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Factors influencing a customer’s loyalty in B2B relationships

A qualitative study of relationship marketing

Written by Pia Andersson, Klara Karlström

Paper category

Master Thesis

Subject

Business Administration>Marketing & Sales

Year

2014

Abstract

Thesis: Conceptualization of Relationship Marketing As Morgan and Hunt (1994) said, relationship marketing is all marketing activities that focus on establishing, developing, and maintaining successful relationship communication. When these activities are successful, they will increase customer loyalty, but the literature on this phenomenon is diverse when it comes to relationship marketing factors that affect customer loyalty (De Wulf et al., 2001). There is little agreement among different researchers on which personal factors best reflect various aspects of the relationship between suppliers and customers (Palmatier, Dant, Grewal, and Evans, 2006). The core of the conceptualization of relationship marketing is that no single factor alone can lead to customer loyalty (ibid.). 2.2 Customer loyalty Customer repeated purchases triggered by supplier activities can be called customer loyalty (Hennig-Thurau, Gwinner & Gremler, 2002). Gummesson (2002) pointed out that loyal customers are important to suppliers because he or she is not so price sensitive. Gummesson (2002) also pointed out that suppliers must constantly remind customers to remain loyal. When it has a loyal customer, it is easier for the supplier to generate additional sales for that particular customer (Blomqvist, Dahl, Haeger, and Storbacka, 1999). Customer loyalty depends on different factors, and loyalty varies with market competitiveness (Blomqvist et al., 1999). Blomquist et al. (1999) explained that in a highly competitive market, customers have higher expectations of suppliers, and customers need more to become loyal. Conversely, in a less competitive market, customer expectations are lower and fewer suppliers are needed to make customers loyal (Blomqvist et al., 1999). Suppliers need to know which market it belongs to in order to calculate how to make customers loyal (ibid.). When investigating the link between relationship marketing and customer loyalty, Bedman et al. (2013) discussed six factors: trust, commitment, communication, conflict handling, contact and ability. According to the research, whether these six factors provide value to customers and are regarded as important factors in achieving customer loyalty (Bedman et al., 2013). According to Jesri, Ahmadi, and Fatehipoor (2013), there is a relationship between customer loyalty and relationship marketing factors such as trust, commitment, communication, conflict resolution, and ability. Bahaedin (2012) also explained that commitment, satisfaction and trust all affect customer loyalty. According to Sin et al. (2005) There are six factors in relationship marketing. 2.2.1 Factors affecting customer loyalty Reciprocity can be described as the dimension of business relationship, which makes it possible for two parts to exchange favors (Trimetsoontorn & Chattananon, 2009). Reciprocity means that the two parties are likely to be independent and mutually beneficial in cooperation (ibid.). According to Cialdini and Rhoads (2001), reciprocity is the obligation of parties to return what they have received from other parties. We define reciprocity according to Cialdini and Rhoads (2001). Ravald and Grönroos (1996) pointed out that when companies want to establish mutually beneficial and valuable long-term relationships with customers, relationship marketing has become the method of choice for companies. Wiersema (1997) explained that the close relationship between suppliers and customers requires mutual understanding. Cialdini and Rhoads (2001) pointed out that reciprocity usually applies to the exchange of gifts or services, but it also applies to concessions. If one party asks for something that the other party is unwilling to accept, then reducing the requirement will make the other party feel more obligated to accept the new proposal (Cialdini & Rhoads, 2001). Sethi and Somanathan (2003) explained that in reciprocal behavior, each party rewards each other for generosity and punishes opportunistic behavior. The behavior received by a party can be expected to be rewarded, whether positive or negative (ibid.). Trust Trust refers to the self-evident understanding between the customer and the supplier and the belief that the seller will be reliable and act in the interests of the customer (Crosby, Evans & Cowles, 1990). Morgan and Hunt (1994) explained that trust exists when one party has confidence in the reliability and integrity of the trading partner. When there is trust in the relationship between the supplier and the customer, a sense of security and control arises (ibid.). We choose to define trust according to Morgan and Hunt (1994). Trust makes the partners in the relationship more willing to make sacrifices and less willing to calculate their benefits and costs (Bendapudi & Berry, 1997). When it comes to the success of relationship marketing, trust is seen as a key variable (Morgan and Hunter, 1994). If suppliers are able to keep their promises and act consistently with integrity and caring for their customers, then this will affect their loyalty to the supplier (Bedman et al., 2013). Morgan and Hunt (1996) explained that a trustworthy party has a high degree of integrity and is honest, fair and honest. When there is a high degree of trust between the supplier and the customer, this relationship is considered safe and highly valued, because both parties can be counted on to create a fair arrangement (Morgan and Hunter, 1996). Read Less