THE IMPACT OF RELATIONSHIP MARKETING IN THE TELECOMMUNICATION INDUSTRY

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CHAPTER ONE

INTRODUCTION

 1.1 Background to the Study

 In today’s market, the mobile technology has been extremely competitive and service providers are moving aggressively to attract versatile users by offering some meaningful attractive promotions and services. Consumers of telecommunications products and services in Nigeria are varied and their tastes, needs and expectations are also varied. According to Roger, (2010), there are five global system for mobile communication (GSM) network and 13 code division multiple access (CDMA)-based network operators in Nigeria. The GSM operators include Airtel, MTN, MTEL, Globacom, and Etisalat while CDMA network operators include Multilinks, Starcomms, O’net, and Visafone amongst others.

The Telecommunication industry is considered to be one of the largest and most powerful industries in the global market, vis-a-vis technological advancement, with its operations covering every corner of the globe and with the world heavily dependent on communication. Today, activities in the telecommunication industry are composed of various procedures including service provision, sales of products like Handsets, Subscriber Identity Module (SIM) packs and other communications gadgets.

The concept of relationship marketing was introduced to service marketing in 1983 by Leonard L. Berry. It is a strategy that mainly focuses on developing-maintaining-enhancing. In other words, it is designed with the aim of developing relationship with existing and potential customers, maintaining these relationships by meeting the expectation of customers from time to time and enhancing the value to customers by providing high quality product at reasonable prices over the time. The benefits relationship marketing offers has helped it gain popularity in the recent years. Companies who gain competitive edge are using it as a competitive marketing weapon. Companies are now using it as a tool of value creation and in this process customers are also encouraged to give their views on critical decision issues like product designing, pricing, distribution etc. companies are looking forward to customers as their co-producer and co-designer Bhatia (2015) .

Relationship marketing is very important in this modern world, since consumers all around the world are sophisticated and have good amount of knowledge and seeks better offers. So, this factor force marketers to shift from push marketing to pull marketing. Organizations are now more focusing on mass mediums and relationship marketing these days. Building relationship with customer was basic function for an organization during last few years. Building relationship is the only way that an organization can achieve a permanent competitive advantage and which leads to survival and long term growth in the market (Jorgensen, 2001). The transition from a traditional economy and intense competition in modern dimensions, customer as the person who organization is willing to create values that influence on their behavior, as main element and the center of all activities of organizations .So that in terms of competitiveness, viability and survival of organizations in identifying and attracting new customers and retaining existing customers is expressed (Gilaninia et al, 2011). On the other hand improving communication, the evolution of the information age and the advent of new communication tools, organizations have made facing with a host of different customers, and many choices that as results additional providing customers and market instability (Rahbarinia, 2011).

Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite there are situational influence and marketing efforts having the potential to cause switching behavior. Kotler defined the term loyalty as a lasting commitment to family, friends or country and believes that it initially entered to the marketing literature by emphasizing on brand loyalty (Ranjbaryan & Barari, 2009). One of the basic assumptions in relationship marketing is that long-term loyal customers are profitable.

There is undoubtedly a growing interest in the subject of relationship marketing. The strong rivalry characterizing today’s business environment has resulted to the building of stronger firm-customer relationships (Ndubisi, 2007). Ndubisi (2007) reported that more and more firms are capitalizing on strong firm-customer relationship to gain invaluable information on how best to serve customers and keep them from defecting to competing brands. Hence, customer relationship building creates mutual rewards which benefit both the firm and the customer.

1.2 Statement of the Problem

Variety of relationship marketing components has become the market norm, leading to strong scramble for market share. Customers are indeed benefiting from the numerous promos, price war and enticing customer services. They are being bombarded by a number of marketing activities and aggressive sales tactics such as doorstep selling, radio advertisement, TV advertisement, internet promotion and other customer loyalty programs. However, a lot of money have being spent and continue to be spent on these tactics which has led some of the telecommunication operators to be struggling to meet their core objective of increasing shareholders’ fund (Asare, 2008).

However consumers would most likely behave differently toward the various mobile operators’ products and services, hence, achieving optimum consumers’ satisfaction is of paramount interest to the mobile service providers. Evaluating the perception of a mobile user in a highly competitive tele-communication market is very crucial.

There is undoubtedly a growing interest in the subject of relationship marketing. The strong rivalry characterizing today’s business environment has resulted to the building of stronger firm-customer relationships (Ndubisi, 2007).  Ndubisi (2007) reported that more and more firms are capitalizing on strong firm-customer relationship to gain invaluable information on how best to serve customers and keep them from defecting to competing brands. Hence, customer relationship building creates mutual rewards which benefit both the firm and the customer. By building relationship with customers, an organization can also gain quality sources of marketing intelligence for better planning of marketing strategy.

It is important, therefore, to empirically examine the actual impact of relationship marketing on customer loyalty. Such understanding will assist in better management of firm-customer relationship and in achieving higher level of loyalty among customers.

1.3 Research questions

In a bid to successfully achieve the goal of this research on the impact of relationship marketing in the telecommunication industry the following research questions will be considered.

1. Does a firm’s commitment to customer care service influence customer loyalty?
2. To what extent does conflict handling influences customer loyalty?
3. Does promotion influences customer loyalty?
4. Does a firm’s customer price perception influence customer loyalty?

1.4 Objectives of the Study

The main objective of this study is to find out the impact of relationship marketing on customer loyalty.

Other objectives of the study are to:

1. Find out extent which a firm’s commitment to customer care service influences customer loyalty.
2. Find out the extent which conflict handling influences customer loyalty.
3. find out the extent which  promotion influences customer loyalty
4. Find out the extent which price perception influences customer loyalty.

 1.5 Statement of hypothesis

For the purpose of this study and the research problems identified the following hypothesis shall be adopted which shall be tested to assist the researcher arrive at a logical conclusion:

Ho:    There is no significant impact of relationship marketing between a firms commitment to customer service and customer loyalty.

H1:    There is a significant impact of relationship marketing between a firms commitment to customer service and customer loyalty.

 1.6 Significance of the study

By the time this study is completed, it is hoped to:

Partially fulfill the requirement for the award of Bachelor of Science Degree        (B. Sc) in Business Administration, and to provide both theory development for academics and practical implication for marketing managements (contribute to knowledge).

Also, the result is expected to inform Mobile operators about their customers’ response to the variety of relationship marketing strategies being deployed as it is helpful for marketers to understand the effectiveness of relationship marketing tactics from consumer’s perspective,

Lastly, to serve as a yard stick for those that implements and formulate policies in the mobile telecommunication industry. The academic world may also benefit from this study; it may serve as a basis for more research in this area, the telecom sector, as well as the rest of the service sectors.

 1.7 SCOPE OF THE STUDY

The research investigates the topic, the impact of relationship marketing on customer loyalty in the Nigerian mobile telecommunication industry: A study of Business Administration fulltime students of the University of Abuja.

The study is expected to cover only mobile users of telecom companies in Nigeria. However, this study is limited to the customers of MTN, Globacom, and other mobile service providers (Airtel, Etisalat) only. The study is also limited to the following telecom services; Mobile Voice call, SMS and Mobile internet. Further, the geographic scope is limited to Business Administration fulltime students of the University of Abuja. The study shall not be extended to other departments in the university. This research work shall be limited by its allowable time frame of two semesters making up one session in the 2015/2016 academic year.

This research study and analysis shall be based only on customer’s point of view, the service firms’ perspective about this subject is not considered in this study. The need to clearly define the scope of this study is inevitable; the researcher shall primarily be limited by the extent of the truthfulness of the information which will be sourced from respondents in the course of this work.

1.8 Limitation of the study

In every research of this nature, there will be some constraints to be encountered either in the process of collecting data or during the compilation of the research work. Similar problems are faced in this research.

The major constraint in this research is the inaccessibility and unavailability of certain vital information which would have added credibility, accuracy and objectivity to the data as well as the decision and conclusion.                                                         Finally, time and finance also contributed some form of constraint to the smooth process of this research work.

1.9 Definition of terms                                 

1. MARKETING:  Marketing in the context of this work may be defined as a continuous process where consumers’ needs are identified and met by way of creating and delivering value.
2. MARKET SHARE: The percentage of an industry or market’s total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period.
3. RELATIONSHIP MARKETING: Relationship marketing essentially means developing customers as partners, where the approach is different from traditional transaction.
4. TRANSACTION MARKETING:Short, discrete transactions that have a distinct beginning and end, and are based solely on price.
   1. RELATIONSHIP MARKETING TACTICS: Relationship marketing tactics are conscious actions taken by a company or person which are designed to cause people to want to buy their goods or services. They often involve psychological aspects geared towards making you think you should buy their product or service.
   2. HYPOTHESIS: Hypothesis is meant to be tested and is subject to approval or rejection. Bereh (2010) defined “hypothesis as a tentative statement or solution to a problem which is tested by a statistical tool”.
   3. SERVICE QUALITY:  Service quality may be defined as the consumers’ judgment about a firm’s overall excellence or superiority.
   4. PRICE PERCEPTION: Is the monetary cost for a customer to buy products or services.
   5. BRAND IMAGE: May be defined as the perception or mental picture of a brand formed and held in customers’ mind, through customers’ response, whether rational or emotional.
   6. VALUE OFFERS: Value offers to a customer means adding something to the core .product that the customer perceives important, beneficial and of unique value.
   7. CUSTOMER LOYALTY: Customer loyalty is the most important goal of implementing relationship marketing activities. Customer loyalty as a deeply held commitment to re-buy or re-patronize a preferred product or service consistently.
5.  TELECOMMUNICATION: Telecommunication occurs when the exchange of information between two entities (communication) includes the use of technology.
6.  PUSH MARKETING: Can be defined as a promotional strategy in which a business attempts to get their message in front of their potential customers without them having a desire or interest to buy the product or learn about it.
7. PULL MARKETING: Can be defined as customers actively seeking out a product define it and the retailer presents his ads, his products, and the path of the consumer.

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