Relationship Marketing and Customer Retention in Bangladesh’s Food Retailing Sector
Datta, Palto Ranjan
The context of this study is Bangladesh`s food retailing sector. The main purpose of this study is to investigate the relationship between Customer Relationship Marketing (CRM) and customer retention. Since Independence in 1971, Bangladesh has made solid progress and made substantial improvements in its economy, with GDP growth of 5-6% consistently over the past decade. With the real economic growth coupled with rapid urbanisation, the country has witnessed a new form of organised retailing that started to emerge in early 2000. This organised retail format is undergoing a period of unprecedented expansion, something that is driving additional demand and as well as creating opportunities for further enterprise. There are clear signs of substantial and potential growth in future. The economic growth coupled with the growth of urbanisation, changes in demographic factors, increases in employment and income levels has had a profound influence on consumers shopping behaviour and hence, Customer Relationship Marketing. The core aim of Relationship Marketing is to build a long lasting mutually bonded relationships with customers and various other important stakeholders. The concept has attracted considerable attention among scholars in recent decades and has appeared in service marketing literature as a new marketing paradigm. The concept is considered to be critical to the success of any organisation as it has been an accepted phenomenon that maintains that existing customers are far easier to retain than is the process of acquiring new customers. In order to stay in business and cope with the challenging business dynamism, organisations are continuously searching for reliable and serviceable strategies to be employed in order to increase customer retention. However, there is a lack of an accepted level of consensus among researchers on the core antecedents of relationship marketing that can be used to achieve the above aims, especially while the concept is new in the context of organised retailing sectors in Bangladesh. In response, this thesis developed a conceptual framework of customer retention strategy to conduct an empirical investigation in one holistic model: (i) the relationships between relationship quality and customer retention; (ii) how bonds influences the relationship quality? As well as (iii) the effect of CRM on customer loyalty and retention. The model incorporates bonds, service quality and components of relational quality (Trust, commitment and satisfaction) into one relationship model to show the relationship between these five constructs and customer loyalty and finally the independent variable of customer retention. The model establishes eleven hypotheses to understand the relationships between various constructs. Furthermore, in order to understand the intensity of grocery food consumers loyalty, Oliver`s Four Stages loyalty model was used. A sample of 202 grocery food retail customers were selected in a random sample from four selected superstores located in Dhaka, the capital of Bangladesh. Data were collected via mail questionnaires. The questionnaires content validity was tested by conducting a pre-test of 50 households before conducting the final survey. The results support hypothesized relationships built on the model. Correlation analysis indicates that all the coefficient correlate significantly except commitment that shows the least strengths of the correlation coefficient. Nevertheless, correlations were statistically significant. Therefore, all eleven hypotheses are confirmed to some degree. The findings indicate that service quality, trust, bond and customer satisfactions are vital for creating positive customer loyalty which in turn creates customer retention. In regards to the intensity of four types of loyalty (cognitive, affective, co-native and action) results indicate that the intensity of cognitive loyalty was higher than affective loyalty, co-native and action loyalty. Co-native loyalty is also higher than action loyalty. This thesis provides evidence for the first time in Bangladesh of various linkages between bonds, service quality, relationship quality, loyalty and retention and hence, contributes to both theoretical and practical knowledge. The findings suggest that by employing adequate service quality provisions and bonds it is possible to enhance and build quality relationships between parties.
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