Customer Loyalty in Relation to Marketing Strategies - Research Proposal Example

Marketing Research Proposal Insert Name Insert Institution Table of Contents Executive Summary 3 Background Information 3 Statement of Purpose 4 Literature Review 4 Strategies of keeping customer loyalty 4 Building and sustaining customer loyalty 6 Benefits of customer loyalty programs 6 Benefits of brand loyalty 7 Benefits of maintaining customer loyalty 7 Research Propositions and Hypothesis 8 Research propositions 8 Hypothesis 8 Sampling Plan 8 Research Methodology 8 Research Purpose 8 Research approach 9 Research Strategy 9 Data Display 10 Executive Summary There have been changes in marketing and organizations are applying customer loyalty to improve sales and increase profits. The objective of the research proposal is to carry an analysis on customer loyalty in relation to marketing strategies of organizations and how customers become loyal and why.. The role played by customer loyalty and the benefits. The paper will use questionnaires for data collection and the data sets will get analyzed through the use of SPSS. Data collection will be in a period of 3 weeks. It is expected that loyalty plays a vital part in present day society and increase of company sales. Background Information In today’s competitive market, industries in the different and similar sectors are becoming increasingly similar in the products and services delivered to customers and shareholders. Differentiating delivery channels and payment for the services has become difficult and complex to spell out clearly. Many companies have therefore taken the direction of positioning their products and services to the potential customers through communication channels and modules. Personal selling and advertising has objective of creating strong cooperate images with purpose of creating relative attractiveness. Research has it that images create a strong effect in decisions made by consumers unless the competition businesses are identical on availability, performance and price. Recently there has been a growth in customer loyalty .There is globalization of competition, development of information technology and saturation of markets having a major change on customer behaviours perceptions. These complications have lead to development of situations where success is not determined by product quality and price only. Therefore companies have to into initiate and sustain long-term customer relationships that foster continuity and sustained customer partnerships with the company. Studies have it that it costs six times to get and win a new customer than to retain an existing one. Relative to industries profit increase can be upto 60 % through reduction of customer loss by 5 %.It is therefore an important aspect of business that holding and sustaining customer loyalty is an important aspect of successful operation of an enterprise. Customer loyalty has become a key factor in the long-term success of businesses. Statement of Purpose The purpose of the study is the determinations of the way companies keep customer loyalty and the benefits of customer loyalty. Literature Review The literature review will focus on two aspects of the subject. First it will deal with strategies of keeping customers loyal and then theories regarding the benefits of customer loyalty to businesses. Strategies of keeping customer loyalty Customer satisfaction and market share definitely leads to business profitability but there is no certainty that market share and customer satisfaction have positive connection (Fornel, 1992).He further states that ,”loyal customers are not necessarily satisfied customers, but satisfied customers tend to be loyal”(p.7). The relationship between companies and their customers is in two kinds of strategies, either offensive or defensive. Offensive strategies purposes for attraction of new customers while defensive strategies dealing with keeping the present customer base. Normally companies have majored on acquisition of new customers bur presently companies apply a combination of offensive and defensive strategies. The defensive strategies have a primary objective of ensuring customers do not switch and maximization of customer retention through brand protection and cushioning customers from competitors through high customer satisfaction. Businesses have also developed switching barriers that make it difficult for customers to switch vendors, store or brand. To accomplish these barriers companies make switching difficult and in some cases even illegal (Fornel, 1992). The barriers could be; transaction costs, search costs, loyal customer discounts, customer habits etc. Any kind of pursuit by the company to limit alternatives for customers to alternative resources and options amount to change barriers since they have direct influence on the ability of a customer to move to another set of supplier or vendor. Customer satisfaction makes it expensive for competitors to entice customers. An example of satisfaction of customers in the country is the ability to switch customers in the airlines business where company switching barriers and programs are designed to encourage repeated purchase with lucrative discount systems and opportunities. These economic incentives are designed to ensure that customers remain loyal to the processes and programs provided by the airline for as long as possible due to the progress of additional advantages to the enterprise. Higher customer satisfaction leads to increase in profits and financial safety to the company (Fornel, 1992). There are three stages in decision making by customers in relation to products of choice. Defining brand alternatives forms the first stage, then review of relevant information about the brand follows and finally ruling on the decision made for brand choice. Customers always have depth of knowledge of brands in the market but they make a decision on purchase of one brand. The range of choice taken as alternatives are referred to as evoked considerations. The composition of brands that evoke feelings is quite important since the products that do not evoke feelings do not undergo any consideration for purchase. Brands that evoke emotions can be considered into two sets; those based on stimulus and memory based. Stimulus based is one where the product is recognized in the environment and memory based is where the product is recalled from memory. In both cases there is a facilitation of brand familiarity in identification of the brand and choice of purchase. Building and sustaining customer loyalty The major goal of a company is profitability and to achieve this there is a need to build and maintain customer loyalty. Investing in building customer loyalty without focussing on profitability may give company losses in the end and an overall failure on the part of an enterprise (Kumar & Shah, 2004).They further explain that there are two types of customer loyalty ;behavioural and attitudinal. The loyalty of a customer is important to a company when its translation is into purchasing power of the enterprise. This leads to generation of benefits to the company that are direct returns. Behavioural loyalty helps in gaining profits by the company since it fosters purchasing power of clients whereas attitudinal loyalty is important in avoiding of exit by customers. Attitudinal loyalty encompasses trust to the company that does not have purchase commitment. Benefits of customer loyalty programs Brand loyalty programs can increase the loyalty through a decrease in sensitivity to prices and decrease in customers desires to consider alternative brands. Customer loyalty programs gain more profits since loyal customers buy more frequently and higher amounts of products. This increases profit forming a significant aspect of a business since most companies are profits seeking (Dowling & Uncle, 1997). Loyalty programs increase word of mouth, increase number of customers and attract more purchases. Loyalty programs are more profitable since the costs of serving present customers are low compared to of attracting and serving new customers. The authors further explain that loyal customers are less sensitive to prices and have habits of spending more money in the company (Yi & Jeon, 2003). Benefits of brand loyalty Keeping customers loyal to a brand is cheaper and more profitable to the company compared to attracting and retaining new customers (Ahmad & Buttle, 2001). Profits increase is due to the purchases of new customers who become loyal in the process. The other benefit of loyalty is increase of spread of word of mouth increasing the client base of products and advertising the products of the company. This will lead to enhancement of the image and reputation of the company increasing the customer base and enticing new purchases of products (Kumar & Shah, 2004).Companies therefore create and initiate incentives not for enticing of customers but for increasing and sustaining brand loyalty. Through brand loyalty companies gain and retain new customers for its products and services (Aekar, 1996). Benefits of maintaining customer loyalty The loyal customers spend more time with the company; they pass on information about the positive aspect of the company to others. These factors encourage and sustain purchases from the company hence profit creation to stakeholders. In order to keep healthy relationship with customers promises and high standards have to be kept. Benefits to the customer include economic advantages, risk reduction and simplification in decision-making process. The functional benefits comprise of saving time, making best purchase decisions and convenience (Wirtz & Mattila, 2003). The social relationship is an indication of how comfortable the state of the relationship is. Research Propositions and Hypothesis Research propositions To identify the loyal customers To identify the non loyal customers To establish why customers are loyal To establish why customers are not loyal To establish to what degree customers are loyal and why Hypothesis There is a relationship between customer loyalty and organizational management models There is no significant relationship between customer loyalty and management models Sampling Plan The samples of the study will comprise the customers to the national air carriers, Qantas Airline. The sample population will be around 200 randomly picked customers at the airport .Sampling population runs over a period of 2 weeks. Research Methodology Research Purpose There are three purposes of conducting research according to Yin 1994; descriptive, exploratory and explanatory. This research will be exploratory since it attempts to gather as much information as possible about the problem .The process is always used when the problem is known but little knowledge is available for comprehensive decision-making (Page, Pitt, & Berthon, 1996).The purpose of this research paper is to determine how organizations maintain customer loyalty. Research approach The approach will be both qualitative and quantitative .These methods will incooperate treatment of, analysis (Yin, 1994).The research is qualitative and data will be collected from everyday occurrences using closed and open-ended interview questions. The aim of the data collection will be obtaining deeper knowledge on the subject matter. Qualitative research implies a search for knowledge that measuring, describing and explaining phenomena of reality and in a well-structured and formalized way (Stone, Woodcock, & Matchtynger, 2000).The obtained data will get analyzed through statistical program for social sciences (SPPSS). The research method will be qualitative since the objective is getting information providing deeper and comprehensive understanding of the subject of the study. The qualitative data will enable understanding of hoe organizations acquire and retain customer loyalty and the benefits of having loyal customers. The qualitative approach will also be used since some of the provided answers will not be in numbers due to open ended questions hence analysis may get limitations. Research Strategy The study will be carried as a case study of the national air carrier. The case study approach is suitable when focussing on few objects from different perspectives. It is equally suitable when asking the “why” and “how “questions. This is applied when the researchers have no control over phenomenon and focus lie within real life events like the operations of a national airline carrier (Marconi, 2000). Data Display Analyzed data will get displayed in pie charts, tables and graphs for deductions and to aid decision making processes. Relay of data will involve both qualitative statistics and descriptive to allow maximum understanding of the information collected. References Aekar, D. (1996). Building Strong Brands. New York: Free Press. Ahmad, R., & Buttle, F. (2001). Customer Retention:a Potential Potent marketing Strategy. Journal of Strategic Management , 29-46. Dowling, G., & Uncle, M. (1997). Do Customer Loyalty Programs Really Work? Sloan Management Review , 71-83. Fornel, C. (1992). A National Customer Satisfaction Barometer:The Swedish Experience. Journal of Marketing , 56 (1), 6-22. Kumar, V., & Shah, D. (2004). Building and Sustaining Profitable Customer Loyalty for the 21st Century. Journal of Retailing , 317-331. Marconi, J. (2000). The Brand Marketing Bookk:Creating ,Managing and Extending the Value of your Brand. Lincolnwood: NTC Business Books. Page, M., Pitt, L., & Berthon, P. (1996). Analysis and Reducing Customer Defections. Long Range Marketing Planning , 821-835. Stone, M., Woodcock, U., & Matchtynger, L. (2000). Customer Relationship Marketing. London: Kogan Page Ltd. Wirtz, J., & Mattila, A. (2003). The Effects of Consumer Expertise on Evoked Size and Loyalty. Journal of Servvice marketing , 649-665. Yi, Y., & Jeon, H. (2003). Effects of Loyalty Programs on Value Perception ,Program Loyalty and Brand Loyalty. Journal of Marketing Research Science , 229-241. Yin, R. (1994). Case Study Research :Designs and Models. Thousand Oaks: Sage Publications. QUESTIONNAIRE MARKETING RESEARCH ON CUTOMER LOYALTY INTRODUCTION This research is aimed at; 1. Determining which customer is loyal and which one is not loyal 2. Establishing why customer is loyal to brands and 3. Determining to what degree customers are loyal to brands and organizations Your participation in this academic study is voluntary. The information collected in this research will be treated with uttermost confidentiality and used for the sole purpose of this study. You are kindly requested to provide accurate information for the success of this study. Your participation is highly appreciated Instruction Please key () in the appropriate box. Section A: Personal information a) Gender: b) Male c) Age (in years) : ……………………………….. d) Marital status: Single Widowed Divorced SECTIONB: Level of awareness a) Have you considered yourself loyal to the organization? Yes No b) If yes, why are you loyal? Others (specify)..................................................................................................................... c) Why are you loyal to the company?............................................................................... SECTION C: Level of confidence a) Do you feel comfortable viewed as loyal? Yes No b) If no, why is it difficult? Agree Disagree Don’t know People will think I have no options. Fellow consumers warned me against that I would become an outcast SECTION D: Overall overview. a) Should other organizations encourage customer loyalty? Yes No b) Should loyal customers be retained and awarded? Yes No c) What are the benefits to loyal customers? Agree Disagree Don’t know Receive discounts from the company Improve profitability and marketing of the company THANK YOU Read More