The competitive nature of our capitalist economy has obviously necessitated the application of certain techniques by banks in a bid to sustain customer patronage, remain in business and outwit competitors. Herein lies the substance of relationship as a communication, marketing and public relations technique aimed at sustaining customers’ patronage. On this note therefore, this study among others, examines the influence of relationship marketing in customers ’ patronage of banks with focus on DIAMOND bank Nnewi branch. For the purpose of this study, the survey research design was used to study a representative size of the population total of 371 sample size was studied from a target population of 1,452 which is the population of academic staff of College of Health Sciences Nnewi campus and a target population of2568 business men of which 200 were studied.Similarly a sample of 6 was purposely selected from a total number of 30 DIAMOND bank staff of Nnewi branch. Questions designed in the Likert Scale Format was used as major instrument for the collection of data while mean score was used for the analysis of the research data. Findings revealed that DIAMOND bank Nnewi branch regularly carried out various relationship efforts in line with the socio- cultural norms of the people of Nnewi and this has translated to positive influence on patronage by its customers. The study therefore concludes that such relationship marketing efforts underscores why College of Health Sciences Nnewi Campus of Nnamdi Azikiwe University Awka still retains DIAMOND bank as their official banks without staff members agitating for a change of bank. The study revealed also that the business men accepted the relationship marketing of the DIAMOND Bank. Deriving from this therefore, the study recommends that DIAMOND bank PLC should increase the community social responsibility efforts for a steady long term relationship marketing and patronage in line with the focus of relationship marketing.
CHAPTER ONE INTRODUCTION
1.1 Background of the Study
Relationship marketing (RM) aims at establishing, maintaining and enhancing relationships between the organization and the customers at a profit so that the organization’s objectives are met. When the relationship is established between the customers and the company, brand loyalty is created from the customer’s repeat purchase and this translates to more profits for the company (Victor 1990:36).
Relationship marketing is a concept that has gained popularity over the recent years. Companies and banks are beginning to understand the value of creating a relationship with the customers. Consequently, they are now striving to develop meaningful relationship more proactively. This concept was originally introduced by Leonard Berry in 1983 when he emphasized that relationship marketing was based on the concept of developing a long term relationship with a customer for the purpose of patronage bearing in mind that other competitors are always available (Yan and Wu, 2007).
According to Doyle & Stern (2006:3), relationship marketing is a long term continuous series of transactions between parties which occurs when each trusts other to deal fairly, reliably and helpfully. Relationship marketing has therefore emerged as “a popular new paradigm due to shift in focus from customer acquisition to customer retention. It is likely to shift once again and will transform into customer relationship management (CRM) with a hybrid of marketing relationship programs that range from relation to out sourcing market exchange and customer interactions” (Sheth & Kellstall,2002:30). It therefore suggests that when a good working relationship is built, negotiating time and costs are reduced and the patterns of transactions become more predictable and secure.
Due to increased competition, today’s banks are beginning to understand and employ the techniques of relationship marketing. To retain these customers, banks are now striving to develop meaningful relationships with key customers and moreso to manage those customer relationships more proactively (Connor, Galvin, Evans , 2004:16).
Relationship marketing therefore attempts to create a more holistic, personalized brand experience (service) to create stronger customer ties. According to Kottler and Armstrong, (2009:14) a number of companies are today offering services and relevant facts to individual customers based on information about past transaction, demographics, psychographics, media and distribution preferences. By focusing on their most profitable customers, products and channels, there is a firm hope to achieve profitable growth capturing a larger share of each customer’s expenditure by building high customer loyalty. Relationship marketing is aimed at retaining existing customers since attracting new customers may cost up to five times more than retaining an existing customer.
If DIAMOND Bank PLC and other commercial banks in Nnewi, Anambra State aim at increasing the size of their customers, the banks must train their employees in cross selling and up selling their products. There is need to realize the benefits from lowered costs and increased profitability from long term relationships between firms and their customers. On the other hand, customers will enjoy the transactions of an organization that understands them and their requirements and they will also have a reliable financial service provider.
Simply put, therefore, relationship marketing involves all activities and efforts of the business organization aimed at creating and sustaining healthy relationship with the customers. This is necessitated by the fact that the customer is central to organizational activities. There is credence by the increasing rate of competition in the business circles especially in the banking sector. It is on this note therefore that Victor (1970:11) acknowledged that; “the key to successful marketing is having the right product at the right price in the right place with the right promotion”. In the end, the person who decides the rightness of these four elements is the customer. The customer is therefore central to the 4Ps of marketing which are: Price, Place, Promotion and Product. It is the customer that determines the relevance of the 4Ps through patronage. Patronage therefore, is arguably the target of the 4Ps of marketing.
However, relationship marketing seems to go a little beyond patronage and aims at securing the loyalty of the customer. The company, in this instance, should not limit the definitions of the business organization to the confines of profit making but should see it as a responsible citizen whose interest is to provide customers’ well being. It is on this note therefore, that business organizations such as banks and even GSM service providers get involved in programme sponsorships and community social responsibility projects in their business locations and in most cases, beyond. In his seeming eulogy to this, Arens (2006:241) noted that, “A market driven firm’s overriding purpose is to create happy, loyal customers. Customers, not products, are the live-blood of the business”. This is underscored by the fact that, “customers can choose from a wide variety of products and services offered by producers located around the world. As a result, the customer relationship, which the sale is only the beginning, is the key strategic resource of the successful twenty-first century business (Fredrick 1994:22).
It therefore suffices that every organizational efforts at retaining customers’ patronage through building a healthy relationship qualifies as relationship marketing. In fact, public relations and advertising as promotional tools qualify as relationship marketing techniques, so also do integrated marketing communications. The above gains support from public relations which leans on goodwill between the organization and its publics (markets) hence, relationship marketing. It is therefore in support of the above that Arens (2006: 338) explained public relations as: “The management function that focuses on the relationships and communications that individuals and organizations have with other groups (called publics) for the purpose of creating mutual goodwill.”
It therefore stirs no surprise that organizations like banks intermittently engage in corporate image research with a view to finding out how the organization is being perceived by its publics.
The result of the studies enables the organization to re-strategize its activities in order to make for good corporate image in the minds of its publics. It therefore implies that effective communication is a sine-qua- non for relationship marketing. Providing the right information at the right time to the right group keeps the target market adequately informed on the organizational activities. Little wonder then that Mckenna (1988:88), acknowledged that all these communications or brand contacts sponsored or not, create an integrated product in the consumer’s mind. The way and manner words are framed determines the meaning it conjures in the mind of the public which also determine the degree at which such organization secures the loyalty and trust of the customer.
Be that as it may, the degree of heightened competition in this global age has necessitated the combination of such practices as advertising, public relations, marketing and their likes (hence, integrated marketing communication) at establishing and sustaining relationship marketing. Definitively, therefore, integrated marketing communication is the process of building and reinforcing mutually profitable relationships with employees, customers, other stakeholders and the general public by developing and co-coordinating a strategic communication programme. According to Shultz, such communication enables them to have a constructive encounter with the company brand through a variety of media or other contacts (Shultz 1993:5). Why much emphasis on relationship marketing? Fredrick (1992:1), arguably provided an answer when he noted that to succeed, “companies must focus on managing loyalty among carefully chosen customers and stakeholders (employees, centers of influence, stakeholders, the financial community and the press).
According to Gary, this is supposedly important since, “No amount of advertising is likely to win back a customer lost from shoddy products or poor service. The real profit lost is the lifetime customer value (LTCV) to a firm. Moreso, research evidence has continued to show that, “90 percent of a manufacturer’s profit comes from repeat purchases” (Gary 1993:21). It therefore makes business sense to secure and retain the loyalty, patronage and understanding of customers since such costs less than wooing new ones. Be that as it may, the question has often been raised on the degree of influence (if any) such efforts at relationship marketing do have on customers in a competitive market economy like Nigeria.
In specifics, however, the heightened competition among banks especially those located in commercial nerve centres such as Nnewi in Anambra State which have led to aggressive advertising and marketing of their products and services have also stirred debates and concern. People have therefore continued to question the influence of their direct marketing approach, sale promotion, advertising; media mix approaches and other efforts at relationship marketing on the customers; and overall customers’ patronage and perception of such organization. On the other hand, literature suggesting answers to questions on how these strategies influence customer loyalty in banks in Nnewi and in DIAMOND bank specifically are scanty. This lacuna has the potentials of preventing insight into how relationship marketing may be or not be of benefit to efforts at preserving customer loyalty and increase patronage.
This, therefore, provides basis for this study which among others pries into the influence of relationship marketing on customers’ continuous patronage of DIAMOND bank using Nnewi Town as a case study. Hence, the result of this study would either provide justification for the human and material resources infused into relationship marketing efforts or not.
Herein, lies the substance of this study which is geared towards measuring the degree of influence DIAMOND bank’s efforts at relationship marketing do have on public perception, loyalty and patronage with a justified bias for banks in Nnewi town of Anambra State.
1.2 Statement of Problem
The increasing competition in the banking sector has necessitated the need for banks to build a long term relationship with customers since it costs more to woo a customer than to retain the patronage of an existing customer. This underscores why DIAMOND bank like other banks seek to embark on relationship marketing techniques which inter alia includes such promotional efforts as public relations, advertising, integrated marketing communications, direct sale, etc. However, it is not known in the literature whether despite the huge amount spent on this effort, people still may not arguably show corresponding interest and enthusiasm to open business that operate with such banks. Literature search showed that this problem has not been documented and this poses a gap in the understanding of the influence of relationship marketing in customers’ continual patronage of the services of DIAMOND bank, Nnewi. It is on this premise therefore that the researcher aims to find out the influence of relationship marketing on customers continuous patronage of banks, using DIAMOND bank ( in Nnewi) relationship marketing efforts on Nnewi people as a reference point.
1.3 Objectives of the Study
This study primarily aims at:
1. To find out how regular DIAMOND Bank Nnewi engage in relationship marketing?
2. To evaluate various relationship marketing techniques adopted by DIAMOND Bank in Nnewi town.
3. To assess the relevance of such relationship marketing approaches within the context of socio- economic realities of Nnewi people.
4. To examine people’s perception of such relationship marketing approaches.
5. To determine the overall influence of such relationship marketing approaches on customers’ patronage of DIAMOND bank products and services.
1.4 Research Questions
The following research questions guided the research for the purpose of this study:-
1. How regular does DIAMOND bank Nnewi engage in relationship marketing?
2. What are the various relationship marketing techniques adopted by DIAMOND Bank Nnewi?
3. To what extent are relationships marketing techniques of DIAMOND bank relevant within the context of the socio-economic realities of Nnewi people?
4. How do the public perceive DIAMOND bank relationships marketing approaches?
5. To what level has a relationship marketing effort of DIAMOND bank in Nnewi town influence customers’ patronage?
1.5 Significance of the Study
This study will be important to the following:
Academically, this study will examine relevant issues related to relationship marketing. This would bring to the fore the inter linkages between various academic disciplines like Mass Communication, Marketing and other related disciplines.
Theoretically related to the above is the fact that the study would explore relevant theories which provide insight and understanding of the subject matter just as it would provide theoretical basis for further research efforts.
Professionally, the study would also help bank professionals to assess their relationship marketing techniques and efforts in a bid to ascertain if it yields desired benefit. Such would enable them tune remedial or corrective actions for better efficiency and productivity.
1.6 Delimitation/Scope of Study
This study is delimited to DIAMOND bank, staff, Nnewi branch and staff in the various departments of the College of Health Sciences, Nnamdi Azikiwe University, Nnewi Campus,
Anambra State. Also, a cross section of the businessmen in Nnewi Market were recruited in the study. The researcher’s choice of category of staff derives from the fact that they are educated, majority of the staff use the bank as their official bank. They also can easily analyze various relationship marketing techniques of the bank under study; and explain in simple terms their opinion, perception of such techniques and the imprinted image of the bank on their minds.
1.7 Operational Definition of Terms