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Abstract
With growing number of organizations offering wide range of choices across the industry made today's
market more competitive than ever before. Fueled with LPG (Liberalization, Privatization and
Globalization), the entry of multinationals encouraged the domestic organizations to move from sellers'
driven marketing to buyers' driven marketing approach. Cultivating customer loyalty is often considered as
the key driver for organization's long term sustainable marketing success. Of late, Relationship Marketing
has emerged as one of the most powerful marketing tools to cultivate customer loyalty, interaction and long-
term engagement. Now a day, Organizations across the industry are depending upon relationship marketing
to broaden their market share by strengthening customer relationships and building customer loyalty.
Taking evidence from Indian Automobile Industry, this study is intended to empirically investigate the
impact of relationship marketing on customer loyalty.
defection and building long lasting relationship in customers. The main intention of implementing
with the customers seem to be the only way of relationship marketing in anorganization is to
achieving sustainable profitable growth. capitalize on customer loyalty (Raza &Rehman,
2012).
The knack of the organization to understand the
desire of the customers and offer the products and At this backdrop, this study is intended to extract
services to satisfy them is vital for the success of various constructs of relationship marketing and
the organization in the market that is characterized empirically investigate their impact on customer
by clutter and cut throat competition. This led loyalty taking evidence from Indian Automobile
organizations to move from product centric Industry.
marketing orientation to customer centric
marketing orientation. In order to build customer 2. Literature Review
loyalty, organizations should maintain a good
relationship with their customers so that The extant literature review for the present research
organizations would be in the position to study has been divided into three broad sections i.e.
understand the customers' needs, wants & Relationship Marketing, Customer Loyalty, and
expectations for delivering desired value in a way Relationship Marketing - Customer Loyalty
that is better than their competitors Relationship.
(Sachro&Pudjiastuti, 2013).
2.1 Relationship Marketing
Automobile Industry in India has emerged as one
of the key drivers of Indian economy as it plays a In recent past, marketing has witnessed paradigm
key role in developing transportation sector and shift in marketing orientations. Alet (2000)
helping economy to grow faster by generating supported the fact that the complexity attributed by
significant number of employment opportunities. technological development and intensification of
Today's Automobile customers are well informed competition in fast changing market making it
and have wide range of choice while buying a difficult to manage business effectively. Fierce
vehicle. With little differentiation among competition and rising customer expectations
automobile products in the same price band and across the industry forced marketers to adopt
availability of wide range of models and variants customer centric marketing stratagem.
often encourage customers to switch from one “Relationship marketing acknowledges that a
automobile brand to another one very easily stable customer base is a core business asset”
(Ambekar, 2013). Pursuit for high market share (Rowley, 2005).
coupled with global competition encouraged
sellers, vendors and customers to get into long term The literature revealed that the marketing has
relationship that finally resulted in greater moved from “transaction marketing to relationship
interdependence. The automobile industry is marketing” (Lindgreen, 2001). While transaction
pioneer in embarking on developing relationship marketing does believe in “sale it and forget it”
with their vendors to ensure quality and to reduce approach; relationship marketing does involve
inventory cost (Mulki& Stock, 2003). In order to interactions, relationship and networks
understand their customers, automobile (Gummesson, 1991). The later approach of
organizations often make use of relationship marketing intends not only at acquiring new
marketing strategy to collect and analyze customers but also at retaining existing customers
important information to help identify the best fit for long period of time. At one hand transaction
between automobile products and customers. marketing approach is based upon the concept of
Grönroos (1994) argued that relationship exchange (Bagozzi, 1974); at another hand
marketing effort should be regarded as investment relationship marketing is “to identify and establish,
(Aaker, 1996). Too et al. (2001) conducted dyadic the organization. In this study, relationships at both
exploratory research of clothing store managers the levels were found to impact positively on the
and their customers to link relationship marketing probability of customers exhibiting behavioral
implementation with customer loyalty in the loyalty.
context of retailing. This study revealed that actual
relationship marketing implementation may not be Liang & Wang (2005) developed and empirically
as important as the customers' perception towards tested a conceptual model in order to examine the
relationship marketing effort to the development of connection between relationship bonding tactics,
customer loyalty. At the same time, customers' customer satisfaction, trust/commitment and
perceptions were found to improve the customers' customer behavioral loyalty in a relationship
trust towards the retail store as well as customer marketing system financial services industry in
commitment to the relationship with the store, Taiwan. The study is based on data collected from
which will ultimately lead to enhanced customer customers of different department of the selected
loyalty. It can be interpreted that the customers' bank viz. 396 from the loans department, 431 from
perceptions towards relationship marketing effort the deposits department and 216 from the credit
of the organization are vital to the enhancement of cards department. First, confirmatory factor
customer commitment and loyalty. analysis (CFA) was performed to evaluate the
construct validity regarding convergent and
Generally, there are two dimensions of customer discriminate validity. In the second stage, path
loyalty i.e. salesperson loyalty (person-to-person analysis was performed to test the research
loyalty) and store loyalty (person-to-organization hypotheses empirically. The study's findings
loyalty). Salesperson loyalty refers to the suggested that financial products with different
dependability demonstrated by customers on the product attributes will benefit the most from
salesperson; whereas store loyalty occurs when individual types and levels of relationship
customers repeatedly patronize the specific investment that can be applied directly to each
organization/store for their requirements. product.
Salesperson loyalty often leads to store loyalty
(Beatty et al., 1996). When a customer is loyal to a Peng & Wang (2006) indicated that organizations
salesperson, the probability that the customer will today have moved their strategic focus from
be loyal to the organizationwho employs the sales attracting new set of customers (targeting
person will be very high. switchers) to retaining existing customers (keeping
loyal customers) with the intention of gaining
Foster &Cadogan (2000)examined how sustainable competitive advantage. As a result of
customers' loyalty is influenced by their liberalization and deregulation, competition across
relationship with organization at two different the industry has increased more than ever before
levels; specific relationship between customers and customers became demanding. The main idea
with the sales person; and the overall relationship behind designing and implementing a relationship
customers share with the organization. Mail survey marketing strategy in an organization is to
for business customers of a large New Zealand maximize customer loyalty. Raza &Rehman
office products organization was undertaken for (2012) found all relationship marketing tactics to
the purpose of data collection. Only those be positively related with relationship quality and
customers were considered for the study who had customer loyalty. It is very vital for the
earlier interaction with company's sales personnel organizations to have a long term profitable
during the month prior to the survey. The results of relationship in order to achieve the utmost level of
the study showed that the relationships that customer loyalty, and it can be done by ensuring
customers experience with sales people play a vital high level of relationship quality while interacting
role in ensuring their long term relationship with with the customers. Apart from relationship
Gaurav (2008); and Alrubaiee& Al-Nazer (2010) described as Repeat purchasing frequency or
this study relies upon a structured questionnaire as relative volume of same-brand purchasing. 16
a measurement instrument. In this study the design items were identified from existing literature
of the questionnaire was mainly based on multiple (Butcher et al., 2001; Leverin&Liljander, 2006;
item measurement scales derived from the Gaurav, 2008) and subsequently adopted in the
previous research studies. The various items were questionnaire in the form of statements. A likert
identified from previous research and further five-point scale ranging from “Strongly Disagree”
adapted according to the requirement of this study. to “Strongly Agree” was used to assess the
In the questionnaire, all the selected items related customer loyalty.
to Relationship Marketing and Customer Loyalty
were presented in the form of statements along 3.3.3 Reliability and Validity
with five-point likert scale (from 1 = strongly
disagree to 5 = strongly agree) in agreement of the Reliability of a scale can be understood as the
statement. extent to which a scale produces consistent results
if repeated measurements are made(Malhotra,
3.3.1 Measurement Scale for Relationship 2007; Moser &Kalton, 1972). In the present study,
Marketing Constructs internal consistency reliability analysis was
undertaken as the measurement scale here is a
Contrary to Transactional Marketing, Relationship summated scale where several items are summed to
Marketing aims at enhancing profitability of the form an overall score. Cronbach's (1951) α (alpha)
organizations while offering expected service to is a coefficient of internal consistency and often
the customers and maintaining long term used as an estimate of reliability of a measurement
relationship with them. O'Malley & Tynan (2000) and it can be referred as “the average of all possible
argued that the relationship marketing works well split-half coefficients resulting from different
when customers are highly involved in the goods splitting of the scale items” (Malhotra & Dash,
or services. Customers are interested to be engaged 2009).
in relationship building activities if an element of
personal interaction is present. Relationship The validity of a scale can be defined as the extent
marketing can be considered as an exit from to which differences in observed scale scores
traditional transaction behavior in order to develop reflect the true differences among objects on the
the customers as partners. In order to appreciate characteristic being measured rather than
customers' perspectives towards relationship systematic or random error (Malhotra, 2007). A
marketing strategy of automobile organizations, scale is assumed to have perfect validity when there
31 items were identified from previous research is no measurement error. In this research study,
(Morgan & Hunt, 1994; Leverin&Liljander, 2006; content validity of the measurement scale was
Ndubisi, 2007; Gaurav, 2008; Alrubaiee& Al- assessed by asking three domain experts to
Nazer , 2010) and included in the questionnaire as scrutinize the scale and provide relevant comment.
statements along with likert five-point scale Accordingly the changes were made and scale was
anchored by 1 = strongly disagree to 5 = strongly revised in line with the suggestions given by the
agree. domain experts.
3.4.3 Sample Size In line with the data analysis strategy adopted by
Ndubisi (2007); Gaurav (2008); and Alrubaiee&
Roscoe (1975) proposed a simple thumb rule for Al-Nazer (2010), this study has employed a two-
selecting appropriate sample sizes based on an step data analysis strategy. In the first stage,
analysis of acceptable confidence levels in Exploratory Factor Analysis was conducted
behavioral research studies. A sample size in the considering correlation coefficient matrix of each
measurement item to identify the constructs for Sphericity the null hypothesis that “the variables
relationship marketing. In the second step, are uncorrelated; correlation matrix is an identity
multiple regression analysis was employed to matrix” was rejected and concluded that there are
comprehend the connection between the correlations among variables that are appropriate
constructs of relationship marketing and customer for factor analysis. Both the Kaiser–Meyer–Olkin
loyalty. (KMO) Measure of Sampling Adequacy and
significant Bartlett's Test of Sphericity strongly
recommended the use of factor analysis in order to
4. Data Analysis extract various constructs of relationship
marketing in automobile industry in India. In line
4.1 Exploratory Factor Analysis with Kaiser (1960), the factors were identified after
computing the Eigen value for the correlation
For this study, Exploratory Factor Analysis was matrix and number of factors were determined and
employed to extract the underlying factors of retained on the basis of factors having Eigen Value
relationship marketing. In this research study, greater than one. With the help of exploratory
Exploratory Factor Analysis was conducted using factor analysis four factors encompassing thirty
SPSS 20.0, a software package used for statistical one variables, all having Eigen values of one or
analysis. Principle Component Analysis along above were extracted. A factor should explain at
with Varimax rotation was employed to identify least as much of the variance if not more, than a
the underlying factors for relationship marketing lone original variable. With the help of exploratory
and factor loading of 0.30 or above on the items factor analysis, four factors were extracted and in
was taken into consideration. Exploratory factor unison all the four factors explain 53.992 percent of
analysis considered all the 31 items related to variance. The very first factor extracted with the
relationship marketing. help of factor analysis has the Eigen value of
13.009 and it explained maximum amount of
The Kaiser–Meyer–Olkin (KMO) value of 0.959 variance in the data. The other three factors were
strongly supports the appropriateness of factor also retained with its Eigen value of 1.477, 1.185,
analysis in this research study (Refer Table 1). On and 1.067 (Refer Table 2).
the basis of highly significant Bartlett's Test of
Table 1: Result of KMO Measure of Sampling Adequacy & Bartlett’s Test of Sphericity
Kaiser–Meyer–Olkin Measure of Sampling Adequacy. .959
Approx. Chi–Square 7975.072
Bartlett’s Test of Sphericity df 465
Sig. .000
Source: Developed by the Researcher
Commitment (X2)
Customer Loyalty (Y)
Trust (X3)
Communication (X4)
Table 5: Coefficients
Coefficientsa
Model Unstandardized Standardized t Sig. VIF
Coefficients Coefficients
B Std. Beta
Error
(Constant) 3.605 .028 127.358 .000
Customer 1.000
.190 .028 .226 6.705 .000
Centricity
I
Commitment .397 .028 .473 14.012 .000 1.000
Trust .265 .028 .316 9.343 .000 1.000
Communication .187 .028 .222 6.584 .000 1.000
a. Dependent Variable: Customer_Loyalty
Source: Developed by the Researcher
communicates with them openly and regularly. close attention to relationship marketing variables
like Customer Centricity, Commitment, Trust and
5. Conclusions Communication.
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