Loyalty and Customer Satisfaction at the Heart of the Marketing Problems Essay

 

 

 

 

 

Abstract:

 

Loyalty and customer satisfaction are important competitive goals of international business firms. However, the achievement of a loyal customer base and satisfied customers are not easy and simple due to the emergence of marketing problems in the business context within which the business firm operates. The study investigates the explanatory and relational links of these marketing problems to loyalty and customer satisfaction by looking at the specific experiences of L’Oreal. Data comes from interviews with the authorised and qualified representatives of the firm. Comparison and classification of answers form the basis of conclusions in terms of the achievement of the aim and objectives and derivation of sound generalisations.

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Section 1: Introduction

 

International business firms aim to provide customer satisfaction and develop customer loyalty to sustain market competitiveness. However, achieving a loyal customer base and ensuring the satisfaction of consumers is not easy or simple because of various marketing problems that emerge and different intervening factors. Internal determinants of loyalty and customer satisfaction include organisational structure, people management, and organisational culture while external determinants include the competitive environment, market characteristics, and market environment. Marketing problems comprise the failure of international firms to consider these determinants. L’Oreal is an international cosmetics firm operating in a highly competitive market. The firm expands its market through mergers and acquisitions of competitors or distribution channels; but maintaining a customer base is equally important to expansion. The study seeks to investigate the extent that loyalty and customer satisfaction are at the core of the marketing problems of L’Oreal. The study would determine the extent that L’Oreal’s marketing problems are rooted to the concepts of loyalty and customer satisfaction. By doing so, the findings would determine the importance of loyalty and customer satisfaction as goals and measures of competitiveness and draw lessons based on the experience of L’Oreal on emerging issues and effective solutions. Competitive international business firms would benefit from the lessons derived from the experiences of the firm.

Section 2: Aim and Objectives

The study focuses on the aim to determine whether the marketing problems faced by L’Oreal find links to loyalty and customer satisfaction and the extent that these links explain the marketing problems. Specific objectives of the study are:

1. To derive secondary data on the relationship of marketing problems to the goals of loyalty and customer satisfaction;

2. To gather primary data on the extent that the marketing problems of L’Oreal are rooted to the nature and extent of its efforts to achieve the goals of loyalty and customer satisfaction;

3. To identify the links and compare loyalty and customer satisfaction, the determinants of these factors, the problems that arise in the achievement of loyalty and customer satisfactions, the effective means of addressing these problems; and

4. To derive generalisations from the lessons that emerges from the experiences of L’Oreal.

Section 3: Background to the Research Area

Lin, Su and Chien (2006) provided that firm-based information is important in developing effective strategies on customer relationship building to achieve satisfaction and loyalty. Karatepe (2006) added that customer complaints are important determinants of marketing problems. Marketing problems find links to loyalty and customer satisfaction because as Bodet (2008) explained, by considering the sports service sector, customer satisfaction affects loyalty but customer satisfaction and loyalty were not able to predict the repurchase behaviour of customers. This leads to two implications. One is that repurchase behaviour cannot be used as the basis in measuring loyalty and customer satisfaction and the other is that the impact of loyalty and customer satisfaction to revenue generation and profitability require reconsideration for the different sectors and individual firms. Shankar, Smith and Rangaswamy (2003) explained that marketing problems is also caused by the failure of firms to understand the link between customer satisfaction and loyalty, which is reciprocal so that one variable has positive effects on the other. Suh and Yi (2006) stated that customer satisfaction directly and indirectly influences loyalty. Bowen and Chen (2001) explained that the relationship between customer satisfaction and loyalty is not linear indicating that different strategies work for different consumer groups. Auh and Johnson (2005) explained that marketing problems are also due to the failure of firms to understand not only the link but also the differences between customer satisfaction and loyalty, with customer satisfaction refers to consumption experience while loyalty pertains to consumer decision-making. Johnson and Gustaffson (2000) stated that marketing problems are due to the failure of firms to link the needs of the customers to their policies or programs to ensure high levels of customer satisfaction and loyalty. As an example, satisfaction of reward program is one way of influencing loyalty but this depends on the type of reward and timing (Keh & Lee 2006). Szwarc (2005) explained that business firms have to be customer-centric to identity the means of ensuring customer satisfaction and loyalty.

Section 4: Research Methods

The study applies the qualitative approach, which focuses on accounts and descriptions of particular cases, phenomena or situations (Creswell 2003). Qualitative approach applies because the study involves descriptions of the manner and extent that the marketing problems of L’Oreal find links to loyalty and customer satisfaction and the study also does not involve the derivation of measures. Application of the qualitative approach is by focusing on the derivation of extensive written and oral or secondary and firsthand accounts of the problems faced by L’Oreal relative to loyalty and customer satisfaction.

Collection of secondary data involves library research while collection of primary data utilizes the interview method. Library research allows the researcher to access to a wide range of sources such as books, journal, papers, and electronic sources. Interview method enables the researcher to obtain in-depth data on the experiences of L’Oreal relative to research topic.

The significance of reliability in qualitative research has been subject to debate. On one hand, some propound that reliability is significant in qualitative studies. This can be ensured or determined by looking at the manner that the study in general and the methods in particular embody trustworthiness based on the premise that reliability in qualitative research is the extent that that a study explains phenomena and the extent that the methods used supported the explanatory value of the results. On the other hand, others explain that reliability is not significant in qualitative research because this developed in quantitative research as involving measures, which has nothing to do with qualitative research and reliability is already covered by reliability. (Stenbacka 2001) For purposes of the study, reliability is considered in light of the first perspective so that the reliability of the study is determined by looking at the extent that the study and the methods used have been able to meet the research aim and objectives. An objective assessment of this forms part of the conclusion and recommendations section.

The applicability of validity in qualitative research was also subject to a similar debate. One side explains that although validity originally developed in quantitative research, this can be refashioned in qualitative research by considering generalizability of the research results as the determinant of validity. The other side claims that validity involves measures and does not match qualitative research. (Stenbacka 2001) The research carries the previous perspective and evaluates the extent of generalizability of the results (Stenbacka 2001) to other business firms, since the primary data came only from a single firm, contained in the conclusions and recommendations section.
Section 5: Detailed Plan of Research

A semi-structured interview questionnaire is the information gathering technique for primary data. The questions focus on the marketing problems of L’Oreal as well as the causes and roots of the problems in terms of variables constitutive of loyalty and customer satisfaction. Open-ended questions work in allowing the researcher to ask clarifications and further explanations. Prior to data collection, coordination with the external affairs department of L’Oreal is necessary to coordinate the interviews and identify interviewees. Interview sessions are strictly on schedule based on the convenient time of the respondents and the place they prefer. Coordination also involves the identification of respondents authorized to represent the firm and qualified to answer the questions. Interviewing at least three people should provide the research with sufficient data. Analysis of the answers involves the comparison of responses and classification of the responses according to themes based on the aim and objectives. Derivation of implications to the aim and objectives follows. Ensuring reliability involves the use of a uniform questionnaire for all respondents and designing the questions to meet the research aim and objectives. Achieving validity is through the derivation of generalisations based on the experiences of one firm.

Section 6: Ethical Considerations

An important ethical issue is the truth of the answers of the respondents. Since the respondents are representatives of the firm, they may have reservations in answering the questions, especially since the study involves the marketing problems of the firm. Giving assurances of the confidentiality of the results according to agreements with firm representatives and explaining the purpose of the study would minimize the likelihood that respondents would not answer the truth.

References

 

Auh, S. & Johnson, M., 2005. Compatibility effects in evaluations of satisfaction and loyalty. Journal of Economic Psychology, 26, p.35-57.

 

Bodet, G., 2008. Customer satisfaction and loyalty in service: Two concepts, four constructs, several relationships. Journal of Retailing and Consumer Services, 15, p.156–162.

 

Bowen, J. & Chen, S., 2001. The relationship between customer loyalty and customer satisfaction. International Journal of Contemporary Hospitality Management, 13(5), p.213-217.

 

Creswell, J.W., 2003. Research design. Qualitative, quantitative, and mixed methods approaches. Thousand Oaks, CA: Sage.

 

Johnson, M. & Gustafsson, A., 2000. Improving customer satisfaction, loyalty, and profit: An integrated measurement and management system. San Francisco, CA: Jossey-Bass.

 

Karatepe, O., 2006. Customer complaints and organizational responses:

The effects of complainants’ perceptions of justice on satisfaction and loyalty. Hospitality Management, 25, p.69–90.

 

Keh, H. & Lee, Y., 2006. Do reward programs build loyalty for services? The moderating effect of satisfaction on type and timing of rewards. Journal of Retailing, 82(2), p.127-136.

 

Lin, Y., Su, H. & Chien, S., 2006. A knowledge-enabled procedure for customer relationship management. Industrial Marketing Management, 35, p.446 – 456.

 

Shankar, V., Smith, A. & Rangaswamy, A., 2003. Customer satisfaction and loyalty in online and offline environments. International Journal of Research in Marketing, 20(2), p.153-175.

 

Stenbacka, C., 2001. Qualitative research requires quality concepts of its own. Management Decision, 39(7), p.551-555.

 

Suh, J. & Yi, Y., 2006. When brand attitudes affect the customer satisfaction-loyalty relation:

The moderating role of product involvement. Journal of Consumer Psychology, 16(2), p.145-155.

 

Szwarc, P., 2005. Researching customer satisfaction & loyalty: How to find out what people really think. London: Kogan Page.
 

 

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