International Journal of Management (IJM), ISSN (Print), ISSN (Online), Volume

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1 International Journal of Management (IJM) International Journal of Management (IJM), ISSN (Print), ISSN (Online), Volume ISSN 2, Issue , May- 6502(Print), July (2011), pp. ISSN (Online) Volume 2, Issue 2, May- July (2011), pp IAEME, I J M I A E M E CREATION OF LOYAL CUSTOMERS WITH RELATIONSHIP MARKETING TR.Kalai Lakshmi, Reseasrch Scholar, Sathyabama University, Chennai-119 Dr. SS Rau, Research Guide &, Registrar, Sathyabama University, Chennai-119 ABSTRACT kalailakshmip@gmail.com "An ounce of loyalty is worth a pound of cleverness. "says a famous an American writer, publisher, artist, and philosopher Elbert Hubbard and also applicable for current market situation where retaining a customer has become an challenging task. Relationship marketing is designed to create, maintain, and enhance strong relationships with profitable customers and other stakeholders and Customer loyalty is a process, a program, or a group of programs geared toward keeping a client happy so he or she will provide more business The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Customer loyalty can be achieved in some cases by offering a quality product with a firm guarantee. Customer loyalty is also achieved through free offers, coupons, low interest rates on financing, high value trade-ins, extended warranties, rebates, and other rewards and incentive programs. The ultimate goal of customer loyalty programs is happy customers who will return to purchase again and persuade others to use that company's products or services. This equates to profitability, as well as happy stakeholders. A loyal customer is one who makes regular purchases, purchases across product and service lines, refers others and also demonstrates immunity to the pull of the competition. This empirical paper studies the impact of relationship marketing in creating loyal customers in supermarkets. Finally, based on this study, some suggestions have been proposed to improve the CRM programs to build loyal customers. INTRODUCTION Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers. Satisfaction alone is not enough to build loyalty. Marketing is shifting from a push to pull model and consumers are taking more control over what they view and how they view it. This shift in the marketing landscape means consumers are less likely to respond to mass media marketing strategies. To address this challenge, companies are turning to relationship marketing in order to develop more creative, innovative and cost-effective strategies for retaining and building loyalty with their customers. The goal of relationship marketing is to retain the existing customers and increase customer loyalty. According to Frederick Reichheld of Bain & Company: Businesses in many industries may lose up to 50% of 44

2 their customers over a five year period. Studies have shown it s 6 to 7 times more expensive to acquire a new customer than it is to retain a current customer. As little as a 5% increase in customer retention can increase profits by 25 to 95%.Hence building customer loyalty becomes as essential practice for all organizations to be successful in today s competitive scenario. Loyalty can be built by keeping touch with customers using marketing,giving the customer thank you cards, showing that you care and remembering what they like and don t like, rewarding them for choosing you over your competitors, and joyful and last but not the least treating your team well so they treat your customers well. SUPERMARKET A supermarket, a form of grocery store, is a self-service store offering a wide variety of food and household merchandise, organized into departments. It is larger in size and has a wider selection than a traditional grocery store, also selling items typically found in a convenience store, but is smaller and more limited in the range of merchandise than a hypermarket or big-box store. The supermarket typically comprises meat, fresh produce, dairy, and baked goods departments, along with shelf space reserved for canned and packaged goods as well as for various non-food items such as household cleaners, pharmacy products and pet supplies. Most supermarkets also sell a variety of other household products that are consumed regularly, such as alcohol (where permitted), medicine, and clothes, and some stores sell a much wider range of non-food products. Need for the study In today s environment people have a drastic change in their culture due to the growth of the economy, globalization and other economics and political changes in the economy. The growth of industries and women population being employed had led to the raise in income of families in India. This has led to the growth of retail industries and also supermarkets in India. Hence this study is essential to understand the factors that influence the growth of supermarkets and the factors which lead to the gain of loyal customers. The researchers has emphasized on the key role played by relationship marketing in creating royal customers to an organization. REVIEW OF LITERATURE In coming months, survival in retail will be directly related to the ability to understand, precisely, the shopper's state of mind, deliver solutions that serve their interests and effectively execute shopper marketing programs. Millerzell Research. Niyo 2008 say that loyalty programs in retail industry are designed to retain existing customers and also attract new customers. Loyalty programs also help to create functional loyalty among customers by adding points and creating a provision for repeated purchase. Tata Consultancy Services,2009 has extensive expertise in bringing business transformation and technology enablement in implementation of customer engagement solutions for leading global retailers, including partnering with a leading grocery retailer to implement its cross-channel loyalty solution and package implementation of Siebel customer data management for another leading US based retailer. The study conveys that with an increasing number of factors influencing a customer's shopping decision, retailers are 45

3 looking for every opportunity to creatively improve customer experience and boost customer loyalty. The agility in leveraging information to personalize customer experience and provide a consistent experience seamlessly across channels is the key to gaining a competitive edge. Customers today are expecting personalized services and not just a 'discount card' when they enroll for the loyalty program with retailers. Lavergne P, 2011 suggests that customers who are early adopters get maximum benefit from the organization an become more loyal towards the organization whereas the late adopters are opportunist and may not be more loyal to the organization. Organization should be able to great a correlation between customer satisfaction and repeat purchase by reliably measuring customer satisfaction Customer Loyalty. Griffin,2009 says that satisfaction alone is not enough to build loyalty. Organization should be able to great a correlation between customer satisfaction and repeat purchase by reliably measuring customer satisfaction. The biggest reason for the disparity between satisfaction rating and repeat purchase is the measurement of satisfaction itself. Recent studies confirm that current satisfaction measurement systems are not a reliable predictor of repeat purchase. Hence a reliable satisfaction rating system should be available to understand the level of customer satisfaction in the organization. RESEARCH DESIGN The survey was conducted on 150 respondents of supermarket chain stores.the study was made to analyze the factors which influence the consumer s preference to visit the supermarket store, regularly visited by his/her. The factors studied are broadly classified into three major categories OBJECTIVES OF THE STUDY Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more. This study had tried to understand the impact of Relationship Marketing Practices in the creation of Loyal Customers in supermarket chain stores. The researcher has considered customer s age and their satisfaction towards relationship marketing practices, customer s period of visit and their perception towards of the relationship marketing practices, relationship practices followed and their influence in creating loyal customers and to study customer s opinion on the impact of loyalty cards in maintaining relationship with its customers. Hypothesis used for the Present Study: There is no significant relationship between customer s age and their satisfaction towards relationship marketing practices in the supermarket chain store. There is no significant relationship between period of visit and perception of customers towards Relationship Marketing practices in the supermarkets There is no significant relationship between relationship practices and their influence in creating loyal customers in the supermarkets There is no significant relationship between customer s opinion on the impact of loyalty cards in maintaining relationship with its customers in supermarkets. 46

4 METHODOLOGY This study follows a formal research design where the objectives are to answer the research question and testing of hypothesis. It is more of a casual study, wherein the objective is to explain the relationship between variables. The researcher has adopted for the purpose of study is Descriptive research design which is an attempt to understand the factors influencing customer satisfaction in supermarket chain stores. The respondents have been chosen for study from the study area according to the convenience of the researcher, convenience sampling technique is used. The sample size considered for the study is 150. Data is collected in supermarkets in Chennai city. The researcher has taken the respondents for the study from five supermarkets in disproportionate numbers. The questionnaire contains of bi-variant questions, multiple choice questions and open ended questions. Tools used to analyze the data are percentage analysis and chi square method. Table no. 1: Chi-square test to test the relationship between customer s age and their Satisfaction towards relationship marketing practices in the supermarket chain store. Hypothesis: There is no significant relationship between customer s age and their satisfaction towards relationship marketing practices in the supermarket chain store. S. No. Age (years) Level of satisfaction HS S M DS HDS & above Age is a factor which influences an individual both physically and psychologically and plays a major role at all times in his life. Hence the age of a person has significant relationship in his decision making process. The above analysis it is proved that the age of a customer has a major influence in his perception and satisfaction towards the store which he regularly visits Hence the researcher has tried to understand the that age of a customer has a major influence in his perception and satisfaction towards the store From the above analysis that calculated chi-squared value is greater than the table value and at 5% level of significance. Hence the null hypothesis is rejected and alternate hypothesis is accepted. Hence, there exists a close significant relationship between customer s age and their satisfaction towards relationship marketing practices in the supermarket chain store.. Table no. 2: Chi-square test to test the relationship between period of visit and perception of Customers towards Relationship Marketing practices in the supermarkets. Hypothesis: There is no significant relationship between period of visit and perception of customers towards Relationship Marketing practices in the supermarkets 47

5 S.No. Period Level of satisfaction SA A N DA SDA years years years More than 10 years Customer Relationship is a concept which has emerged since 1980 s and has its own importance in today s booming economy. It is a well known fact that the more you get acquainted with some one the more you get attached to them and start liking them. The same psychological concept plays a major role in customer s psychology in choosing a store and ultimately makes him to be a loyal customer to the store. Hence the researcher has tried to understand the relationship between period of visit and perception of customers towards Relationship marketing practices in the supermarkets.the above analysis shows that the calculated chi-squared value is and is greater than the table value and it is significant at 5% level. Hence it is proved that there exists a close significant relationship period of visit and perception of customers towards Relationship marketing practices in the supermarkets.hence the above analysis proves that the longer the customer has been visiting a store the more strongly he has developed a relationship with the store. Table no. 2: chi-square test to test the relationship between relationship practices and their influence in creating loyal customers in the supermarkets. Hypothesis: There is no significant relationship between relationship practices and their Influence in creating loyal customers in the supermarkets S. No. RELATIONSHIP PRACTICES 1 Maintains my Database Level of influence HI I N NI HNI Personalized services are rendered as per my need Gets feedback about the services rendered Feedback is used for improvement in the store

6 An organization tries to maintain relationship with is customers is by maintaining a strong database of the customer, identifying their needs, getting feedback about the services rendered and last but not the least using the feedback acquired for further improvement of services in the store. The customer visiting to any store wants himself to be recognized by the store and given personalized services and it is achieve only through relationship management in any store. Hence the researcher has tried to understand the relationship between relationship practices followed by the store and their influence in creating loyal customers to a store. The above analysis shows that calculated chi-squared value is greater than the table value at 5% level of significance. Hence the null hypothesis is rejected and alternate hypothesis is accepted. It is proved that there exists a close significant relationship between relationship practices influence in creating loyal customers. Table no. 2 : Chi-square test to test the relationship between customer s opinion on the impact of loyalty cards in maintaining relationship with its customers in supermarkets. Hypothesis: There is no significant relationship between customer s opinion on the impact of Loyalty cards in maintaining relationship with its customers in supermarkets. S. No. Benefits Level of satisfaction 1 I get the privilege of a loyal customer I am informed about all the new arrivals in the store The store offers me all the discounts announced during every regular periods The store gives me points on very regular purchase Which I can use as a discount on my future purchase Loyalty Cards plays a vital role in today s marketing environment in maintaining customer relationship in supermarkets. Every Market tries to identify his set of loyal customers with the help of loyalty cards. These cards help them to maintain a track of their customers and keep the customers in their customer-base. It is also equally useful to 49

7 a customer, as it help him to get the privilege of a loyal customer. He enjoys the benefits given to the customer holding a loyalty card. He is informed of all new arrivals and all promotional offers. He is considered as a valuable customer to the store. Hence the researcher had tired to establish the relationship of loyalty cards in maintaining relationship the customers in supermarkets. The above analysis shows that calculated chisquared value is greater than the table value at 5% level of significance. Hence the null hypothesis is rejected and alternate hypothesis is accepted. Hence, there exists a significant relationship in loyalty cards in maintaining relationship the customers in supermarkets. CONCLUSION The researcher had made an effort to establish that the there is a strong relationship between customer s perception towards relationship marketing practices in creating loyal customers.. This study had considered customer s age and its relationship with his period of visiting to a store, customers perception towards relationship marketing practices in the store, customer s perception on loyalty cards in the creation of loyal customers. Hence this study though not extensive in nature but had tried to establish the relationship between customers perception of relationship marketing in loyal customers to the store. REFERENCES 1. Webtrends products and services at or call er_retailer_loyalty_program_11_2009.pdf