Dissertation Proposal

Customer loyalty in e-retailing marketplace

- case study of Argos in UK -

1
1.1

Introduction
Rationale for chosen topic

Known as e-retailing, internet retailing has been growing quickly in the current market
because of its competitive advantages over the traditional brick and mortar shops (Giovanis
and Athanasopoulou, 2014; Dennis et al., 2004; Srinivasan et al., 2002; Toufaily et al., 2013,
Fuentes-Blasco et al., 2010). It can be seen that e-retailing could be more flexible, lower cost
than the traditional retailing, which helps businesses to enhance the outreach of the potential
market, bring better customisation and convenience for clients, as well as enhance the speed
of transactions and product lines. However, the question raised is that how e-retailing
business can generate sales and utilize its advantages over the traditional businesses? It is
known that a business needs customers, who are the main factors to generate the sales of the
business. However, it can be seen that acquiring new clients online are time consuming and
very costly (Dennis et al., 2004). For that reason, it is of importance to retain customers and
turn them to loyalty clients. It is proved that the company profits will increase by 25% to 95%
thanks to 5% of customer loyalty increase (Reichheld and Schefter, 2000). Client retention is
very important for the e-retailing business because client loyalty is always the long-term
achievement of any business, especially the online environment. It can be seen that because
of the increasing growth of the internet retailing, clients have more choices for products and
service online than ever before, therefore, it might be easy for them to find the alternative
products and services. The competiveness online, thus, is very stiff. Therefore, building
customer loyalty is of utmost importance for the survival of businesses in terms of its
influence on the companys profits and sales by reducing the financial and timing cost of
finding new customers (Giovanis and Athanasopoulou, 2014).
It can be seen that in order to maintain customer loyalty, it is of importance to understand the
habits of customer loyalty online as well as the factors affect the loyalty of customers online.
Many research with extensive studies have done about the customer loyalty in traditional
retailing, of which the scales and relationship with online loyalty was found and applied
(Toufaily et al., 2013). With an aim of fully understanding the e-loyalty concept and the
factors that affecting customer online loyalty, this study will conduct the research on e-loyalty
with the case study of the UK e-retailer Argos.

1.2 Research aim and objectives

This research aims at evaluating the factors affecting the online loyalty of clients in the online
retailing industry, with the case study of the UK e-retailer Argos. The research has the
following objectives:

Tobuildaconceptualframeworkforempiricaltestsbasedonthetheoreticalstudies

andbackground.
Toinvestigatethelinkagebetweencustomerloyaltyintheonlinemarketandfactors
thataffecttheloyaltyofcustomers.

2
2.1

Literature review
E-loyalty

It is noted that customer loyalty has not been one of the many options to enhance companies
profits but it is the essential factor for the companies to survive in the higher competitive
market than ever (Reichheld and Schefter, 2000; Fuentes-Blasco et al., 2010). It is argued that
loyalty customers are worthier than the average ones, who could help the company to
generate more profits and revenues. In other word, they are more profitable than other clients
of the companies, especially over the internet retailing environment because of the wider
range of online shops and the increased competitiveness of the online market (Rose et al.,
2012; Mouakket and Al-hawari, 2012). It is also claimed that customer loyalty is the utmost
important factor for online companies to achieve its financial plan because it could be more
expensive for the e-retailers to acquire new customers than the off-line companies do
Reichheld and Schefter, 2000). In other words, it can be said that building customer loyalty in
the online market is a must to maintain the long-term profits for e-retailers. In order to do so,
the companies need to provide excellent service, create excellent customer experience for
clients, and maintain a long term and fruitful relationship with clients.
Customer loyalty is defined as the opportunity for clients to return to the shops, provide
positive comments about the products and service of the organization, as well we act as the
believable source of reference for other clients to try the products and service (Scott and Von
Der Heidt, 2015). Another definition of customer loyalty is that it is the intention of clients to
comment positively to certain business and its products and service. It is also the chance to
purchase the products and service again in the future (Evanschitzky et al., 2012). What is
more, e-loyalty is referred to clients attitude of favor toward a particular business over the

internet, which leads to their repeated purchase behaviors towards the products and service of
that e-business (Anderson and Srinivasan, 2003). From this definition, customer e-loyalty can
be viewed in two perspectives, which is the spreading out of positive comments (word of
mouth) of e-businesss goods and services, as well as the intention of re-purchasing the
products and services in the future.
As far as it is concerned, the benefits of maintain customer loyalty online is that it enhance
companys profitability in terms of the decrease of cost to reach new clients, and the revenues
from the repurchasing behaviors of clients (Kim et al., 2009). What is more, customer loyalty
online could bring the competitive advantage for the company because it could generate the
interests and commitment of clients with the products and service of the company, and thus,
leading to clients repeated purchase behaviors. It is noted that the greater the experience that
clients have with the company, the more likely they are willing to come back and repurchase
the products and service of the company (Smith, 2000). In addition, clients tend to spread
good comments about a company if they have positive perceived about the company and its
products as well as they are in good mood when they visit the shops (Yoo et al., 2013). In that
case, it can be seen that loyalty clients will become effective marketers for the business. What
is more, it is revealed that loyalty customers tend to buy more frequently than the other
clients, and they tend to pay premium price for products and service at their loyal shops
(Turban et al., 2015). In addition, it is known that loyalty clients are tend to be more
understandable and tolerant than other clients when issues happen in the company. From the
above reasons, it can be said that the company can be successful thanks to the support of its
loyalty customers, therefore, building a strong loyalty customer base is very important for the
company. For the e-business, customer loyalty is also essential to stay competitive in the emarket, as well as generate the growing income and profits for the company. Therefore, it is
of importance to understand the factors that may affect clients loyalty online so as to have
proper strategy to win customers loyalty online.
2.2

Conceptual framework

It can be seen that customer satisfaction is one of the important factors leading to customer
loyalty in the online market (Giovanis and Athanasopoulou, 2014). There is no doubt that
dissatisfied clients tend to find alternative options from the companys competitors, which
leads to the damage of the company in terms of reputation and potential profits (Hsu et al.,
2013). A satisfied clients tend to play it safe by choosing the same company and products that
they have bought, and are more likely to become the loyalty clients. Moreover, they tend to

have the intention of repurchasing the products and services and make recommendation about
them for others (Kim et al., 2009). What is more, they also are more likely to spread out good
comments about the products and services to others, as well as encourage others to choose the
products and services that they have tried and made them satisfied. Therefore, it can be seen
that these loyal customers are very important for the companys current and future
profitability.
In this research, clients satisfaction is measured in the online context, which refers to the
relationship between clients and the online business. The role of clients satisfaction in the
online market could have certain linkage to their loyalty towards the online business. From
the arguments and discussions above, several hypothesis regarding e-loyalty and esatisfaction have been formed as below: H1. E-loyalty is directly and positively influenced
by e-satisfaction.
Another factor affecting clients loyalty is customer trust, which refers to the belief of clients
on the business and its products and services (Kassim and Abdullah, 2010). It can be seen
that, in the e-commerce environment, trust is of necessary to build and maintain the
relationship with clients for any e-business, which result in positive words of mouth in the
online world (Yoo et al., 2013). In addition, in order to maintain a long-term relationship,
buiding trust must be paid strong attention to. It can be seen that when clientss perceived risk
is high, their trust does matter and it could affect their purchase decisions (Chou et al., 2015).
In the online market, customers perceived risk is proved to be high due to the lack of face to
face contact with the actual stores, products and personel. Therefore, it can be seen that trust
is very important for clients to believe in the products and services of an e-business and click
on the purchase button. Therefore, for online stores, building trust is more important than
the off-line stores (Reichheld and Schefter, 2000). It is said that trust is the first and foremost
factor that could affect clients intention to purchase and the selection online retailers
(Giovanis and Athanasopoulou, 2014). Therefore, concerning the importance of trust with the
online retailers and clients e-loyalty, a hypothesis was formed as below: H2. E-trust directly
and positively influences e-loyalty.
It is argued that an excellent quality of the online service could be important for the online
businesses because it could satisfy clients and thus, make the company become successful
(Zhang et al., 2014). It can be seen that companies has been focusing in the quality of their
services and products with an aim of gaining clients loyalty. The service quality online could

be defined as clients evaluation on the service that an e-business offers and also reflected
customer experiences and perceptions towards the companys products and services. What is
more, e-service quality affects clients trusts and satisfaction towards the products and
services of an online company, which in turns, could have the influence on clients loyalty
online. It is even claimed that all facets of quality of the online service could also have certain
effects on the e-loyalty as in the case of the website design, customization and assurance
about the service and product quality (Mouakket and Al-hawari, 2012; Fan and Tsai, 2010;
Kassim and Abdullah, 2010). From the above arguments, it can be seen that the quality of
online service could affect the e-loyalty of clients. Therefore, the following hypothesis were
proposed:
H3. E- loyalty was directly and positively affected by the e-service quality
H3a. E- loyalty was directly and positively affected by the ease of use
H3b. E- loyalty was directly and positively affected by the Website design
H3c. E- loyalty was directly and positively affected by the responsiveness of the e-business
H3d. E- loyalty was directly and positively affected by customization
H3e. E- loyalty was directly and positively affected by the assurance of the products quality
and services.

3
3.1

Research strategy and methods

Research approach

It can be seen that there are two types of research approach, including deductive and
inductive approach. While the former refers to the research that is to test the existing theories
in reality by observations, the latter refers to the research that starts with observation and
concludes with theory (Flick, 2015). Regarding this study, the deductive research approach
will be employed because the aim of this research is to investigate the reality based on the
established framework that is created by the existing theories.
Regarding data collection methodology, there are two types including qualitative and
quantitative method (Saunders et al., 2011). It can be seen that the former method is
associated with pictures and words, whereas the latter is associated with numbers. In this
research, a quantitative data collection method will be applied because the research look for

the wide application for the population and aims at a wide perspective, not a detailed and
deep analysis of a particular subject. Therefore, working with a wide range of data and
variables and analysed them via the quantitative method are the suitable methods to achieve
the researchs objectives.
3.2

Research design

The research design is refered to the way the research will be shaped and the research
questions will be answered. There are three research designs that can be used in the academic
research, namely explorative, explanatory and descriptive research design (Saunders et al.,
2011). The first research design explorative research can be used when there is a real-life
issue that the research wants to clarify and explore. This is frequently used when the
researchers want create a general background and picture about the issues, which is new to
them, and they want to develop the method to analyse the issue in the new research areas. The
second research design explanatory research could be employed to explain the certain facts
and issues. The last research design descriptive research can be applied to describe a
phenomenon. In this study, both exploratory and descriptive research will be employed to
help investigate the factors that affect e-loyalty of clients at Argos shop, as well as describe
the relationship between the antecedents and the customer e-loyalty. Another reason is that
because of the topic about the influence of factors on customer e-loyalty has not been
explored widely, it is necessary to apply the exploratory research in order to clarify the
relationship of the affecting factors and the customers e-loyalty.
3.3
3.3.1

Data collection and analysis

Data source

It is known that there are two distinct data sources, namely secondary and primary data
(Flick, 2015). In this research, primary data will be collected from the empirical research and
tailored for the purposes of this research. The primary data is essential in this research
because it could enable the research to gain more knowledge about customers loyalty in the
online environment, especially towards the products and services of the e-business Argos. It
can be seen that the case study of Argos and the industry of online products have not been
investigated by previous research, it is of importance to get primary data in order to make the
research reliable and legitimate.

In this study, survey and questionnaire will be utilized to obtain the primary data because it
could help to obtain the data in a shortest time, with low cost and still assure the accuracy of
the data.
3.3.2

Sampling method

Regarding sampling method, there are two sampling techniques that could be mentioned,
namely probability and non-probability sampling (Saunders et al., 2011). The first sampling
method refers to the equal opportunity that every member of the population have in terms of
being chosen for the study. On the other hand, the latter refers to the samples that are selected
non-randomly, or in other words, they are selected based on the certain choice of the
researchers. By doing this, it is clear that each member of the population will not have an
equal chance to be selected for the study.
In the course of this study, a sampling method of probability will be employed and go
through four sequencing steps as below:

Based on the research objectives and questions, suitable sampling frame will be
identified, with the target population are those aged from 18 to 49 years old who have

experience the online purchase on Argos.

A sample size will then be decided. It is seen that the bigger the sample size is, the
better and the more generalizable the result will be. Therefore, this research will try to

reach as higher response rate in a big sample as possible.

The sampling teniques and samples will then be selected. A random sampling
technique will be employed in this study. This means each individual in the
population will have an equal chance to be selected in this research. This could enable

the generalisation of the research result afterwards.

The sample will be checked if it is representative for the whole population. The
survey questionnaire will be designed promptly so that all the necessary of the
respondents will be obtained and used in the purpose of the research. Based on the
respondents background and personal data (such as age, income, gender, and
location), researchers could divide respondents to different groups and gain insights
from their answers.

3.3.3

Data analysis

The raw primary data will be analysed using the software SPSS, an useful research analysis
program which helps reseachers to analyse the data and find the relationship between

valuables scientifically and systematically. It could also help to gain the descriptive
information about the data on the research topic, as well as conduct necessary validity tests.
What is more, by using the SPSS program, the hypothesis that was proposed in the previous
section of this study will be tested by using different regression analysis.

Ethical Considerations

It is known that ethics play a very important role in academic research. Regarding this study,
it has followed strictly the ethics guidelines and regulation of the University of the West of
England in conducting research. Indeed, all of the questionnaires of this research were in
accordance to the rules of conducting surveys. More detailed, this research purpose and
objectives have been presented in the beginning of the questionnaires so that every
respondents can see. Respondents have the right to accept or refuse to do the survey. The
survey research did not ask the too personal questions such as participants names or credit
card numbers. All of the information provided in the questionnaire will be kept confidential
and only be used for academic reasons.

Timeframe

The following Gantt Chart has been built to assure that the research meet the deadline
provided:

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