Study of Relationship Marketing and Its Impact on Consumer Behavior

Relationship Marketing and Its Impact on Consumer Behavior

Research Questions & Sub-questions

Research Design & Methodology

Organization of Study

Secondary Research

This report explores Customer Relationship management. In [articular the investigation seeks to understand the impact of relationship Marketing and Its Impact on Consumer Behavior. This issue has proven problematic for businesses because many do not have the ability to form effective relationships with customers. This deficiency costs companies customers and profits. The report sought to present effective ways to better customer relations at the business level. More specifically, the investigation saught to determine how businesses can determine what their customers really need and how will meeting these needs affect the customers' behavior? A review of the literature suggest the customers are effected by the attitudes of employees that they come into contact with. The attitude of a saleclerk can often have an impact on a customers decision to do business with a certain company. In addition, there are a host of other things that impact customer relations.such as the quality of the product, the price and the company's ability to meet the needs of the customer. In addition, the report focuses on the development of a Customer Relationship Management model. The report asserts that customer Relationship Management (CRM) is a field of management that concerns itself with the interaction between customers and businesses. Customer relationship management is an essential component in any successful firm. The report also discusses an adaptive approach to the implementation of a Customer relationship management system. The report concludes that it would be advantageous of businesses to develop a plan that incorporates a CRM model using an adaptive approach.

Chapter One

Introduction

Context of the Problem

Relationship Marketing and Its Impact on Consumer Behavior is qn issue that has existed for many years, and it appears as though it will remain with the business world for some time to come. This problem stems from the inability of many businesses to relate to their customers, and therefore many customers choose not to return to a business. Therefore, businesses must develop tactics that will encourage customers to return to the business. Because the problem extends to so many businesses and walks of life it is, contextually, quite large.

Early on, there were fewer merchants, and people that needed goods and services bought from those merchants because there were not any other alternatives. Currently, there are literally hundreds of choices for some items, and customers can make better decisions about where they want to purchase a product, based on various factors such as price, treatment, etc. This is beneficial for customers, but it has proven problematic for businesses, as many of them can not relate to current or future customers.

Because of the number of businesses today and the increasing consumer demand for so many products, the context of the problem is important, and vast. Customers are able to choose from such a wide array of products and services that fewer of them are interested in developing any kind of relationship with the businesses. Still others are left feeling as though the business has no interest in developing a relationship with them. In either case, it harms the businesses, and new schemas must be developed to change it if businesses want to keep customers coming back.

Statement of the Problem

The problem, specifically, is that businesses are not developing good relationships with their customers. They have been ineffective in ensuring that customers are happy and that those same customers will return to shop with them. Naturally, this is a great concern for the businesses, because it is often harder to get new customers than to keep the ones that they have. It is also more expensive in most cases.

For large chain stores, retaining customers is not as significant, because there are always more customers coming in to replace those that choose not to return. However, for smaller, or more select businesses, losing a customer to a competitor can mean losing a great deal of money. Businesses do not want this, but in the past businesses have done a poor job at determining what a customer needs in order to get him or her to continue patronizing a particular store.

Customers who feel appreciated are more likely to return to a particular store, and when they are treated poorly or indifferently, they are less likely to return. This is a simple unpleasant fact, and applies to almost everyone. However, what customers think and feel has quite often been overlooked by many businesses, and it is only recently that many of these same businesses are starting to look for new ways of understanding what customers want and need. The way that customers are treated by a business, and the relationship that the business has with the customers appears to affect the customer's behavior, and this can be very significant for a business that needs to keep its customers coming back.

Despite the fact that many businesses are aware that customer retention and customer decisions can be affected by the relationship between the customer and the business, few businesses actually devote much time to understanding what their customers need. Naturally, this will not work for all customers, as there will always be some who shop at a particular store only when it has a good sale, or buys a particular brand on someone else's recommendation, etc. However, most customers can be retained if businesses develop an understanding of what customers need when they enter the business and then making sure that they get it. This is not just true for the product or service, but for the treatment that they receive as well, as this is very important to many people.

Understanding customer needs seems to be a huge part of the problem. Because most customers enter a shop, get what they need, and leave, it is difficult to get them to talk about what else they might want. Asking people to take surveys or answer questions while they are trying to purchase products and then return to their daily lives, is often difficult and many people refuse. This makes the issue more problematic because getting the answers that businesses need requires talking to these customers and finding out what a particular business is doing right or wrong so that changes can be made. Until enough customers are surveyed so that a well-rounded picture of what they need can be developed, businesses will continue to struggle with the problem of how to keep the customers. In addition, they have the added responsibility of continuing to build relationships with new customers so that their base of shoppers will increase, thus increasing their profits and what they are able to do for the customers that they have.

Research Question and Sub-questions

It is important, at this point, to look at the question that will be asked in the study. Without a clear research question, there is no real way to determine what a study is for or to ensure that anything gets accomplished as the study is completed. For purposes of this study, there will be one main research question and some sub-questions that will also need to be answered.

The research question for this study is:

How can businesses determine what their customers really need and how will meeting these needs affect the customers' behavior?

There are also sub-questions that will be answered, as the research question itself could lend itself to many different interpretations and opinions. The sub-questions that will be looked at in this study are as follows:

What is the best way for businesses to determine what their customers really want from them?

How can these wants be turned into policies that will keep everyone, both employees and customers, happy?

What will the business receive in return for meeting the needs of the customers who have expressed their opinions on the issue?

How will meeting the needs of the customers change the behavior that those customers have toward a particular business?

These are not the only questions that could be determined by this study. However, they are the main issues that should be investigated. Realizing that customer behavior will be changed because of the actions of a business is only common sense, but determining what changes a business should make and why, is still met with difficulty in the minds of many individuals.

By looking at the research question and sub-questions, and by attempting to answer them as realistically as possible based on the literature review, one can get a better understanding of just how difficult it is for a business to get the answers it needs when it comes to what to do to retain customers. One can also develop a more thorough understanding of how customers react to the changes and how developing a relationship with a customer will lead to a change in customer behavior.

Significance of the Study

This study has a strong significance for many. Not only are businesses affected by what customers do, but also customers are affected by what businesses do. Because they have such a strong relationship with each other, they must be aware of one other when involved in transactions. Wants and needs of both parties are significant to the other, and even though there will always be customers who just want to buy and leave, and businesses who just want money, most of the relationships that develop between customers and businesses are stronger and more important than that.

The behavior of consumers is something that many businesses, especially the larger ones, have been studying for quite some time, because they feel that there is much to be learned from consumer spending patterns. It would appear that the way consumers feel when they are shopping at a particular place has much to do with why they return. Price is, of course, important to many, but many consumers would gladly pay a little more for an item if they have a good experience at the store. Many customers want to be pampered. They want the clerk to know their name, and they want to feel as though they matter for more than just the money that they will spend that day.

It is not always easy to make customers feel appreciated, but simple things such as friendly clerks who will thank a person by name if they see it on a check or credit card often goes a long way toward establishing some kind of relationship. Society in general is becoming increasingly automated. With increased automation comes convenience but also annoyances and problems. The personal relationships that many businesses used to have with their customers are a thing of the past and have been replaced with ATMs, automated phone services, and self-checkout lines at department stores.

Naturally, many of these items are very convenient for the businesses, and some are even more convenient for the consumers, but they still do not allow for the human interaction that so many people actually need. With convenience and automation comes isolation, and human beings are generally social creatures by nature. In general, they like the company of others and the interaction that comes from social encounters. These are the things that they do not get when they use an ATM or call a business and get an automated recording. Businesses have tried very hard to make their customers lives easier and more convenient, but they have also sacrificed the simple pleasure of talking with and smiling at another person, which may brighten the day of many people.

Research Design and Methodology

The research design and methodology for this study will be relatively simple. A review of the literature will be conducted in Chapter two. From there, the information in the literature will be analyzed. Since this information comes from other scholarly sources, it can be assumed that the data in it is valid and reliable, and that all limitations have been clearly stated. This literature review will then be used to determine what else should be done in this field and to answer the research question and sub-questions that were created and discussed earlier in this chapter.

In addition to the review of the literature, some primary research must also be conducted. This involves a survey that will be sent to stores in the local area and a survey that will be taken at random of individuals that shop at these stores. The surveys for the businesses will be mailed to their owners or managers with an explanation of what is needed for the study, why it is being done, how to fill out the survey, and where to return it. A prepared envelope will be included to return the completed survey. It is understood that not all owners and managers of stores that receive these surveys will fill them out and return them. Many may be too busy, and some simply will not participate in this kind of event. However, since retaining customers and building relationships with them have become so important recently, it is likely that at least 1/2 of those surveyed will respond.

As for the consumer side of the survey, mailing surveys out randomly would become expensive, and so the surveys will be filled out in person at various stores. Many people are too busy to stop and fill out a survey when they are arriving to shop. However, there will always be people who are not in a hurry, or who are concerned enough about customer service, prices, and other issues that they will take the time to complete the survey. The surveys will be simple and to the point, but will leave space for comments in case the consumer has strong opinions on the issue that he or she needs to express.

When the answers from these surveys are coupled with the literature review information, many conclusions can be drawn based on how consumers feel regarding the strength of the relationship that they have with various businesses. This can help not only the researcher and others who study this issue but the businesses as well, since some of the customers' thoughts and ideas might be important and worthy of consideration. If a business sees that a large number of customers are asking for something specific, the business may make more of an effort to implement their requests. This will help build a stronger relationship with those customers and their family and friends.

Ideally, a larger number of customers and stores would be surveyed, but there are time and financial constraints that prohibit that at this point. Regardless of this, however, some idea of what customers need and what businesses are giving them can be obtained through this study. In addition, it will help to pave the way for other studies in the future where more thorough research might be done. This, in turn, could lead to changes being made in many businesses so that consumer relationships are stronger and their behavior is changed. By marketing these business changes, consumers will be drawn to the store, and many of them may return if they find that they have had a pleasant experience.

Organization of the Study

The organization of the study is also very simple. This first chapter provided all of the background based on the information needed to conduct the research. It dealt with the context, the actual problem, the significance of that problem, the research questions, and the methodology that would be used. A tentative reference list follows, and rounds out the first chapter. Chapter Two will deal with the literature review. Reviewing literature is very important to any study because it details what has happened in the past and what kinds of studies have already been conducted. By being aware of this information, the researcher can be more thorough in what is currently being studied. It also avoids going back and studying something that has already been thoroughly dealt with.

Literature reviews also provide insight for the researcher in that they sometimes raise new opinions and questions that were previously overlooked but need to be studied. These questions that need more attention can lead to new areas of inquiry and provide more help to businesses that appear to be struggling customer relations. In addition, it will allow the business to, keep the customers that they already have, and generally ensure that they are the type of company that is customer focused. If the business can figure out the factors that contribute to customer satisfaction it will have a winning formula and will have a strong advantage over much of its competition.

Reference List

The following references, also listed in the 'Works Cited' page, will be utilized in this particular study. They will be seen throughout Chapter 2, as they will constitute the bulk of information that has been collected on this topic. They are important research tools because they provide insight into the background of the study and some of the issues of the past. From that vantage point, one can look at these problems more realistically and help to determine whether any of them have been solved by the studies that have gone before. Also determined by this type of study can be what should be done in the future in order to help the problem get better and help these businesses make the most of the relationships that they have developed with their customers.

Other references may be needed later, but the references listed here are the ones that are being used now and will continue to be used, even if more are included. These resources are used because they provide the best kind of information into this topic and are understandable and interesting. References must not only provide important information, but must also show there is much to be learned about a topic that is interesting and worthwhile.

Achrol, R. & Stern, L.W. "Environmental Determinants of Decision Making Uncertainty in Marketing Channels." Journal of Marketing Research, 25, 1988: 36-50.

Anderson, E. & Weitz, B.A. "The Use of Pledges to Build and Sustain Commitment in Distribution Channels." Journal of Marketing Research, 29, 1992: 18-34.

Andersson, P. "Analyzing Distribution Channel Dynamics: Loose and Tight Coupling in Distribution Networks." European Journal of Marketing, 26, 1992: 47-68.

Assael, H. "Consumer Behavior and Marketing Action." Third Edition, Boston, MA: PWS-Kent 1987.

Bleeke, J. & Ernst, D. "Collaborating to Compete." New York, USA: John Wiley and Sons 1993.

Cavusgil, S.T., Zou, S. & Naidu, G.M. "Product and Promotion Adaptation in Export Ventures: An Empirical Investigation." Journal of International Business Studies, 24, 1993: 479-506.

Clark, T. "International Marketing and National Character: A Review and Proposal for an Integrative Theory." Journal of Marketing, 54, 4, 1990: 66-79.

De Vaus, D.A. "Surveys in Social Research." Second Edition, London, UK: Unwin Hyman 1990.

Doney, P.M. & Cannon, J.P. "An Examination of the Nature of Trust in Buyer-Seller Relationships." Journal of Marketing, 61, 1997: 35-51.

Dunning, J.H. "The Globalization of Business." London, UK: Routledge 1993.

Dwyer, F.R., Schurr, P.H. & Oh, S. "Developing Buyer-Seller Relationships." Journal of Marketing, 51, 1987: 11-27.

Ganesan, S. "Determinants of Long-Term Orientation in Buyer-Seller Relationships." Journal of Marketing, 58, 1994: 1-19.

Gundlach, G.T., Achrol, R.S. & Mentzer, J.J. "The Structure of Commitment in Exchange." Journal of Marketing, 59, 1995: 78-92.

Hamzah-Sendut, T.S.D., Madsen, J. & Thong, G.T.S. "Management in a Plural Society." Singapore: Longman 1990.

Hoelter, J.W. "The Analysis of Covariance Structures: Goodness-of-Fit Indices." Sociological Methods and Research, 11, 1983: 325-344.

John, G. "An Empirical Investigation of some Antecedents of Opportunism in a Marketing Channel." Journal of Marketing Research, 21, 1984: 278- 289.

John, G. & Weitz, B.A. "Forward Integration into Distribution: Empirical Test of Transaction Cost Analysis." Journal of Law, Economics and Organization, 4, 1988: 121-139.

Johnson, D.W., Johnson, R.T. & Maruyama, G. "Interdependence and Interpersonal Attraction Among Heterogeneous and Homogeneous Individuals: A Theoretical Formulation and a Meta-Analysis of the Research." Review of Educational Research, 53, 1983: 5-54.

Kale, S.H. & Barnes, J.W. "Understanding the Domain of Cross-National Buyer-Seller Interactions." Journal of International Business Studies, 23, 1992: 101-132.

Kalwani, M.U. & Narayandas, N. "Long-Term Manufacturer-Supplier Relationships: Do They Pay Off for Supplier Firms?" Journal of Marketing, 59, 1995: 1-16.

Chapter Two

Secondary Research

This chapter will provide the research that was collected using the tentative reference list discussed at the end of Chapter 1. It is possible that more references will need to be added later, but these references appear to be most relevant. They also appear to provide the most information about this topic while still ensuring that enough background information is provided to give the reader a thorough understanding of the past, the ideas of the present, and the plans for the future.

The idea of relationship marketing appears to be very popular now, and it has been for several years. Companies talk of how well they are meeting customer needs and responding to what consumers' want. In addition, technology is allowing for new and better ways of doing things (Gundlach, Achrol, & Mentzer, 1995). However, many of the relationships that businesses have with their customers are actually rather troubled and complex, and it is important to understand why this is the case (Gundlach, Achrol, & Mentzer, 1995).

For the last few years, relationship marketing has been very popular. Many managers talk about how important it is to businesses (Gundlach, Achrol, & Mentzer, 1995). Many companies also talk about how they are creating new and different ways to make relationship marketing even better (Gundlach, Achrol, & Mentzer, 1995). Those who look at it from an academic perspective also talk about the merits of consumer relations and how significant it in the business world (Gundlach, Achrol, & Mentzer, 1995). Companies are creating new and efficient ways that help to not only understand but to respond to the preferences and needs that many of their customers have (Gundlach, Achrol, & Mentzer, 1995).

This knowledge allows these companies to create connections with their new customers and that are more meaningful than the ones they have had in the past (Gundlach, Achrol, & Mentzer, 1995). By increasing the revenue that the company makes and reducing the costs that they must have to keep their customers these stronger connections promise a benefit to the bottom line of any company (Gundlach, Achrol, & Mentzer, 1995). This is all extremely important and worthwhile, but by looking closely at this new idea of relationship marketing and how well it isworking it appears that the relationships that consumers and companies have with each other are often very troubled (Gundlach, Achrol, & Mentzer, 1995).

When individuals are asked about their consumer preferences and how they feel about the businesses that they deal with there is very little praise. In addition many are not enthusiastic about the businesses that consider themselves corporate collaborates with the public (Gundlach, Achrol, & Mentzer, 1995). Instead of praise for the busineses, most tell tales of insensitive, confusing, stressful, and other manipulative issues in the marketplace. This often makes these individuals feel as though they are trapped and victimized by larger companies (Gundlach, Achrol, & Mentzer, 1995). It would appear that many companies are delighted by learning more about their customers and providing services and features to these individuals (Gundlach, Achrol, & Mentzer, 1995). Customers, however, do not take any delight or joy in the way they are treated (Gundlach, Achrol, & Mentzer, 1995). Instead, they simply go through and cope with the treatment (Gundlach, Achrol, & Mentzer, 1995).

Salesclerks often have many questions for customers even if they buy something small. This is especially true if the clerks have been required by their companies to conduct any kind of survey regarding who is purchasing their products and what they planned to do with them (Gundlach, Achrol, & Mentzer, 1995). The salesclerks that do not ask questions are quite often sullen and seem as though they do not enjoy their jobs. Another difficulty that many of these customers face is that there are so many products available on store shelves, especially in the grocery store, that it becomes difficult to make a decision about what is the best deal for the best price (Gundlach, Achrol, & Mentzer, 1995).