EFFECT OF RELATIONSHIP MARKETING ON ORGANIZATIONAL PERFORMANCE

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EFFECT OF RELATIONSHIP MARKETING ON ORGANIZATIONAL PERFORMANCE

ABSTRACT

This study looked at the impact of relationship marketing on organisational performance using AIICO Insurance Plc as a case study. Effective relationship marketing is critical to service organisations’ existence, prosperity, and continuity.

The success of relationship marketing in service organisations has a significant impact on the organization’s performance as well as the satisfaction of consumers who get services from the organisation.

The descriptive survey research design was used for this investigation. This study’s sample included 128 selected employees and clients from the organisation in Lagos State, Nigeria.

The major research tool was a questionnaire. Data were collected and analysed using descriptive statistics, with the Chi-Square statistical approach employed to test hypotheses.

The study found that relationship marketing improves the performance of marketing organisations. Ineffective relationship marketing reduces consumer loyalty; there is a link between relationship marketing and organisational survival; and there is a direct link between customer satisfaction and relationship marketing.

Thus, it was proposed that AIICO Nig. Plc. should be focused with meeting individual and stakeholder demands. Organisations should give their consumers with quality services that fulfil their expectations in order to enjoy relational benefits.

AIICO Nig. Plc. management must recognise that many firms have achieved market success by implementing a marketing relationship strategy.

Organisations must develop and maintain satisfactory customer relationships in order to reduce transaction costs and perceived risk. AIICO Nig. Plc. must also address the challenges and problems associated with relationship marketing strategy. Chapter one

INTRODUCTION

1.1 Background for the Study

Effective relationship marketing is critical to service organisations’ existence, prosperity, and continuity. The success of relationship marketing in service organisations has a significant impact on both the organization’s performance and the satisfaction customers can obtain from the organization’s offerings.

Relationship marketing (RM) is receiving more attention in marketing research and has emerged as a crucial enterprise marketing activity in recent decades.

The term’relationship marketing’ was coined over twenty years ago and has since received a lot of attention from both researchers and practitioners (Yang and Wu, 2007; Sharker, 2009).

Mulki and Stock (2003) explore various environmental elements that have contributed to the growth of this idea, including trends for enterprises to be service and information-oriented, niche-oriented, global in nature, and, of course, to adopt information technologies.

The concept of “relationship marketing” is central to the study of marketing management and organisational behaviour. Relationship marketing is a modern concept in marketing management that is gaining the interest and attention of marketing organisations and companies (Achumba, 2002).

To survive the onslaught of competition, any organisation must clearly define its relationship marketing, which is a technique used to foster a positive relationship between the marketing company and its clients. This will ensure that the company’s aims and goals are met, and the results will always be beneficial (Weitz and Sandy, 1995).

Despite its relevance, not everyone understands its full meaning; possibly this is because to its difficulty to describe and apply in organisations.

Relationship marketing is consequently concerned with the creation and maintenance of mutually beneficial exchanges and relationships between the marketing organisation and the target audiences in order to achieve organisational goals (Berry, 1995). This is only achievable by delivering high-quality services, ensuring availability, and offering after-sales support.

Relationship Marketing’s role in Competitive Marketing Strategy includes guiding moments of truth, improving profitability, building partnerships, addressing ‘Customer Better’, gaining customer attention, protecting emotional well-being, understanding consumer psychology, and building customer trust (Morgan and Shelby, 1994).

Relationship marketing acts as a moderator in the maintenance of positional advantages, influencing the impact of competition and market conditions on the design of the marketing mix. In the service industry,

there is always some direct (social) contact between the customer and the service provider. This direct (social) interaction or’service encounter’ is such a crucial aspect of service delivery that it is commonly referred to as ‘the moment of truth’ (Johns, 1999).

One of the primary goals of competitive marketing strategy is to increase long-term financial performance. Relationship marketing achieves this marketing strategy’s financial performance goal by aiming to improve profitability through the use of relationships.

In reality, relationship marketing pays off handsomely when products or services have substantial switching costs, such as an office automation system.

Relationship marketing is profitable when customers are willing to stick with a supplier for an extended length of time. Transaction marketing, on the other hand, is profitable when switching costs are minimal.

According to Egan (2001), connection marketing encourages external alliances to meet a company’s mega-marketing needs. It promotes external ties through networks (people relations), collaborations (organisational relations), and alliances.

These sets of external linkages combine market aspects in a synergistic manner. Importantly, for relationship marketing to be effective, it must address client behaviour.

Furthermore, in today’s corporate environment, marketing is more than just designing, selling, and delivering products and services (Gilbert and Choi, 2003); it is also concerned with recruiting, developing, sustaining, and improving customer relationships.

By implication, organisations must approach their client base as individual assets in and of itself, keeping in mind that the costs of recruiting consumers are often higher than the costs of retaining them, which is especially evident in the service sector (Ennew and Bink, 1996).

In order to effectively serve its clients, the organisation must provide genuine satisfaction. Consumers should be able to extract utility, which is the satisfaction gained from using a specific service (Berthon, Leyland, Michael, and Gunnar, 2003).

This research project would provide light on the impact of relationship marketing on organisational performance in service organisations.

1.2 Statement of Problem

The study revealed the multiple issues that an organisation may face if relationship marketing is not carried out successfully, as well as the implications for client loyalty. What implications does this have for the organization’s products/services and profitability?

Lack of patronage, unfavourable attitude, no repeat purchase, absence of customer royalties, lack of quality service, and low profitability levels are all the result of failing to implement successful relationship marketing strategies.

The hurdles for the firm in implementing this plan include a complicated array of technology, a lack of skills and resources, a significant amount of time and effort, fast changing markets, and increasingly demanding consumers’ current service organisation.

With this unusual collection of issues, many marketing experts and practitioners recognised that developing relationships is critical to competing effectively, particularly in this tumultuous and complex corporate environment.

Thus, the management of a service organisation should implement excellent relationship marketing to foster positive relationships between the organisation and its clients.

This study aims to investigate the impact of relationship marketing on organisational performance at AIICO Nig Plc.

1.3 Objectives of the Study

The primary goal of this study is to objectively investigate the impact of relationship marketing on organisational success. The precise aims include:

i. Investigate the significance of relationship marketing to marketing organisations.

ii. To assess the impact of relationship marketing on client loyalty.

iii. Determine whether relationship marketing promotes positive relationships between organisations and their customers.

iv. Determine whether the organization’s management encourages relationship marketing.

v. Identify the problem that the organisation is experiencing as a result of inefficient relationship marketing.

1.4 Background and Significance of the Study

The necessity of creating and maintaining long-term relationships with consumers of service organisations is widely recognised in marketing literature.

As a result, the organisation, practitioners, consumers, and all other stakeholders will greatly benefit from this study.

The importance of this study cannot be overstated in industry. Although it is being conducted for academic purposes, it is important to note that it will be extremely beneficial to service organisations;

it will demonstrate the relevance of relationship marketing and the various ways in which relationship marketing can help to increase customers’ commitment to organisational services.

The study would also serve as a guide for business managers, advising them on how to establish solid relationships with potential clients in order to ensure high demand for their services.

1.5 Research Questions.

The following research questions were prepared for the study.

i. What is the importance of relationship marketing to marketing organisations?

ii. How does relationship marketing effect client loyalty?

iii. How can relationship marketing foster positive relationships between service organisations and their customers?

iv. How can marketing managers in service organisations promote effective relationship marketing practices?

V. How does inadequate relationship marketing impact marketing practices?

1.6 Research Hypotheses.

The following research hypotheses were developed for this study:

Hypothesis 1.

Ho: Relationship marketing improves the performance of marketing organisations.

Hi: Relationship marketing does not improve the performance of a marketing organisation.

Hypothesis 2.

Ho: Ineffective relationship marketing reduces client loyalty.

H1: Ineffective relationship marketing does not harm client loyalty.

Hypothesis 3.

H0: There is no correlation between relationship marketing and organisational survival.

H1: There is a link between relationship marketing and organisational survival.

Hypothesis 4.

H0: There is no clear link between customer happiness and relationship marketing.

H1: There is a clear link between customer happiness and relationship marketing.

1.7 Scope of Study

The scope of this study is limited to AIICO Insurance Plc, 36/38 Industrial Avenue Ilupeju, Lagos, Nigeria. In this study, an attempt was made to analyse current concerns with relationship marketing and its impact on organisational performance,

specifically AIICO Insurance Plc. in Nigeria. As a result, the opinions of members of AIICO Insurance Plc in Illupeju, Lagos Nigeria, were polled to determine whether or not relationship marketing is beneficial in the organisation.

This company has at least 100 employees, including management and non-management staff. However, for the purposes of this study, only management/senior staff will be considered based on their knowledge of the topic under review. The study’s results and recommendations were limited to AIICO.

1.8 Definition of Terms.

This component of the study focuses on the definition of ideas and terms used in the study. The following are the main variables used in the study:

Marketing is the combined social and societal efforts of corporate activities aimed at satisfying both current and potential clients.

Relationship marketing is a strategic approach that focuses on retaining and developing existing consumers rather than gaining new ones, i.e. maintaining reciprocal relationships.

Organisational performance refers to the level of success obtained by businesses as a result of proper resource utilisation inside the organisation. These criteria are used to evaluate performance.

Planning involves forecasting trends and establishing the best techniques for achieving organisational goals.

Strategies are strategies or plans that a manager expects to implement in order to meet its goals.

Promotion encompasses all activities aimed at informing, educating, persuading, and raising awareness about the company’s offerings.

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