Investigating Dynamics of Customer Loyalty: The Case of IKEA - Essay Example

? Research Proposal: ‘Investigating Dynamics Loyalty: the Case of IKEA’ and number submitted Table of Contents Aim of the Research 3 Relevance of the Research 3 Literature Review 4 Research Questions 6 Methodology of Research 7 Preliminary Ideas for Data Analysis 8 Timescale 9 Issues in Completion and Success of the Project 10 References 12 Appendix A 14 Appendix B 16 Aim of the Research This text is a proposal for the funding of research into the affects, causes and natures of different forms and extents of customer loyalty. The research hopes to unearth in a decisive fashion and to a measurable extent the realities of the whole matter of customer loyalty that has picked up steam in recent high level business management discourse. Customer loyalty is more a result of tactics and a performance indicator than a tactic itself or a tangible tool for managing business operations according to Nareeman and Hassan (2013). Hence this research might help in putting a full stop to the ongoing debate about the dynamics of customer loyalty and providing analysts and corporate office-holders a clear and utilizable understanding of the aspects of customer loyalty that are relevant to any organization’s fundamental orientation. Relevance of the Research Sustainability is without doubt the most popular buzzword in some of the largest academic and industrial circles of today. These circles include the energy industrial sector, life sciences and social welfare work among others (Wheeler, Colbert, and Freeman, 2003). However, relevant to the field of the researcher is the concept of sustainability of a corporation or an organization in its field or business environment. Quite obviously the medium any for-profit organization has to sustain itself in is most usually its ‘market’. There has been an abundance of research studies into the understanding and achievement of some degrees of market sustainability. One of the largest factors affecting market sustainability of any business enterprise is said to be the identification of the customers of the enterprise to it. Hence customer loyalty is key in moving closer to the ideal of market sustainability. This research will look into how customers help the organizations by persisting with them, in terms of the different impetuses for persisting and their consequences for the organizations. While because of its scope the research will use for a model the furniture company IKEA, it is to be focused on the various aspects of customer loyalty in general. According to Dick and Basu (1994), customer loyalty is the single most important factor in determining the stability in an unstable market of any business. Because the target of the research unintentionally implies furthering the business fraternity’s efforts of building customer loyalty, it will hopefully be useful for, apart from students and business operators, inquisitive customers as well. Literature Review A review of the formal academic literature regarding the issue of customer loyalty found that while there was a lot of research into the causes and effects of customer loyalty in forms of comparative analyses, quantitative studies and case studies, all the studies seem to be targeting a specific facet of the broad phenomenon of customer loyalty. There is no major research that links holistically the various sources and types of customer loyalty to a corporation’s fortunes or studies the nature of the implications of each of the major forms of customer loyalty. But there are studies like Kuusik’s (2007) that take customer loyalty as a single metric instead of considering the forms and impacts of customer loyalty and investigate the sources of and factors affecting the said metric in good detail. However the most relevant published work with regard to this research proposal is a 2003 article by D. L. Duffy titled “Internal and external factors which affect customer loyalty”, who realized that the contributing factors of customer loyalty must at least be divided into two broad categories because of the drastic differences in the impact of each form. He called factors such as brand awareness and quality maintenance external in nature and factors like philanthropic activism and employees’ identification with the firm internal sources of customer loyalty. The sources of customer loyalty. Because the importance of ethicality of a corporation’s activities has been recently recognized on a mass scale as crucial to the sustainability of the corporation, there is an abundance of research covering all aspects of the relation of Corporate Social Responsibility to customer and stakeholder trust. Similarly the quality of service and product has been linked to the establishment of a loyal customer base by many researches (Asatryan, 2013; Martinez and Rodriguez, 2013; Choi and La, 2013) ever since the early prominent writings on the subject of market sustainability around the start of the past decade. However there has been minimal focus of scholars on the study of the generosity of return, replace and free repair policies of companies and the impacts of these policies on the customer bases of those companies. One understandable reason for the lack of research on the topic could be that traditionally there have been no large scale producers that would have any considerable dealing in the return and replacement of their product as that would be severely detrimental to the reputation of the companies, though there have been smaller store operators that have had to institute policies of that sort to keep their businesses up (You, 2009). However since the advent of humungous global retail brands like eBay and Amazon.com that deal in provision of third party products, these policies have become a crucial part of the retail storage business. In fact it was estimated that in the year 2009, Amazon.com incurred costs of over 162 million dollars purely through its return policy. Hence it is astonishing that the question of why these companies adhere so strongly to these policies has not been notably investigated by researchers yet. Similarly there has been little research linking the effectiveness of after-sales services of companies to the strength of the customer base. There is only one published work (Monga and Chaudhary, 2012) on the topic and it refers to the automotive industry as the model for study. Apart from that there has been one prominent research study (Koskela, 2002) on the issue and it investigates the provider’s tale of the pursuit of customer satisfaction and loyalty through sound after-sales support. IKEA and customer loyalty. This research uses the furniture manufacturer IKEA as the model to investigate for the study. Thankfully, there is an abundance of useful research material on the issue of customer loyalty relating to the very company IKEA (Wei, 2010; Liao, 2011), though understandably no research has gone into detail about any of the factors affecting the loyalty of IKEA customers. Still there is for instance a scholarly attempt at understanding how IKEA’s various social and environmental policies have been shaped for delivering on the business front and what their impact has been on the company. Similarly there was an investigative study by Maon and Swaen (2006) that listed the prominent CSR commitments of the company from the past and detailed the impact of each initiative on the fate of the enterprise. Inspiration from past work. The established scholarly work has been very beneficial in determining the specific methodology and intended outcomes of the proposed study described by this text. It was stated by H. J. Kim (2011) in the Journal of Hospitality Marketing & Management that “consumers are none other than humans or groups thereof just as the sellers are no more than humans and hence it would be presumptuous and self-deceptive to try to formulate a mechanical construct of the loyalty of the consumer.” This statement has informed the style of the proposed research in that an empirical research into the actual views and perceptions of consumers is the only way of having any idea of how large-scale customer loyalty works to bring about the economic outcomes that it does. Similarly the many studies on related issues, both quantitative and qualitative, have provided for the formation of the methodology of this proposed research. For instance the stress of Liu and Ji (2010) on the relationship between assurance of confidentiality of statements and the customers’ openness in telling their views about the dairy industry of China is implemented as a fundamental lesson to be adhered to in the research project proposed. Research Questions Because the study is intended to help in constructing an overall picture of the dynamics of customer loyalty and will be concerning only a few of the IKEA customers to understand the customers’ views, the research questions have to be broad, all-incorporating in combination and addressing completely different aspects. Hence the questions may be related to the customer’s perception of the employees’ obedience, the fluctuation in company attitudes over many years, the nature of the customers and its link to levels and forms of loyalty, comparison of the corporation-related activities of different groups of customers (for example: old versus new) and prioritizing of the likeability of corporate activities by consumers etc. However since this research needs to have very specific aims and objectives the following seem the most appropriate research questions to be addressed by the investigation: How do customers perceive stands, activities and policies of IKEA on the subjects of Corporate Social Responsibility, customer care and quality of service? The reasons for persistence with IKEA of different types of customers (classified according to marital or family status, social class, sex, spending interests and openhandedness). The effect of customer loyalty on salespeople’s morale and performance. Methodology of Research The research will have elements of both qualitative and quantitative styles of research; this will be evident during the analysis phase however the data collection and processing techniques are tilted towards a qualitative style of researching. As indicated by the title of the research, the target population for the research consists of the relatively loyal IKEA customers. An additional study which is not part of the basic hypothesis of the research will be conducted with IKEA salespeople as the target lot to gain deep insight into the impacts of different forms and levels of customer loyalty. The main sample from the target population will be selected based on a strict criteria determining whether a customer qualifies as a ‘loyal’ customer. Hence the sampling will not be probability-based and a disproportionate, small group of subjects will be selected. The exact criteria for the determination of a relatively loyal customer has not been finalized however it will include conditions like proof of considerable amount of purchasing from IKEA and some method of proving the subject’s preference of IKEA for furnishing of their residential properties etc. Once a sample has been selected a primary method of data collection will be employed to collect the data in the form of questionnaires from the subjects of the research. This will require in-person interaction with the subjects and before the commencement of questioning the option of a legal contract of confidentiality of statements will be offered to the subjects. The two questionnaires to be presented to the main sample and to the sample of employees are included in tabular form in the appendices A and B of this document. Note that the official performance reports of the employees will have to be acquired to link the questionnaire data to the employees’ performance. The study as a whole is tilted towards the qualitative style of research because the research is not an activity to determine the variation or frequency of a factor over a population but rather an investigation of the different facets of a specific phenomenon regardless of the identity, size, location or any other property of the sample of subjects as long as they fit into a clearly defined criteria. The sample size and personnel for administering the questionnaires will depend upon the availability of time and monetary resources. As a principle strategy the researcher shall try to assemble a team of volunteer students from the university for administering the questionnaires. However there is no upper or lower limitation to the size of the sample of the IKEA salespeople and as many potential subjects as possible will be requested to volunteer for the research. The plan of the additional study which deals with employees is expendable and will only be given proper consideration if there are enough resources and time left for conducting the study. As a general rule the sample size for the main study should exceed a hundred subjects so that outlying information is easily differentiable from the major trends. Also in qualitative studies focusing on a specific type of person, the size of the sample is a trivial matter because any observation of human behavior gives diverging results as more types of personalities are included in the set of subjects. It is pertinent to mention that customers will be sorted according to some criteria described earlier in this text so that the effects of these attributes of customers can be determined from the inputs they provide. Preliminary Ideas for Data Analysis There are no dependent or independent variables in this study as it is strictly observational and variability is not part of the assessed factors of the study. However the data collected will necessitate organization and some software processing as well. The employee research will especially require some quantitative analysis to determine how the different types of customer input affects salespeople’s morale and performance. The main study will require a critical analysis of the input from the subjects and so observation and commentary will be the main method of analysis of the primary data. Sociology and marketing experts may also be employed to combine the different statements on specified subjects by the participants of the research into a cumulative understanding of customer perspectives. Whereas for sorting and processing of data statistically including graphical presentation of the data, the data will first be manually transferred to a software database such as MySQL and then processed using a software package like the Statistical Package for Social Science (SPSS). Specifically the following information may be expected as the useful output coming out of this research: The general construct of customers’ loyalties with IKEA by way of impressions of CSR, quality standards and reliability, customer appreciation, and service and product support. The effects of these impressions of customers on the customers’ behaviors affecting their dealings with IKEA. A measure of the sustainability of IKEA and the extents of impacts of different forms of customer loyalties on the market sustainability of IKEA. The effect of different forms of customer identification with IKEA on employee morale and performance (quantitative indicators like variation and performance indicators as well). Timescale A basic, tentative breakdown of the timeline of activities in the research is given below: Activity Approximate Time Finalization of customer selection criteria 1 week Printing of questionnaires and preparation of voice recording and software questionnaire applications 2 weeks Fulfillment of legal requirements for the research 2 weeks Contacting subjects of the research. Door-to-door conducting collection of primary data for the research 7 weeks Sorting, storage and preparatory processing of the collected data 2 weeks Consultation with academia and scholars for interpretation of the data, preparation for statistical analysis of the data 2 weeks Recording of analysis of data and results of processing of statistical data, and supervision of hired analysts 2 weeks Finalization of the report including analysis of results 4 weeks Issues in Completion and Success of the Project The company IKEA was selected for the case study because it fitted several requirements for determination of the target company: Large scale and scope of the organization, easy access to work structure and company data, high degree of relevance with CSR (IKEA contributes one percent to the total wood consumption globally), importance of after-sales service, place of customer appreciation in business model, and considerable effect of maintenance of standards of quality on company’s fortunes. Still there are some aspects of the company that will possibly hinder the conducting of the proposed research. One of these is the busy schedules of salespersons. IKEA pays its contingent marketers on hourly basis and hence soliciting time for volunteering for the interview from this group of salespeople will be hard. Similarly according to the major schools of thought, the client-worker relationship is strictly professional and the customer and seller compete with each other to cut the better deal for themselves. Hence having someone speak of their affection with their competitor can be unnerving for the speaker and care is to be taken in not giving an impression of belittling the wisdom of the subjects of the research in this task. References Nareeman, A., & Hassan, Z. (2013). Customer Perceived Practice of CSR on Improving Customer Satisfaction and Loyalty. International Journal of Accounting and Business Management, 1(1), 30-49. Wheeler, D., Colbert, B., & Freeman, R. E. (2003). Focusing on value: Reconciling corporate social responsibility, sustainability and a stakeholder approach in a network world. Journal of General Management, 28(3), 1-28. Dick, A. S., & Basu, K. (1994). Customer loyalty: toward an integrated conceptual framework. Journal of the academy of marketing science, 22(2), 99-113. Kuusik, A. (2007). Affecting customer loyalty: do different factors have various influences in different loyalty levels? (pp. 1-29). Tartu University Press. Duffy, D. L. (2003). Internal and external factors which affect customer loyalty. Journal of consumer marketing, 20(5), 480-485. ASATRYAN, R. The effect of CSR initiatives on customer loyalty in the airline industry. Martinez, P., & Rodriguez del Bosque, I. (2013). CSR and customer loyalty: The roles of trust, customer identification with the company and satisfaction. International Journal of Hospitality Management, 35, 89-99. Choi, B., & La, S. (2013). The impact of corporate social responsibility (CSR) and customer trust on the restoration of loyalty after service failure and recovery. Journal of Services Marketing, 27(3), 223-233. You, K. S. (2009). The study of Relationships among Warranty, Innovation, Trust and Customer Loyalty–A case of Auto Service Industry. Monga, N., & Chaudhary, B. (2012). Effect of After Sales Services of Cars in Building Customer Loyalty. International Journals of Marketing and Technology, 2(2), 153-171. Koskela, H. (2002). Customer Satisfaction and Loyalty in After Sales Service: Modes of Care. In Delivery. Helsinki University of Technology. Wei, N. (2010). Investigating factors that can have an impact on customer loyalty: an empirical study of IKEA (Doctoral dissertation, University of Gavle). Liao, L. Y. (2011). Studying the relationship among the experiential value, satisfaction and, loyalty: An case study of IKEA. Maon, F., & Swaen, V. (2006). On the differential impact of CSR commitments and CSR communication on company's external stakeholders. The case of Ikea. In Conference Internationale sur Corporate Responsibility and Global Business: Implications for Corporate and Marketing Strategy. Liu, Y., & Ji, H. (2010, June). A study on the perceived CSR and customer loyalty based on dairy market in China. In Service Systems and Service Management (ICSSSM), 2010 7th International Conference on (pp. 1-6). IEEE. Kim, H. J. (2011). Service orientation, service quality, customer satisfaction, and customer loyalty: testing a structural model. Journal of Hospitality Marketing & Management, 20(6), 619-637. Appendix A Questionnaire for the subjects (IKEA customers) of the main study Question Answer Which quality out of CSR, quality/reliability, customer care and product support contributes the most to your appreciation of IKEA or its products? Why do you rate the quality you selected so highly? How is IKEA different in possessing the said quality from other furniture companies? If you do, how do you repay the company for the benefits it offers you apart from paying for its services and how do you intended to do it or not do it in the future? Appendix B Questionnaire for IKEA salespersons Question Answer Why, in your view, does IKEA enjoy the levels of customer loyalty that it does? What type of compliment for IKEA from the customer do you relish the most? How high numerically would you rank people’s love for your brand as a morale booster for you? What percentage would you allot to the contribution of public identification of your brand to your desire of working for IKEA? Read More