EFFECT OF RELATIONSHIP MARKETING ON THE PERFORMANCE ON DIAMOND BANK BRANCHES IN MARINA AND TRADE FAIR, LAGOS

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CHAPTER ONE

Introduction

1.1   Background to the Study

Marketing is no longer just about developing selling and delivering products. It is more increasingly concerned with the development and maintenance of mutually satisfying long term relationship with customers (Buttler, 1996). Relationship Marketing is based on the premise that it makes economic sense to satisfy and retain customers as the strength and duration of the relationship is directly proportional to resultant profitability. This contemporary interest in maintaining customers is reforming marketing with an emphasis on the creation of value and building of relationships. This new marketing refocusing has been explored in consumer service marketing (Morgan and Hunt, 1994).

Relationship marketing refers to a wide range of ˜relationship type strategies’ that have developed over the past few decades in product as well as service markets and in consumer as well as business to business sectors. The relationship marketing strategies involves several tactics such as: service quality, price perception, value offers, brand image, communication, personalization, power, cooperation. In this article, these eight variables have been concerned to show their effects on relationship quality and also customer loyalty.

Relationship marketing is all about acquiring new customers and retaining existing customers. The concept of relationship marketing has received a great deal of attention from Scholars in the field of marketing. The concept

has been investigated from many perspectives and examined in many ways indicating its conceptual and practical importance. Relationship marketing concept is based on the paradigm of a true balance between giving and getting as a key benefit to encourage an active role and is conducive in delivering two- way value, where loyalty is based on trust and partnership, will prove to be one of the most significant policies to be pursued in development and sustenance of competitive advantage (Gronroos, 1994).

According to Christopher (2002), the real purpose of business is to create and sustain mutually beneficial relationships, especially with selected customers. With the main proposition which assume that successful relationships is the two-way flow of value.  Positive relationship has been established between relationship marketing and organization performance.

Relationship marketing usually results in strong economic, technical and social ties among the stakeholders parties thereby reducing their transactions costs and increasing exchange efficiencies included in relationship marketing which are not only buyers or sellers exchanges but also business partnerships, strategic alliances, and cooperative marketing networks. The relationship typically involves seller- customer exchange, but it could involve any stakeholder’s relationship (Morgan and Hunt, 1994; Gronroos 1994).

Ismail (2009) opines that relationship marketing emphasizes that relationships are partnerships with emphasis on social bonding, co-operation, and joint problem solving, sharing resources and activities, and basing relationship on common goals. He, however, challenged that the benefit should be relational and dyadic too.

Most of the studies have been emphasizing the effect of relationship marketing on organization performance neglecting customer benefits. Moreover, relationship marketing emphasizes that long-term relationships are mutually beneficial. In any genuine relationship, both parties involves should be beneficiaries of the outcome of such relationship. Ismail (2009) observed that if genuine partnerships, as relationship marketing suggests exist, relational quality and relational benefits must be of great value.

1.2 The Statement of Problem

Despite the existence of a large and growing body of literature on relationship marketing in general, there is still some inadequacy surrounding the practice and how it influences performance particularly in an organization. The challenge of implementing relationship marketing with absolute measures to guarantee customer satisfaction and monitoring the return on customized offers to the market may not worth the cost incurred in the process. Even though literature has shown that relationship marketing leads to performance, in practice firms struggle to adapt models to their business contexts. However, most scholars have argued that relationship marketing will not automatically lead to stronger customer relationships but rather, customers will exhibit different levels of relationship closeness and strength with the organization. The new focus has been driven by competitive pressures within the business environment. It is today recognized as a concept which basically emphasizes on customer needs and wants. Thus, the real focus of organizations is to create and sustain mutually beneficial relationships especially with carefully selected customers.

 1.3 Aim and Objectives of the Study

The main objective of this study is to relate the performance of Diamond Bank to the concept of relationship marketing.

1. To measure the effect relationship marketing on organization profitability.
2. To measure the influence of relationship marketing on customer loyalty.
3. To examine the benefits of relationship marketing on organizational turnover.
4. To evaluate the effect of relationship marketing in customers’ satisfaction.
5. To examine the average time spent on a transaction by customers.

1.4 Relevant Research Questions

1. How effective is relationship marketing on organizational profitability?
2. What is the influence of relationship marketing on loyalty?
3. How effective is relationship marketing on organizational turnover/frequenting of transaction?
4. How effective is relationship marketing in customers’ satisfaction?
5. What is the average time spent on a transaction by customers?

1.5 Relevant Research Hypotheses

In carrying out this research work these hypothetical statements are made to serve as a direction on which the work will premised.

1. H_o: There is no positive relationship between relationship marketing and organizational profitability.

H₁:  There is positive relationship between relationship marketing and organizational profitability.

1. H_o: Relationship Marketing does not have any significant effect on customers’ loyalty

H₁:  Relationship Marketing does have significant effect on customers’ loyalty.

1. H_o: Relationship Marketing does not have any significant effect on organizational turnover.

H₁:  Relationship Marketing does have significant effect on organizational turnover..

1. H_o: There is no positive relationship between relationship marketing and customers’ satisfaction.

H₁:  There is positive relationship between relationship marketing and customers’ satisfaction.

1. H_o: Relationship Marketing does not have any significant effect on average time spent on a transaction.

H₁:  Relationship Marketing does have significant effect on average time spent on a transaction.

1.6 Scope of the Study

The research work seeks to evaluate the effect of relationship marketing on the performance of two branches of Diamond Bank branches of Marina and Trade fair branches in Lagos.

The study as perceived might face some logistic challenges in term of the time and the costs involve in carrying out the research, but nevertheless, it would strive to accomplish its aims and purpose.

1.7   Significance of the Study

It is hoped that the findings and recommendations of the study will be of great benefit through the following ways:

The study will equip students on the relevance of relationship marketing in service delivering. The application of the knowledge derived from the study can increase organizational turnover etc.

The study will give customers insight on how relationship marketing can be of great benefit to their purchase decision. It will serve as guide to their purchase preference.

Furthermore, the study will serve as added advantage to the banking sector, revealing ways in which relationship marketing can ensure better service delivery to customers.

1.8 Definition of relevant Concepts

 Organization: An organization is a social group which distributes    tasks for a collective goal.

Marketing:  Marketing is the process of communicating the value of a product or service to customers, for the purpose of selling the product or service. It is a critical business function for attracting customers..

Relationship marketing: Relationship marketing was first defined as a form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions.

For the purpose of this study, performance of the bank shall be measured by the following variables. They are: 1. Profits, 2. Size of customer, 3. Size of asset base, 4.Number of branches, 5. Time spent on a transaction, 6. Customers’ Satisfaction, 7. Customer loyalty and 8. Customers’ turnover

REFERENCES

Morgan, R. M. and Hunt, S. D. (1994). The Commitment Thrust-Theory of Relationship Marketing. Journal of Marketing, 58

Buttler, F. (1996). Relationship Marketing, In Buttler, F. (Ed), Relationship Marketing Theory and Practice, Paul Chapman Publishing Ltd., London

Gronroos C (1994). Service Management and Marketing “ A Customer Relationship Management Approach, Chichester: Wiley and Sons

Christopher, M., Payne, A., & Ballantyne D. (2002). Relationship Marketing: Creating Stakeholder Value. Oxford: Butterworth Heinemann.

 Patsioura, F., Vlachopoulou, M., and Manthou, V. (2009) A new advertising effectiveness model for corporate advertising web sites: A relationship marketing approach , Benchmarking: An International Journal, 16(3): 372-386.

 Treacy, M. and Wiersema, F. (1993).   Customer Intimacy and other Value Disciplines,Harvard Business Review, January-February.

Webster, Jr, F.E. (1992). The Re-discovery of the Marketing Concept, Business Horizons, Vol. 31, May-June.

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