THE IMPACT OF RELATIONSHIP MARKETING IN THE TELECOMMUNICATION INDUSTRY
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In today’s market, the mobile technology has been extremely competitive and
service providers are moving aggressively to attract versatile users by offering some meaningful attractive promotions
and services. Consumers of telecommunications products and services in Nigeria are varied and their tastes, needs
and expectations are also varied. According to Roger, (2010), there are five global system for mobile communication
(GSM) network and 13 code division multiple access (CDMA)-based network operatorsin Nigeria. The GSM operators include Airtel, MTN, MTEL, Globacom, and Etisalat while CDMA network operators include Multilinks,
Starcomms, O’net, and Visafone amongst others.
The Telecommunication industry is considered to be one of the largest and most powerful industries in the global
market, vis-a-vis technological advancement, with its operations covering every corner of the globe and with the world
heavily dependent on communication. Today, activities in the telecommunication industry are composed of various
procedures including service provision, sales of products like Handsets, Subscriber Identity Module (SIM) packs and
other communications gadgets.
The concept of relationship marketing was introduced to service marketing in 1983 by Leonard L. Berry. It is a
strategy that mainly focuses on developing-maintaining-enhancing. In other words, it is designed with the aim of
developing relationship with existing and potential customers, maintaining these relationships by meeting the
expectation of customers from time to time and enhancing the value to customers by providing high quality product at
reasonable prices over the time. The benefits relationship marketing offers has helped it gain popularity in the recent
years. Companies who gain competitive edge are using it as a competitive marketing weapon. Companies are now
using it as a tool of value creation and in this process customers are also encouraged to give their views on critical
decision issues like product designing, pricing, distribution etc. companies are looking forward to customers as their
co-producer and co-designer Bhatia (2015) .
Relationship marketing is very important in this modern world, since consumers all around the world are sophisticated
and have good amount of knowledge and seeks better offers. So, this factor force marketers to shift from push
marketing to pull marketing. Organizations are now more focusing on mass mediums and relationship marketing
these days. Building relationship with customer was basic function for an organization during last few years. Building
relationship is the only way that an organization can achieve a permanent competitive advantage and which leads to
survival and long term growth in the market (Jorgensen, 2001). The transition from a traditional economy and intense
competition in modern dimensions, customer as the person who organization is willing to create values that influence
on their behavior, as main element and the center of all activities of organizations .So that in terms of
competitiveness, viability and survival of organizations in identifying and attracting new customers and retaining
existing customers is expressed (Gilaninia et al, 2011). On the other hand improving communication, the evolution of
the information age and the advent of new communication tools, organizations have made facing with a host of
different customers, and many choices that as results additional providing customers and market instability (Rahbarinia, 2011).
Loyalty is a deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite
there are situational influence and marketing efforts having the potential to cause switching behavior. Kotler defined
the term loyalty as a lasting commitment to family, friends or country and believes that it initially entered to the
marketing literature by emphasizing on brand loyalty (Ranjbaryan & Barari, 2009). One of the basic assumptions in
relationship marketing is that long-term loyal customers are profitable.
There is undoubtedly a growing interest in the subject of relationship marketing. The strong rivalry characterizing
today’s business environment has resulted to the building of stronger firm-customer relationships (Ndubisi, 2007).
Ndubisi (2007) reported that more and more firms are capitalizing on strong firm-customer relationship to gain
invaluable information on how best to serve customers and keep them from defecting to competing brands. Hence,
customer relationship building creates mutual rewards which benefit both the firm and the customer.
1.2 Statement of the Problem
Variety of relationship marketing components has become the market norm, leading to strong scramble for market
share. Customers are indeed benefiting from the numerous promos, price war and enticing customer services. They
are being bombarded by a number of marketing activities and aggressive sales tactics such as doorstep selling, radio
advertisement, TV advertisement, internet promotion and other customer loyalty programs. However, a lot of money
have being spent and continue to be spent on these tactics which has led some of the telecommunication operators
to be struggling to meet their core objective of increasing shareholders’ fund (Asare, 2008).
However consumers would most likely behave differently toward the various mobile operators’ products and services,
hence, achieving optimum consumers’ satisfaction is of paramount interest to the mobile service providers.
Evaluating the perception of a mobile user in a highly competitive tele-communication market is very crucial.
There is undoubtedly a growing interest in the subject of relationship marketing. The strong rivalry characterizing
today’s business environment has resulted to the building of stronger firm-customer relationships (Ndubisi, 2007).
Ndubisi (2007) reported that more and more firms are capitalizing on strong firm-customer relationship to gain
invaluable information on how best to serve customers and keep them from defecting to competing brands. Hence,
customer relationship building creates mutual rewards which benefit both the firm and the customer. By building
relationship with customers, an organization can also gain quality sources of marketing intelligence for better planning
of marketing strategy.
It is important, therefore, to empirically examine the actual impact of relationship marketing on customer loyalty. Such
understanding will assist in better management of firm-customer relationship and in achieving higher level of loyalty among customers.
1.3 Research questions
In a bid to successfully achieve the goal of this research on the impact of relationship marketing in the
telecommunication industry the following research questions will be considered.
- Does a firm’s commitment to customer care service influence customer loyalty?
- To what extent does conflict handling influences customer loyalty?
- Does promotion influences customer loyalty?
- Does a firm’s customer price perception influence customer loyalty?
- 1.4 Objectives of the Study
- The main objective of this study is to find out the impact of relationship marketing on customer loyalty.
Other objectives of the study are to: - Find out extent which a firm’s commitment to customer care service influences customer loyalty.
- Find out the extent which conflict handling influences customer loyalty.
- find out the extent which promotion influences customer loyalty
- Find out the extent which price perception influences customer loyalty.
- 1.5 Statement of hypothesis
For the purpose of this study and the research problems identified the following hypothesis shall be adopted which
shall be tested to assist the researcher arrive at a logical conclusion:
Ho: There is no significant impact of relationship marketing between a firms commitment to customer service and customer loyalty.
H1: There is a significant impact of relationship marketing between a firms commitment to customer service and customer loyalty. - 1.6 Significance of the study
- By the time this study is completed, it is hoped to:
Partially fulfill the requirement for the award of Bachelor of Science Degree (B. Sc) in Business Administration,
and to provide both theory development for academics and practical implication for marketing managements
(contribute to knowledge).
Also, the result is expected to inform Mobile operators about their customers’ response to the variety of relationship
marketing strategies being deployed as it is helpful for marketers to understand the effectiveness of relationship
marketing tactics from consumer’s perspective,
Lastly, to serve as a yard stick for those that implements and formulate policies in the mobile telecommunication
industry. The academic world may also benefit from this study; it may serve as a basis for more research in this area, the telecom sector, as well as the rest of the service sectors.
THE IMPACT OF RELATIONSHIP MARKETING IN THE TELECOMMUNICATION INDUSTRY