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BizTrends Year of the proven point Paul Middleton. Most Read 7 days 30 days By Industry. BizTrends The great retail powershift is here Jonathan Cherry. Clover boycott heats up in Pick n Pay. Murat Dogdubay. A short summary of this paper. Download Download PDF. Translate PDF. Several researchers have pointed out that it costs more than five to six times as much to obtain a new customer than to keep an existing one and an improvement of 5 percent in customer retention leads to an increase of 25 percent to percent in profit.
This study is focused on defining the customer loyalty and explaining its concept. Over the past few years, loyalty has become important because of increased competition within respective industries.
It also results in recommending the goods and services to friends and associates. Similarly Musriha also asserted that customer loyalty is the commitment held by customers to repurchase or subscribe to a product or service in the future. Instead, companies build their success on a long-term customer relationship. According to Pitta et al the concept of customer loyalty is not something that consumers recognize.
For most companies the customer or brand loyalty issue is, in behavioral terms, nothing more than repeat purchasing.
In fact, many company efforts aim solely at increasing the percentage of repeat purchases among current customers. Supporting this effort, marketing strategists have developed predictive models that show the important profitability effects of increasing the repeat purchase rate among existing customers.
So thereby causing repetitive same-brand or same -brand set purchasing. Quality is a necessary element in defining loyalty. Furthermore, service quality, perceived value and customer satisfaction are associated with loyalty. Concept of Customers Loyalty Customer loyalty has been the popular topic among the business workplaces Leong et al and recent years have shown a growing interest in customer loyalty Kuusik so has been widely researched in the domain of marketing BOSE and RAO Loyalty is a positive belief in the value that a company provides, leading to increased purchases over time.
However, in the business world, there are still considerable differences of opinion about the specific elements of loyalty Thompson, Uncles et al asserted that at a very general level, loyalty is something that consumers may exhibit to brands, services, stores, product categories e.
Customer loyalty as opposed to brand loyalty is to emphasize that loyalty is a feature of people, rather than something inherent in brands. Unfortunately there is no universally agreed definition. In this view, customer loyalty is an attitude or behavior that customers explicitly vocalize or exhibit.
It is related to the behavior of the customers who visit the supermarkets repeatedly. It is very important to keep a customer happy to have more business. In order to keep the customer for more businesses the customer satisfaction needs to be warranted by the market. The customer satisfaction can be thought as a key element of the strategies that supermarkets can gain loyalty with. However Oracle Corporation argued that loyalty should not be confused with customer satisfaction.
Although loyalty is built on satisfaction, organizations can have satisfaction without loyalty. Marshall also asserted quoting many studies that loyalty refers to a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future, thereby causing same-brand or same organization purchasing, despite influences and marketing efforts having the potential to cause switching.
The customer loyalty is winning the confidence of the customer in favor of an organization so that the relationship becomes a win-win situation for both the organization as well as the customer. The customer loyalty is termed as customer commitment to do business with particular organization, purchasing their goods and services repeatedly and recommending the products and services to friends, acquaintances and associates. Loyalty is more than just repeat purchase.
Someone who keeps buying may be doing so out of inertia, indifference or exit barriers rather than loyalty. Customer loyalty has evidence not only as behavior but also as attitude. The latter as a certain belief and feeling stimulates to react in a certain way towards things, people and events, determines attachment to goods, service or organization. A richer understanding of the attitudinal component of loyalty is crucial, as it is shown linked to future usage, enhanced word-of-mouth recommendations, and ultimately to customer profitability.
Loyalty based on the attitude is less faithful than loyal behavior; moreover both attitude and behavior are changing over time. In other words loyalty is not a static state.
Some researchers created a framework of four different categories of loyalty, based on the factor of behavior and attitude: true loyalty, spurious loyalty, latent loyalty and no loyalty, and six types of loyalty: monopoly loyalty, inertia loyalty, convenience loyalty, price loyalty, incentivised loyalty and emotional loyalty.
Customers can be loyal forcibly when they have not another choice prisoners , can be loyal in several cases detached loyalists , can be venally loyal purchased loyalists , can be loyal from satisfaction satisfied loyalists and can be loyal implicitly apostles.
McCain et al extracting from several studies asserted that customer loyalty is generated through a belief service quality , affect satisfaction , and cognitive customer loyalty process. Studies reported that the development of consumer loyalty follow the cognitive—affective—conation—action pattern.
During this process, a consumer can become loyal at each of these four phases. The first phase is cognitive loyalty. In this stage, consumers recognize that one brand is better than other alternatives and form preferences based upon their evaluations of service quality.
The second phase is affective loyalty, in which the liking of the product and a positive attitude toward the brand are developed based upon continuous experiences of product satisfaction. In the third loyalty phase, conation loyalty, a brand-specific commitment to repurchase is generated and the intention to return is formed.
In the loyalty development process, it is vital to note the importance of the cognitive loyalty as the starting point that leads to subsequent loyalties. They revealed that customer loyalty previously associated with the field of marketing studies is becoming a link between management and marketing. The quantifiable loyalty factors i. Marketing def- inition of loyalty traditionally covered two aspects of the phenomenon: behavioral aspect and attitudinal aspect.
Every customer has different basics to the loyalty. It depends on their objectivity. The loyalty of customer is showed, by giving recommendation to other costumers and keeping the consumption of the product continuously.
That customer remains loyal to an organization as long as that organization gives better services or products as compared to another organization. The key to the successful adoption of relationship marketing lies in the building of client loyalty in dynamic business environments. Nowadays, increase in multilateral information of customers regarding market and access to information has caused less loyalty of customers to the companies.
So, today the visitors are looking for ways and information through which they would make faithful customers for themselves, because it causes decrement in marketing and operational expenses and increase in profits, that the organization and companies are determined to make firm connections with their customers by taking advantages from marketing strategies.
More Filters. The impact of loyalty programs on customer retention was investigated in this study. Concomitantly, the mediating effects of brand association and customer satisfaction between loyalty programs and … Expand. View 2 excerpts, cites results and background. Journal of Business Economics and Management. The aim of this paper is to define the significance of different indicators that affect the expected benefit of customers when using loyalty cards in the purchasing process in the retail sector.
Sheth , p. Bell , p. Gremler and S. Brown , p. Basing on literature search, we can find plenty of researches, studies, articles, etc. Ong and S. Salleh deal with customer loyalty of SMEs. Some research papers focus on customer loyalty programs e. Ismail and N. Safa try to reveal the factors influencing customer loyalty in electronic commerce. Yap, T. Ramayah and W. Shahidan explore satisfaction, trust and customer loyalty of financial institutions.
Based on the literature search, the following factors can be considered as the most important factors affecting customer loyalty at the general level: perceived quality, per- ceived value, brand equity, satisfaction, trust, switching costs, and experience, quality of ser- vices, recommendation, expectation and price sensitivity.
In recent decades, more and more researches and articles have been focused directly on customer loyalty in the mobile phone and mobile operator markets e. Bayraktar, et al. Said , S. Donighi and S. Davarpanah ; E. Rasheed and M. Anser propose to consider the following factors influencing customer loyalty in the mo- bile phone market: customer expectations, perceived quality, customer satisfaction, perceived and expected value, brand image, trust, price tolerance, repurchase likelihood, brand aware- ness, promotion, product and services quality.
Researches focusing on customer loyalty in banking services revealed as particular factors for customer loyalty, for instance, bank fees or switching costs e. The most critical factors that affect customer loyalty in the mobile phone market are as follows: customer satisfac- tion, trust, expectation, perceived quality, experience and promotion. A satisfied customer should not be a loyal one, even though there is a correlation between satisfaction and loyalty, for example, if the customer lacks the trust toward the com- pany, or if the price does not meet the needs of the customer.
Either a brand name or a trademark causes a very significant com- petitive advantage. Singh claims that customer or brand loyalty is nothing more but the pro- vision satisfaction to any customer, and this customer satisfaction derives from the trust of the customer towards a particular product, service or brand.
Kuusik found that trust is the most critical determinant to establish loyalty and is directly related to purchasing. Upaman- nyu, Bhakar and Gupta state that brand trust represents a feeling of safety during any interaction with concrete product or brand and is based on commitment, expectations, and promises in the context of reliability and sense of responsibility toward customer and commu- nity welfare.
Aaker defined per- ceived quality as customer perception of the quality of the product compared to products of competitors. Aydin, G. Lodorfos, K. Mulvana and J. Reichheld and P. Lee et al. Dotchin and J. Oakland refer to perceived quality as the extent to which a product or service meets customer expectations or needs. Continuous good promotion is another crucial factor which leads to brand loyalty, since promotion and advertisement build brand awareness and help customers to identify different brands.
Mise and K. Chandrasekar examined the relation- ship between promotion and customer loyalty and concluded that well-targeted promotion leads to customer loyalty. Azad and R. A more significant loyal segment, on the other hand, requires more promotional activities than a smaller one Agrawal, The author deals with the key determi- nants of customer loyalty - satisfaction, trust, perceived quality, customer experience and promo- tion.
The author tries to reveal the contribution of these factors to customer loyalty. The core aim of this paper is to verify the developed hypotheses that reflect the impact of the proposed factors and answer the main research questions. What are the crucial factors influencing loyalty in the Czech mobile phone market?
Is there any statistically significant correlation between proposed factors and customer loyalty in the Czech mobile phone market? Material and methods Based on the extensive literature search of prior researches, studies and academic papers described above, the author generated the first initial version of the determinants of customer loyalty in the mobile phone market. Most authors focus on satisfaction, trust, perceived quality, customer experience and promotion.
Less effort is devoted to customer expectations, and the perceived price and price sensitivity of the customer, which is in negative relationship to cus- tomer loyalty and satisfaction, as demonstrated by H. Said Therefore, the author chose these factors for detailed investigation and research of customer loyalty in the mobile phone market in the Czech Republic. The stated research hypothesis will be empirically tested against primary data collected us- ing a questionnaire survey.
The questionnaire involved a standardised set of questions and statements and was anonymous. The questionnaire was divided into two sections.
The first part involved the collection of statements for evaluation, and the second part included demo- graphic information of respondents. The author used a five-point Likert scale in the assess- ment of proposed statements ranging from strongly disagree with scale point 1 to strong- ly agree with scale point 5. Statements were divided into five groups related to the factors as mentioned above - satisfaction, trust, perceived quality, customer experience and promotion.
The last group of statements was devoted to customer loyalty. Data were collected based on simple random sampling. The methodology of this article is based on the previous research by the author, which is based mainly on the study of G. Based on the literature search, the author stated 5 hypothesis Table 2.
In order to test the stat- ed hypotheses, the regression analysis will be used. Results The questionnaire was randomly distributed among mobile phone users. Out of those, 50 questionnaires were excluded from the final evaluation. The final size for this paper is question- naires. The demographic profile of respondents is summarised in the Table 3. Among respondents, the most represented age groups fell below the age group of and years. Compared to the research published by Statista.
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