Abstract
There has been fierce competition in
the contemporary business world and many companies are therefore required to
build effective and profitable relationships with their clients in the verge of
attaining customer loyalty. This is the major reason that makes relationship
marketing very imperative particularly in the service industry. There are
various relationship marketing tactics employed by various firms in order to
retain customers. It is worth noting that some of those techniques do not
effectively alter customer loyalty and there have been switching behaviours
among the customers who are mostly targeted by these firms. Therefore, this
study aimed at examining impacts of relationship marketing techniques on
customer satisfaction and trust in the hotel and destination industry. The
study developed an analytical framework which helped in evaluating whether
relationship marketing tactics employed have an effect on hotel and
destinations industry. Quantitative methods were utilized in the study. In
collecting primary data, self –administered questionnaires has been designed
and they were administered to the sampled respondents. Some were mailed to the
respondents who then mailed back for the analysis. In order to process the
data, SPSS software was used. The findings demonstrates that various
relationship marketing aspects including service quality, value offers,
perception of prices as well as brand image have a significant impact
especially on consumers’ loyalty as well as trust. The finding also shows that
the brand image seems to have a direct connection to the loyalty of the
customers. It was however noted that the switching costs are less linked to
customers’ satisfaction, loyalty and trust in the hotel and destination
industry.
Competition
in business world has continued to be turbulent over the years and the most
critical issues many organizations face today are not just in providing
excellent and good quality products and services but also in ensuring
satisfaction and retaining of customers ensues (Gordon, 1998). To be have a competitive edge in such an
overcrowded as well as interactive marketplace, marketers do not have a choice
but to utilize various marketing strategies that are past the ancient 4ps
marketing tactics which are nowadays considered inadequate to be taken to
effect in the verge of attaining and maintaining competitiveness in the market.
To various organizations, relationship marketing is a great alternative since
it has the potential of building a strong and continuous link with their
esteemed customers. Relationship
marketing is a field with marketing strategies that usually seek to acquire and
retain customers by ensuring that organizations provide quality services to the
customers. Its main purpose lies in its ability to help firms to acquire
well-built competitive advantage in the current markets due to its ability to
establish a barrier to entry, enhancing accessibility of the markets as well as
creating a repeat purchase.
Relationship
marketing began to receive much attention in the last few decades; and it began
to dominate marketing management concepts in the very last decades of the
twentieth century. Relationship marketing entails building loyalty of the
customers and this is enhanced through provision of valuable services to all
parties involved in effective relational exchanges (Bowie, & Buttle, 2004).
Usually, buyers and sellers involved in a market attain a mutual benefit
through establishing links and they are not simple at all. Often, there are various
switching behaviours that arise in diverse stages of partnership association.
Relationship marketing strategies are therefore methods that are aimed at putting
relationship marketing into practice. Efficient relationship marketing
strategies that are customer oriented may enable various marketers to gain
customers, maintain them, and take full advantage of customer profitability as
well as enhance their loyalty to the services offered by the organizations they
represent (Reid, & Bojanic, 2009).
Economic as well as business
disciplines have continued to foster the image of the organizations. Therefore,
marketing literature has been preoccupied with large corporations that show
potential for growth and in the current world; such a view goes along with the
efforts to comprehend small and medium sized enterprises (SMEs) whereby various
enterprises work in unison in order to establish as well as strengthen the
competitiveness of their businesses. Due
to this, various hotels utilize marketing advisors who usually help the
companies to develop as well as design comprehensive marketing plans which
would make them ready to withstand competition as well as establish new markets
(Reid, & Bojanic, 2009).
Relationship marketing in hotel and
destination industry entails promoting the hotels, destination and therefore,
companies usually think about the excellence of the travel services and they
focus more on taking care of the desires of the customers in the quest to enhance
their satisfaction. Many companies
develop various marketing approaches including designing excellent destination
marketing strategies which begin with an analysis of various markets in respect
to the destination. Therefore, relationship marketing is very vital since it
helps hotels to recognize the needs of the customers so that they can formulate
winning strategies (O'Fallon, & Rutherford, 2010).
According to pike (2008), current
businesses have shown growing interest on establishing whether relationship
marketing is more preferable to relying on sales transaction. Gummesson (2008)
argues that, as a result of various dynamics in the prevailing business
environment, various marketers are now laying more focus on satisfaction of the
customers as well as retaining them more than they do on advertising and sales
promotions. Some researchers have carried out studies on hotel and destination
industry and they found out that many customers who are targeted by both local
and international companies usually consider the quality of services offered
and prices in a particular company prior to making their decisions (Hougaard
& Bjerre, 2003).
Over the years, hotel and destination
industry is exemplified by complexity as well as rigidity and it has therefore
become very crucial for the managers to come up with various strategies which
would help them attain the goals and objectives of the organizations. Relationship marketing has been made easier
by technological advancement and this has become a critical component in
various companies. Companies have therefore been forced to incorporate
technologies in order to remain afloat in the prevailing market which is
characterised by high competition and uncertainty. Putting in mind the significance of
relationship marketing in the current business in the hotel and destination
industry, it is worth to comprehend how the relationship marketing tactics are
carried out in practise as well as how this form of marketing impacts the
businesses, for instance, influencing the long-term associations building as well as enhancing customers’
loyalty (Hayes, 2008).
Therefore, it is beyond reasonable
doubt that a thorough research is needed concerning customers’ satisfaction as
well as retention so that people can fully comprehend the impacts of
relationship marketing on Hotel and Destination Marketing.
1.2 Statement of the problem
Hotel and destination industry is
among the fields that are faced with severe contest in the marketplace. Several
marketing strategies are often utilized by the businesses in order to enhance
their competitiveness in the verge of enhancing customer satisfaction as well
as customer retention. However, customers are usually perturbed by various
range of activities which include aggressive sales strategies, telemarketing,
use of direct mail, advertisement on the media, internet promotions as well as
carrying out doorstep selling. Evidence has demonstrated that in situations
whereby customers are not contented with the products and services offered by a
particular company, they usually opt to seek the same bundles goods and
services from other companies as well in the hotel and destination industry (Doney
and Cannon, 1997).
Relationship marketing tactics is
considered one of the essential means of offering services in the verge of
retaining as well as building customers.
Various empirical researches have offered confirmation that portray
relationship marketing tactics as having various impacts and more importantly
on behavioural loyalty which has an effect to retention of the customers as
well as building a superior relationship with them. The major challenge for the hotel service
provision is attracting more customers, focusing on superior relationship
building with the customers as well as building trust in them on the services
offered through relationship marketing strategies.
1.3 Aims and objectives
The general purpose of this paper is
to find out whether relationship marketing has an impact on the organization’s
values to their customers.
It should be understood that the
chief goal of relationship marketing implementation is to make improvements on
the value of services offered to customers. With this in mind, the study will
try to evaluate whether there has been any improvement especially on customer
satisfaction and retention. The steps that have been advanced in order to help
the researcher attain the aim are formulated into various objectives as stated below;
i.
To
determine how relationship marketing affects different aspects of hotels
ii.
To
determine how relationship marketing impacts satisfaction
iii.
To
review the impact of relationship marketing from previous studies
iv.
To
analyse the impact that satisfaction has on customer loyalty
v.
To
provide recommendations on how management teams can improve the effectiveness
of their relationship marketing endeavours
For
these objectives to be achieved, this study focuses on making an analysis on
the conceptual framework that has been developed from customer’s views. The
ultimate goal for engaging in relationship marketing is to ensure that quality
and pricing are in conformity with customer expectations. In accordance to
this, the hypotheses below were tested.
H0:
Relationship marketing affects the excellent of service delivery and this is directly
linked to customers’ satisfaction.
H1:
High quality of services as viewed by the customers is absolutely linked to
their trust level.
H0:
Reasonable prices alleged by the customers are linked to their satisfaction in
an affirmative manner.
H1:
Excellent brand image viewed by the customers is directly linked to their
satisfaction.
1.4 Research questions
Organizations have gone further and
implemented mixed relationship marketing strategies in the hotel and
destination industry. However, it’s worth noting that some of their strategies
have not worked successfully and there are several circumstances that show that
there is frequent behaviour switching in these companies which usually
transpire among the customers who are most targeted. Therefore, this study’s
questions which are put forward are as follows:
i.
Is
there improved performance in the companies that utilize relationship
marketing?
ii.
What
are the concerns that call for considerations in order to have an effective
implementation of relationship marketing?
iii.
Which
are the some of the challenges that companies operating in destination and
hotel industries face while making implementation of various relationship
marketing strategies?
iv.
Do
diverse relationship marketing strategies have impacts on the loyalty of the
customers?
1.5 Significance of the study
The rationale behind this study has
been carrying out an investigation on the various impacts of customer
relationship marketing in hotel and destination industries. Unlike in
advertisement and promotional marketing, relationship marketing focuses more on
the retaining the customers, therefore, the researcher developed an interest in
the topic. This study enabled the researcher to acquire adequate knowledge on how
relationship marketing works as well as its benefits either to the companies or
to their customers. Moreover, the
research will be crucial and it will enable people to gain deeper understanding
on the difference between relationship marketing and promotional marketing as
well as advertising. This study will benefit future researchers as well as
marketers since it will provide them with adequate literature concerning the
topic. The study will provide guidance
to the proprietors who own hotels concerning how they need to carry out
relationship marketing in order to increase the loyalty of the customer.
1.6 Research Plan
The study demonstrated two dissimilar
methods that were utilized to gather adequate information. In the first step,
an infinite body of literature was reviewed and the second step involved
consultations of various experts so that they could provide new and deeper relevant
data. Concerning the aims and the overall objectives of the study, it has
purposed to evaluate the impacts of relationship marketing in hotels and
destination industries. The literature
was also reviewed which comprised of academic field as well as other sources
that have been peer-reviewed.
The
study was determined at evaluating all the important aspects of relationship
marketing and the impacts they have had on the hotel and destination industry.
There were various limitations that were met along the way when carrying out
the study. To begin with, there are four means of carrying relationship
marketing strategies, these are; quality of services, brand image, value offer
as well ad price perception. Out of the
four strategies, there are only to crucial components that were used to
evaluate relationship quality, the two of them are satisfaction and trust.
These two components are not adequate to measure the impacts of relationship
marketing in hotel and destination industry.
The second limitation is that the study focused more on consumers’
perspectives. Therefore, the firms’ point of views concerning this subject did
not come out strongly (Doney and Cannon, 1997).
This chapter contains five vital
parts; there is the theory of relationship marketing that has been discussed. A
conceptual framework that shows the relationship between various variables;
Variables have been drawn to depict the relationship that exists between
various aspects in relationship marketing field.
Relationship marketing field emerged
in the last decades of the twentieth century. It is a field that has been
viewed as an avenue for thorough planning as well as marketing tactics both in
the consumer and industrial marketing.
Foss & Merlin (2001) argues that relationship marketing refers
broadly to the marketing strategies that are often deliberated to develop,
establish and maintain triumphant relational link with the customers. Hayes
(2008) on the other hand defines it as an
entity’s behaviour with an aim of developing, sustaining and creating
profitable and competitive association in order to benefit both parties that
are involved. As a result of profitable
association on a lifetime base, losses are likely to occur at some junctures
during the duration. Gordon (1998), argues that marketing executives ought to
make considerations on three dissimilar
objectives: managing the initiation of the client relationships, maintaining as
well as enhancing the existing relationships as well as being able to handle
relationship termination effectively. Chu, (2009) made some suggestions that, levels
of relationship duration has a potential to result in diverse intensity of
consumption familiarity, resulting in diverse consequences, satisfaction as
well as allegiance to different relationship marketing strategies.
Making comparison between traditional
marketing and relationship marketing, one would not fail to notice that
relationship marketing focuses more on building customer relationships so that
companies may be able to attain long-term shared benefits for every party that
are involved in particular exchange.
Essentially, relationship marketing entails establishing customers as
associates and this is very different from conventional form of marketing. The table below portrays a comparison between
traditional marketing and relationship marketing.
Since the ultimate intention of the
implementing relationship marketing is to enable companies to achieve maximal
value of their customers, there is need to emphasize on the customer loyalty in
order to attain this aim. The greatest advantage of relationship marketing is
exhibited in the continued support of the customers who are loyal to the
products and services that are offered by a particular company. Such customers
are usually not very receptive to price reduction for a certain period of time
(Gordon, 1998). Having interdependence, mutual cooperation as well as commitment
involving the suppliers and the customers usually tends to be a very important
component in relationship marketing. The reason for this is that, such
relationship is perceived to be paramount in enhancing competitive advantage of
a particular organization.
1.9 Conceptual framework
Relationship marketing is very essential in
business in the current world therefore; it is paramount to comprehend how this
field is executed in practice as well as the way it takes effect, for instance,
playing a vital role in enhancing enduring relationship edifice and enhancing
customer loyalty (Foss
& Merlin, 2001).
Therefore, in this section, the study purposes to establish an
analytical framework concerning relationship marketing. This structure is based on re-examining
previous literature concerning the impacts the field has in businesses as well
as making consideration for the theories about relationship marketing
strategies, quality of relationship as well as loyalty of the customers. The
diagram below summarizes the relationship.
Table 2.0: Conceptual framework on the Impacts of relationship
marketing in hotels and destination industry
Relationship
marketing strategies: Relationship marketing is usually
executed using various strategies which are commonly applied in businesses
today. Many strategies that are used in relationship marketing have a potential
to influence the quality of relationship as well as retention of
customers. Based on previous studies,
the four common methods used that are used to implement relationship marketing,
which are emphasized in this study as well are service quality, value offers,
price perception as well as brand image. The four tactics are well elaborated
in the literature review section.
Relationship
quality: Quality of the relationship is often used to evaluate the efficiency
of relationship marketing strategies. Marketers consider quality of
relationship as an antecedent of attaining loyalty of the customer. Aydin, and
Özer (2005) argues suggest that the two fundamental components that should be
used to appraise the quality of a relationship are trust and satisfaction. The
higher the intensity of relationship quality, the higher the levels of customer
trust as well as satisfaction (Gummesson, 2008).
Switching
costs: switching of costs often occurs when the customer shifts from an
active supplier to a new one. Switching
costs as viewed by customers may be either monetary or it can also be in
non-monetary terms. Non monetary terms
include factors such as time, effort, psychological state and the degree of
risk taking. This is one of the barriers that often influence decisions of the
customer when changing to a new provider and they in turn influence customer’s
readiness to continue being loyal to the existing provider (Pike, 2008).
Customer
loyalty: this concept was defined by Hayes (2008) as a deep held dedication
to rebury or rather continue being committed to a desired product or service
constantly in the future, therefore leading to recurring same-brand set buying
irrespective of situational pressures as well as marketing strategies that have
the potential to switch customers’ consumption behaviour. Customer loyalty is
the ultimate aim or goal that a company, therefore, it is the reason as to why
organizations apply relationship marketing tactics. The goal of many
organizations when utilizing relationship is to build enduring links with its
customers. Therefore, the fundamental impact of relationship marketing is to
enhance customer loyalty (Gummesson, 2008).
2.0 Literature review
In this chapter, information pertaining to relationship marketing has
been considered. This information has
been gathered from previous studies on the same field. The section begins with outlining the
evolution of relationship marketing and the way it has been practiced. It is
followed by various discussions from previous literature concerning
relationship marketing. Relationship marketing tactics, quality of
relationship, switching of the costs as well as customer loyalty have also been
discussed.
2.1 Relationship marketing in practice
In
the last decade of twentieth century, many practitioners and scholars have been
focusing on the way companies relate to their markets. Consequently, this has
resulted to a sub discipline of marketing which is now commonly known as
relationship marketing. Foss and Merlin (2001) defined relationship marketing as those
marketing activities which are geared towards creating, developing and
maintaining triumphant relational exchanges. Separating those who produce from
the consumers was a natural result of the industrial era. On one side,
production in large volumes obligated the producers to sell their products and
services via the middlemen. On the other hand, industrial organizations as a
result of specialization in their corporate functions went ahead and developed
specialist purchasing departments as well as buyer professionals thereby
separating the consumers from the producers. It is worth noting that in the
modern technological world, technological advancement has enabled producers to
interact in a direct manner with the growing number of customers. As a result
of availability of variety of development processes of the organizations, which
include empowerment as well as entire quality organization programs, express
boundary between both the consumers and the producers is made possible in
either consumer or industrial markets. Therefore relationship marketing is a
field that tries to absorb and join together customers, producers, suppliers as
well as other essential partners into an organization’s developmental as well
as marketing activities. O'Fallon and Rutherford (2010) offered
a summary of diverse relationship variables which significantly affect the link
between an organization and diverse stakeholders. Such variables include
commitment, cooperation, trust level, mutual aims and goals, performance
satisfaction, adaptation, shared technology and social ties among others. Hayes (2008)
discussed relationship variables and focused more on trust as well as commitment
as the chief variables that affect relationship between parties which are
implicated in the marketing exchanges and in making transactions (Foss & Merlin, 2001).
Nordic
school of thought emphasized more on marketing as well as cross functional process.
According to this school, maintaining relationship marketing function should be
a function of all the workers and departments in any organization (Moorman, Deshpandé, & Zaltman, 1993).
Therefore, it should not be more concentrated in the marketing department only.
International marketing and purchasing groups usually focus on the Business to
Business (B2B) markets. In industrial marketing, relationships are usually
built over a period of time with an elevating experience, therefore reducing
uncertainty and at the same time enhancing each other. Anglo Australian school
of thought on the other hand focuses more on the quality as well as service of
marketing and on delivering customer value. Usually, customers judge the value
of service or a product from their perceived benefits compared to its costs.
The better the value that is delivered by an organization, the customer
relationship will be better. Irrespective of the school of thought that one
chooses, it is worth to remember that customer retention is the major ground of
relationship marketing (O'Fallon & Rutherford, 2010).
A study that was carried out on 5-star
hotels in Bangalore demonstrated various effects of relationship marketing
strategies. Among the findings include the fact that relationship occurs even
before making transactions; but transactions relationship is usually mechanical
in nature. The hotels explained various elements that were construed to be
essential for both the businesses and the customers. Some of those elements
include transparency and honesty.
Relationship marketing does not lay emphasis on expenses that the
business incurs on developing facilities as well as offering the strategies,
however, the focus ought to be making the customers satisfied by the goods and
services provided to them. Hotels are
therefore the service providers and they usually focus on the satisfaction of
the customers in order to have them retained (Krishnan & Hartline, 2001).
Studies show that hotels apply diverse
strategies in the verge of attracting customers as well as focusing on
customers’ retention. Among the things that were found to be offered in many
hotels in India include provision of wireless internet to the customers,
offering corporate loyalty programs as well as forming various tie-ups. Chu, (2009) agrees
that relationship marketing tactics are very strong especially in the hotel
industries. The most striking aspect is that relationship marketing exists from
the employees and executives and the efforts are usually directed towards the
customers, governments, individual travellers, people who makes decisions in
the organizations, travel agents as well as socialites in the upmarket among
others. Research establishes that the efforts of relationship marketing tactics
that are exhibited by these hotels also targets officials who deal with the
bookings. The reasons for these has been that the way these officials handle
customers matters a lot in determining the quality of services provided by the
hotel. The study established that those
officials were trained to smile when serving the customers as well as on using
courteous language when serving them. Development of relationships usually
develops arises from building of personal connection as well as through a word
of mouth. Numerous hotels have executives who are dedicated to implement
relationship marketing and the managers are willing to fund customers’
relationship management in order to ensure that they are satisfied. A large number of hotels have been found to
utilize their sales team to build relationships with the customers (Foss & Merlin, 2001).
Scholars agree that relationship has to
go hand in hand with commitment. O'Fallon, & Rutherford (2010) suggest
that commitment prevail in a relationship, customers develop trust in the
services and products provided by the seller. Usually, there exists no open
buying on the side of the buyers. Many hotels have been found to focus on
nurturing relationships so that customers can continue being loyal to their
services. Another important aspect is that they also focus on increasing
switching costs so that the customers would stick to their services. This is
also a method of retaining customers.
Hotels in India have been found to increase switching costs through
locking of the emotions, enhancing wonderful experience, offering wonderful
conferencing facilities, offering executives’ holidaying among other
strategies. Hayes (2008) argues that definitive service is the
most important concept in many hotels. A hotel that puts this factor in mind
does not put all its efforts on relationship marketing, rather it would expect
that its customers would continues repeating their purchase due to its
provision of an ultimate service. Research has established that employees in
many hotels are often empowered to deliver an impeccable service to their
customers. In such hotels, relationship
marketing forms a very minute component of the process aimed to please
customers. Such hotels that have small
portion of relationship marketing in India are those that provides ultimate
services as being part of the enormous group of hotels, usually, those that
provide service quality value by offering free internet connectivity to
customers and enhancing security.
Research shows that hotel managers are
very keen on emphasizing implementation of relationship marketing as a
marketing strategy that enhances emotional needs of the customers. Researchers argue that the level of emotional
quotient in firms operating in hotel businesses is often very high. The reason
which makes the hotels to protect emotional welfare of the customers is that it
is highly related to trust building. A
five star hotel that was examined in India was found to be taking care of the
health of its customers. It often offered free massage services. The executives
in that hotel stated that the reasons for employing massage experts to take
care of their customers health is that, massage is very useful in relieving
stress and it was helpful especially to customer who travel all over the
country. There was another hotel that strived to offer excellent security
system which had a wonderful CCTV. Other
hotels were found to be very cautious on food tests for the customers in order
to make sure that whatever they eat was perfect. Cheng, Lai and Yeung (2008) demonstrated that there are companies which follow
strictly the police procedures in retrieving an item of the customer when
stolen or even retrieving a misplaced one.
Some hotels form associations with the
government in order to ensure that customers build trust on their products and
services. Aydin and Özer (2005) shows a study where one of the hotels in India
had obtained seventy licences. The reason the hotel was keen on getting
licences was that it was able to access vital information which was
advantageous to the hotel which would enable it to build excellent
relationships with its customers. Chu, (2009) argues
that there is a hotel that obtained information in advance through its
relationship with government concerning the location of an intended
international airport; therefore, the hotel went ahead and bought the land
nearby at a cheaper price. Surprisingly, relationship marketing does not only
target customers but also other vendors, employees, as well as experts in the
microbiology section that deals with sampling and testing. This is one of the
ways that assists an organization to market its brand image
2.2 Relationship marketing tactics
Over the years, there have been
several ways that are used by marketer in making implementations of the
relationship marketing strategies. Chu
(2009) suggests that relationship marketing tactics can be carried out through
price perception, quality of services and products, value offered alternative
attractiveness of the services among others. Gummesson (2008) discussed that various
tactics that are common in relationship marketing include use of tangible
rewards, direct mails to customers, interpersonal communication, close door
selling, preferential treatments as well as membership which could have an
impact of enhancing long-term association as well as elevating relationship
satisfaction, and more importantly, enhancing trust and commitment of the customers. The use of tangible benefits implies that the
customers targeted must be provided with a compelling reason to be loyal to the
new relationship (Gregory, 2003). This point of view takes a presumption that
customers will always be rational and will always evaluate their options before
settling for the ones that offer the most desirable benefits. The application
of this view alone would imply that only organisations offering great benefits
stand a chance of success in relationship (Gregory, 2003). However, this may
not be the case when other factors are considered. For instance, an
organisation with lower benefits but offers preferential treatment to its loyal
customers can enjoy higher levels of success despite having comparatively low
benefits offering. Studies indicate that in most cases customers are moved when
they are treated specially more than when benefits are provided in a haphazard.
Direct mailing on the other hand tends to be effective when the targeting is
done strategically (Kotler, 2003). Research shows that a majority of consumers
tend to pay a lot of attention to advertisements that appear on their personal
mail boxes. This makes the conversion rates for direct mails to be much higher
than that for other non personalised modes of communication (Kotler, 2003). The
use of interpersonal communication and closed door selling are highly dependent
on the tact and the ability of the direct sales staff to convince the customers
targeted.
Some scholars examined the
applicability of relationship strategies in the offering quality services,
creation of brand image, price perceptions as well as value offers and they
came to an agreement that such tactics are very important in enhancing customer
satisfaction as well as retention (Foss & Merlin, 2001). On the basis of ancient
presumptions, some relationship marketing strategies that are considered vital
especially in the service industries include quality of service, value offers,
and brand image as well as price perception.
Service Quality
This concept is of course different
from offering physical products. It is
beyond doubts that services are intangible, heterogeneous produced and consumed
and more importantly, services cannot be kept as stock. A generally accepted
definition of service is that a service is the progression that consist a
sequence of intangible activities which normally (although not essentially)
occur in interaction between the service workforce or even the service
providers as well as the customers (Hayes,
2008). These activities are usually provided in order to offer certain
solutions to the customers. The definition has been applied and it therefore
sheds light that services should be a process whereby interaction between
customers as well as service providers often exists. In order to uphold customer loyalty in the
verge of maintaining an organization’s profitability, the chief issues that
service providers are often faced with is making use of the existing
relationship in a manner that would manage customers through offering the
services that the customers’ needs (Bryman,
and Bell, 2003).
Studies show that the quality of a
service is individually viewed by the customers especially when they are
interacting with the organizations providing them (Chu,
2009). Hayes, (2008) defined
service quality as the customers’ judgement concerning an organization’s
general fineness or superiority.
Whatever takes place and is seen by customers in the interaction process
usually has crucial impacts on the way customers make their evaluation on
service quality.
Chu (2009) contended
that as a result of certain attributes of service, the assessment on the
service quality is usually more intricate than making assessments of the
quality of products. Different ways of measuring service quality has been
advanced by various studies as well as literatures. One of the common
measurement frameworks of quality of service is acknowledged as SERVQUAL which
was established in 1988. It measures the discrepancies between customers'
expectations and the perceptions they exhibit across five determinants that are
elaborated below:
Tangibles: This category entails an appearance of physical facilities, equipments,
communication equipments as well as the employees.
Reliability: This entails the capability of a service company to offer the services
that it promised to customers accurately and in a dependable manner.
Assurance: This is the Employees’ acquaintance as well as behaviours concerning
courtesy, the ability to express trust and develop confidence.
Responsiveness: This has to do with whether a company that is offering services is
willing to assist its customers as well as provide services without
delays.
Empathy: This evaluates whether the company offering services is willing to
provide care as well as individualized consideration to all its customers and
having effective hours that are convenient to them.
Recently, Chu (2009) made
a summary of seven criteria of excellent service quality which include
professionalism as well as skills, behaviours and attitudes of the employees,
trustworthiness and reliability, accessibility and flexibility in service
provision, service recovery and reputation and credibility. On a thorough outlook of the seven criteria,
the first one seem to be outcome-related and hence it is a technical aspect
that deals with quality whereas the preceding one is more related to the image
and thus it is aimed at fulfilling a filtering purpose. The other five criteria
are process related and therefore, they are perceived to be functional aspects
of quality.
High quality of service is often held
to be a very crucial aspect in order to enhance cut-throat competition in the
service markets. Many scholars have argued that service quality that is
perceived by the customers to be commendable usually enhance their satisfaction
and their trust in the services offered by hat particular organization
(O'Fallon, & Rutherford, 2010).
Customers are often satisfied when an
organization offers high quality services than they had expected. Various
studies’ findings shows that customers’ trust is also elevated when they
perceive positive service quality has been offered by a certain organization
and the same customers are made to believe that the organization has a
potential to bring their preferred outcomes for them (Pike, 2008). In the hotel and destination industry which
belong to the service industry, service quality is a very crucial indicator
that is used to evaluate the performance of a service provider. Service
providers who offer high quality services are highly appreciated and they
create customer trust and satisfaction and in addition to this, they obtain
competitive advantages. They are also able to foster long-term relationship
with their esteemed customers (O'Fallon, & Rutherford, 2010).
It therefore makes sense to propose
the following assumptions:
- High quality services perceived by customers are positively linked to customer satisfaction.
- High quality services that are viewed by customers are positively associated to trust of the customers.
Price perception
Price is usually considered to be the
pecuniary cost for a customer to purchase a product or a service. Literature shows that price is a crucial
determinant which significantly influences the decision making of a customer
concerning buying of a particular product or a service. The choice of the
service providers as well as the organization whereby they would buy a product
is hugely determined on customers’ perceived price (Hougaard & Bjerre
2003). The price that the customers are
willing to pay significantly differs as a result of the deference in their
desires as well as their wants. Therefore, the perceptions about price of the
same products or services usually differ among people. Studies on relationship
marketing in hospitality industry shows that higher pricing that are perceived
by consumers sometimes has the potential to unconstructively influence their
likelihood to buy the products or services (Pike, 2008). Price perception is
sometimes construed to be linked to price search. Often, it is likely that
consumers would be persuaded by perceived high quality of services at their
perceived reasonable prices especially during the price searching process.
Bryman, and Bell (2003) argues
that customers often make judgements on prices by relating them to services
quality and therefore they accordingly express either contentment or
dissatisfactions depending on the opinion on equity. When a customer views price as fair, he/she
would be prepared to carry out transactions with the business that is providing
the service, and which is offering the favourable price for that good or a
service. Having evaluated various
studies, Bryman and Bell (2003) made proposition that price
perception can be deliberated by utilizing two effective dimensions: the first
one is competitiveness of prices, which would reflect the manner in which that
price has been perceived by customers who are comparing the prices to that of
the competitors and the second dimension is value for money. Value for money
considers the relative prices of the provider of the service especially in
terms of price. Generally, superior services are construed to cost more than
those which are of low quality (Bryman, and Bell, 2003).
Another important component of the
pricing decision is the consideration of how the pricing strategy selected
impacts on the perceptions on quality of services offered. This is a common
perception that has been proven by researchers over and over. The question of
price sensitivity applies in many of the services where quality is not the
consumer’s primary concern (Kotler, 2003). Businesses should therefore price
only after conducting a thorough research on the philosophies and perceptions
of the market targeted. For instance, low end consumers may choose the hotels
of choice based on pricing in their quest to fit within their small budgets and
make some savings where possible. On the other hand, hotels targeting the high
end customers may be ill advised to embrace the habit of under pricing their
services. Lower prices may lead to an exodus of clientele rather than attract
them due to the fact that this category of clients may be more attracted to what
they consider to be of a higher quality with the price as an indicator of the
quality (Bouncken, 2005). A recent survey conducted in the hospitality industry
on the customer perceptions in the hotel industry confirms this assertion by
indicating a significant rise in performance among luxury hotels that increased
their prices.
This pricing strategy can be utilised
very effectively when combined with the relationship marketing strategy. An
organisation whose services are high could use that to portray the image of
being producers of top of the range services hence attract the attention of the
customers targeted (Kotler, 2003). The loyal customers may thereafter be
offered benefits that may include free services, discounts or even the offering
of certain unique experiences. Offering an additional service at no extra cost
or the offering of an outright discount helps such customers to feel special.
The mere knowledge of the fact that they pay rates that are only applicable to
them produces a high level of loyalty that can potentially convert them from
being mere customers to being the business’s advocates as well as partners for
ensuring improvement in service delivery (Henning-Thurau, Gwimmer &
Grembler, 2002). As analysts would observe, it is not uncommon for very
satisfied customers to come up with suggestions on how a business can improve
its service delivery or offer tips on additional services that can be provided
that are in line with trends in the market. These customers will always provide
the organisation with benefits that outweigh the discounts provided by
providing the mentioned insights and also be acting as referees to help in
attracting more customers (Kotler, 2006).
Various researchers have come to
agree that price perception usually influences customer trust as well as
satisfaction. Customers switch the products or services mainly because of
prices issues, for instance, having perceived high prices, when unfair or
rather deceptive pricing practices prevail in the market among others. Therefore, to elevate customer satisfaction,
it is paramount that service entities aggressively handle their customers’
price perception, for instance, conducting attractive pricing as well as
providing reasonable price mix for their products and services as well as
lowering prices and at the same time maintaining their quality (Aydin,
and Özer, 2005).
Brand image
Marketing literatures have often
discussed this concept extensively. According to an evaluation carried out by Chu (2009) on the previous studies on relationship
marketing in the hotel industry, brand building is a very essential driving
force especially when dealing with marketing of physical products, and more so,
the hotel products. It is also a very crucial issue for the service industry as
well. In defining brand image, Pike, (2008) defined it as the perceptions
regarding a brand in the manner in which it is exhibited by the brand links
that are often held in the minds of the customers. It is usually considered as
the perception or rather a psychological representation that is formed as well
as held in the minds of the consumers, often through a customer’s response be
it rational or emotional. Hougaard and
Bjerre (2003) argues that a brand is not first established and then viewed by
the customers, rather, every action involved in the process of branding, each
brand message is often independently perceived by the customers and together
they form what is later referred to as brand image and this is usually formed
in the cognition of the customers. Consequently, brand image is an outcome of
how a buyer perceives the connection with a brand over time
The concept of relationship marketing
in the hotel and destination industry displays the substance of having a
one-on-one association between the customers and the organizations as well as
having a link between the brands and the customers (Reid & Bojanic,
2009). Establishment of a brand link
with the customers is usually based on a sequence of brand contacts that are
experienced by the customers. What the customers’
views as the brand image especially during their experiences is paramount and
organizations should put this in mind. In addition to this, customers are
usually inclined to structure brand image in their mind using inexperienced
habits, for instance, through the word of mouth, the way a company is reputable
in the public, effective marketing communication among others. O'Fallon, &
Rutherford (2010) carried out an evaluation of relationships marketing studies
and found out that a constructive brand image makes it effortless for a company
to communicate the value of its brand to its esteemed customers as well to
favourably create good brand image through a word of mouth. On the contrary, an image that is negative
usually affects individuals and makes them dissatisfied. On the other hand,
neutral as well as unfamiliar brand image do not cause any damage to the
company, however, it doesn’t elevate effectiveness of communication (Cheng,
Lai, and Yeung, 2008).
An assessment carried out on brand
image by Aydin,
and Özer (2005) shows that the more customers consider value of the brand, the more the
companies expect to make sales and achieve more. It is therefore worth to note
that positive brand usually meet customers’ expectations and it provide them
with various benefits that may as well lead to customer satisfaction as well as
trust.
Branding provides organisations with
the opportunity to build special relationships with their clients. It helps in
focusing the attention of the market on attributes that are more than the
actual benefits provided by the products or services (Kotler, 2006). These
unrelated attributes are known as the product intangible attributes and they
differ from the product tangible attributes that are directly connected to the
product or service (Kotler, 2006). Product tangible attributes could include
the nature of service, the components of the services, the skills with which
the services are delivered, and the speed of delivery. Product intangible
attributes on the other hand can be used to define the things like the aura or
the feeling that surrounds the service (Birkin, 1994). A hotel should be able
to create a special feeling about the consumption of their services. This is
the only way to ensure that replication by competitors is not possible.
The type of services and the modes of
delivery can be replicated with relative ease among competitors. However, it is
difficult to replicate the special connection that is experienced between the
brand and the customers (Kotler, 2006). A hotel that manages to portray itself
as a service provider of a certain class or section of the community may be
successful in retaining customers that associated with the class in a
remarkable way. For instance, where a hotel distinguishes itself as a hotel of
choice for the higher class in the society would in many cases receive guests
that would want to be associated with the class, or those that are already
considered members of a class (Bouncken, 2005). Consumers tend to be most
comfortable when they are in situations that they believe are more compatible
with their social preferences and perceptions. Similarly, one that portrays
itself as the destination of choice for business clients would end up receiving
business executives more if the branding process is successful (Bouncken,
2005). This is the reason why hotels are embracing the concept of brand
building in order to create and sustain a competitive advantage in the market.
The use of branding and astuteness in
marketing is an approach which can yield excellent results when implemented
effectively (Cronroos, 2010). This is because the brand tends to have a
personality similar to human attributes that the market can relate to with
ease. For instance, a brand can have the personality of being caring, socially
responsible, trustworthy, and so on (Aaker, 1997). These are attributes that
products cannot have on their own and the affinity between these attributes and
human nature makes it very easy to have a special relationship between the
brand and the consumers. It works much the same way that relationships between
human beings are created where it becomes very difficult to replicate a
relationship between two people where the relationships can only be similar in
relative terms (Aaker, 1997).
So, how relevant is branding when it
comes to relationship marketing? Relationship marketing focuses on building
long term relationships with customers through offering high quality and
preferential treatments in order to ensure customer loyalty (Sheth, 2002). It
focuses on both the quality and pricing of the services as well as the nature
of the relationship that is shared between the brand and the customers. The
brand element is therefore very crucial. Without a formidable brand, the
relationship marketing efforts are bound to be fruitless.
Value of Offers
Studies have shown that customers
often make judgement on the value of consumption especially after comparing the
benefits that they have acquired from products as well as services with their
costs (Bowie & Buttle, 2004). Service companies usually offer superior
value through enhanced offers and such companies often improve customer
satisfaction especially through elevating the customers’ perceived benefits as
well as lessening the sacrifice in order to improve retention of the
customers. Researches haves shown that
companies conduct certain value addition strategies which can elevate
customers’ perceived benefits as well as lessen their perceived sacrifices,
which would go a long way to stimulate customer re-purchasing activities thus
making customers to become attached to a certain service provider (Cheng,
Lai and Yeung, 2008). In a relationship that is
long-term, customers’ perceived a value that is offered is linked to previous
episodes as well as expectations. After satisfying a customers’ expectation,
they often feel satisfied, they feel safe, secure and credibility ensues as
perceived value in such an association. This elevates trust as well as enhanced
loyalty of the customers (Bryman, and Bell, 2003).
In this respect, companies in the
hotel and destination industry ought to be very concerned with customer’s value
from customer’s point of view and they should systematically comprehend value
chain so that they would be able to lessen customers’ perceived sacrifices. Aydin,
and Özer (2005) assessed studies that focused on value offers in relationship marketing
and they suggested that by increasing the benefits of the customers, it means
companies should be making additions to the core products that their customers
perceive to be important and beneficial as well as having a unique value. In
hotel and destination industry, it is paramount that the proprietors try to
offer something that is valuable to their customers for instance, reward refund
activities as well as promotional offers so that they would gain customer
satisfaction as well as enhancing customer trusts. There are the expected
aspects in order to enhance loyalty of the customer in the companies (Bansal,
Taylor and James, 2005).
2.3 Relationship quality
Relationship quality resulted from
relationship marketing field. Relationship marketing has been recognized to be
very essential in the current world of businesses. Previous studies have shown
that relationship quality is very important especially in assessing the
relationship potency and the extent to which customers needs and desires are
met (Foss & Merlin, 2001). It is worth noting that triumphant exchange
events usually lead to a lasting seller-buyer association especially when they
are appropriately taken care of from both the sellers’ and the buyers’ points
of view. In some of the contexts whereby
the companies offer services, since they are invisible and often heterogeneous,
many buyers exhibit high risk uncertainty and this translate in making risky
transactions. Therefore, excellent
relationship between the sellers and the buyers can assist in lessening
uncertainty in the verge of increasing customers’ reliability as well as
establishing long-term relationships. Put in simpler terms, higher quality of
association usually develops relationship between those who provide services
and the customers and this has an impact on fostering long-standing steady
exchanges whereby both parties involved can have shared benefits (Cheng,
Lai, and Yeung, 2008).
It has been proved from the past that
relationship quality has no universally accepted definition as well as
measures. Several dimensions try to come up with measures of relationship
quality within marketing studies. An attempt that was aimed at conceptualizing
relationship quality viewed it as an elevated order concept that have to be
comprised of two things, trust and satisfaction. Aydin and Özer (2005) explored this issue and explored
commitment-trust theory that proposes that, trusts as well as commitment are
two important concepts that should be considered in measuring relationship
quality. From business organization’s perspective, scholars suggest that
quality of relationship reveals the strength of the shared information, quality
of communication as well as satisfaction with the link between both the
importer and the exporter.
Even if there is no general agreement
concerning the mechanism that make up quality of the relationship, it is
commonly agreed that trust as well as satisfaction are two vital factors that
can be used to determine relationship quality.
Trust
Trust is an extensive subject which
has been incorporated in various disciplines which include philosophy,
psychology, economics as well as management. Various definitions have been put
forward to try and help people understand trust. There is a general definition
that explains trust as the compliance of a party to be susceptible to another
party’s actions on the basis of prospects that the other party will be able to
perform a certain course of action to the trust or no matter the ability to
control or monitor the other party. On a closer outlook of this concept, trust
is usually grounded on evaluating one another’s personality trait behaviours as
well as motives (Foss & Merlin, 2001).
Bowie and Buttle (2004) assessed
previous studies on relationship marketing in hospitality industry and found
out that trust and distrust have a place in relationship building. When a
seller makes relationship efforts, there must be some evidence to customers to
show that that seller can be trusted, therefore, the service providers must be
prepared to fore-go some desires in order to fulfil customer’s needs in an
association (Taylor,1998).
Literature shows that in business
activities, trust is required in developing an enduring and successful
relationship (Bryman and Bell, 2003). When the market has so many
complexities, trust does not prevail, and rather, people tend to make their
decisions based on their previous experiences.
Hayes (2008) therefore argues that making
investment in the long-standing relationships with the customers usually helps
to establish customer trust as well as improve the effective quality of an
association so that the parties involved can obtain mutual benefits (Aydin,
and Özer, 2005).
Satisfaction
Customer satisfaction is a concept
that has received wide attention over the years. It is one of the expected ending in various
marketing activities. Literature demonstrates that provision of satisfactory
services and products to the customers is positively linked to the success of
the businesses in the current world whereby businesses continue to face fierce
competition. Gummesson (2008) defines
satisfaction as a general appraisal which depends on the entire purchase as
well as consumption of a product or services compared with repurchasing
prospects over a period of time (Doney and Cannon,
1997). Many scholars agree on reviewing satisfaction as gratifying realization
that is exhibited by consumers when consuming a product. Therefore, this
demonstrates that customers are able to sense that consumption discharges some
needs and desires.
A study carried out on relationship
marketing demonstrated in Doney and Cannon (1997) shows that in relationship
marketing field, satisfaction of the customer is usually seen as a very
important performance indicator for assessing the quality of association
between the customers and the service providers. Expectations of the customers especially in
regards to cost and benefits of a certain relationship chiefly rely upon past
experiences as well as satisfactory experiences that elevate motivation as well
as the probability that an individual would stay in a relationship.
2.4 Switching the cost
Switching of cost behaviour in
customers refers to termination of their relationship with the service provider
(Hayes, 2008). Studies show that there are
various reasons that lead to switching behaviours by the customers. Chu, (2009) projected that customers change
service providers because of some factors such as monetary constraint, habit
among parties, limitation of time and problem in accessing information. Doney
and Cannon (1997) on the other hand suggested eight
significant factors that lead to switch behaviour. They include attraction of
the competitor’s services, inappropriate response by the employees of the
current service provider; problems in pricing, core service malfunctions, when
service encounter failures, inconveniencies in the service provision, ethical
dilemmas as well as situational changes (Hayes,
2008).
This cost is acquired when customers
switch from the existing provider to a new one in the market. This is often a
barrier which has the potential to influence customer’s decision in order to
shift to a new service provider. Studies show that switching of cost includes
financial, psychological and technical costs which make it complex or costly
for the customers to change brands. Bryman
and Bell (2003) described switching costs as the perceptions of the customers on the
implications of the extra cost leading to termination of relationship in order
to secure an alternative one. Literature has shown that perceived costs of
switching may be monetary or non monetary. Non-monetary costs include time,
risk taking as well as psychological nature.
It has been previously established that when the perceived switching
cost are higher, they usually affect customers switching behaviours. Therefore,
the higher the perceived switching cost, the more the customers are willing to
remain loyal to their current service providers (Aydin
and Özer, 2005).
2.5 Customer loyalty
Customer loyalty is the most
significant reason that forces many organizations to implement relationship
marketing strategies (Hayes, 2008). Companies focus on customer
loyalty since customers are the major driving force in the verge of enhancing
profitability. For a customer, loyalty is usually a positive attitude and
behaviour that is related to the level of repurchasing dedication to a brand in
the future. Literature shows that customers who are loyal are less likely to
switch to a service provider who is a competitor due to price. Companies
usually consider loyal customers as the most important asset. Organizations
take it as their responsibility to keep loyal customers who make contributions
to long-term company profits. Aydin and Özer (2005) found out that vendors attempt to
make existing customers to purchase more in order to reinforce financial growth
in their companies. In addition, companies’ financial growth is relies on their
abilities to retain existing customers at a higher rate than they acquire new
ones. Managers agree that executives in companies should try and comprehend
that growth in their firms depend on the customers and therefore, they should
not only focus on attracting new ones but they should also motivate the
existing ones so that they could continue spending more on their products and
services.
Literature shows that customer
loyalty arises either due to their attitude or behaviours. Attitudinal loyalty
revolves around customers’ attitude towards loyalty. Doney
and Cannon (1997) indicates that customers measure their preferences, buying attention
willingness to recommend products to others as well as prioritizing suppliers
on the basis of the attitude they form towards services and products of a
particular vendor. Behavioural loyalty
has to do with the share of customers’ purchase, which is their purchasing
frequency. Evidence shows that the stronger the relationship between buyers and
sellers, the more likely are the buyers to continue supporting the sellers by
purchases more units of their products (Chu,
2009). Foss & Merlin (2001) defined behavioural loyalty as a compound
measure that is based on the consumers’ frequency of purchases as well as the
amount the consumers spend on the products and services of a certain provider
compared to the amount that spent on the other providers. A significant
association between the levels of buyers’ relationship dedication and their
acceptances, propensity to leave as well as cooperate was found by researchers
carrying out studies in hospitality industry was considered to be the
behavioural outcome of relationships. Therefore, customer loyalty has been seen
to be the final goal of many business entities when implementing relationship
marketing (Bryman, and Bell, 2003).
The buzz word in the hospitality industry today is ‘innovation’
(Bouncken, 2005). Today’s consumers are increasingly demanding and well
informed with many often out to look for special experiences in addition to the
usual comforts offered by hotels. Consideration of the changing needs and
preferences of the market is the key to success and hotels are increasingly
conforming to this view (Kotler, 2006). In fact, such a move is necessary for
businesses across all industries as it is in meeting the customers’
expectations that a business can have any realistic chance of making good
returns. According to Freund de Klumbis (2011), consumers in contemporary times
are focused more on rewarding themselves by getting unique experiences from
hotels and would therefore be attracted to only those hotels that can provide
this benefit. This new outlook may be informed by the fact that the average
consumer is a lot busier and with less time to spend on luxury. This makes them
want to have the hotel services packaged in a manner that enables them to
maximise their experiences in the short time they have to spare (Bouncken,
2005). Moreover, hotel managers must be alive to the fact that information is
spread with more ease in the contemporary world. Consumers are more informed
than in the past with the majority of them able to access information about the
offers and the quality of services across the industry with remarkable use.
This improvement in the rate at which information is spread across the industry
has more to do with the use of the internet where comprehensive information
about hotels can be gathered at the click of a button. There are also numerous
reviews of hotel services from past clients who provide an indication of the
level of service provision in the various hotels (Freund de Klumbis, 2011). The
internet is a reality that the modern day relationship marketers must embrace
if they are to remain ahead of the pack.
The level of information in the market tends to be directly related to
the level of expectations in the market. Relationship marketing can only
succeed where consumers are confident that the hotel in question can live up to
their expectations. By gathering information on the services and customer
reviews that other hotels have, consumers tend to expect the same level from
the preferred hotels; if not better (Earnst & Young, 2011). This of course
mounts more pressure on the organisations seeking to establish customer loyalty
through relationship marketing to be keener in their service delivery and
branding operations. As Freund de Klumbis (2011) puts it, customers expect
their favourite hotels to be a manifestation of a ‘home away from home’. In
other words, they need to have the hotels services structured in a manner that
provides the unique experiences that are not normally associated with hotels.
Given that hotels are becoming more competitive in terms of the service offering,
focus is shifting towards how such services can be modified to provide unique
experiences that are hard to replicate among the competitors (Earnst &
Young, 2011).
As has been recorded above, customers are more attracted to the hotels
when they view their services or associated benefits as significant. To meet
this threshold, the businesses must make all efforts to ensure that they
understand their target clients and get to understand what kinds of offers they
consider substantial or what unique experiences would attract them to the
businesses with ease (Earnst & Young, 2011). The main focus should be the
provision of services with a level of uniqueness that leaves lasting
impressions on the customers who will in turn not only become loyal customers,
but will also act as referees and recommend the hotel to people in their social
networks (Kotler, 2006).
The relationship marketer should take cognisance of the fact that the
customers in contemporary times have a clearer understanding of what their
needs are and that they wouldn’t easily get satisfied unless they received the
kind of services they are looking for (Hu, Horng & Sun, 2008). This
assertion has been confirmed by several researchers who hold the opinion that
the consumers of hotel and hospitality industry products are no longer as
gullible and they tend to have a precise description of what they would like to
see. In fact, many studies that have been conducted in recent times indicate
that consumers tend to be more loyal to hotels which have been able to master
the art of innovation and the creation of unique services that have in most
cases left the consumers yearning for more of the services (Hu, Horng &
Sun, 2008). This may be the reason for the apparent trend to upgrade hotels
into lifestyle hotels with innovation being the main driver. Innovation is the
key to survival in today’s hotel and hospitality industry. Those who are able
to innovate are certain to have better results than those that do not; and this
is the reality in the industry today (Bouncken, 2005).
It must also be acknowledged that the concepts of the 7Ps of marketing
can no longer stand alone in ensuring the marketability of a hotel. They
provide an approach to marketing that disregards the relationship aspect hence
ignoring an avenue through which sustainability in business can be achieved
(Kotler, 2006). This is however not to imply that the 7ps concept is useless:
it simply means that they are not adequate in the current world and additional
themes such as relationship marketing should be looked into in depth.
Having established the current trends in the industry and highlighted
that innovation is the key to survival in the hotel industry in modern times,
it is important to illustrate how relationship marketing can help in boosting
innovation in hotels.
The most important component in any hotel when it comes to the refining
of product offering and the creation of desired experiences is the feedback
from the clients. Relationship marketing aims at turning normal and regular
customers into loyal ones who are keen to make observations and make
recommendations on what they would like to see in their favourite hotels
(Sheth, 2002). As has been observed earlier, relationship marketing aims at
ensuring improved quality of service and the meeting of client expectations and
this also is the main condition for enhancing meaningful innovations in the
industry. The relationship marketer must start by understanding the needs of
the target clients before coming up with the benefits that could help in
getting them to become loyal customers. Loyal customers are a resource to the
organisation and they tend to be willing to act as referees hence they provide
the independent opinion that most people could rely on when making their
purchasing decisions (Kotler, 2006).
3.0 Research Design and Methodology
This chapter
starts with a brief clarification of the methods that have been selected for
this research. Sampling procedures and sample size, questionnaire design, data
collection procedures, reliability, validity as well as statistical analysis
has been critically elaborated.
3.1 Research Design
In this
paper, the preliminary stages generally involved a critical study of the contemporary
relevant issues in order to fully figure out as well as identify the scope that
is required and the goals of the dissertation paper. A range of qualitative,
quantitative as well as mixed methods were evaluated for use. It is worth
noting that many studies mostly utilize qualitative and quantitative methods.
Saunders, Lewis and Thomhil (2000) suggested
that the link between a theory and research, ontological and epistemological
deliberations, qualitative and quantitative research should be considered as
two characteristic clusters of research strategy.
After making
various considerations, quantitative and qualitative methods were found to be
more appropriate for this study in the initial stages. It entailed a
qualitative survey in order to study relationship marketing tactics used in the
organizations in details in the verge of establishing their impacts. In the
second phase, questionnaires were administered on the respondents. According to
Thomhil (2000), an effective research design comprises of diverse structures
that are utilized in data collection and in analysis. Studies carried out by
Yin (1994) demonstrated that quantitative research methods are suitable for a
research which seeks to describe a phenomenon, circumstances, a problem or even
an event. They believed that since these methods are usually unstructured,
flexible and has untied methodology it develops a subjective situation which is
appropriate for such research. Wood (2008) also
argues that qualitative research via questionnaires is usually the least
probable to be biased and on the other hand, explanatory research via case
studies forms a very vital component of a qualitative research.
Yin (1994)
argued that quantitative method cannot be ignored in any study since it
emphasizes on quantification during data analysis and more so in situations
that entails a deductive method in order to link research with the theory,
especially when the theories are to be tested. The approach also integrates
norms and practices of the framework of natural science as well as positivism.
Quantitative method exemplifies social reality points of view as peripheral
factors. This means a comprehensive study should include both qualitative and
quantitative research method.
This paper
has therefore utilized the use of questionnaires as the major data collection
instruments for the study in the verge of ensuring that raw data that is
utilized in the analysis is up to date and reliable for use by the
practitioners who are interested in relationship marketing. However, the
research also recognized the importance of secondary data which was adequately
considered. The secondary data involved utilization of library materials such
as business reports. A case study of one hotel was utilized in order to enrich
the study’s data collection methods.
3.2 Data collection methods
3.2.1 Case study of Hotel Business Relationship marketing
Background
The following
is a case study of a hotel business relationship marketing that focus on a
Millennium Seoul Hilton Hotel in South Korea. The company is among the most
reputable companies in the hotel and destination industry. It was founded on December 14, 1997 through
an agreement that was between Dongwoo Development Company Limited (which was an
affiliate company of Daewoo International) and the Hilton International
Company. The hotel location faces Mt. Namsan views and it is usually packed
with clients throughout the four seasons of the year. The ownership of the
hotel was transferred to City Development Limited (CDL) in 1999 which is an
investment company that is based in Singapore.
The hotel services and amenities often guarantee its customers unique
stay and its location is convenient since it’s located in major business
districts (Tseng, 2007).
One of the
crucial elements of triumphant businesses is ensuring that the customer base in
a firm is stable (Morgan & Hunt, 1994). Businesses especially those
operating in the hotel and destination industry can attain stable customer base
by placing their focus on the loyal customers as well as acquisition of new
customers. Therefore, the hotel employs customer relationship principle in
order to elevate customer base. The hotel has staffs that spend ample time
trying to nurture relationships with its customers. The hotel managers have noted
that the major reason which makes customers to continue buying a product and
services is often due to the way they relate to the owners of the businesses
(N’Goala, 2007). Therefore, they usually refer to customers as friend as well
as business partners. From the hotel’s statistics, it has been shown that the
customers who have been consuming its products and services usually spend
thirty three more times than the customers who are new. In addition to this,
repeat customers usually have more than 100 greater referrals compared to the
non-customers. The hotel has also established that in order to influence a
potential customer to buy their products and services, it costs 6 times more
than when selling the products to the old customers. Therefore, when building,
nurturing as well as creating new customer relationship, the marketing budget
often shoots up compared to spending on gaining new customers. However, they
have acknowledged that building customer relationships has the benefit of
building trust, enhancing customers’ satisfaction as well as maintaining
customers (Leong, & Qing, 2006)
Relationship marketing
in the firm
The company
has been undertaking various relationship marketing strategies as part of the
business process in the verge of ensuring satisfaction and retention of the
customers in the business. In many
cases, the company has been undertaking actions that are transactional in
nature. As noted from the company, in cases where the industry has stiff competition
as well as aggravated customers’ expectations, it has been introducing several
relationship marketing strategies. Often, the company has frequently utilized
actions such as customer bases development, promotions using methods such as
greetings cards, organizing parties, carrying joint promotions which involve
other firms as well as tailoring service process in order to suite certain
customer segment (Peng, Leong & Wang, 2006).
Marketing objective
Millennium
Seoul Hilton Hotel has formulated various marketing objectives which entail
profit maximization, market share maximization, sales maximization, elevating
the image of the brand, increasing satisfaction of the customers, provision of
value services to customers as well as maintaining stable prices in order to
entice and maintain customers. Relationship marketing therefore becomes
paramount in enhancing these objectives in the verge of attracting and
maintaining customers as well as enhancing customers’ loyalty. Through CRM,
Millennium Seoul Hilton Hotel has been able to understand and manage their
customers better. The CRM utilized by the hotel assists in making sales
analysis, analyzing customer prolife, doing a campaign analysis, analyzing the
loyalty of the customers, assessing the profitability of the hotel as well as
carrying out customer contact analysis.
Relationship technology
Millennium
Seoul Hilton Hotel has been undertaking relationship technology in order to
address their customers in an enhanced manner.
This has been made possible through installation of Customer Relationship
Management (CRM) systems in the Hotel. Through CRM system, relationship
management in the hotel has helped in uncovering customer insights. It is worth
noting that relationship marketing often leads to creation of deeper customer
insights and according to O’Loughlin, Szmigin and Turnbull (2004), this is
helpful in the formulation of appropriate marketing plans. The company also
uses database marketing by utilizing databases in order to hold as well as
analyze information of the customer, therefore assisting them to create
marketing plans. By mining the data, the
hotel is able to uncover its relationships with the customer from the available
data. The use of advanced software and hardware in Millennium Seoul Hilton
Hotel has enabled extraction of customers’ insights which could not have been
possible without the modern technology.
Active
On-line Marketing through the Millennium Seoul Hilton Hotel’s Website
Millennium
Seoul Hilton Hotel introduced on-line marketing strategies in 2001 by
developing a consumer website. The website made use of the renowned chief
marketing principles of segmentation of the market, positioning, relationship
marketing as well as partnership. The hotel’s website offered practical
information for conventional segments, for instance leisure travellers,
customers who had gone to the country for business purposes, stopover
travellers, as well as family group tourists amongst other travel segments
headed for meetings, seminars and conventions as well as corporate incentive
travels. Hyperlinks to other service providers as well as sponsors, such as the
South Korea Information Centre, airlines and shopping malls were
well-established in the website. This indicated that there were a sturdy
partnership with government and players in the hotel and destination industry.
In order to enhance effective customer relationships, a multiplicity of
inquiries systems, suggestions systems, recommendations systems as well as
feedback systems were created in the website (N’Goala, 2007).
Changing the way brands and consumers interact
The hotel industry is often filled with various experts;
hence, with so many people offering advice to customers concerning their
products and services, it becomes hard for the customers to distinguish between
different products provided by the firms in the industry. Millennium Seoul Hilton Hotel
therefore has embarked on changing the way their brands and customers interact.
Through social media, the hotel has been able to give customers a voice to
choose the brand they want. This has been done in recognition that customers’
voice is very paramount in enhancing good relationship as well as enhancing
brand image of the company.
The
hotel has been focusing on the humanization of brands which entails being there
for customers whenever they experience problems with certain aspects of the
products and services. The hotel’s customer service has been shaping the basic
principles and this has been exhibited in the social media. Social media is
usually seen as an avenue of giving a voice to the customers in order to
understand what they think of it in order to enhance their brands. This is the
major reason why Millennium Seoul Hilton Hotel has been in the forefront in
enhancing an effective interaction between the customers and the brand through
the use of social media (Kim, Zhao and Yang, 2008).
Relationship marketing
strategies in Millennium Seoul Hilton Hotel
Relationship marketing has been seen to play a vital role in
the hotel industry in South Korea. An analysis of Millennium Seoul Hilton Hotel
revealed some best practices in the field of relationship marketing has been
utilized. Relationship
marketing being the process of magnetizing, maintaining as well as enhancing
relationships with people especially the customers is very paramount in
businesses (Peng, Leong & Wang, 2006). Contemporary research in the
marketing field illustrates that forming productive relationships with the
targeted customers paramount in order to enhance lasting success compared to
acquiring extensive public awareness within the target group.
It is worth noting that relationship marketing does not exist in isolation. The
hotel noted that even if they provide superior products services, they also
needed to back up relationship marketing in order to enhance mutually gainful
relationship.
Scholars have been arguing that there is no particular way
of putting into practice relationship marketing. For instance, some hotels
dedicated team of relationship marketing practitioners, while in other hotels;
relationship marketing is spearheaded by the entire sales team. Millennium Seoul Hilton Hotel
has explicit relationship marketing. It
uses quality of service as an avenue for building effective relationship and
this has been making the customer to continue going back to the hotel.
Relationship marketing programs Millennium Seoul Hilton Hotel
include giving preferential rates, implementing loyalty plans, regularity
marketing, tying-up with credit card companies, guest relationship plans,
having favourite partner plans as well as holding food festivals. Relationships
are also determined by rate fixing for the amount at which the rooms are rented
since the hotel gives variable rate which is pegged on the business. The hotel
goes an extra mile to build relationships. The hotel is also evaluating on the
probability of helping long-term customers to settle in a new home as well as
establishing relationships with its customers in the bargain (Wulf, Odekerken and Iacobucci, 2001).
There are other strategies that Millennium Seoul Hilton Hotel has
established. These include;
Making every customer
interaction count
The foremost strategy that Millennium Seoul Hilton Hotel recognizes is making
sure that every interaction with the customer counts. The hotel has trained its
staffs not to take any customer for granted since the statistics shows majority
of the new customers are often as a result of referrals. The hotel perceives
the interaction as a gift and hence it values it. To attain the interaction,
the hotel has set up various focus groups which comprises of the customers who
are loyal. The focus groups are utilized by the hotel as tools for getting into
the customers’ needs as well as understanding their needs in order to offer the
customers better products and services.
Following through on
commitments and claims about products or services
The hotel has
been very attentive to delivery of specific promises to customers during its
operations. This has been an effective means of services delivery; however, the
hotel noted that this could be in vain if the customers advance false claims
against the hotel’s products and services. Therefore, one of the most important
relationship strategies that it has embarked on is following through the
comments of the customers in the verge of solving issues in order to avoid such
false claims which have the effect of harming its credibility (O’Loughlin,
Szmigin, and Turnbull, 2004).
Building strong brand
loyalty
Millennium
Seoul Hilton Hotel recognizes the importance of building strong brand identity
so that it would be easier for its customers to distinguish its products and
services from those of its rivals. The hotel liaises with its customers in
coming up with a strong brand image therefore the customers feel they are a
part of the products. This is an effective relationship marketing strategy that
the hotel uses in order to retain customers on top of enhancing customers’
loyalty.
Rewarding loyal
customers
It is notable
that many businesses do not recognize the importance of rewarding the loyal
customers. They are often focused on looking for new customers. The uniqueness
of Millennium Seoul Hilton Hotel is noted in the way it focuses on the existing
customers in the verge of enhancing effective relationships. The hotel
introduced loyalty plans as an effective relationship marketing approach. By
appreciating the existing customers, the hotel has been able to straighten the
bonds with its customers and this act as the basis for customer referrals. By
thanking the customers, the hotel creates an effective brand image and this
connects it effectively with its customers.
Creation of a blog
concerning the Hotel’s business
In the
contemporary world of business, blogging has become an effective tool which
enhances interaction of the businesses with the customers (Peppers and Rogers,
2004; Stone, Woodcock and Machtynger, 2000). Millennium Seoul Hilton Hotel has
created a blog in its website in order to enhance effective communication. This
is one of the effective communication ways that the hotel uses to keep in touch
with its customers. The most important aspect if the blog is enhancing feedback
from the customers, therefore, this has enabled the hotel to build effective
relationship with its customers.
Major
reasons for formulating relationship marketing in Millennium Seoul Hilton Hotel
i.
Guiding moments of truth
The
hotel noted that direct contact or rather what is commonly known as service
encounter is very crucial in the service delivery. Initially, this was refereed
to as the moment of truth. This aspect often makes or breaks the perceptions
that consumers have concerning the service provider especially in a sensitive
industry. Therefore, Millennium Seoul Hilton Hotel had to put in place
relationship marketing in order to come out in what the firm called the moment
of truth. The reason for this is that the hotel would be able to continually
get engaged with its customers and this would enhance effective relationship
therefore changing the customers’ perception in favor of their products and
services.
ii.
Improvement of profitability
Millennium
Seoul Hilton Hotel had noted that effective relationship with the customers
significantly makes improvements on the quality as well as enhancing customers’
satisfaction. It has been proved that
the internal relationships with the workers of the hotel often foster enhanced
quality of goods and services. The hotel
has noted that effectual relationship with the customers has augmented better
understanding of the needs that customers have and this always put the hotel in
a position to understand the product and services it is supposed to avail to
its customer. The foremost advantage of enhancing quality and satisfaction is
that eventually the hotel is able to retain its customers as well as enjoy
increased profits. Therefore, the hotel has undertaken relationship marketing
an element of competitive marketing plan which create an avenue for attaining
higher profits. In circumstances where
switching costs are higher especially in cases where there is office automation
system, an aspect of relationship marketing has been helping the hotel to
achieve high profitability (Tseng, 2007).
- Fostering a Variety of Annual Festivals and Cultural Events
South Korea
citizens are proud of their colourful history as well as exceptional oriental
culture and more specifically related to the antique South Korean traditions.
It is worth noting that some Korean region’s most admired annual festivals as
well as events exemplify the real meaning of people’s culture. South Korean
representatives have effectively developed cultural festivals and events into
international, renowned must-see or rather must-do attractions, and this
provides an exceptional illustration of a victorious cultural tourism. Having
noted the importance of these cultural events, Millennium Seoul Hilton Hotel
has been participating in organizing various cultural events and extending
their services to the customers who often come to celebrate these events. This
is often in the verge of building effective relationships with the customers in
order to attract new customers as well as maintain the existing ones.
iv.
Building partnership
From
the literature, it has always been considered that relationship marketing often
builds as well as fosters partnership which is paramount for the marketing
requirements in any organization. Millennium Seoul Hilton Hotel has been in the
forefront in enhancing networks, individual relations as well as enhancing
collaboration among various parties in the verge of building effective
relationship marketing. The relations therefore have been helpful especially in
managing the external environment of the Hotel or rather what is referred to as
mega-marketing (Tseng, 2007).
v.
Addressing customers better
Relationship
technology has enabled Millennium Seoul Hilton Hotel marketers to comprehend as
well as address customer and their needs effectively. Through the use of Customer Relationship
Marketing (CRM) system that entails profile analysis, loyalty analysis,
campaign analysis, as well as profitability analysis, the hotel has been able
to uncover the insight of the customers. The hotel has also benefited from the
utilization of database management and direct marketing which are also
relationship technologies that its marketers have widely used to gain insights
from their customers’ data as well as make translations to those insights into
marketing communication that is highly personalized (Tian, Lai, and Daniel,
2008).
vi.
Catching Customers Attention
Millennium
Seoul Hilton Hotel understands that flourishing relationship marketing
encompasses at least two interested parties which have to come together, in
this case, the hotel and its customers. Therefore, the hotel lets customers to
know their objectives as well as functioning in order to enhance their
relations. This has been making it easier for the Hotel to implement other
competitive marketing approaches in a cost effective way since the customers
are tuned into an effective relationship.
- Building Trust with Customer
Trust is considered to be the leading moderator in the field
of relationship marketing. When implemented productively, it assists in
overcoming over doubts that the customers might be having in their mind. Millennium Seoul Hilton Hotel
understands that it’s through relationship marketing that it has been able to
effectively elevate the level of trust that their customers have in the
products and services it offers.
3.3 Data Collection Methods
3.3.1 Sampling and sample size
This study,
focused on hotel and destination sector in order to evaluate whether relationship
marketing tactics implemented by firms operating in the sector have various
impacts. The researcher chose to focus on hotel and destination sector since it
has potential for growth and high competition between firms that has called for
utilization of relationship marketing. Companies in this industry are striving
to attain a long-standing competitive advantage which is embedded on the
loyalty of their customers.
Saunders,
Lewis and Thomhil (2000) define population as the entire group which is focused
by the study. Sample on the other hand entails a section of the population
which is picked for examination. Usually, in quantitative approach, sampling
requirement is perpetually bumped into. Commonly, sampling is a major step in
the process of a study especially in the social survey study (Wood, 2008). As a
result, this study focused more on the perspectives of the customers. The
population was expected to engage persons who consume products and services
from the hotel and destination industry in the United Kingdom. It is however
worth mentioning that it was not possible for the researcher carrying out the
study to access a large number of the sample. Sample size is considered to be a
very significant aspect in any study. Saunders, Lewis and Thomhil (2000) argues that the decision concerning sample size is an
issue that requires consideration in regards to time management, cost
efficiency, precision as well as a set of other important factors. Time and
cost limitations resulted to selection of a study sample that constituted two
hundred and fifty customers from various hotel and destination firms. Primary
data was collected from players in the hotel and destination sector where a
sample size of 300 was arrived at. To ensure that cases of low questionnaire
turnover as well as the irrelevance of answers provided were pre-empted and
dealt with, 350 questionnaires were distributed.
In this
stage, the initial step was to clarify the sources of data effectively. Data
sources that were analyzed were primary and secondary. Primary sources
comprised of the information from the original sources and there were the most
preferred for use in this study.
Patterson and
Smith (2003) identified five common techniques for collection and analysis of
experiential data especially in research that focuses on business field. This
comprises of survey methods, experiments analyzing information from archives,
utilizing case studies as well as histories. This research used survey as the
chief method for undertaking the study. Usually, data are harmonized in a
survey to make comparison easier. It is however worth noting that it often
requires a significant amount of the researcher’s time.
The survey in
this study entailed a self-completed questionnaire which had both open and
closed ended questions. Self administered questionnaires are the most common
tools utilized in business research. The researcher formulated it in a manner
that was simple for the respondents to follow and more strikingly: the questionnaire
questions were very easy to follow and understand. It is worth mentioning that
dilemma concerning whether a researcher should use a structured or unstructured
questions cannot be avoided. Wood (2008) argues
that structured questions have several merits that include being simple to
process its answers, their ability to augment or rather to allow easy
comparability of the data as well as making it easy to demonstrate the
variables’ relationships. Unstructured questions on the other hand are very essential
since they allow the respondent to expresses their opinions in unrestricted
manner (Patterson and Smith, 2003). Due
to this, the study utilized unstructured questionnaires in order to get the
opinion of the customers which was the central focus. Generally, questionnaires
are utilized in most business research since they are easier to administer and
they collect major facts concerning the research topics on the ground (Yin,
1994).
Bearing in
mind that the study majorly focused on consumers in the verge of appreciating
their response on the values they acquire from the hotels that they favour, the
study utilized a mixed research method in the data collection. In order to
attain its purpose, questionnaires were administered to those customers who have
been consuming goods as well as services from various hotels.
Questionnaires
totalling to 350 were administered to the respondents who were mainly the
customers in various hotels. Out of these, 320 duly completed questionnaires
were collected. However, only 300 of these were found to be useful for the
purposes of data analysis in the research. A significant proportion of these
questionnaires (40%) were administered via face-to-face interactions with some
being delivered through friends and acquaintances. The major constructs that
the questionnaire questions sought to evaluate included service quality,
perception of price, brand image, trust and value offered. There were numerous
items that were developed on those constructs which have been widely utilized
in the previous studies. Those items were evaluated using a five-point response
scale on the Likert scale which ranged from strongly agree on a scale of 5 to
strongly disagree which was at the scale of 1.
The other section of the questionnaire comprised of unstructured
questions which the respondents filled in their individual responses.
Secondary
sources of data collection were not ignored in this study. They significantly
provided the research with researched data which were taken to be a major
ground for the direction that the new study would take. Data from secondary
sources also assisted the researcher to make comparisons in the analysis of the
data. Patterson and Smith (2003) made some
observations that researchers needed to make consideration for the alternatives
to questionnaires since these instruments do not offer a perfect research
activity. Due to this reason, secondary data sources that were utilized to
enrich this study included business reports and previous research reports. The
sources were paramount in gathering adequate information especially on the
relationship marketing topic so that the researcher could also recognize what
had been previously done on this field. This assisted the researcher to avoid
repetitions.
3.3.3 Reliability and validity
Reliability
Wood (2008) defines reliability as the consistency of certain
measures in any study. The three major aspects that are related to reliability
include internal reliability, steadiness and consistency of the
inter-observer. This study has focused
more on the internal reliability. Patterson and Smith (2003) argue that a
measure that comprises of various items in a measure whereby every answer to
each question is summed up to form a general score. The researcher has to make sure that all the
pointers are associated to one another. This study ensured that a higher level
of internal reliability ensued.
Validity
In a general
term, validity in research refers to the extent to which any measuring
instrument measures what it purports to measure. Oliver (1997) argued that the
most vital issue of validity of measures relates to whether the concept is
measured by its appropriate measures. There are various ways in which validity
is developed, this include face validity, validity of predicative, concurrent
validity construct validity as well as convergent validity. In this study,
construct validity was considered very useful. The study made some assumptions
from a relevant theory that was related to relationship marketing concept.
3.4 Data and Descriptive Analysis
The findings
in this study as provided by the questions from both the questionnaires
sessions were taken through an analysis that utilized SPSS (Statistical Package
for Social Sciences) software. This software was the best for use in this study
since it provided a wide range of abilities to have a detailed analysis that
was required in the entire study. Information from the respondents especially
the consumers and the hotel owners was entered into SPSS software in order to
generate the mode and mean which were used to make further generation of
findings in the study. The researcher later executed a thorough descriptive
analysis in order to facilitate interpretation of the information gathered
during the data collection. This study adopted a situational analysis as its
chief descriptive analysis technique in evaluation of the variables that were
obtained from the participants in the study. The reason for this is that there
were expectations that the findings were based on the descriptive observation
that had been established by the respondents. The data to be collected from the
hotels proprietors and the customers who were sampled was considered to contain
very informative data since they had relevant information concerning the
constructs that were being measured. The
study found out that the respondents’ perceptions on the impacts of
relationship marketing strategies especially on remaining loyal to a product
was influenced by the places where the respondents lives.
3.5 Data analysis and findings
3.5.1 Data reliability testing
The researcher found it useful to
conduct a reliability test in order to establish whether the study was
consistent. From all the eight constructs that were used in the research, it
was paramount to carry out their internal reliability as stipulated in the
research design section and the test in each of the constructs was carried out
with its different forms of items. The researcher utilized Cronbach’s alpha
which were computed for items intended for similar constructs. Usually, in the presence of multi-facets, this
alpha is usually low and in such a case, the alpha can either utilize factor
analysis or make considerations for utilization of correlation milieu of those
items in order to pick a subset with items that are inclined to be unidirectional.
For the purposes of establishing reliability and validity, 80 results were
considered. Out of the entire eighty items, seventy of them have an alpha that
is greater than 0.7 and this is a level that can be well thought-out to
acceptable in many studies that are business oriented. However, switching cost
was less than that alpha suggesting that reliability on the item was a bit
low. Table 3.0 below summarises the
test.
Constructs
|
Cronchach's alpha
|
Number of items
|
Service quality
|
0.791
|
60
|
Price Perception
|
0.766
|
50
|
Brand Image
|
0.798
|
30
|
Value offers
|
0.791
|
40
|
Trust
|
0.848
|
50
|
Satisfaction
|
0.808
|
40
|
Switching costs
|
0.486
|
50
|
Customer loyalty
|
0.850
|
60
|
Table generated through the Cronbach’s
alpha’s SPSS feature
The items used for the analysis are
as outlined
Since the switching costs alpha is
0.486 which is below the recommended level, it means that its internal
consistency measure is very little therefore raising an issue that some of the
items used may have been multi-dimensional during the study. To make sure that
separate items were selected in the verge of enhancing internal reliability, a
correlation milieu for the five items used in the concept of switching costs
was calculated as shown in the figure 3.1 below. There seems to lack
correlation between the five items in the switching cost construct as indicated
in the column S/C5. It therefore makes sense to eliminate S/C5 from this
analysis. Lack of correlation in switch in S/C5 could be as a result of failure
of the statement to consider the features of the switching costs. After S/C5
was eliminated, the alpha increased from 0.486 that was there previously to
0.529 which was still minimal.
SPSS used to generate the Pearson’s
correlation figures. The total number of items used was 50
3. 5.2 Empirical Data of Correlation Analysis
Subsequent to reliability test of the
items, the researcher found the need to average the scores of all the items in
every construct as the ultimate score that could be used for more analysis. The
following table (Table 3.2) demonstrated the means and the standard deviations
for the constructs that were used in the study. From the table, it is evident
that five of those eight constructs were within the half of middle scales which
is 3 in exception of Service Quality and Customer Loyalty. The standard deviation for the image of the
brand was 0.778 whereas the customer loyalty followed closely with 0.724. The
two levels are comparatively high compared to other constructs. The rest of the
constructs ranged between 0.60 to 0.997 and their mean was 0.665. The
researcher noted that many of the constructs in the analysis were negatively
skewed which could be attributed to variables being inter-correlated.
SPSS used to
generate the skewness test which measures the degree and direction of assymetry
The following table (Table 3.3) shows
the preliminary measures of the hypothesis that indicated in the study. The
variables in the table seem to be positively correlated and they were measured
at the level of 0.01 in exception of the variables in the values offer
constructs as well as switching costs. In the intervening time, the
correlations that exist between the switching cost and other variables seem to
be weak based on the correlation scale. The scale ranges from 0.182 to 0.45
whereas the correlations that exist between other items’ pairs ranges from
0.391 to 0.76 for the brand image and value offers respectively. On the basis
of pairs, correlations offer an estimate of relationship that exists between
diverse factors. In order to examine the structure of the assumptions in a more
technical manner, it is worth utilizing linear frameworks by accounting to the
effects the constructs used.
Table generated
using the t-test feature of SPSS
3.5.3 Relationship marketing factors influencing consumption decisions
There are
numerous relationship marketing aspects that have been considered as imperative
in influencing decision making of the consumers. These are the basis of
relationship marketing due to the fact that the chief intention of the hotels
is to influence customers’ buying decisions through relationship marketing.
Histogram generated using SPSS
The figure
shows that price quality of a service is the one that seems to significantly
influence customers’ buying decisions. From the above comparison, it can be
deduced that relationship marketing targeting to strengthen the ties between
the customers and the service providers cannot be effective if they provide low
quality services.
Pie chart generated using SPSS
The figure
above (figure 4.2) shows how price perception influences consumption decision.
Customers agreed that it is one of the major factors which are put into
consideration when making vacation decisions. Based on 10 point scale measure,
most customers rated the scale that was closer to ten. 10 was the highest scale
that showed the most considered factor. A scale of 1 demonstrated there was no
influence of the factor under consideration on the decisions of the consumers.
This concept was rated number two after quality of service in having influence
on decision making, and hence customers’ loyalty.
According to the findings, the
biggest number of respondents (59.1%) felt that price is often the most
significant factor they consider while making consumption decisions. They
linked price as the strongest factor which allows them to make decisions to
purchase certain products and services offered by the services providers. This
is the major reason for their choice of different hotels. These respondents
were of the view that mostly, the superiority of the services as well as
products is determined by the prices. This tallied with suggestions by Parsons
(2002), which shows
customers especially in the service industries attach the value of services to
prices offered by various organizations. The findings seemed to suggest that such
customers who attach prices to the value of services provided works on the
value perception. 17.4% of the respondents felt that price perception is a
strong element that determines how they make their consumption decisions.
Majority of the hotel owners did not however mention price as the strongest
factor that influences customers’ buying decisions. According to them, there
are other factors which seem to have more influence on the consumption
decisions. However, they sited price as the major factor that their
relationship marketing targets in the verge of winning customers. Only 1.4% of
the respondents did not seem to attach price factor as a consideration in their
decisions. 13.1% of the respondents felt that price perception had no influence
on their consumption. This group was of the view that price expectations varied
with the destinations that they are visiting. They seem to agree that there are
certain destinations that require businesses to offer services at high prices
whereas in other places, the prices are bound to be cheaper. Similar views were
shared by Sharp & Sharp (1997), who
suggested that customers make expectations when making travelling choices and
they expect certain hotels to offer certain levels of prices for products and
services which they believe do not vary significantly.
Histogram generated using SPSS
The above graph (Table 4.3) shows the
respondents views concerning quality as a factor that influence decision
making. It was noted that a significant number of the respondent were of the
view that service quality is the most considered element when deciding about
consumption. 62.7% of the respondent in this study considered quality of
service as a very strong influence in decision making. Majority of the
respondents would rather consider consuming services and products which are of
high services at higher prices than products that are cheaper and of low
quality. To them, price was not the issue; quality of services is all that
matters. It was discovered that the same
number of people were of the view that companies that offer services should try
and find out their taste and deliver high level of quality services. A great number still considered service quality
as a strong element that influences consumption decisions. This group
constituted 20.9% of the respondents in the study. They shared similar views
with those who had mentioned the factor to be a very strong component. On
discussing service quality issue, Lee, Lee, & Feick (2001) suggested that quality of services is considered the
most important factor by the service providers since it has an impact on
enhancing customer loyalty to the products which therefore translates to high
profits in a business. Most of the hotel owners’ respondents agreed that they
resort to relationship marketing in order to capture the attentions of the
customers as well as enhance long-term relationships which would benefit their
businesses. They therefore considered service quality improvement as a way of
building relationships with the customers.
7.8% of the respondent in this study considers service quality as a fair
factor that influences their decision making. Majority of them significantly
felt that service quality to some extent does influence their decision to
consume services provided by certain hotels. 8.7% of the respondents
significantly disputed that quality of service significantly influences their
decision making. According to their view, hotels and other firms in the
industry considers the fact that the services they provide suites their
customers in order to enhance business continuation.
Value offers
Pie chart generated using SPSS analysis
From the table above, (Table 4.4), it
is clear that a large number of the respondents agree that the value offers
significantly influences consumption decisions. 45.2 percent of the respondents
were of the view that values offers are aspects that have very strong influence
on consumption decision. 13.1% of them still ranked this factor as among those
elements that strongly determines whether consumers are going to buy certain
products or services. It is also worth noting that the number of those who felt
that these factors do not have a link to consumers’ decision making was also
high (25.5%). Those who said it is a fair determinant in consumption decision
making were 16.5% of the respondents.
3.5.4 Improvement of service due to Relationship Marketing
Pie chart generated using SPSS analysis
From the above figure (Figure 5.0),
it has been demonstrated that majority of the respondents (42%) strongly agree
that relationship marketing significantly improves performances in the hotel
and destination marketing. In addition to that, 27% of the respondents also
came to an agreement that relationship marketing essentially elevates the
performance of the hotel and destination industry. This is similar to the view
of Ke (2006) that relationship marketing influence customers through aspects such
as quality of services and changing brand image and are paramount in improving
the performance of the service industry. 18% of the respondents however said
that relationship marketing fairly improves business performance. They felt
that relationship marketing was just one of the many factors that lead to
business improvement; however, on its own, it would not entirely be attributed
to the performance. 13% of the respondents however did not agree that the
aspect has a connection with improvement of the business performance.
3.5.5 Challenges in relationship Marketing
There are various challenges that
were found to be major hindrance to Relationship Marketing. These challenges
have to do with the four variables that were under study; formulating brand
image, improving service quality, understanding price perception as well as
value offers. The table below summarises respondents’ view of the challenges
encountered;
Very strong (7-10)
|
Strong
(5-6)
|
Indifferent (3-4)
|
No challenge (1-2)
|
|
Price
|
58
|
20%
|
12%
|
10%%
|
Quality of
service
|
27%
|
31%
|
12%
|
30%
|
Brand image
|
37.1%
|
12.7%
|
26.7%
|
18.5%
|
Value
offers
|
45%%
|
16%%
|
18%
|
21%%
|
Figures and percentages generated
using the SPSS analytical tools
From the above table (table 6.0), it
can be clearly seen that formulating strategies on the price, value offers and
brand image seem to be considered among the greatest challenge with majority of
the respondents expressing them to have very strong challenge (45% and 39.1%
respectively). The respondents felt that these two factors were not easy to
determine since there are various factors that significantly affect them. Many
of the respondents did not consider service quality as a major challenge because
it is easily determined and improved through conducting various market researches
to know the particular needs of the customers. Formulating strategies on
improving brand image was considered to be a major hindrance owing to the fact
that business rivals sometimes comes up with counter strategy and sometimes
coming up with similar brand. Price formulation strategy was considered a major
hindrance by the respondents. Prices significantly influence financial bonds
that customers have with their hotels. Respondents felt that hotels changing
prices on the hotel services become difficult of the high competition that
exists in the industry. In many cases, a change in prices calls for counter –
strategies from other hotels in the industry which ends up in a cut – through competition.
3.6 Discussions of the findings
3.6.1 Service quality
It was revealed that customers usually expect
a particular level of quality of service from various luxury hotels. However,
it has not been met as expected. Customers have therefore regarded this as a
gap in service quality. The researcher tried to cast some light on the dark
side of relationship marketing putting into consideration the gaps in service
quality among the main dark sides in RM. The researcher felt that there exist
loopholes in various strategies set out to improve the relationship marketing
especially through offering quality of services, which may be considered to be
gaps in the plans. In the luxury hotels and destination firms’ segment, the
major component of the dark side to relationship marketing is often the gaps in
the quality service. The respondents felt that it was indeed imperative for the
hotels to find out about various customer needs that they feel should be met.
The respondents said that the hotels should conduct consumer research in order
to find out what they really want as well as advance some efforts towards
knowing customers’ expectations. Customers anticipate a certain level of
service quality from the hotels and they are willing to pay certain prices
attached to the expected service quality. From the findings, when customers
lack satisfaction on quality service level provided, they would then
unquestionably demand the hotel to explain why that level is not met.
It was found out that sometimes there exists a
gap in communication between the hotels which offers services and the customers
which often paves way for service gap. The respondents perspectives portrays
that luxury hotels often promise a particular service quality level via an
assortment of channels which include advertisements, publicity as well as
marketing. The reason for making that promise is to acquire more customers
which lead to attainment of high profits. This designates that customers are
the sources of businesses for the luxury hotels. Gaps in the quality service
often points out that there exists a gap in profits to a substantial degree.
According to the study, gaps in quality of services may occur as a result of
existence of a gap in customers’ perception management, perception of quality,
service delivery as well as a gap in marketing communication which are
attributes of relationship marketing. The permutation of such four gaps may
eventually lead to the superficial gap in the quality of service. This leads to
dissipation of customers’ loyalty to the products and services provided by the
hotels that fails to provide the expected service quality. The respondents in
the study were of the opinion that gaps would always exist as a result of the
hotel’s strategy to make promises that are more than what they are capable to
deliver as they compete towards building large customer base. Such an approach
may adversely affect the hotels’ business as well as reputation. The
respondents felt that it is essential for the luxury hotels promise only what
they are able to deliver. There is a respondent who said that if the hotel
cannot deliver the anticipated level of service quality, it would be better for
it not to offer services. It is imperative to note that sometimes service
quality gaps can arise but if they are negligible, the customers may fail to
notice them and therefore they would consider the well-built image. Respondents
felt that sometimes the gaps are as a result of human errors since humans make
mistakes at times. However, the degree of the mistakes is what matters.
Therefore, when the mistake occurs few times, customers may choose to ignore
them. The respondents felt that recurring mistakes are merely mischief. For
example, one of the respondents felt that if a hotel promises certain luxury
such as a swimming pool, it would be wrong for it to provide a pool that has a
size of a bathtub to its guests. The respondents agreed that gaps could at
times result from too many expectations from the hotel which might often be
misinterpreted and confused with service failure. It is true that some
customers can have a high anticipation from the hotel especially in terms of
service it may provide, which may not be appropriately met. However, if the
hotel is able to offer a consistent quality service, it may not be held
responsible on service failure grounds.
Therefore, service gaps arises due to
incapability of the hotel to meet the desired quality of service to its
esteemed customers due to two major causes; the failure of the hotel to deliver
the promise it has made to its customers as well as inability of the hotel to
offer expected quality of services. In the long-run, it would make no sense for
the hotel to have service gaps since it would not be able to remain loyal to
its customers. Therefore, quality of services is considered paramount to any
hotel business since it is a major attribute that enhances customers’
satisfaction in the verge of attaining and maintaining customers. This is the
major reason as to why hotels need to engage in relationship marketing in order
to understand the service quality needed by the customers in the verge of
maintaining effective business.
3.6.2 Price perception
The study has
found out that price perception remains a critical aspect that has been a focus
of relationship marketing. Businesses understand that relationship marketing
strategies are very important in enhancing business performance. Price
perception determines whether customers who are price conscious are going to
buy from a certain service provider or not. The findings from this research
shows that guest in the hotels and cruise services prefer certain service
providers due to the perception they had on the prices offered. It can therefore be pointed out that price
value determines whether the business will perform better or not. The findings
have shown that consumers’ buying decisions are in a major way influenced by
the perception in price. Therefore, if businesses would wish to improve their
performances; they need to put in mind consumer’s price perceptions aspect when
formulating relationship marketing strategies.
3.6.3 Impacts of RM on the quality of relationships
The study established that customers
usually prefer buying a product or a service more than they can trust. The
researcher felt that many of the previous studies have actually underscored that
an essential factor with far reaching effects on driving profitability of an
entity, enhancing enduring relationship with customers was trust.
The findings shows that higher
satisfaction level of the customers usually enables the customers to become
loyal to the entities that provide them with services and in return, those
firms are able to gain economic successes in turn of profitability, elevate
their market share as well as realize huge investment returns.
Satisfaction and trust factors in the
analysis have demonstrated figures greater than zero, therefore demonstrating
that a positive link exists between customers’ loyalty and their satisfaction
and more so, the trust level. This is very consistent with the assumptions that
were made by the study at the beginning.
Report shows that hotel proprietors
in the industry are very focused on establishing long-standing relationships
with their customers and they agreed that they had adopted various tactics that
included ensuring that they offer high quality services to their customers,
equal values in prices, enhancing excellent brand image as well as value
offers. The owners of the hotels agreed that such strategies have proved to
have improved the quality of their relationships with customers and as a
result, customers’ trust and loyalty has ensued.
3.6.4 Impact of RM on switching costs
Previously studies maintain that
switching costs are very vital factors that usually have enormous influence on
the loyalty of the customers. Nevertheless, this study has pragmatic
information that has shown that although switching costs seems to have a
correlation with the loyalty of the customers, the connection lessens with the
presence of other aspects such as satisfaction and trust in the hotel
industries. The research also establishes that it is not easy for the business
entities in the hotel and destination industry to influence non monetary
factors in order to elevate switching costs which would ensure that customer remains
loyal to a particular service provider.
The United Kingdom is a high wealthy
nation therefore, the transactional cost on switching from one service provider
to another and the impacts of switching costs on the loyalty of the customers
seem unclear. However, it is worth appreciating that the situation is different
from the studies that are carried out in the developing nations whereby,
research shows that the switching costs in those nations usually cover the
impacts of the loyalty of the customers as compared to the satisfaction of the
customers. In addition to that, the findings show that price perception has a
direct influence on the customer satisfaction, their repurchase objectives as
well as the possibility of the customer referring others to their preferred
hotels. From the information collected
from the customers in this research, it has become apparent that price acts as
cues for the customers to make decisions concerning the quality of a certain
offer. This exemplifies that customers in the hotel and industry have high
expectancies towards the quality of services.
3.6.5 Price perception’s impacts
This study has provided evidence
showing that price perception has a direct influence on the purchasing
behaviours of the customers. The findings tallied with the one provided by the
customers in the study. This can be construed to mean that hotel and
destination line companies’ customers would choose not to buy from certain
hotel entities in case their value perceptions seem to be negative. It was noted
that many hotels engage in the price war in order to gain more customers. Some
hotels were found to use pricing strategies as a way of enticing their
customers to buy from them. From the
findings of this study, the hotel owners agreed that relationship marketing has
had a huge impact on influencing customers to buy from them. They felt that the
hotels have to consider pricing strategies as a way of enticing more customers
which has a far-reaching effect on the customer trust as well as satisfaction.
3.6.6 Challenges facing relationship marketing
This study significantly outlined various challenges that
face relationship marketing. It appeared that formulating strategies that would
cater for the price anticipation of the customers, effective image brand, value
offers as well as quality of services provided by the hotels is a tedious job.
These are very crucial relationship marketing aspects that businesses should
put into consideration when coming up with effective relationship marketing
strategies.
3.7 Research Limitations and Suggestions for Future Research
This study has examined the impact of relationship marketing
on hotel and destination industry. Although the study has provided substantive
elaborations, there still exist some limitations, which significantly call for
future research.
This study has employed study stratified sampling technique
in the collection of research data, since it was practically impractical to
collect data from the whole population. It would be imperative for other
studies to be conducted which would focus on other valid techniques, for
instance, simple random technique. External validity element is yet another
critical issue that poses as a major limitation to this study. For instance,
lack of ability to generalize the findings in the whole hotel and destination
industry seems to be a validity issue. The findings that are discussed as well
as their implications have been obtained from a particular study which
evaluated several aspects of relationship marketing in the verge of obtaining
information concerning their implication on the industry. Therefore, there is need for future researchers
to exercise caution especially when generalizing the findings as well as
discussions to the whole hotel and destination industry.
3.8 Ethical Issues
Throughout
the study, the researcher highly observed various ethical issues as well as
adhering to the code of conducts essential in effective research. Among the key
aspects observed was maintaining confidentiality of respondents’ information. Before
the beginning of the study, clients were assured of confidentiality of their
information which was observed throughout the study. In cases where deceptions
occurred in order to get certain information, the respondents were later
notified in order to elaborate to them the importance of the information
provided in the study.
4.0 Recommendations
This study is very significant since
it has evaluated various aspects that revolve around relationship marketing
aspect with the view of finding out whether the field enhances business
performances. From the findings, several points were noted which calls for
recommendations as follows;
i.
Hotel
and destination industry firms should focus on improvement of quality of
services in order to attract new customers as well as retaining the already
existing ones. From the findings, it became clear that customers make decision
concerning what to consume on the basis of quality of services provided.
Therefore, although relationship marketing targets customer satisfaction and
enhancing customer loyalty, it may not be possible if quality services are not
provided.
ii.
To
enhance performance of the company through relationship marketing, it would be
appropriate for the company to ensure they come up with value offers strategy
so that they would effectively build trust in their customers.
iii.
Hotel
and destination industry faces fierce competition and it would be appropriate
if the firms try to understand various important aspects such as price
perception concerning their services and products. These are the only avenues
where the companies may be able to strategize effectively on the best
relationship tactics that would improve performance of their businesses.
iv.
It
is imperative for the hotels to aim at attaining higher satisfaction levels
which are attributed to consumer loyalty.
5.0 Conclusion
Retention of customers is considered
a very paramount factor in hotel and destination industry and it is one of the
essential objectives of relationship marketing. Tactics utilized in relationship
marketing are often considered paramount in the verge of building enduring
relationships with the customers with an aim of attaining shared benefits of
all the parties that are involved. Even if relationship marketing has been
actively utilised in the hotel and destination industry, there is evidence to
show that customers are inclined to switch to competitors.
This study had been conducted to
establish the impacts that relationship market tactics have on the hotel and
destination industry. The tactics that were being examined includes value that
is offered, image of the brand, service quality as well as the price
perception. Surprisingly, all these tactics were found useful in influencing
customers’ loyalty on the products and services offered by the preferred
service providers. The findings from the study are extensively summarised as
follows:
i.
There
are four relationship tactics that are used to influence the quality of
relationships in a constructive way by the firms operating in the hotels and
destination industry. The four of them include value offers strategies,
perception on the prices, improving the image of the brand and improving the
quality of the services. Among those four strategies, value offers demonstrated
the weakest link with the trust of the customers as well as in relations to
their customers’ satisfaction. The implications of this were that the value
addition activities that have been put into operations by the hotels including
giving small gifts seem to have ineffectively enticed the customers. The
quality of relationships between the hotels and the customers which was being
measured using two aspects, satisfaction and trust seem to be affirmatively
related to customers’ loyalty. Results from the findings exhibits practical
evidence that supports the prevailing presumptions that elevated levels of
trust as well as satisfaction which are perceived by the customers lead to
higher customer loyalty levels.
ii.
It
is surprising that switching costs demonstrated least correlation with loyalty of
the customers and their trust as well as satisfaction. This is in contrast with
the previous literature from the studies that have been carried out in many
other industries. In this research, switching costs have proved to have little
to offer in influencing the loyalty of the customers in the hotel and
destination industry. This is attributed to the fact that customers consuming
services provided by the firms in this industry do not consider switching costs
when making their consumption decisions.
iii.
Tactics
on improving the brand image has a direct link to customers loyalty
irrespective of whether there is prevailing influence of intervening factors
such as trust and satisfaction or not.
Therefore, it can be argued that brand image seems to be an autonomous
variable in determining the loyalty of the customers.
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