THE IMPACT OF CUSTOMER RELATIONSHIP MARKETING

TACTICS ON CUSTOMER LOYALTY

(A STUDY OF PAKISTANS CELLULAR COMPANIES)
By

Anas zia

Supervisor name:

Mr. Waseem Abbas

To

FACULTY OF MANAGEMENT SCIENCES

(MS Business Administration)

NATIONAL UNIVERSITY OF MODERN LANGUAGES, ISLAMABAD

1. Introduction

There are many relationship marketing tactics that directly or indirectly affect the customers
loyalty. In this era of competition, every organization wants to compete with their competitors.
Due to this tough competition every organization requires to build strong, long term and
profitable relationship with their customers. For this strong relationship, the organization
should know who are their actual customers, as described earlier that there are lots of
marketing tactics, however, some of these tactics may not affect customer loyalty and
switching behavior. This study will explore and investigate the most effective marketing
tactics that affect customer trust and customer satisfaction, which afterwards increase the
customer loyalty by focusing on Pakistans Cellular companies sector.
The question what is the impact of customer relationship marketing tactics on customer
loyalty? addresses three major points: first it presents and evaluate the scope and definition
of relationship marketing, relationship marketing tactics and some other key definitions.
Secondly it also puts a question that what is relationship quality like customer trust and
customer satisfaction? And third the effect of all these on customer loyalty.
Cellular companies deliver voice communications, data, graphics, and video at ever increasing
speeds. The telecommunication industry is becoming one of the most important industries in
the world. There are more than 120 million mobile customers in Pakistan, Pakistan has the
highest mobile penetration rate in the South Asian region PTA, March (2012).According to
the Pakistan Telecommunication Authority PTA, March (2012) Mobilink continues to lead the
market with 35.7million subscribers, followed by Telenor with 29.3 million, Ufone with 23.1
million,Zong with 15.6 million, and Warid Telecom with 14.3 million. All telecom companies
are working to broaden their networks in the Azad Jammu and Kashmir and Northern Areas,
which were largely ignored until recently. The competition is also becoming more and sharper.
In order to obtain sustainable competitive advantage, telecommunication companies are
forced to develop strong relations and do their best for customer satisfaction. Due to this,
customer relationship marketing can play an important role in telecommunication industry. It
demands a relationship-oriented strategy in marketing Grnroos, (2004).

2. Problem statement

In view of the cut throat competition in the Pakistani telecommunication industry, the cellular
services providers are charting out new marketing strategies. On the other hand, the
consumers are confounded by myriad marketing initiatives like loyalty programs, direct mail,
telemarketing and other internet promotion campaigns .We also know that customer does not
hesitate in switching to other choices if his/her service quality demands are not fulfilled.

Relationship marketing tactics can be the best choice in gaining, retaining and enhancing the
customers loyalty. The available research literature shows ample proof that customer
relationship marketing tactics have direct effect on loyalty behavior that ultimately results in
customer retention (Peng and Wang, 2006).

Hence, the relationship between relationship marketing tactics and its impact on attaining and
enhancing the customer loyalty is the problem to be exploredin this study.

2.1Research Question:

There are lot of relationship marketing tactics used and implemented by different organization
but some of the tactics are effective and some may not. So this studyfocuses on important
tactics and some questions are brought forward as follows:
(1) What are the important relationship marketing tactics that can enhance customer loyalty?
(2) What is the impact of customer relationship marketing tactics on customer loyalty?

2.2Significance of Study:

The purposed study will differentiate itself from others by using different statistical
techniques. This study is from customers point of view, So this will be beneficial for service
providers, to know that what are needs and demands of customers in cellular services. This
study will also explore and investigate that what are the most important customer relationship
marketing tactics.

2.3Hypothesis:

H1a: High service quality perceived by customers is positively related to customer

satisfaction.
H1b: High service quality perceived by customers is positively related to customer trust.
H2a: Fair price perceived by customers is positively related to customer satisfaction.
H2b: Fair price perceived by customers is positively related to customer trust.
H3a: Positive brand image perceived by customers is positively related to customer
satisfaction
H3b: Positive brand image perceived by customers is positively related to customer trust.
H4a: The value offers perceived by customers are positively related to customer satisfaction.
H4b: The value offers perceived by customers are positively related to customers trust.
H5: Customer trust is positively related to customer loyalty.
H6: Customer satisfaction is positively related to customer loyalty.
H7: High switching cost perceived by customer is positively related to customer loyalty
Hypothesis: (new)
H1a: High service quality leads towards high customer satisfaction.
H1b: High service quality leads towards high customer trust.
H2a: Fair price may create high customer satisfaction.
H2b: Fair price may build high customer trust.
H3a: Positive Brand image may create high customer satisfaction.
H3b: Positive Brand image may build high customer trust.
H4a: The value offers have positive impact on customer satisfaction.
H4b: The value offers have positive impact on customer trust.
H5:

Customer trust have a positive relation with customer loyalty.

H6:

Customer satisfaction leads towards high customer loyalty.

H7:

Switching cost has a direct impact on customer loyalty.

Theoretical Framework
Relationship Marketing
Tactics

Service

Relationship Quality

Quality

Price
Perception

Customer
Trust

Customer
Satisfaction

Customer
loyalty

Brand
Image

Value
Offers

Switching
Cost

Figure (1.1)

Literature review

This available literature, in the recent past, has focused on four major areas of research;
customer relationship marketing tactics, relationship quality, switching behavior and customer
loyalty. Relationship marketing influences the customer loyalty and customer retention. In
order to maintain, create, extend and sustain the successful relationship, relationship
marketing tactics are very necessary (Morgan and Hunt 1994; Mishra&Li,2008). By
relationship marketing, companies can make more profit if they sustain relationship with
short term goals towards long-term relationship (Kotler, 2003).Relationship marketing is a
tool to develop long term relationship with their customers and suppliers and it also helps to
improve performance and efficiency.
As the spirited environment becomes more unstable, the most significant problem faced by
seller is no longer to give excellent, good quality products or services, but also to keep loyal
customers who will add long-term profit to organizations (Tseng, 2007). To compete in such
stuffed and interactive marketplace, marketers are forced to look beyond the traditional 4Ps of
marketing strategy, which are no longer enough to be implemented for achieving competitive
advantage. Therefore, relationship marketing has become an alternative means for
organizations to build strong and ongoing associations with their customers. As a part of
marketing strategy, relationship marketing seeks to acquire and retain customers by providing
superior quality customer services.It has become a key to success in acquiring strong
competitiveness in the present markets, because of its implications for access to markets,
generation of repeat purchase, creation of exit barriers, and the view that it benefits all parties
(Andaleeb, 1996)

To achieve mutual benefits buyers and sellers should develop relationships and it is not so
simple that a customer is 100 percent loyal with the organization (Stone, Woodcock &
Machtynger,2000).In this era, customer relationship marketing has got much importance due
to more and more fierce competition among companies, because they want to create value for
the customer to get more benefit from them.
Service is an intangible term as compared to products; it is different from physical products.
High service quality leads towards high customer satisfaction (Aydin and zer, Ismail,
&Parasuraman, 1988, 2005, 2006).Customer may become satisfied when he/she got the better
quality of services as his/her pre-purchase expectation. In telecommunication sector, service
quality is an important tool to evaluate/ judge the operator or service providers performance.
Service quality is positively related to customer trust and satisfaction Aydin, (1988).
Price perception can be measured in two ways, one in the monetary term that the customer
pay by comparing with other competitors, in this case customer often selects the reasonable
price Cheng et al. (2008) and the other is the value for the money that customer feels during
interaction with the company and expect high quality services except money Chitty et al.
(2007).Price perception is very important factor that directly affects the customers loyalty it
may be positive or could be negative. It is very necessary for service firms that to actively
manage the price perception of their customers. Customers often switch by unfair or high
pricing that they perceived Peng and Wang, (2006).In earlier studies many researchers have
found that price perception has a direct affect on customers trust and customers satisfaction;
in short we can say price perception influence customers loyalty Oliver, (1999); Peng and
Wang, (2006); Cheng et al., (2008); Kim et al., (2008).
Brand image is the brand association of anybody in mind or memory that anybody perceives
Keller, (1993).Brand image directly related to customers loyalty Feng, (2002). Brand image
is basically the perception and mental picture of customer and develop through customers
experience with the company Grnroos, (2000).The brand image we can also say the word of
mouth and reputation o f the company. The positive word of mouth or positive brand image
can enhance the sales of the company and it makes easy for the company to give its brand
value, neutral brand image cannot enhance or reduce the sales of the company but negative
brand image affect badly on sales and reputation of the company Kotler (1983).
Value offered means, adding something extra to the core product that a customer feels
positively and beneficial Wilson and Jantrania, (1995). In service sector, service
provider/operator should give extra value, beneficial promotions to improve customersloyalty

Zeithaml (1988). When we give value to our customer it will automatically increase customer
trust and satisfaction.
Switching cost is referred as the cost that discourage customers from switching to the other
Company. It also include the cost of gathering information about competitors. Switching costs
include those that are monetary, behavioral, searching and learning relatedChea&Luo, (2006).
Switching behavior in loyal customers is less than the non loyal customers solely because of
price Bowen and shoemaker, (2003). Loyal customer has a positive behavior towards
repurchasing and telling others to purchase that brand or product that helps the organization to
improve their financial growth.

Customers loyalty builds from customers trust and customers satisfaction. Customer loyalty
is objective of all the customers relationship marketing tactics. We apply these tactics to
achieve customers loyalty. The main source of profits is customer and customer loyalty leads
towards more profitability Hayes, (2008). Loyal customers are considered as the asset of the
company so the companies should attain loyal customers with them to make long term
relationship and loyal customers are more profitable than non loyal customers Tseng,
(2007).This research study seeks to investigate if factors that determine customer loyalty in
other telecom industries will hold for the case of Pakistans mobile telecom industry.

Research methodology

Research Method

Survey method would be used in this study. The questionnaire would be the main tool. The
researcher is conducting this study fromcustomers pointof view because customers loyalty
could be accurately judged/measured by customers point of view.
Population of the study

Unit of analysis is cellular service users. The population is the individuals who are using the
mobile services.
Sample Size

Sample would consist of 300 respondents from student of different universities and the
visitors/customers of big Shopping Malls (Hyper Star, CSD).Due to the time and costs

constraint, the university students and visitors of shopping malls, using cellular services will
be surveyed.

Sampling Technique& Statistical Tool

Convenient sampling design would be used as a sampling technique and Factor analysis to
discard less important factors in the study, Multiple regression would also be used in this
study.
2

Research Instrument/Tools

Survey method would be used. For this purposequestionnaire is the main tool or instrument
for primary data collection.Questionnaire is of five point likert scale from which respondent
shall indicate their response by checking how strongly they agree or disagree with the
statement of question.

Data collection

Primary data will be collected through survey method and it will consist of respondents
answer based on research questionnaire.

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Annexure
Questionnaire

Individual Characteristics
a) Your Gender: Male

Female

b) Please fill in the name of the mobile telecom operator you are using now? (e.g. mobilink,
ufone, telenor, warid or zong ) _____________________________
Service quality
1. This mobile telecom operator follows up in a timely manner to customer requests.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree

2. The frontline employees of this operator are always willing to help me.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
3. The response to consumers complaints are always taken quickly.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
4. This operator is consistent in providing good quality service.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
5. This operator offers personalized services to meet customers need.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
6. This operator provides timely information when there are new services.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree

Price
7. This operator took
effective ways to help us
know its pricing policies
of products and services.
5 strongly agree

4 agree

3 neutra

8. The pricing policies of products and services

5 strongly agree 4 agree 3 neutra

9. The calling rate offered by this operator is rea

5 strongly agree 4 agree 3 neutra
10. This operator
is
offerin
g
flexibl
e
pricing
for
various
service
s that
meet
my
needs.
5
strongl
y agree
4 agree
3
neutral
2
disagre
e1
strongl
y
disagre
e
11. I will continue to stay
with this operator unless
the price is significantly
higher for the same
service.
5 strongly agree
Brand Image

4 agree 3 neutra

12. I consider that this operators reputation is h

5 strongly agree 4 agree 3 neutra

13. I have a good feeling about the operators so

5 strongly agree 4 agree 3 neutra

14. The operator delivered a good brand image

5 strongly agree 4 agree 3 neutra
Value Offered

15. The promotional offers from this operator w

5 strongly agree 4 agree 3 neutra

16. It was easy to get benefits from the promoti

5 strongly agree 4 agree 3 neutra

17. The proposed rewards from this operator we

5 strongly agree 4 agree 3 neutra

18. It is highly likely that I will achieve the prop

5 strongly agree 4 agree 3 neutra

Trust

19. This operator is reliable because it is mainly

5 strongly agree 4 agree 3 neutra

20. The billing system of this operator is trustw

5 strongly agree 4 agree 3 neutra

21. The reputation of this operator is trustworth

5 strongly agree 4 agree 3 neutra

22. The policies and practices of this operator a

5 strongly agree 4 agree 3 neutra

23. The service process provided by this operato

5 strongly agree 4 agree 3 neutra
Satisfaction

24. I am satisfied with the overall service qualit

5 strongly agree 4 agree 3 neutra

25. I am satisfied with the professional compete

5 strongly agree 4 agree 3 neutra

26. I am satisfied with the performance of the fr

5 strongly agree 4 agree 3 neutra

27. I am comfortable about the relationship with

5 strongly agree 4 agree 3 neutra
Switching costs:

28. I feel that switching to a new operator cause

5 strongly agree 4 agree 3 neutra
29. To switch to a new
operator; I should compare
all operators (on account
of services, coverage area,
billing, etc.
5 strongly agree
4 agree 3 neutral 2
disagree 1 strongly
disagree

30. Even if I have enough information, comparing the operators with each other takes a lot of
energy, time and effort
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
31. If I change my phone number, I would be concerned if people dial my previous number
but could not reach me.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree

32. If I switch to a new operator, I am not able to use some services (MMS, GPrice
PerceptionS, WAP, etc.), until I learn to use them
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
Customer loyalty
33. I intend to continue using mobile services from this operator for a long time.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
34. If I want to change a new telecom service, I am willing to continue selecting this operator.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
35. Even if another operator price is lower, I will go on using this provider.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
36. I am willing to say positive things about this operator to other people.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
37. I will encourage friends and relatives to use the services offered by this operator.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree
38. To me, this operator clearly is able to provide the best service.
5 strongly agree 4 agree 3 neutral 2 disagree 1 strongly disagree