Understanding Customer Loyalty - Assignment Example

New Project Table of Contents Introduction 3 Understanding Loyalty 4 Factors affecting loyalty 6 Relevance of PERVAL in addressing customer loyalty 7 Conceptual framework detailing the relationships between the drivers of customer loyalty 8 Marketing Research Plan for Asda 10 Data Analysis 10 Reference 13 Introduction The world of the 21st century is moving at a very fast pace. The world as of the recent times is surviving in an era which promotes growth in the fast track as well as rapid development. It is important to mention that the daily high speed connectivity that is available to the masses in the recent times, has played a major role in regards to the process of triggering the rapid pace of development. Talking on this note, it needs to be mentioned that the steady growth of the telecommunication technology as well as the internet along with the smooth acceptance and integration of various kinds of sophisticated technological gadgets has resulted in the evolution of easy access of the internet powered virtual world. It is important to mention that this surge in connectivity related development has been witnessed in the developed as well as the developing economies that are spread all around the world. Having analyzed and studied the trends related to the internet powered human behavior, it can be said that the virtual world seems a very favorable place for creating a connection among individuals of diverse geographical locations because of its power to take away the barriers that exists in terms of geographical boundaries in the real world. Thus, it can be said that the virtual world has literally transformed the world into a single well connected global entity. It is to mention that because of this transformation of the world, various trends of globalization that are emerging from some of the most active and well developed economies are getting increasingly diffused in some of the highly potential developing economies. This is creating the demand for new kinds of products and services in the emerging economies. This emergence of demand for new products and services are being increasingly viewed as a significant business opportunity by organizations around the world. As more and more international and multinational and transnational business organizations look forward to entering the newer markets for capitalizing on the potential growth opportunity, the competition in the global markets intends to become more and more intense in nature. It is also relevant to mention that since the number of product and service alternatives are increasing every day in the market, the organizations are increasingly concentrating on fulfilling the needs, desires and wants of the consumers in a more proactive manner. Hence, the factors like customer satisfaction and customer loyalty are becoming more and more critical with every passing day. In this particular assignment, it can be said that the focus will be more on providing a better understanding customer satisfaction and loyalty as well as with various ways of improving it. Understanding Customer Loyalty It can be said that the global markets of today, because of their highly interconnected nature has become largely competitive in nature. The companies around the world has to either listen actively to the different and diverse needs of the customers and thereby have the option to either customize or perish in the competition for sustainability. It is relevant to mention that the case of customer loyalty shares a significant relation with that of customer retention. In most cases, the issue of customer loyalty is to some degree related to satisfaction gained by the customer in regards to product or service. The issue of satisfaction gained by the customer can be explained in terms of theory of utility of microeconomics. It states that consumers generates satisfaction for a particular product or service, only if the repeated consumption of that product or service provides him or her with an added and increase in utility or value as compared to that of the previous usage. However, talking more about the case of customer satisfaction, it can be said that customer satisfaction can depend on a large number of issues ranging from price, response and lead time, reliability, responsiveness as well as convenience served by the product or service. But the single most important contributing variable in the case of customer satisfaction is the factor of perception of the product or service by the customers (Cochran, 2003, p. 1). While defining the case of customer satisfaction in terms of theoretical manner, it is often said that it is dependent on the perceived performance of the product with that of the customer’s expectations from the product or service in terms of value. While elaborating on the customer’s perceived value, it is relevant to highlight that the value perception by the customer is dependent largely on the lines of difference that exists in regards to the cost and benefits offered by the product or service in regards to it substitute and alternatives. It is to be said that by synchronizing customer satisfaction with the factor of customer value, a solid and lasting form of customer relationship can be created between the seller as well as the buyers or user of the related product or services (Kotler and et.al, 2010, p. 13). It is important to mention that the customer when focuses on the process of value acquisition in terms of product purchasing does not concentrate on the issues of customer loyalty (Lawfer, 2004, p. 11). Their sole and prime focus is on the issue of whether purchasing the relevant product or service will provide them with their desired and expected value. However, having a favorable relationship existing between the consumers and the seller helps in creating a preference factor in the mind of the consumers. It is to be said that this factor of preference is largely built on the issues of trust that the seller has successfully developed and instilled among the consumer in regards to previous case of value communication, and value capture. Hence, it is relevant to state that customer loyalty is a factor that can be built by the marketers with regards to trusted value delivery to the consumers. Talking in regards to ASDA, it can be the British oriented American supermarket chain focuses in a unique way in regards to developing the loyalty factor for the customer. It is highly interesting to mention that while other large scale retailers has gone forward to developing special loyalty based programs for the consumers, the largely popular super market chain did not opt for that traditional and conventional method (YourAsda.com, 2009). Rather than doing that, the focus of the American owned retailer is on the lines of providing various price based discounts, special offers so as to retain the interest of the consumers. The retailer believes that by opting for the everyday low pricing tactic (EDLP), they will be successful in creating and building the loyalty factor of the consumer. Needless to say, this helps the retail chain ASDA in a great way in driving the issues of value based product offering and value delivery to the consumer. Factors affecting customer loyalty It needs to be mentioned that in most cases, the customer loyalty for a particular product or service is being developed on the lines of trust as well as satisfaction that the customer has derived from past usage of the product or service. It has to be often acknowledged that the loyalty factor for a particular product or service among the customer is being built on the lines of product satisfaction, convenience, quality as well as the related price points for the product or service. In most cases, it can be noticed that the customers show a strong loyalty towards a specific brand of products or services. Talking on these lines, it has to be mentioned that the issues of brand image as well as brand loyalty has strong connection in regards to loyalty of the customers. An in-depth study of the factors that influence the issues of brand loyalty for a particular product reveals that the variables like product quality, product features, marketing image, depth of product lines helps in generating the attention of the consumers in the long run. Also, in some cases, the brand loyalty for the consumers is being influenced by the particular market structure (Kumar, 2009, p. 372). While talking from a different point of view, it can be said that the loyalty schemes that are rolled out by the various retailers, sellers and merchandisers on a regular basis helps in a great ways in the process of building the loyalty factor of the brand in the minds of the consumers. Talking in a very specific manner, it can be said that four very specific factor that influence customer loyalty are commitment, trust, conflict handling as well as communication (Lancaster and Massingham, 2011, p. 30). It has to be mentioned that by having a favorable base of loyal customers, it provides a great mileage to the business in regards to the process of developing lower costs of service as well as favorable and free word of mouth communication. Also, it helps in a great way in the process of developing the opportunity of a high level of repeat purchases from the same customers (Shajahan, 2004, p. 127). Relevance of PERVAL in addressing customer loyalty It is important to mention that the issues of loyalty of the consumers and customers are largely associated with the process of value perceived by the customers. The PERVAL represents the value perceived by the customer. In the theoretical terms, it can be said that the PERVAL is elaborated as the customer’s broad assessment of the utility of a product with regards to that of the value exchanged (Helkkula and Pihlstrom, n.d., p. 2). Talking in a more specific manner, it can be said that the perceived value of the customer can be explained as the difference that exists as a result of evaluation of the benefits and costs of a particular offerings with regards to that of its alternatives (Kotler and Keller, 2007, p. 86). It is of considerable importance to mention that while discussing on these lines, the issues of total customer value and total customer cost needs to be highlighted. It can be mentioned that the total customer value talks about the summation of the monetary value of the total of economic, psychological as well as functional benefits that a customer expects from the market offerings. The total customer costs talks about the cost that will be incurred by the customer in regards to the process of acquiring, using, evaluating and obtaining of the particular product offering. Conceptual framework detailing the relationships between the drivers of customer loyalty Talking in regards to customer loyalty, it can be said that the issue is largely connected to the factor of customer satisfaction. While defining customer satisfaction, it can be stated that it is the feeling of an emotional and sentimental note. It needs to be elaborated that it is an issue of an value that was delivered successfully to the customer in the past time. Loyalty, when defined in theoretical terms can be highlighted as the potential promise related to future delivery of value to the customers. The fine connection that exists in regards to the two is that to have a loyal customer, it is very important for the seller or the retailer to provide a customer with high degree of customer satisfaction. However, it is important to mention that high level of customer satisfaction may not always lead to the process of having a high consumer loyalty. The presence of other alternatives have significant amount of influence in regards to the process of influencing the loyalty of the consumers. But, it is important to mention that the factors of customer satisfaction and customer loyalty can be well connected to each other. Source: Sugandhi, 2003, p. 143 This particular matrix represents the connection between satisfaction and loyalty of the customers. The quadrant of low satisfaction and low loyalty represents a lost customer while the quadrant high on satisfaction and low on loyalty leaves the issue of customer who can be retrospect in nature. It can be said that a retrospect customer provides the opportunity for conversion to a loyal customer. The quadrant of low satisfaction and high loyalty represents the issue of trapped customers, who increasingly look for the next opportunity to provide a shift in consumer loyalty. Finally, it can be said that the quadrant with high satisfaction and high loyalty promotes a leading customer who will definitely show high levels of loyalty for the particular product or service (Sugandhi, 2003, p. 143). Marketing Research Plan for Asda It needs to be mentioned that this particular project focuses on the process of determining the issues of customer satisfaction and customer loyalty for a specific retailer, which in this case is ASDA. While concentrating on the process of marketing research, it is important to mention that the research can be exploratory, descriptive or causal in nature. While exploratory research helps in the process of discovery of new ideas and insights, the descriptive kind of research methodology helps in a great ways in the process of describing market related characteristics and functions. It also needs to be mentioned that the causal kind of a research helps in a great ways in the process of finding cause and effect based relationships. Also, the nature of the research might vary from qualitative as well as quantitative in nature It is utterly relevant to mention in this case, that the marketing research plan for ASDA will be largely exploratory in nature. The reason for opting for a exploratory kind of a relationship is because of the fact that the research will be focused on finding new insights related to customer loyalty and customer satisfaction for the customers of the American owned British retail chain Asda. The research that will be conducted will be of quantitative in nature as data will be collected in the form of a close ended survey instrument like a questionnaire. It has to be mentioned that the data will be collected from the consumers of ASDA and the sample size will comprise of around 100 respondents Data Analysis It needs to be mentioned that the respondents for The ASDA questionnaire survery largely varied in regards to demographic factors like age and sex. However, it was found that around 48% of the total respondents has a visit frequency of around 3 to 5 times for ASDA stores. The analysis of the data from the respondents also revealed that around a large majority of the respondents feel that ASDA provides the latest product as well as a wide assortment of product variety. Also, the respondents voted pretty highly in regards to the factors of high quality products as well as acceptable standards of service. However, it needs to be mentioned that when the respondents were asked to rate their responses in regards to whether ASDA provides products as per their enjoyment, their responses were on the neutral lines. But the customers responded favorably in regards to the feel good factors as well as acceptable prices of the products. The respondents also said that the retailer provides value for money. The retailer scored the maximum in regards to promotional offers as well as goods and sales promotion. Nearly over 50% of the respondents said that they are loyal to Asda and will prefer Asda’s product. Most of the respondents said that the operating hours of the retailer is convenient and that they would recommend Asda’s products to family members. A lot of the respondents said that they have a high satisfaction level for Asda. A considerable large number of the total respondents said that the relationship with Asda is very important to them and they care a lot about it and are considerably committed towards the relationship. Also, a large number of the respondents said that Asda can be trusted completely because of their high integrity factor. Reference Sugandhi, R.K., 2003. Customer Relationship Management. India: New Age Publishers Pvt. Ltd. Kotler, P., and Keller, K.L., 2007. Framework For Marketing Management, 3/E. India: Dorling Kindersley Pvt. Ltd. Helkkula, A., and Pihlstrom, M., n.d. From Customer Perceived Value (PERVAL) to Value-in-Context Experience (VALCONEX). UK: Hanken School of Economics. Shajahan, S., 2004. Relationship Marketing: Text and Cases. India: Tata McGraw Hill Publishing. Lancaster, G., and Massingham, L., 2011. Essentials of Marketing Management. USA: Routledge. Kumar, S. R., 2009. Consumer Behaviour And Branding: Concepts, Readings And Cases-The Indian Context. India: Dorling Kindersley Pvt. Ltd. Kotler, P., and et.al, 2010. Principles Of Marketing: A South Asian Perspective, 13/E. India: Dorling Kindersley Pvt. Ltd. YourAsda.com, 2009. Why dont we have a loyalty card? Heres the reason... [Online] Available at: http://your.asda.com/news-and-blogs/why-don-t-we-have-a-loyalty-card-here-s-the-reason [Accessed 11 May 2013] Lawfer, M.R., 2004. Why Customers Come Back: How to Create Lasting Customer Loyalty. Career Press. Cochran, C., 2003. Customer Satisfaction: Tools, Techniques, And Formulas For Success. USA: Paton Press LLC. Read More