recognized that building relationships is essential to
compete effectively especially in this turbulent and challenging business
environment.
Thus,
the management of service organization should put in place an effective
relationship marketing to promote cordial relationship between the organization
and its customers.
It
is against this background that this study seeks to examine the effect of
relationship marketing on organizational performance at AIICO Nig Plc.
1.3 Objectives of
the Study
The main aim of the research
study is to critically examine the effect of relationship marketing on
organizational performance. The specific objectives are:
i.
To
examine the relevance of relationship marketing to marketing organization.
ii.
To
determine the effect of relationship marketing on customers' loyalty.
iii.
To
examine whether relationship marketing promote cordial relationship between
organization and its customers.
iv.
To
examine whether management of organization encourage relationship marketing.
v.
To
identify the problem faced by organization as a result of ineffective
relationship marketing.
1.4 Background and Significance of the Study
The
importance of developing and maintaining enduring relationship with customers
of service, businesses is generally accepted in the marketing literature.
This
study, therefore, shall be of immense benefits to the organization,
practitioners, customers and all concerned stakeholders.
The essence of this study
cannot be over-emphasized in industries. Although it is undertaken for academic
purpose, it is pertinent to note that it will be of immense benefits to service
organizations; it would reveal the relevance of relationship marketing and the
various ways relationship marketing can help in enhancing customers' commitment
to organizational services. The study would also be of guide to business
managers by directing them on how to go about creating good relationship with
their potential customers to ensure high demand for their services.
1.5 Research Questions
The
following research questions are generated for the study.
i.
What is the
relevance of relationship marketing to marketing organization?
ii.
How does relationship
marketing impact on customer's loyalty?
iii.
How relationship
marketing promote cordial relationship between service organizations and their
customers?
iv.
How do marketing
managers in service organization encourage good relationship marketing
practices?
v.
How does ineffective
relationship marketing affect marketing practices?
1.6 Research
Hypotheses
The
following research hypotheses were formulated for the study:
Hypothesis 1
Ho: Relationship marketing enhances the
performance of marketing organization.
Hi: Relationship
marketing does not enhance the performance of marketing organization.
Hypothesis 2
Ho:
Ineffective relationship marketing affects customers' loyalty.
H1:
Ineffective relationship marketing does not affect customers' loyalty.
Hypothesis 3
H0: There is no
relationship between relationship marketing and organisational survival.
H1: There is a relationship between
relationship marketing and organisational survival.
Hypothesis 4
H0: There is no direct connection between customer satisfaction and
relationship marketing.
H1: There is a direct connection between customer satisfaction and
relationship marketing.
1.7 Scope of the Study
The
scope of this study is limited to AIICO Insurance Plc located 36/38, Industrial
Avenue Ilupeju, Lagos Nigeria. In this project,
an attempt was made to consider topical issues relating to Relationship
marketing and the effect on organizational performance, precisely AIICO
Insurance Plc. in Nigeria. Hence opinion of members of this AIICO Insurance Plc
in Illupeju, Lagos Nigeria was sampled to obtain the effectiveness or
otherwise, Relationship marketing operating in the organization. The staff
strength of this company is not less than 100 employees ranging from management
to non-management staff. However, for the purpose of this study, only the
management/ senior staff will be considered based on the know legibility in the
area under study. The
research findings and recommendations was limited to AIICO.
1.8 Definition
of Terms
This
section of the study has to do with the definition of concepts and terms in the
study. The followings are the key variables used in the study:
Marketing: Marketing is the totality of both social
and societal efforts of business activities designed to satisfy both the
present and potential customers.
Relationship
marketing: Relationship
marketing is a strategic orientation that focuses on keeping and improving on
current customers, rather than acquiring new customers i.e. maintaining mutual
relationship.
Organizational
performance:
Organisational performance is the level of success business organizations have
achieved resulting from proper utilization of resources in the organization.
Those parameters used in evaluating performance.
Planning:
Planning has to do with anticipating trend and determining the best strategies
to achieve organizational goals.
Strategies:
Strategies are methods or plans which manager hopes to deploy in order to
achieve its objectives.
Promotion:
Promotion are all activities aimed at informing, educating,
persuading and creating awareness for the company’s offerings.
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