Types of Commitment in Marketing - Term Paper Example

Types of commitment in marketing Introduction Customer commitment has gained much interest as a result of trust-commitment theory of relationship marketing. Recent research has shown that customer commitment is a predictor of various aspects related to customer retention and repurchase intentions. The studies also show that building and enhancing long-term relationships with customers generates positive outcomes. Commitment is found in three major streams of research which include interpersonal relationships, buyer-seller relationships and organisational commitment. Gruen et al. (2000) describes that commitment is the central factor to successful relationships. Customer commitment is defined as an affective attachment and an intention to maintain long-term relationships with partners. Commitment also shows a feeling of being attached to something for example where a customer feels attached to a particular seller. This study shows the link between customer commitment and a firm’s profitability. It also shows the different types of commitment in marketing and the method in which commitment is measured. Commitment in marketing According to La and Kamdampully (2004) consumer commitment is described by various models which include structural model. This model involves relationship quality, expectation of reciprocity and dependency. The relationship quality shows the past experiences that a customer has with the partners. It involves satisfaction and trust for example if a customer is satisfied with business services offered to the m and if the services offered are of good quality then they will be committed to one partner. Expectation of reciprocity involves the expected benefits received by being committed. Dependency on the other hand is the extent to which an individual is hindered by various alternatives, investments or replacement costs for them to rely upon one exchange partner (Ruth et al. 2002). Consumer commitment is the main mediating goal for many companies as it appears to be a promising market segmentation criterion. Retaining customers is one way of is the major practice of good customer service. One of the best ways of helping unhappy customers and in order to change their attitude towards the services offered by the company is by listening to their complaints. It is necessary to be polite, friendly and helpful. This is because if the problem is not fully resolved, the customer will feel less negative about the business by the fact that the business did everything possible. Machleit and Eroglu (2000) explains that authorities have therefore urged businesses to work towards the development of customer commitment as this also develops a strong attachment to or engagement with a particular brand or company. There are three forms of commitment use din marketing and these include instrumental, relational and value-based commitment. Instrumental commitment This is commitment which is applied when customers are convinced that there is no other better company or brand is capable of offering better services or no other company is capable of meeting their needs more effectively. Palmatier et al. (2006, 36) gives in this type of commitment, customers are not just satisfied but are exceptionally satisfied. This is because customers feel that they are all expressed and that their latent needs are effectively met. One example is when a customer feels that his bank offers the best services, has best products and that it is easily accessible one will be committed to use the bank for long time and build a lasting relationship with the bank. Instrumental commitment is therefore mostly used by customers who feel connected to a particular service provider. Relational commitment This is where customers become highly attached to the people within a company. It is referred as am emotional tie existing and formed with an individual, a work group or the company as whole. Pimentel and Kristy (2004) shows this is for example cases where customers tend to talk about their banker, their doctor, or their mechanic who are found within a particular company. In this case, customers tend to feel a sense of personal identification with their service provider. Most of the time, such kind of employee is highly valued within an organisation and therefore goes an extra mile to completely satisfy their customers. The employees are also reliable, competent, empathic and responsive to the needs of their customers (Pimentel and Kristy Reynolds 2004). It is therefore necessary for customer-focused organisations to ensure that they create heroes out of such employees. In relational commitment customers also become attached to a particular group within a business set up. Robbins and Miller (2004, 95) explains that this is for examples where certain customers are highly committed to a particular branch of a bank and do not prefer to transact anywhere else. Customers are also committed to a particular organisation. These customers believe that the people of that particular organisation are better than the competitors’ people in meeting their needs and in terms of other aspects such as quality. Values-based commitment In this type of commitment, customers become committed when their values are linked to those of the company. These values include core beliefs like being environmental conscious, honest, child protection, independence, family-centeredness etc. These values represent cultural norms that may serve to organise and direct attitudes and behaviours. If such admirable values to the society coincide with those of a particular organisation, some customers become committed to the organisational products and the services offered. Companies known for child labour, damage to the environment and those that act unethically are therefore at a great risk of losing customers in the market. Factors noted in customer retention Context makes a difference There are factors that influence customer commitment to an individual, organisation or a group of people. These factors include; context. Context makes a difference in customer retention in various ways. One is where there are circumstances where customer’s acquisition makes more sense as a strategic goal of a business. The other way is where customer retention strategies vary according to the environment in which the company competes. When wanting to introduce a new product in the market, a company focuses on customer acquisition. In contexts where there are one-off purchases for example in funerals, there are infrequent purchases for example heart surgery. In this case customer retention is subordinate to acquisition. This shows that the impact of contextual conditions in terms of choice and timing of customer retention practices has unclear though it is seen that various contextual considerations impact on customer retention practices. Number of competitors Various industries lack competitors meaning that these companies barely suffer badly from customer churn. This mostly applies in state-provided services for example education and several utilities such as gas, electricity and telecommunication. Customer retention is not a matter since once customers are dissatisfied by the services; they have no competitor to turn to. This causes inertia in the market as customers feel that all suppliers have the same service standards (Sui and Seyhmus 2003). Corporate culture This may be applied in corporate banking where the short term profit requirement of management and shareholders results into lack of genuine commitment to relationship banking. This is because most banks are opportunistic in their preference for credit-based relationships with its customers. McCole (2004) shows in order to understand the ways of customer retention, it is important to know the reasons that cause customer churn. These reasons include price level, inconvenience, core service failure, competitive issues and service encounter failures. Most of these reasons are influence by service provider. It is therefore necessary to sustain a worthwhile business-customer relationship. This is because commitment plays a role in the formation of consumer loyalty and a behavioural intention. Role of emotions in marketing In marketing, emotions are mental states of readiness that arise as a result of appraisals of events or thoughts. Emotions are also markers, mediators and moderators of consumer responses which are then analysed. In various professions such as attorneys, executives, accountants and engineers, decisions are made as a result of emotions rather than logic. Thwaites and Williams (2006) shows this is because logic supports one’s emotions and emotion is the core ingredient of logic. Products that people have little emotion on are hard to sell as well as advertisements that do not provoke people’s emotions do not work for the company. It is therefore important to have a message that provokes emotion. To come up with this, it is necessary to understand what customers love and what they dislike. It is also necessary to understand what keeps customers awake, what gives them ulcers and what catastrophic events they fear most. These enable the business to know how to design its products, services and market in a way that addresses the feelings of the customers. Customer satisfaction is an important factor while purchasing of a product. This is because a comparison is made between the expectations of performance and the actual performance. Satisfaction occurs where the actual performance if higher than the expected performance. Customer satisfaction is influenced by their emotions and how they feel deep inside their hearts about a particular service provided. This question therefore will analyse the role of emotions in marketing and it gives practical suggestions on how emotions can help in selling a product. Emotions can be defined as a mental stage of readiness that arises from cognitive appraisal of events or thoughts they have a phenomenological tone and accompanied by physiological processes (McColl-Kennedy et al. 2003). Emotions in marketing are often expressed physically and may result in specific actions to affirm or cope with the emotion, depending on its nature and meaning for the person having them. Emotions are put in two categories, which include positive emotions and negative emotions. Researches in the marketing discipline have largely adopted the appraisal theory of emotions to study customer emotions in service consumption. The theory has the ability to integrate the informational and directive roles of specific emotions in goal-directed. Equally, cognitive appraisal theory of customer emotions is appropriate for this research as it allows predictive ability of both antecedents and consequences of customer emotions in collective hedonic services (Wirtz and Mattila 2004). Customer emotions have various effects on the marketing of products. These effects are as a result of customer satisfaction, perceived value and behavioural intentions. Kau and Wan-Yiun (2006) explains that customer satisfaction is seen as an overall affective based post-consumption judgment. Mattila and Enz (2002, 268) shows customer emotions influence customer satisfaction in product, utilitarian and retail service contexts. Perceived value shows the overall evaluation of the utility of a service. Studies show customer emotions influence perceived value in a collective hedonic service for example sporting match thus, it is useful to revisit and extend this relationship by studying it in a variety of collective mass hedonic services contexts. According to Leeuwen et al. (2002, 99) Behavioural intentions are defined as the subjective probability that an individual will take a particular action. The interrelationship between satisfaction, perceived value and behavioural intentions has not been investigated in the context of collective hedonic services. It is therefore seen that emotions are ubiquitous in marketing as they influence the processing of information, and mediate responses in order to form persuasive appeals. Emotions also measure the effects of marketing stimuli, initiate goal setting, and enact goal directed behaviours and measures consumers welfare. Emotions are also subject to actions. They also influence cause and effect. They are root of motivation (Jones and Farquhar 2007). Emotions in marketing also affect consumer behaviour. Consumer behaviour entails the psychological processes that consumers go through in the recognition of their needs, in finding ways of resolving these needs, when making purchasing decisions, when interpreting information, when making plans and when implementing these plans. By studying consumer behaviour, firms are able to understand the psychology of how consumers think, feel, reason and select between different alternatives of brands. Parasurama (2006, 590) explains that consumer behaviour is also essential in the understanding of how consumers shop and make other marketing decisions. Firms are in a better position of understanding how consumer knowledge or information processing limitation impact on decisions and marketing outcome. According to White and Yanamandram (2007) consumer loyalty is also important in marketing as a feeling of attachment to certain companies. This is because companies with loyal customers gain important competitive advantages in marketing such as reduced transaction costs, reduced cost of failure and increased cross-selling rate. Loyalty is also defined as the degree where consumer’s emotions are attached to a brand and this occurs in six dimensions. Theses include consumer willingness to repurchase a product, price premium, satisfaction rate, switching cost and commitment to a brand. Loyalty is therefore as a result of being highly committed to a particular product or company (Robbins and Miller 2004). Once customers are loyal, they tend to buy more from the company and recommend the company to their friends. They also stay with the company for a longer time therefore improving profitability as well as increased job satisfaction and staff morale. Hocutt et al. (2006) shows in order to compensate for the problems caused to the customer by the company, it is necessary to first introduce training activities. The company should be able to ensure that their staff members identify good examples from their own experiences. The training resource should be intended for use by trainers in order to help participants in examining the issues of compensation from both business and customer viewpoints. They should also suggest better ways of achieving win-win situations and at the same time focusing on the overall performance of the business. Conclusion Emotions are ubiquitous throughout marketing as they influence information processing. Emotions also mediate responses and measure the effects of marketing stimuli. They also initiate goal setting and enact organisational goal-directed behaviours. Emotions finally serve as ends and measures of consumer welfare. Research has shown that both consumer emotions and customer retention increases the firm’s profits once their rate rise in the market. This is because consumer commitment reflects both affective attachment and an intention to develop and maintain long-term relationships between business members and consumers. This is because as commitment grows stronger, customers are unable to reflect from the relationship. Consumer commitment is therefore said to inspire customer retention. References Gruen, Thomas, John Summers, and Frank Acito. 2000. “Relationship Marketing Activities. Commitment and Membership Behaviors in Professional Associations.” Journal of Marketing, 64. 34-49 Hocutt, M, Bowers, M & Donavan, D. 2006. The art of service recovery: fact or fiction? The Journal of Services Marketing, 20. 199-207. Jones, H & Farquhar, J. 2007. Putting it right: service failure and customer loyalty in UK banks. The International Journal of Bank Marketing, 25. 161-172. Kau, A & Wan-Yiun Loh, E. 2006. The effects of service recovery on consumer satisfaction: a comparison between complainants and non-complainants, The Journal of Services Marketing, 20. 101-111. La, K, & Kamdampully, J. 2004. Market oriented learning and customer value enhancement through service recovery management, Managing Service Quality, 14. 390-401. Leeuwen, L, Quick, S. & Daniel, K. 2002. “The sport spectator satisfaction model. A conceptual framework for understanding the satisfaction of spectators.” Sport Management Review, 5. 99-128. Machleit, K, & Eroglu, S. 2000. “Describing and measuring emotional response to shopping experience.” Journal of Business Research, 49(2): 101-111. Magnini, V. Ford, J, Markowski, E & Honeycutt, J. 2007. The service recovery paradox: justifiable theory or smoldering myth? The Journal of Services Marketing, 21. 213-225. Mattila, A, & Enz, C. 2002. “The role of emotions in service encounters.” Journal of Service Research, 4(4): 268-277. McCole, P. 2004. Dealing with complaints in services. International Journal of Contemporary Hospitality Management, 16. 345-354. McColl-Kennedy, J, Daus, S & Sparks, A. 2003. The role of gender in reactions to service failure and recovery. Journal of Service Research, 6. 66-82. Palmatier, Robert, Rajiv Dant, Dhruv Grewal, and Kenneth Evans. 2006. “Factors Influencing the Effectiveness of Relationship Marketing. A Meta-Analysis.” Journal of Marketing, 70. 36-53. Parasuraman, A. 2006. Modeling Opportunities in Service Recovery and Customer-Managed Interactions. Marketing Science, 25. 590-593. Pimentel, Ronald, & Kristy Reynolds. 2004. “A model of consumer devotion. Affective commitment with proactive sustaining behaviors.” Academy of Marketing Science Review. Robbins, T, & Miller, J. 2004. Considering customer loyalty in developing service recovery strategies. Journal of Business Strategies, 21. 95-109. Ruth, J, Brunel, F, & Otnes, C. 2002. “Linking thoughts to feelings. Investigating cognitive appraisals and consumption emotions in a mixed-emotions context.” Academy of Marketing Science, 30(1): 44-58. Sui, Jun, and Seyhmus Baloglu. 2003. “The role of emotional commitment in relationship marketing. An empirical investigation of a loyalty model for casinos.” Journal of Hospitality and Tourism Research, 27 (4): 47-89. Thwaites, E, & Williams, C. 2006. Service recovery: a naturalistic decision-making approach. Managing Service Quality, 16. 641-653. White, L, & Yanamandram, V. 2007. A model of customer retention of dissatisfied business services customers. Managing Service Quality, 17. 298-316. Wirtz, J, & Mattila, A. 2004. Consumer responses to compensation, speed of recovery and apology after a service failure. International Journal of Service Industry Management, 15. 150-166. Read More